<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 9, 1996
REGISTRATION NO. 333-12457
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 NORTH CLARK STREET, SUITE 1010
CHICAGO, ILLINOIS 60610
(312) 644-8673
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive office)
----------------
PAUL G. SIMON
GENERAL COUNSEL
UNIVERSAL OUTDOOR HOLDINGS, INC.
321 NORTH CLARK STREET, SUITE 1010
CHICAGO, ILLINOIS 60610
(312) 644-8673
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
----------------
WITH COPIES TO:
<TABLE>
<S> <C>
LELAND E. HUTCHINSON STACY J. KANTER
WINSTON & STRAWN SKADDEN, ARPS, SLATE, MEAGHER & FLOM
35 WEST WACKER DRIVE 919 THIRD AVENUE
CHICAGO, ILLINOIS 60601 NEW YORK, NEW YORK 10022
(312) 558-5600 (212) 735-3000
</TABLE>
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act of 1933 registration statement number
of the earlier effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Section 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC.
CROSS-REFERENCE SHEET
<TABLE>
<CAPTION>
FORM S-1 ITEM NUMBER AND HEADING PROSPECTUS CAPTION OR PAGE
- ------------------------------------------------------------------- ---------------------------------------------------
<C> <S> <C>
1. Forepart of Registration Statement and Outside Front Registration Statement Cover; Outside Front Cover
Cover Page of Prospectus................................ Page of Prospectus
2. Inside Front and Outside Back Cover Pages of Inside Front Cover Page; Available Information;
Prospectus.............................................. Outside Back Cover Page
3. Summary Information, Risk Factors and Ratio of Earnings Prospectus Summary; Risk Factors; Business
to Fixed Charges........................................
4. Use of Proceeds......................................... Prospectus Summary; Use of Proceeds
5. Determination of Offering Price......................... Underwriting
6. Dilution................................................ Not Applicable
7. Selling Security Holders................................ 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; The Transactions;
Use of Proceeds; Dividend Policy; Price Range of
Common Stock; 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 THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
STATE.
<PAGE>
SUBJECT TO COMPLETION
DATED OCTOBER 9, 1996
[LOGO]
5,750,000 SHARES
UNIVERSAL OUTDOOR HOLDINGS, INC.
COMMON STOCK
----------
Of the shares of Common Stock ("Common Stock") offered hereby (the
"Offering"), 5,000,000 shares are being sold by Universal Outdoor Holdings, Inc.
("Universal Outdoor" or the "Company") and 750,000 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.
The Common Stock is quoted on the Nasdaq National Market under the symbol
"UOUT." On October 8, 1996, the last reported sale price for the Common Stock,
as reported on the Nasdaq National Market, was $37.25 per share. See "Price
Range of Common Stock."
Following the Offering, Universal Outdoor, Inc., a wholly-owned subsidiary
of the Company, intends to offer $200 million aggregate principal amount of its
Senior Subordinated Notes due 2006 (the "New Notes") by a separate prospectus
(the "Notes Offering," and together with the Offering, the "Offerings"). Certain
terms of the Notes Offering are set forth in "Description of Indebtedness and
Other Commitments."
--------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 9 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 has granted the Underwriters a 30-day option to purchase up to
862,500 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 will be $ , $ , $ and $ ,
respectively. 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 October ,
1996.
ALEX. BROWN & SONS
INCORPORATED
BEAR, STEARNS & CO. INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
THE DATE OF THIS PROSPECTUS IS , 1996.
<PAGE>
[INSIDE COVER PAGE]
--------------
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 NASDAQ NATIONAL MARKET, THE OVER-THE-
COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED
AT ANY TIME.
IN CONNECTION WITH THE OFFERING, CERTAIN UNDERWRITERS OR THEIR AFFILIATES
MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK ON THE
NASDAQ NATIONAL MARKET IN ACCORDANCE WITH RULE 10b-6A UNDER THE SECURITIES
EXCHANGE ACT OF 1934. SEE "UNDERWRITING."
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) THE
COMPLETION OF THE TRANSACTIONS (AS DEFINED) SCHEDULED OR ANTICIPATED TO OCCUR,
(II) THE COMPLETION OF THE OFFERING AT A PRICE OF $32.00 PER SHARE, AND (III) NO
EXERCISE OF THE UNDERWRITER'S OVER-ALLOTMENT OPTION. THE "TRANSACTIONS" CONSIST
OF THE ACQUISITION OF OUTDOOR ADVERTISING HOLDINGS, INC. BY AN INDIRECT
SUBSIDIARY OF UOI PURSUANT TO A MERGER OF SUCH INDIRECT SUBSIDIARY WITH AND INTO
OUTDOOR ADVERTISING HOLDINGS, INC. (THE "POA ACQUISITION"), THE DEBT TENDER
OFFERS (AS DEFINED), THE EXECUTION OF THE NEW CREDIT FACILITY (AS DEFINED), THE
MEMPHIS/TUNICA ACQUISITION (AS DEFINED) AND THE ADDITIONAL ACQUISITIONS (AS
DEFINED). SEE "TRANSACTIONS." "ACQUISITIONS" MEANS, COLLECTIVELY, THE POA
ACQUISITION, THE MEMPHIS/TUNICA ACQUISITION AND THE ADDITIONAL ACQUISITIONS.
"OPERATING CASH FLOW" HAS THE MEANING SET FORTH IN FOOTNOTE 2 ON PAGE 7 HEREOF
AND "OPERATING CASH FLOW MARGIN" HAS THE MEANING SET FORTH IN FOOTNOTE 3 ON PAGE
7 HEREOF. THE TERM "MARKET" REFERS TO THE GEOGRAPHIC AREA CONSTITUTING A
DESIGNATED MARKET AREA AS DEFINED BY THE A.C. NIELSON COMPANY.
THE COMPANY
The Company is a leading outdoor advertising company operating approximately
21,114 advertising display faces in two distinct regions: the Midwest (Chicago,
Minneapolis/St. Paul, Indianapolis, Milwaukee, Des Moines, Evansville (IN) and
Dallas) and the Southeast (Orlando, Jacksonville, Palm Beach, Ocala and the East
Coast and Gulf Coast areas of Florida, Memphis/Tunica and Chattanooga (TN) and
Myrtle Beach (SC)). After giving effect to the Acquisitions, the Company will be
the third largest pure-play outdoor advertising company in the United States on
the basis of net revenues. For the six months ended June 30, 1996, on a pro
forma basis the Company had net revenues and Operating Cash Flow of $65.1
million and $32.0 million, respectively, which compare favorably to the pro
forma results for the same period in 1995 of $56.7 million and $26.4 million,
respectively. For the fiscal year ended December 31, 1995, on a pro forma basis
the Company had net revenues and Operating Cash Flow of $121.0 million and $58.1
million, respectively. The Company believes that its 1995 Operating Cash Flow
Margin of 48.7%, or 48.0% on a pro forma basis after giving effect to the
Acquisitions, is among the highest in the industry.
3
<PAGE>
The Acquisitions will significantly expand and diversify the Company's
presence into new major metropolitan markets. The following table sets forth, as
of August 31, 1996, certain information with respect to the Company's outdoor
markets after giving effect to the Acquisitions:
<TABLE>
<CAPTION>
% OF 1995
PRO FORMA 30-SHEET 8-SHEET TOTAL DISPLAY
MARKET NET REVENUES BULLETINS POSTERS POSTERS FACES
- ------------------------------------- 1995 --------------- ----------- ----------- ----------- -------------
PRO FORMA
NET REVENUES
----------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
MIDWEST:
Chicago............................ $ 16,579 13.7% 653 -- 3,646 4,299
Minneapolis/St. Paul............... 16,320 13.5 447 1,365 -- 1,812
Indianapolis....................... 9,897 8.2 257 1,385 142 1,927
Milwaukee.......................... 4,686 3.9 260 -- 321 581
Des Moines......................... 3,141 2.6 84 590 9 683
Evansville......................... 3,028 2.5 142 687 -- 829
Dallas............................. 1,738 1.5 245 -- 1,201 1,446
SOUTHEAST:
Orlando............................ 22,253 18.4 842 1,080 -- 1,922
Jacksonville....................... 8,528 7.0 383 942 -- 1,325
Palm Beach......................... 290 0.2 99 21 -- 120
Ocala.............................. 5,011 4.1 879 199 -- 1,078
Memphis/Tunica*.................... 13,104 10.8 706 1,179 133 2,018
Chattanooga........................ 4,582 3.8 359 663 -- 1,022
Myrtle Beach....................... 7,931 6.6 729 455 -- 1,184
East Coast area (FL)............... 2,784 2.3 567 -- -- 567
Gulf Coast area (FL)............... 1,095 0.9 444 -- -- 444
---------- ----- ----- ----- ----- -------------
Total............................ $ 120,967 100.0% 7,096 8,566 5,452 21,114**
---------- ----- ----- ----- ----- -------------
---------- ----- ----- ----- ----- -------------
</TABLE>
- ------------------------
* To be acquired in connection with the Memphis/Tunica Acquisition.
** Excludes 143 transit display faces located in Indianapolis.
OPERATING STRATEGY
The Company's objective is to be the leading provider of outdoor advertising
services in each of its two regional operating areas and to expand its presence
in attractive new markets. The Company believes that regional clusters provide
it with significant opportunities to increase revenue and achieve cost savings
by delivering to local and national advertisers efficient access to multiple
markets or highly targeted areas. Management intends to implement the following
operating strategy:
- MAXIMIZE RATES AND OCCUPANCY. Through continued emphasis on customer
sales and service, quality displays and inventory management, the Company seeks
to maximize advertising rates and occupancy levels in each of its markets. The
Company has recruited and trained a strong local sales staff supported by local
managers operating under specific, sales-based compensation targets designed to
obtain the maximum potential from the Company's display inventory.
- INCREASE MARKET PENETRATION. The Company seeks to expand operations
within its existing markets through new construction, with an emphasis on
painted bulletins, which generally command higher rates and longer term
contracts from advertisers than other types of display faces. In addition, the
Company historically has acquired, and intends to continue to acquire,
additional advertising display faces in its existing markets as opportunities
become available.
- PURSUE STRATEGIC ACQUISITIONS. In addition to improved penetration of
its existing markets, the Company also seeks to grow by acquiring additional
display faces in closely proximate new markets. Such new markets allow the
Company to capitalize on the operating efficiencies and cross-market sales
4
<PAGE>
opportunities associated with operating in multiple markets within distinct
regions. The Company intends to develop new regional operating areas in regions
where attractive growth and consolidation opportunities exist.
- CAPITALIZE ON TECHNOLOGICAL ADVANCES. The Company seeks to capitalize on
technological advances that enhance its productivity and increase its ability to
effectively respond to its customers' needs. The Company's continued investment
in equipment and technology provides for greater ongoing benefits in the areas
of sales, production and operation.
- MAINTAIN LOW COST STRUCTURE. Through continued adherence to strict cost
controls, centralization of administrative functions and maintenance of low
corporate overhead, the Company seeks to maximize its Operating Cash Flow
Margin, which it believes to be among the highest in the industry. The Company
believes its centralized administration provides opportunities for significant
operating leverage from further expansion in existing markets and from future
acquisitions.
- DEVELOP OTHER OUT-OF-HOME MEDIA. The Company seeks to develop other
forms of out-of-home media such as bus shelter or transit advertising in order
to enhance revenues in existing markets or provide access to new markets.
The Company believes that its experienced senior management team is an
important asset in the successful implementation of its operating strategy.
Daniel L. Simon, President and Chief Executive Officer and the founder of the
Company, has spent his entire professional career of 23 years in the outdoor
advertising business. Brian T. Clingen, Vice President and Chief Financial
Officer, and Paul G. Simon, Vice President and General Counsel, together possess
over 24 years of experience in the industry. As of June 30, 1996, this
management team has successfully completed and integrated 16 acquisitions since
1989.
RECENT ACQUISITIONS
Consistent with its operating strategy, the Company has recently acquired
the assets or capital stock of three outdoor advertising companies and has
entered into an agreement to acquire the assets of an additional outdoor
advertising company. The Company believes that these acquisitions will
significantly strengthen its market presence in the midwest and southeast United
States and will allow the Company to capitalize on the operating efficiencies
and cross-market sales opportunities associated with operating in closely
proximate markets.
THE POA ACQUISITION. The Company acquired the outstanding capital stock of
Outdoor Advertising Holdings, Inc. ("OAH") pursuant to a merger of an indirect
subsidiary of the Company with and into OAH for approximately $240 million in
cash. As a result of the POA Acquisition, the Company acquired a total of
approximately 6,337 advertising display faces located in five markets in the
southeast United States.
The Company believes that the POA Acquisition will substantially strengthen
the Company's operations in the southeast United States, particularly in
Florida, where the Company believes it has the largest number of outdoor
advertising display faces and has the largest market share in each of its
markets, except Palm Beach. The Company believes that the southeast United
States is a particularly attractive region due to its (i) high concentration of
destination cities and resorts; (ii) above average population growth; (iii)
extensive highway/roadway systems; and (iv) temperate climate that promotes
outdoor lifestyles.
THE MEMPHIS/TUNICA ACQUISITION. The Company, through a newly-formed
indirect subsidiary, has acquired the option (the "Memphis/Tunica Option") to
purchase during the period from December 1, 1996 to December 31, 1996 certain
assets located in and around Memphis, Tennessee and Tunica County, Mississippi
(the "Memphis/Tunica Acquisition"). The purchase price of the Memphis/Tunica
Option was $5 million. The purchase price of the Memphis/Tunica Acquisition is
approximately $71 million (inclusive of the price of the Memphis/Tunica Option)
plus 100,000 shares of Common Stock of the Company.
5
<PAGE>
Upon consummation of the Memphis/Tunica Acquisition, the Company will acquire a
total of approximately 2,018 advertising display faces located in and around
Memphis, Tennessee. A significant number of these display faces were previously
owned by Naegele (as defined).
The Company believes that the Memphis/Tunica Acquisition will complement the
Chattanooga operations which were acquired by the Company in the POA
Acquisition. This will give the Company a leading presence in two of the largest
markets in Tennessee and strengthen its presence in the southeast United States.
THE ADDITIONAL ACQUISITIONS. The Company has acquired certain assets of (i)
Iowa Outdoor Displays for approximately $1.8 million in cash (the "Iowa
Acquisition") and (ii) The Chase Company for approximately $5.8 million in cash
(the "Dallas Acquisition," and together with the Iowa Acquisition, the
"Additional Acquisitions"). As a result of the Additional Acquisitions, the
Company will acquire approximately 160 advertising display faces consisting
primarily of posters in and around Des Moines and approximately 245 advertising
display faces consisting primarily of bulletins in and around Dallas.
The Company believes that the Additional Acquisitions will further enhance
the Company's current presence in each of its Des Moines and Dallas markets and
provide increased revenue opportunities in the midwest United States. As of the
date of this Prospectus, the Memphis/Tunica Acquisition have not been
consummated. See "Transactions" and "Description of Indebtedness and Other
Commitments -- New Credit Facility".
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered by the Company.......... 5,000,000 shares
Common Stock offered by the Selling
Stockholders................................ 750,000 shares
Common Stock to be outstanding after the
Offering.................................... 23,242,800 shares(1)
Use of Proceeds to the Company............... To repay existing bank indebtedness,
repurchase certain outstanding notes and
finance a portion of the purchase price
payable in connection with certain of the
Acquisitions. The Company will not receive
any proceeds from the sale of shares by the
Selling Stockholders. See "Principal and
Selling Stockholders."
Nasdaq National Market Symbol................ UOUT
</TABLE>
- ------------------------
(1) Excludes 2,470,608 shares of Common Stock issuable pursuant to the 1996
Warrant Plan and 387,200 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." Excludes
issuance of 100,000 shares of Common Stock to be issued in connection with
the Memphis/Tunica Acquisition.
6
<PAGE>
SUMMARY PRO FORMA FINANCIAL INFORMATION
The following sets forth summary unaudited consolidated pro forma financial
information derived from the information contained under the caption "Pro Forma
Financial Information" elsewhere in this Prospectus. The summary unaudited pro
forma consolidated statement of operations for the year ended December 31, 1995
and for the latest twelve month period ended June 30, 1996 give effect to (i)
the Transactions, (ii) the Offerings and the application of the estimated net
proceeds therefrom (assuming an Offering price of $32.00 per share), (iii) the
acquisitions of NOA Holding Company ("Naegele"), Ad-Sign, Inc., Image Media,
Inc. and consummation of the IPO (as hereafter defined) and the application of
the estimated net proceeds therefrom, and (iv) the net reduction in operating
expenses of the businesses acquired as if each had occurred at the beginning of
the respective periods. The summary unaudited pro forma balance sheet as of June
30, 1996 has been prepared as if the Transactions, the Offerings and the IPO had
occurred on June 30, 1996.
The summary unaudited consolidated pro forma financial information does not
purport to present the actual financial position or results of operations of the
Company had the transactions and events assumed therein in fact occurred on the
dates specified, nor are they necessarily indicative of the results of
operations that may be achieved in the future. The summary unaudited pro forma
consolidated financial information is based on certain assumptions and
adjustments described in the notes contained in "Pro Forma Financial
Information" and should be read in conjunction therewith. See "Management's
Discussion and Analysis of Results of Operations and Financial Condition," the
Consolidated Financial Statements and the Notes thereto of the Company, the
Consolidated Financial Statements and the Notes thereto of NOA Holding Company,
the Statement of Revenues and Direct Expenses and the Notes thereto of Ad-Sign,
the Financial Statements and Notes thereto of POA Acquisition Corporation and
the Combined Financial Statements and Notes thereto of Tanner-Peck, L.L.C.
included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
PRO FORMA LATEST
PRO FORMA TWELVE MONTHS
YEAR ENDED DECEMBER ENDED
31, 1995 JUNE 30, 1996
------------------- -----------------
<S> <C> <C>
(DOLLARS IN THOUSANDS)
STATEMENT OF OPERATIONS DATA:
Net revenues(1)........................................................ $ 120,967 $ 129,381
Direct cost of revenues................................................ 45,309 46,938
General and administrative expenses.................................... 17,590 18,803
Depreciation and amortization.......................................... 36,271 35,786
Non cash compensation for common stock warrants........................ -- 9,000
Operating income....................................................... 21,797 18,854
Interest expense....................................................... 31,656 31,656
Other expense (income), net............................................ (150) 1,552
Net loss............................................................... (9,709) (14,354)
OTHER DATA:
Operating Cash Flow(2)................................................. $ 58,068 $ 63,640
Operating Cash Flow Margin(3).......................................... 48.0% 49.2%
</TABLE>
<TABLE>
<CAPTION>
AS OF JUNE 30, 1996
--------------------------------------
ACTUAL AS ADJUSTED
------------------- -----------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital........................................................ $ 8,330 $ 21,608
Total assets........................................................... 179,175 521,158
Total long-term debt................................................... 182,673 323,303
Common stockholders' equity (deficit).................................. (9,682) 187,911
</TABLE>
- ------------------------------
(1) Net revenues are gross revenues less agency commissions.
(2) "Operating Cash Flow" is operating income before depreciation and
amortization and other non cash charges. Operating Cash Flow is not
intended to represent net cash flow provided by operating activities as
defined by generally accepted accounting principles and should not be
considered as an alternative to net income (loss) as an indicator of the
Company's operating performance or to net cash provided by operating
activities as a measure of liquidity. The Company believes Operating Cash
Flow is a measure commonly reported and widely used by analysts, investors
and other interested parties in the media industry. Accordingly, this
information has been disclosed herein to permit a more complete comparative
analysis of the Company's operating performance relative to other companies
in the media industry.
(3) "Operating Cash Flow Margin" is Operating Cash Flow stated as a percentage
of net revenues.
7
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------------------------------------- --------------------
1991 1992 1993 1994 1995 1995 1996
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Gross revenues................................... $ 21,435 $ 27,896 $ 28,710 $ 33,180 $ 38,101 $ 18,292 $ 29,366
Net revenues(1).................................. 18,835 24,681 25,847 29,766 34,148 16,411 26,239
Direct advertising expenses...................... 7,638 10,383 10,901 11,806 12,864 6,266 9,520
General and administrative expenses.............. 3,515 3,530 3,357 3,873 4,645 2,233 3,086
Depreciation and amortization.................... 5,530 7,817 8,000 7,310 7,402 3,538 4,674
Non cash compensation for common stock
warrants........................................ -- -- -- -- -- -- 9,000
Operating income................................. 2,152 2,951 3,589 6,777 9,237 4,374 (41)
Interest expense................................. 6,599 9,591 9,299 11,809 12,894 6,342 8,441
Loss before extraordinary item(2)................ (4,500) (6,349) (6,061) (5,166) (3,703) (1,993) (10,156)
Net loss......................................... (4,500) (6,349) (9,321) (5,166) (3,703) (1,993) (10,156)
Net loss per share............................... (0.59) (0.83) (1.22) (0.67) (0.48) (0.26) (0.97)
Weighted average common and equivalent shares
outstanding..................................... 7,654 7,654 7,654 7,654 7,654 7,654 10,489
OTHER DATA:
Operating Cash Flow(3)........................... $ 7,682 $ 10,768 $ 11,589 $ 14,087 $ 16,639 $ 7,912 $ 13,633
Operating Cash Flow Margin(4).................... 40.8% 43.6% 44.8% 47.3% 48.7% 48.2% 52.0%
Capital expenditures............................. 2,047 2,352 2,004 4,668 5,620 2,521 2,943
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1996
----------------------------------------
ACTUAL PRO FORMA(6) AS ADJUSTED(7)
--------- ------------- --------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital....................................................... $ 8,330 $ 21,608 $ 21,608
Total assets.......................................................... 179,175 514,408 521,158
Total long-term debt(5)............................................... 182,673 449,837 323,303
Common stockholders' equity (deficit)................................. (9,682) 54,627 187,911
</TABLE>
- ------------------------------
(1) Net revenues are gross revenues less agency commissions.
(2) Extraordinary loss represents loss on early extinguishment of debt.
(3) "Operating Cash Flow" is operating income before depreciation and
amortization and other non cash charges. Operating Cash Flow is not intended
to represent net cash provided by operating activities as defined by
generally accepted accounting principles and should not be considered as an
alternative to net income (loss) as an indicator of the Company's operating
performance or to net cash provided by operating activities as a measure of
liquidity. The Company believes Operation Cash Flow is a measure commonly
reported and widely used by analysts, investors and other interested parties
in the media industry. Accordingly, this information has been disclosed
herein to permit a more complete comparative analysis of the Company's
operating performance relative to other companies in the media industry.
(4) "Operating Cash Flow Margin" is Operating Cash Flow stated as a percentage
of net revenues.
(5) Long-term debt does not include current maturities.
(6) Represents actual amounts adjusted to give effect to the Transactions, and
the application of the net proceeds from the IPO of $62.4 million.
(7) Represents pro forma amounts adjusted to give effect to the Offerings.
8
<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 and indebtedness incurred as a result of the Acquisitions and the
Note Offering and the application of the net proceeds of the Offerings, as of
June 30, 1996, the Company's total long-term debt was approximately $323.3
million, and on a pro forma basis for the last twelve months ended June 30, 1996
interest expense was approximately $31.7 million, or 24.5% 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 and the New Notes, the Company or its subsidiaries may incur
additional indebtedness to finance working capital or capital expenditures,
investments or acquisitions or for other purposes. See "Description of
Indebtedness and Other Commitments." 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. In addition, Universal Outdoor is a holding
company with the capital stock of UOI being its sole asset. There is no
assurance that UOI will generate sufficient cash flow to pay dividends or
distribute funds to Universal Outdoor so as to allow it to pay its expenses or
cash dividends on the Common Stock. See "Selected Consolidated Financial and
Operating Data" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
ACQUISITION STRATEGY. The Company's growth has been facilitated by
strategic acquisitions that have substantially increased the Company's inventory
of advertising display faces. One element of the Company's operating strategy is
to make acquisitions in new and existing markets. While the Company believes
that the outdoor advertising industry is highly fragmented and that significant
acquisition opportunities are available, there can be no assurance that suitable
acquisition candidates can be found. The Company is likely to face competition
from other outdoor advertising and media companies for acquisition opportunities
that are available. In addition, if the prices sought by sellers of outdoor
advertising display faces and companies continue to rise, the Company may find
fewer acceptable acquisition opportunities. There can be no assurance that the
Company will have sufficient capital resources to complete acquisitions or that
acquisitions can be completed on terms acceptable to the Company. Also, in the
Minneapolis/St. Paul market, the Company is subject to a consent judgment that
restricts the Company's ability to purchase outdoor advertising display faces
until February 1, 2001. See "Business -- Government Regulation." As part of its
regular on-going evaluation of strategic acquisition opportunities, the Company
may from time to time engage in discussions concerning possible acquisitions,
some of which may be material in size. The purchase price of such acquisitions
may require additional debt or equity financing on the part of the Company.
THE ACQUISITIONS; CHALLENGES OF INTEGRATION. With respect to the
Acquisitions, there can be no assurance that the Memphis/Tunica Acquisition will
be consummated. See "The Transactions" and "Description of Indebtedness and
Other Commitments -- New Credit Facility." In the event the Memphis/Tunica
Acquisition is not consummated, the Company will not be refunded the purchase
price of the Memphis/Tunica Option. In addition, the Company will face
significant challenges in integrating the operations acquired in connection with
the Acquisitions with those of the Company. In particular, the Company has never
integrated an acquisition the size of the POA Acquisition. Integration of such
9
<PAGE>
operations will require substantial attention from the Company's management.
Diversion of management attention from the Company's existing business could
have an adverse impact on the revenues and operating results of the Company.
There can be no assurance the Company will be able to integrate such operations
successfully.
TOBACCO INDUSTRY REGULATION. On a pro forma basis taking into account the
Acquisitions, approximately 9.9% of the Company's net revenues in 1995 were
derived from tobacco advertising. In August 1996, the U.S. Food and Drug
Administration issued final regulations governing certain marketing practices in
the tobacco industry. Among other things, the regulations prohibit tobacco
product billboard advertisements within 1000 feet of schools and playgrounds and
require that tobacco product advertisements on billboards be in black and white
and contain only text. In addition, one major tobacco manufacturer recently
proposed federal legislation banning 8-sheet billboard advertising and transit
advertising of tobacco products. There can be no assurance as to the effect of
these regulations or the proposed legislation on the Company's business and on
its net revenues, Operating Cash Flow and financial position. A reduction in
billboard advertising by the tobacco industry could cause an immediate reduction
in the Company's direct revenue from such advertisers and would simultaneously
increase the available space on the existing inventory of billboards in the
outdoor advertising industry. This could in turn result in a lowering of rates
throughout the industry or limit the ability of industry participants to
increase rates for some period of time. Any such consequence could have the
effect of reducing the Company's Operating Cash Flow, which could in turn reduce
the Company's ability to meet its financial obligations under the New Notes and
the New Credit Facility (as defined in "Transactions"). See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business -- Customers" and "-- Government Regulation."
PRIOR PERIOD LOSSES. The Company has historically had net losses which have
resulted in significant part from substantial depreciation and amortization
expenses relating to assets purchased in the Company's acquisitions, interest
expense associated with related indebtedness and deferred financing costs
charged to extraordinary losses. Moreover, additional acquisitions will result
in increased depreciation, amortization and interest expenses. There can be no
assurance that the Company will generate net income in the future.
RESTRICTIONS IMPOSED BY THE COMPANY'S INDEBTEDNESS. The banks under the New
Credit Facility have a lien on substantially all of the assets of UOI, including
the capital stock of its subsidiaries, to secure the indebtedness of UOI under
such credit facility. In the event UOI's subsidiaries merge with and into UOI,
the banks will have a lien on substantially all of the assets of UOI previously
held by such subsidiaries. The Company's debt instruments contain restrictions
on the Company's ability to incur additional indebtedness, create liens, pay
dividends, sell assets and make acquisitions. Furthermore, the New Credit
Facility contains certain maintenance tests. There can be no assurance that the
Company and its subsidiaries will be able to comply with the provisions of their
respective debt instruments, including compliance by UOI with the financial
ratios and tests contained in the New Credit Facility. Breach of any of these
covenants or the failure to fulfill the obligations thereunder and the lapse of
any applicable grace periods would result in an event of default under the
applicable debt instruments, and the holders of such indebtedness could declare
all amounts outstanding under the applicable instruments to be due and payable
immediately. There can be no assurance that the assets or cash flow of the
Company or the Company's subsidiaries, as the case may be, would be sufficient
to repay in full borrowings under their outstanding debt instruments whether
upon maturity or earlier or if such indebtedness were to be accelerated upon an
event of default or certain repurchase events or that the Company would be able
to refinance or restructure its payments on such indebtedness or repurchase the
New Notes (or the Existing Notes if not repurchased). If such indebtedness were
not so repaid, refinanced or restructured, the lenders could proceed to realize
on their collateral. In addition, any event of default or declaration of
acceleration under one debt instrument could also result in an event of default
under one or more of the Company's other debt instruments. See "-- Substantial
Leverage; Ability to Service Indebtedness" and "Description of Indebtedness and
Other Commitments."
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,
10
<PAGE>
location and operation of billboards and, in limited circumstances, regulate the
content of the advertising copy displayed on the billboards. Some governmental
regulations prohibit the construction of new billboards or the replacement,
relocation, enlargement or upgrading of existing structures. Some cities have
adopted amortization ordinances under which, after the expiration of a specified
period of time, billboards must be removed at the owner's expense and without
the payment of compensation. Ordinances requiring the removal of a billboard
without compensation, whether through amortization or otherwise, are being
challenged in various state and federal courts with conflicting results. Other
than in the Company's newly acquired Jacksonville market, amortization
ordinances have not materially affected operations in the Company's markets. As
a result of a settlement of litigation related to certain assets in the
Jacksonville market prior to their acquisition, the Company has removed 165
outdoor advertising structures in 1995 and is required to remove an additional
546 (of its total of 1,493) outdoor advertising structures over the next 19
years with 317 of such structures to be removed between 1995 and 1998. There can
be no assurance that these removals will not adversely affect the Company's
results of operations. Recently, no assurance can be given as to the effect on
the Company of existing laws and regulations or of new laws and regulations that
may be adopted in the future. See "-- Tobacco Industry Regulation" and "Business
- -- Customers" and "Business -- Government Regulation."
ECONOMIC CONDITIONS; ADVERTISING TRENDS. The Company relies on sales of
advertising space for its revenues and its operating results therefore are
affected by general economic conditions as well as trends in the advertising
industry. A reduction in advertising expenditures available for the Company's
displays could result from a general decline in economic conditions, a decline
in economic conditions in particular markets where the Company conducts business
or a reallocation of advertising expenditures to other available media by
significant users of the Company's displays.
COMPETITION. The Company faces competition for advertising revenues from
other outdoor advertising companies, as well as from other media such as radio,
television, print media and direct mail marketing. The Company also competes
with a wide variety of other out-of-home advertising media, the range and
diversity of which has increased substantially over the past several years,
including advertising displays in shopping centers and malls, airports,
stadiums, movie theaters and supermarkets, and on taxis, trains, buses and
subways. Some of the Company's competitors are substantially larger, better
capitalized and have access to greater resources than the Company. There can be
no assurance that outdoor advertising media will be able to compete with other
types of media, or that the Company will be able to compete either within the
outdoor advertising industry or with other media. See "Business -- Competition."
RELIANCE ON KEY EXECUTIVES. The Company's success depends to a significant
extent upon the continued services of its executive officers and other key
management and sales personnel, in particular its President and Chief Executive
Officer, Daniel L. Simon. Although the Company believes it has incentive and
compensation programs designed to retain key employees, 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."
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 and the Common Stock
issuable upon exercise of the Warrants 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 33.7% of the
outstanding shares of the Common Stock. See "Principal and Selling
Stockholders." Such persons, if acting together, would have sufficient voting
power to influence the outcome of corporate actions submitted to the
stockholders for approval and to influence the management and affairs of the
Company, including the election of the Board of Directors of the Company. As a
result of such influence, 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
11
<PAGE>
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."
LIMITED TRADING HISTORY AND VOLATILITY OF STOCK PRICE. The Company
completed the initial public offering of its Common Stock in July 1996 and,
therefore, there is a limited trading history for the Common Stock. In addition,
from time to time, there may be significant volatility in the market price for
the Common Stock of the Company. Quarterly operating results of the Company,
changes in earnings estimates by analysts, changes in general conditions in the
Company's industry or the economy or the financial markets or other developments
affecting the Company could cause the market price of the Common Stock to
fluctuate substantially. In addition, in recent years the stock market has
experienced significant price and volume fluctuations. This volatility has had a
significant effect on the market price of securities issued by many companies
for reasons unrelated to their operating performance.
SHARES ELIGIBLE FOR FUTURE SALE. Approximately 180 days following the date
of this Prospectus, (upon expiration of lockup agreements with the
Underwriters), approximately 6,201,546 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 beneficially own 10,432,400 shares of Common
Stock upon the consummation of the Offering, have certain registration rights
with respect thereto. Upon consummation of the Memphis/Tunica Acquistion, the
Memphis/Tunica Sellers will receive 100,000 shares of Common Stock which will
have the benefit of certain registration rights. See "Management -- The 1996
Warrant Plan" and "Description of Capital Stock -- The Noteholder Warrants" and
"Shares Eligible for Future Sale."
NON-CONSUMMATION OF DEBT TENDER OFFERS. Although the Company expects the
Debt Tender Offers to be consummated, the Offerings are not conditioned upon
consummation of the Debt Tender Offers (or the obtaining of the requisite
consents required pursuant to the consent solicitations occurring in connection
therewith). In the event the Debt Tender Offers are not consummated, the
principal amounts outstanding under the Existing Notes (as defined herein) will
remain outstanding, the amount of the New Credit Facility will be reduced by a
corresponding amount (plus the premiums and costs in connection with the Debt
Tender Offers), and the Company and UOI will remain subject to the restrictive
covenants contained in the indentures relating to the Existing Notes, including
without limitation, the reduction under the debt incurrence covenant of the Cash
Flow Leverage Ratio (as defined in the indentures relating to the Existing
Notes) from 6.0:1 to 5.5:1 effective November 15, 1996. Historically, the
Company has financed its acquisitions primarily through the incurrence of debt
based upon a Cash Flow Leverage Ratio equal to 6.0:1. Although there can be no
assurances, the Company believes that the continued application of the
restrictive covenants under the Existing Notes will not materially impair its
ability to consummate future acquisitions. See "The Transactions -- The Debt
Tender Offers."
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<PAGE>
THE TRANSACTIONS
THE ACQUISITIONS
THE POA ACQUISITION. On August 27, 1996, the Company entered into the
Agreement and Plan of Merger pursuant to which it agreed to acquire the
outstanding capital stock of OAH for approximately $240 million in cash. The POA
Acquisition was effectuated pursuant to a merger of an indirect subsidiary of
the Company with and into OAH with OAH continuing as the surviving corporation
following the merger. As a result of the POA Acquisition, the Company acquired a
total of approximately 6,337 advertising display faces consisting of bulletins
and posters in five markets located in the southeast United States, including
Orlando, Ocala, Palm Beach, Myrtle Beach and Chattanooga, as well as the East
Coast and Gulf Coast areas of Florida.
The Company believes that the POA Acquisition will substantially strengthen
its operations in the southeast United States, particularly in Florida, where
the Company believes it has the largest number of outdoor advertising displays
and has the largest market share in each of its markets, except Palm Beach. The
Company believes that the southeast United States is a particularly attractive
region due to its (i) high concentration of destination cities and resorts; (ii)
above average population growth; (iii) extensive highway/roadway systems; and
(iv) temperate climate that promotes outdoor lifestyles.
THE MEMPHIS/TUNICA ACQUISITION. On September 12, 1996, the Company entered
into the Option and Asset Purchase Agreement with Tanner-Peck, L.L.C., TOA
Enterprises, L.P., William B. Tanner, WBT Outdoor, Inc. and The Weatherley
Tanner Trust (collectively, the "Memphis/Tunica Sellers") pursuant to which a
newly-formed indirect subsidiary of the Company acquired the Memphis/Tunica
Option which gives it the option to purchase certain assets of the
Memphis/Tunica Sellers during the period from December 1, 1996 to December 31,
1996. The purchase price of the Memphis/Tunica Option was $5 million in cash
(which is to be credited against the purchase price of the assets) and is
nonrefundable irrespective of whether the Company shall exercise the
Memphis/Tunica Option, subject to certain limited exceptions. The Company
intends to exercise the Memphis/Tunica Option. The purchase price in connection
with the purchase of the assets upon exercise of the Memphis/Tunica Option is
approximately $71 million plus 100,000 shares of Common Stock of the Company.
As a result of the Memphis/Tunica Acquisition, the Company will acquire a
total of approximately 2,018 advertising display faces consisting of bulletins
and posters in and around Memphis, Tennessee and Tunica County, Mississippi. A
significant portion of these display faces were purchased by the Memphis/Tunica
Sellers from Naegele in November, 1995. The Company believes that the Memphis/
Tunica Acquisition will complement the Chattanooga operations which are being
acquired by the Company in the POA Acquisition. This will give the Company a
leading presence in two of the largest markets in Tennessee and strengthen its
presence in the southeast United States.
In connection with the Memphis/Tunica Acquisition, the Company has entered
into a Joint Management Agreement with Tanner-Peck, L.L.C. pursuant to which the
Company shall provide management services to Tanner-Peck, L.L.C. during the
period beginning September 13, 1996 and ending concurrently with the closing of
the Memphis/Tunica Acquisition or the expiration of the Memphis/Tunica Option.
In exchange for such management services, the Company shall be paid a monthly
fee equal to $82,000.
The consummation of the Memphis/Tunica Acquisition will be subject to
certain conditions, including without limitation, the expiration or early
termination of the waiting period under the HSR Act and the consent of the
lenders under the New Credit Facility.
THE ADDITIONAL ACQUISITIONS. On September 12, 1996, the Company entered
into the Asset Purchase Agreement with Iowa Outdoor Displays pursuant to which
the Company agreed to purchase certain assets of Iowa Outdoor Displays for
approximately $1.8 million in cash. The Iowa Acquisition was consummated on
September 16, 1996. On September 11, 1996, the Company entered into the Asset
Purchase Agreement with The Chase Company pursuant to which the Company agreed
to purchase certain assets of The Chase Company for approximately $5.8 million
in cash. The Dallas Acquisition was consummated on September 19, 1996.
13
<PAGE>
As a result of the Additional Acquisitions, the Company acquired
approximately 160 advertising display faces consisting primarily of posters in
and around Des Moines and approximately 245 advertising display faces consisting
primarily of bulletins in and around Dallas. The Company believes that the
Additional Acquisitions will further enhance its current presence in each of the
Des Moines and Dallas markets and provide increased revenue opportunities in the
midwest United States.
Following completion of the Acquisitions, UOI intends to merge each of its
subsidiaries with and into UOI.
THE NEW CREDIT FACILITY
The Company financed the purchase price of certain of the Acquisitions and
the related refinancing of certain existing bank indebtedness of the Company and
paid the fees and expenses associated with the Acquisitions in part through a
total commitment of $300 million under a new credit facility (the "New Credit
Facility").
THE DEBT TENDER OFFERS
THE COMPANY DEBT TENDER OFFER. In connection with the Acquisitions, the
Company commenced a tender offer and consent solicitation (the "Company Debt
Tender Offer") to purchase all of its outstanding 14% Senior Secured Discount
Notes due 2004 (the "Existing Company Notes") and obtain the consent of the
holders of the Existing Company Notes to modify or eliminate certain provisions
of the indenture governing the Existing Company Notes to permit, among other
things, the consummation of the Offerings, the Acquisitions and the execution of
the New Credit Facility. The Company Debt Tender Offer will expire on October
18, 1996, unless extended, at which time the Company expects to purchase all the
Existing Company Notes tendered with consents. Upon receipt of consents from
holders representing not less than a majority of the Existing Company Notes, the
Company will execute a supplemental indenture reflecting the amendments. See
"Use of Proceeds." Based upon discussions with the holders of the Existing
Company Notes, the Company believes that holders representing more than 50% of
the aggregate outstanding principal amount of such notes will tender their notes
and consent to the proposed amendments.
THE UOI DEBT TENDER OFFER. In connection with the Acquisitions, UOI
commenced a tender offer and consent solicitation (the "UOI Debt Tender Offer,"
and together with the Company Debt Tender Offer, the "Debt Tender Offers") to
purchase all of its outstanding 11% Senior Notes due 2003 (the "Existing UOI
Notes," and together with the Existing Company Notes, the "Existing Notes") and
obtain the consent of the holders of the Existing UOI Notes to modify or
eliminate certain provisions of the indenture governing the Existing UOI Notes
to permit, among other things, the consummation of the Offerings, the
Acquisitions and the execution of the New Credit Facility. The UOI Debt Tender
Offer will expire on October 18, 1996, unless extended, at which time UOI
expects to purchase all the Existing UOI Notes tendered with consents. Upon
receipt of consents from holders representing not less than a majority of the
Existing UOI Notes, UOI will execute a supplemental indenture reflecting the
amendments. See "Use of Proceeds." Based upon discussions with the holders of
the Existing UOI Notes, the Company believes that holders representing more than
50% of the aggregate outstanding principal amount of such notes will tender
their notes and consent to the proposed amendments.
THE NOTES OFFERING
Following the Offering, UOI intends to offer $200 million aggregate
principal amount of the New Notes by a separate prospectus. The New Notes will
be issued pursuant to an indenture between UOI and the United States Trust
Company of New York, as trustee (the "New UOI Indenture"). The New Notes will be
general unsecured obligations of UOI subordinate in right of payment to all
existing and future senior indebtedness of UOI. There can be no assurances that
the Notes Offering will be consummated and, if not consummated, the Company may
require other sources of financing including the New Credit Facility. In the
event the Notes Offering is not consummated, there will be an additional $200
million outstanding under the New Credit Facility accruing interest at an
assumed rate of 8.25% compared with an assumed rate of 10.25% under the Notes
Offering.
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<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the Offering and to UOI from the Notes
Offering, are estimated to be approximately $151.7 million (or approximately
$178.0 million if the Underwriters' over-allotment option is exercised in full)
and $193.3 million, respectively, after deducting estimated underwriting
discounts and commissions and offering expenses.
The Company and UOI intend to use the net proceeds of the Offering and the
Notes Offering, together with borrowings under the New Credit Facility, to
refinance indebtedness outstanding under the Existing Credit Facilities, to
repurchase in full the Existing Notes, and to pay the purchase price of certain
of the Acquisitions. Specifically, the Company intends to (i) repurchase all of
the outstanding Existing Company Notes and pay all fees and expenses incurred in
connection with such redemption; (ii) repurchase all of the outstanding Existing
UOI Notes and pay all fees and expenses incurred in connection with such
redemption; (iii) repay approximately $168 million (a portion of which will have
been incurred to finance the POA Acquisition) outstanding at the time of the
consummation of the Offerings under the New Credit Facility which initially
bears interest at a rate of LIBOR plus 2.50% and terminates in full on September
30, 2004; and (iv) pay the purchase price of the Memphis/Tunica Acquisition
(excluding the option price) which totals approximately $66 million in the
aggregate. The indebtedness under the New Credit Facility was incurred, in part,
to refinance the Existing Credit Facilities and to finance the POA Acquisition.
In the event the Notes Offering is not consummated, the Company intends to
first, repurchase the Existing Notes and second, repay certain amounts
outstanding under the New Credit Facility.
The estimated sources and uses of funds in connection with the Transactions
and the IPO, which took place subsequent to June 30, 1996, are set forth below:
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C>
Sources of Funds:
Gross proceeds of the Offering........................................ $ 160,000
Gross proceeds of the Notes Offering(1)............................... 200,000
New Credit Facility................................................... 123,303
Net proceeds to the Company of the IPO (July 23, 1996)................ 62,436
----------
Total Sources..................................................... $ 545,739
----------
----------
Uses of Funds:
Repay Existing Credit Facilities(2)................................... $ 87,210
Repurchase Existing Notes(3).......................................... 95,463
Purchase price of the Acquisitions.................................... 328,400
Fees and expenses of the Offerings.................................... 26,716
Capitalized financing fees............................................ 6,750
Other costs related to the IPO........................................ 1,200
----------
Total Uses........................................................ $ 545,739
----------
----------
</TABLE>
- ------------------------
(1) The Company intends to offer the New Notes following the Offering. There can
be no assurances that the Notes Offering will be consummated.
(2) Balance as of June 30, 1996.
(3) Excludes fees and expenses related to prepayment. See "Risk Factors --
Non-consummation of Debt Tender Offers."
The Existing Company Notes were issued in June 1994 in an aggregate
principal amount of $50 million. The Existing Company Notes accrete at the rate
of 14% per annum. No cash interest will accrue until July 1, 1999. The Existing
UOI Notes mature on July 1, 2004 and were issued in March, 1994 in an aggregate
principal amount of $65 million. The Existing UOI Notes accrue interest at the
rate of 11% per annum and mature on November 15, 2003. See "Description of
Indebtedness and Other Commitments."
The Company will not receive any proceeds from the sale of Common Stock by
the Selling Stockholders.
15
<PAGE>
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 debt instruments 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.
PRICE RANGE OF COMMON STOCK
The Common Stock is quoted on the Nasdaq National Market under the symbol
"UOUT." The following table sets forth, for the periods indicated, the high and
low closing sales prices for the Common Stock as reported by the Nasdaq National
Market. Prior to July 23, 1996, the day on which the Common Stock was first
publicly traded, there was no public market for the Common Stock.
<TABLE>
<CAPTION>
1996 HIGH LOW
- ------------------------------------------------------------------------ --------- ---------
<S> <C> <C>
Third Quarter (beginning July 23, 1996)................................. 36.25 16.50
Fourth Quarter (through October 8, 1996)................................ 37.50 34.75
</TABLE>
On October 8, 1996, the last reported sale price per share for the Common
Stock on the Nasdaq National Market was $37.25 per share. As of the dates
immediately prior to the public announcements of the POA Acquisition (August 26,
1996) and the Memphis/Tunica Acquisition and the Additional Acquisitions
(September 12, 1996), the last reported sales price per share for the Common
Stock on the Nasdaq National Market was $24.50 and $32.75 per share,
respectively.
16
<PAGE>
CAPITALIZATION
The following table sets forth the unaudited capitalization of the Company
at June 30, 1996 and as adjusted to give effect to the Acquisitions, the Debt
Tender Offers, the New Credit Facility, the IPO and the Offerings. The table
should be read in conjunction with the Consolidated Financial Statements and
related notes included elsewhere herein.
<TABLE>
<CAPTION>
JUNE 30, 1996
-----------------------------------------
AS
ACTUAL PRO FORMA (1) ADJUSTED (2)
----------- -------------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Long-term debt:
Existing Credit Facilities:
Revolving Credit Loan............................................. $ -- $ -- $ --
Acquisition Credit Loan........................................... 9,700 284,680 --
Acquisition Term Loan............................................. 75,000 75,000 --
New Credit Facility:
Revolving Credit Loan............................................. -- -- --
Acquisition Credit Loan........................................... -- -- 123,303
14% Senior Secured Discount Notes due 2004(3)....................... 31,266 23,450 --
11% Senior Notes due 2003(3)........................................ 64,197 64,197 --
New Notes(4)........................................................ -- -- 200,000
Other obligations................................................... 2,510 2,510 --
----------- -------------- ------------
Total long-term debt and other obligations...................... 182,673 449,837 323,303
Common stockholders' equity (deficit)................................. (9,682) 54,627 187,911
----------- -------------- ------------
Total capitalization............................................ $ 172,991 $ 504,464 $ 511,214
----------- -------------- ------------
----------- -------------- ------------
</TABLE>
- ------------------------
(1) Represents actual amounts adjusted to give effect to the Transactions and
the application of the net proceeds from the IPO of $62.4 million.
(2) Represents pro forma amounts adjusted to give effect to the Offerings.
(3) See "Risk Factors -- Non-consummation of Debt Tender Offers."
(4) The Company intends to offer the New Notes following the Offering. There can
be no assurances that the Notes Offering will be consummated.
17
<PAGE>
PRO FORMA FINANCIAL INFORMATION
The following sets forth unaudited consolidated pro forma financial
information for the Company. The unaudited pro forma consolidated statement of
operations for the year ended December 31, 1995, the six month period ended June
30, 1996 and for the latest twelve month period ended June 30, 1996 give effect
to (i) the Transactions, (ii) the Offerings and the application of the estimated
net proceeds therefrom, (iii) the acquisitions of Naegele, Ad-Sign, Inc., Image
Media, Inc. and consummation of the IPO and the application of the estimated net
proceeds therefrom, and (iv) the net reduction in operating expenses of the
businesses acquired as if each had occurred at the beginning of the respective
periods. The unaudited pro forma balance sheet as of June 30, 1996 has been
prepared as if the Transactions, the Offerings and the IPO had occurred on June
30, 1996. There can be no assurances that the Transactions will be consummated.
See "Risk Factors -- Non-consummation of Debt Tender Offers" and "The
Transactions -- The Notes Offering."
The unaudited consolidated pro forma financial information does not purport
to present the actual financial position or results of operations of the Company
had the transactions and events assumed therein in fact occurred on the dates
specified, nor are they necessarily indicative of the results of operations that
may be achieved in the future. The unaudited pro forma consolidated financial
information is based on certain assumptions and adjustments described in the
notes thereto and should be read in conjunction therewith. See "Management's
Discussion and Analysis of Results of Operations and Financial Condition," the
Consolidated Financial Statements and the Notes thereto of the Company, the
Consolidated Financial Statements and the Notes thereto of NOA Holding Company,
the Statement of Revenues and Direct Expenses and the Notes thereto of Ad-Sign,
the Financial Statements and Notes thereto of POA Acquisition Corporation and
the Combined Financial Statements and Notes thereto of Tanner-Peck, L.L.C.
included elsewhere in this Prospectus.
18
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC.
PRO FORMA COMBINED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
UNIVERSAL AD-SIGN, INC NOA JULY
OUTDOOR HOLDINGS, AND IMAGE HOLDING ACQUISITION OFFERING
INC. MEDIA COMPANY ADJUSTMENTS ADJUSTMENTS
------------------- ------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net revenues.............................. $ 34,148 $ 3,367 $ 24,848 $ -- $ --
-------- ------------- ----------- ------------- -------------
Operating expenses:
Direct cost of revenues................. 12,864 1,286 10,285 -- --
General and administrative expenses..... 4,645 402 5,378 (2,500)(1) --
Depreciation and amortization........... 7,402 640 4,341 3,260(2) --
-------- ------------- ----------- ------------- -------------
24,911 2,328 20,004 760 --
-------- ------------- ----------- ------------- -------------
Operating income (loss)................... 9,237 1,039 4,844 (760) --
Interest expense.......................... 12,894 -- 2,503 3,569(3) (5,502)(4)
Other expense (income).................... 46 -- -- -- --
-------- ------------- ----------- ------------- -------------
Net income (loss)......................... $ (3,703) $ 1,039 $ 2,341 $ (4,329) $ 5,502
-------- ------------- ----------- ------------- -------------
-------- ------------- ----------- ------------- -------------
Operating cash flow....................... $ 16,639 $ 1,679 $ 9,185 $ 2,500 $ --
-------- ------------- ----------- ------------- -------------
-------- ------------- ----------- ------------- -------------
<CAPTION>
MEMPHIS/ PRO FORMA
PRO FORMA POA TUNICA ADDITIONAL ACQUISITION PRO FORMA
UNIVERSAL ACQUISITION ACQUISITION ACQUISITIONS ADJUSTMENTS AS ADJUSTED
----------- ----------- ----------- ------------- ------------- ------------
<S> <C> <C>
Net revenues.............................. $ 62,363 $ 43,946 $ 13,104 $ 1,554 $ -- $ 120,967
----------- ----------- ----------- ------------- ------------- ------------
Operating expenses:
Direct cost of revenues................. 24,435 13,770 6,352 752 -- 45,309
General and administrative expenses..... 7,925 11,087 2,313 405 (4,140)(1) 17,590
Depreciation and amortization........... 15,643 7,650 1,800 51 11,127(2) 36,271
----------- ----------- ----------- ------------- ------------- ------------
48,003 32,507 10,465 1,208 6,987 99,170
----------- ----------- ----------- ------------- ------------- ------------
Operating income (loss)................... 14,360 11,439 2,639 346 (6,987) 21,797
Interest expense.......................... 13,464 7,370 1,575 69 18,900(5) 41,378
Other expense (income).................... 46 (84) -- (112) -- (150)
----------- ----------- ----------- ------------- ------------- ------------
Net income (loss)......................... $ 850 $ 4,153 $ 1,064 $ 389 $ (25,887) $ (19,431)
----------- ----------- ----------- ------------- ------------- ------------
----------- ----------- ----------- ------------- ------------- ------------
Operating cash flow....................... $ 30,003 $ 19,089 $ 4,439 $ 397 $ 4,140 $ 58,068
----------- ----------- ----------- ------------- ------------- ------------
----------- ----------- ----------- ------------- ------------- ------------
<CAPTION>
PRO FORMA
OFFERINGS AS
ADJUSTMENTS ADJUSTED
------------- -----------
Net revenues.............................. $ -- $ 120,967
-----------
Operating expenses:
Direct cost of revenues................. -- 45,309
General and administrative expenses..... -- 17,590
Depreciation and amortization........... -- 36,271
------------- -----------
-- 99,170
------------- -----------
Operating income (loss)................... -- 21,797
Interest expense.......................... (9,722)(6) 31,656
Other expense (income).................... -- (150)
------------- -----------
Net income (loss)......................... $ 9,722 $ (9,709)
------------- -----------
------------- -----------
Operating cash flow....................... $ -- $ 58,068
------------- -----------
------------- -----------
</TABLE>
See accompanying notes to pro forma combined statements of operations.
19
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC.
PRO FORMA COMBINED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
UNIVERSAL AD-SIGN, INC NOA JULY
OUTDOOR HOLDINGS, AND IMAGE HOLDING ACQUISITION OFFERING
INC. MEDIA COMPANY ADJUSTMENTS ADJUSTMENTS
------------------- --------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net revenues.............................. $ 26,239 $ 842 $ 5,832 $ -- $ --
-------- ----- ----------- ------------- -------------
Operating expenses:
Direct cost of revenues................. 9,520 322 2,616 -- --
General and administrative expenses..... 3,086 100 1,459 (676)(1) --
Depreciation and amortization........... 4,674 160 1,053 815(2) --
Non cash compensation for common stock
warrants............................... 9,000 -- -- -- --
-------- ----- ----------- ------------- -------------
26,280 582 5,128 139 --
-------- ----- ----------- ------------- -------------
Operating income.......................... (41) 260 704 (139) --
Interest expense.......................... 8,441 -- 468 863(3) (2,751)(4)
Other expense............................. 1,674 -- -- -- --
-------- ----- ----------- ------------- -------------
Net income (loss)......................... $ (10,156) $ 260 $ 236 $ (1,002) $ 2,751
-------- ----- ----------- ------------- -------------
-------- ----- ----------- ------------- -------------
Operating cash flow....................... $ 13,633 $ 420 $ 1,757 $ 676 $ --
-------- ----- ----------- ------------- -------------
-------- ----- ----------- ------------- -------------
<CAPTION>
MEMPHIS/ PRO FORMA
PRO FORMA POA TUNICA ADDITIONAL ACQUISITION PRO FORMA
UNIVERSAL ACQUISITION ACQUISITION ACQUISITIONS ADJUSTMENTS AS ADJUSTED
----------- ----------- ------------- --------------- ------------- ------------
<S> <C> <C>
Net revenues.............................. $ 32,913 $ 23,565 $ 7,717 $ 929 $ -- $ 65,124
----------- ----------- ------------- ----- ------------- ------------
Operating expenses:
Direct cost of revenues................. 12,458 7,241 3,956 343 -- 23,998
General and administrative expenses..... 3,969 6,305 599 313 (2,020)(1) 9,166
Depreciation and amortization........... 6,702 4,022 762 58 5,506(2) 17,050
Non cash compensation for common stock
warrants............................... 9,000 -- -- -- -- 9,000
----------- ----------- ------------- ----- ------------- ------------
32,129 17,568 5,317 714 3,486 59,214
----------- ----------- ------------- ----- ------------- ------------
Operating income.......................... 784 5,997 2,400 215 (3,486) 5,910
Interest expense.......................... 7,021 3,702 47 -- 10,208(5) 20,978
Other expense............................. 1,674 2 5 -- -- 1,681
----------- ----------- ------------- ----- ------------- ------------
Net income (loss)......................... $ (7,911) $ 2,293 $ 2,348 $ 215 $ (13,694) $ (16,749)
----------- ----------- ------------- ----- ------------- ------------
----------- ----------- ------------- ----- ------------- ------------
Operating cash flow....................... $ 16,486 $ 10,019 $ 3,162 $ 273 $ 2,020 $ 31,960
----------- ----------- ------------- ----- ------------- ------------
----------- ----------- ------------- ----- ------------- ------------
<CAPTION>
PRO FORMA
OFFERINGS AS
ADJUSTMENTS ADJUSTED
------------- -----------
Net revenues.............................. $ -- $ 65,124
------------- -----------
Operating expenses:
Direct cost of revenues................. -- 23,998
General and administrative expenses..... -- 9,166
Depreciation and amortization........... -- 17,050
Non cash compensation for common stock
warrants............................... -- 9,000
------------- -----------
-- 59,214
------------- -----------
Operating income.......................... -- 5,910
Interest expense.......................... (5,149)(6) 15,829
Other expense............................. -- 1,681
------------- -----------
Net income (loss)......................... $ 5,149 $ (11,600)
------------- -----------
------------- -----------
Operating cash flow....................... $ -- $ 31,960
------------- -----------
------------- -----------
</TABLE>
See accompanying notes to pro forma combined statements of operations.
20
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC.
PRO FORMA COMBINED STATEMENTS OF OPERATIONS
FOR THE TWELVE MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
UNIVERSAL AD-SIGN, INC NOA JULY
OUTDOOR HOLDINGS, AND IMAGE HOLDING ACQUISITION OFFERING
INC. MEDIA COMPANY ADJUSTMENTS ADJUSTMENTS
------------------- ------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net revenues.............................. $ 43,976 $ 2,525 $ 19,953 $ -- $ --
-------- ------------- ----------- ------------- -------------
Operating expenses:
Direct cost of revenues................. 16,118 965 8,108 -- --
General and administrative expenses..... 5,498 301 4,116 (1,875)(1) --
Depreciation and amortization........... 8,538 480 3,695 2,445(2) --
Non cash compensation for common stock
warrants............................... 9,000 -- -- -- --
-------- ------------- ----------- ------------- -------------
39,154 1,746 15,919 570 --
-------- ------------- ----------- ------------- -------------
Operating income.......................... 4,822 779 4,034 (570) --
Interest expense.......................... 14,778 -- 1,345 2,677(3) (5,502)(4)
Other expense (income).................... 1,695 -- -- -- --
-------- ------------- ----------- ------------- -------------
Net income (loss)......................... $ (11,651) $ 779 $ 2,689 $ (3,247) $ 5,502
-------- ------------- ----------- ------------- -------------
-------- ------------- ----------- ------------- -------------
Operating cash flow....................... $ 22,360 $ 1,259 $ 7,729 $ 1,875 $ --
-------- ------------- ----------- ------------- -------------
-------- ------------- ----------- ------------- -------------
<CAPTION>
MEMPHIS/ PRO FORMA
PRO FORMA POA TUNICA ADDITIONAL ACQUISITION PRO FORMA
UNIVERSAL ACQUISITION ACQUISITION ACQUISITIONS ADJUSTMENTS AS ADJUSTED
----------- ----------- ----------- ------------- ------------- ------------
<S> <C> <C>
Net revenues.............................. $ 66,454 $ 47,166 $ 14,207 $ 1,554 $ -- $ 129,381
----------- ----------- ----------- ------------- ------------- ------------
Operating expenses:
Direct cost of revenues................. 25,191 14,477 6,518 752 -- 46,938
General and administrative expenses..... 8,040 12,279 2,219 405 (4,140)(1) 18,803
Depreciation and amortization........... 15,158 7,967 1,732 51 10,878(2) 35,786
Non cash compensation for common stock
warrants............................... 9,000 -- -- -- -- 9,000
----------- ----------- ----------- ------------- ------------- ------------
57,389 34,723 10,469 1,208 6,738 110,527
----------- ----------- ----------- ------------- ------------- ------------
Operating income.......................... 9,065 12,443 3,738 346 (6,738) 18,854
Interest expense.......................... 13,298 7,519 350 69 19,976(5) 41,212
Other expense (income).................... 1,695 (143) -- -- -- 1,552
----------- ----------- ----------- ------------- ------------- ------------
Net income (loss)......................... $ (5,928) $ 5,067 $ 3,388 $ 277 $ (26,714) $ (23,910)
----------- ----------- ----------- ------------- ------------- ------------
----------- ----------- ----------- ------------- ------------- ------------
Operating cash flow....................... $ 33,223 $ 20,410 $ 5,470 $ 397 $ 4,140 $ 63,640
----------- ----------- ----------- ------------- ------------- ------------
----------- ----------- ----------- ------------- ------------- ------------
<CAPTION>
PRO FORMA
OFFERINGS AS
ADJUSTMENTS ADJUSTED
------------- -----------
Net revenues.............................. $ -- $ 129,381
------------- -----------
Operating expenses:
Direct cost of revenues................. -- 46,938
General and administrative expenses..... -- 18,803
Depreciation and amortization........... -- 35,786
Non cash compensation for common stock
warrants............................... -- 9,000
------------- -----------
-- 110,527
------------- -----------
Operating income.......................... -- 18,854
Interest expense.......................... (9,556)(6) 31,656
Other expense (income).................... -- 1,552
------------- -----------
Net income (loss)......................... $ 9,556 $ (14,354)
------------- -----------
------------- -----------
Operating cash flow....................... $ -- $ 63,640
------------- -----------
------------- -----------
</TABLE>
See accompanying notes to pro forma combined statements of operations.
21
<PAGE>
NOTES TO UNAUDITED CONSOLIDATED PRO FORMA
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995, FOR THE SIX MONTHS ENDED JUNE 30,
1996 AND FOR THE TWELVE MONTHS ENDED JUNE 30, 1996
(DOLLARS IN THOUSANDS)
The following explanations describe the assumptions used in determining the
pro forma adjustments necessary to present the pro forma results of operations
of the Company giving effect to the Transactions, the Offerings and the
application of the estimated net proceeds therefrom, the acquisitions of
Naegele, Ad-Sign, Image Media, Inc. and consummation of the IPO and the
application of the estimated net proceeds therefrom and the net reduction in
operating expenses of the businesses acquired as if each had occurred at the
beginning of the respective periods.
<TABLE>
<CAPTION>
SIX MONTHS TWELVE MONTHS
YEAR ENDED ENDED ENDED
DECEMBER 31, 1995 JUNE 30, 1996 JUNE 30, 1996
------------------- --------------- --------------
<S> <C> <C> <C>
<CAPTION>
1. Entry records reduction in general and administrative
expenses relating to elimination of certain duplicate
corporate expenses, principally relating to employee costs
and costs relating to other corporate activities. Amounts
have been determined based upon specific employees
identified for termination plus actual benefits costs
incurred, and expenses associated with leased facilities
which will not be assumed or will be canceled upon
consummation of the acquisition.
<S> <C> <C> <C>
NOA Holding Company, Ad-Sign and Image Media.............. $ 2,500 $ 676 $ 1,875
-------- --------------- --------------
-------- --------------- --------------
POA Acquisition........................................... $ 2,800 $ 1,400 $ 2,800
Memphis/Tunica Acquisition................................ 1,000 500 1,000
Additional Acquisitions................................... 340 120 340
-------- --------------- --------------
$ 4,140 $ 2,020 $ 4,140
-------- --------------- --------------
-------- --------------- --------------
2. Entry records the increase in depreciation and amortization
expense arising from purchase accounting adjustments to
advertising structures and goodwill amortized over a period
of 15 years:
NOA Holding Company, Ad-Sign and Image Media.............. $ 3,260 $ 815 $ 2,445
-------- --------------- --------------
-------- --------------- --------------
POA Acquisition........................................... $ 7,799 $ 3,703 $ 7,482
Memphis/Tunica Acquisition................................ 2,933 1,605 3,001
Additional Acquisitions................................... 395 198 395
-------- --------------- --------------
$ 11,127 $ 5,506 $ 10,878
-------- --------------- --------------
-------- --------------- --------------
3. Entry records additional interest expense assumed to be
incurred in connection with the acquisition of NOA Holding
Company, Ad-Sign and Image Media............................ $ 3,569 $ 863 $ 2,677
4. Entry to record the reduction in interest expense from the
application of the net proceeds of the IPO to the repayment
of long-term debt........................................... $ 5,502 $ 2,751 $ 5,502
5. Entry to record additional interest expense at an assumed
rate of 8.5% per annum in connection with the Transactions:
POA Acquisition........................................... $ 21,250 $ 10,625 $ 21,250
Memphis/Tunica Acquisition................................ 6,018 3,009 6,018
Additional Acquisitions................................... 646 323 646
-------- --------------- --------------
27,914 13,957 27,914
Actual interest expense for POA Acquisition,
Memphis/Tunica Acquisition and Additional Acquisitions... (9,014) (3,749) (7,938)
-------- --------------- --------------
$ 18,900 $ 10,208 $ 19,976
-------- --------------- --------------
-------- --------------- --------------
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
SIX MONTHS TWELVE MONTHS
YEAR ENDED ENDED ENDED
DECEMBER 31, 1995 JUNE 30, 1996 JUNE 30, 1996
------------------- --------------- --------------
<S> <C> <C> <C>
6. Entry to record the changes in interest expense to reflect
the Offerings and the application of the net proceeds
therefrom:
Interest expense:
New Notes at an assumed rate of 10.25%.................. $ 20,500 $ 10,250 $ 20,500
New Credit Facility at an assumed rate of 8.5%.......... 10,481 5,241 10,481
Less pro forma, as adjusted interest expense............ (41,378) (20,978) (41,212)
Amortization of deferred financing costs.................. 675 338 675
-------- --------------- --------------
$ (9,722) $ (5,149) $ (9,556)
-------- --------------- --------------
-------- --------------- --------------
</TABLE>
23
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC.
PRO FORMA COMBINED BALANCE SHEET
JUNE 30, 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
UNIVERSAL MEMPHIS/
OUTDOOR HOLDINGS, JULY OFFERING POA TUNICA ADDITIONAL
INC. ADJUSTMENTS ACQUISITION ACQUISITION ACQUISITIONS
-------------------- -------------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Current assets...................... $ 14,514 $ -- $ 14,767 $ 4,294 $ 100
Property and equipment.............. 152,279 -- 23,433 20,727 50
Deferred taxes...................... -- -- 11,835 -- --
Other assets........................ 12,382 -- 49,338 -- --
---------- -------------- ----------- ----------- -------
Total assets........................ $ 179,175 $ -- $ 99,373 $ 25,021 $ 150
---------- -------------- ----------- ----------- -------
---------- -------------- ----------- ----------- -------
Current liabilities, excluding
current maturities................. $ 6,184 $ -- $ 3,419 $ 311 $ 30
Current maturities of long-term
debt............................... -- -- 9,110 52 --
Long-term debt...................... 182,673 (61,236 (1) 73,948 1,108 --
---------- -------------- ----------- ----------- -------
Total liabilities................... 188,857 (61,236 ) 86,477 1,471 30
---------- -------------- ----------- ----------- -------
Stockholders' equity (deficit)...... (9,682 ) 61,236 12,896 23,550 120
---------- -------------- ----------- ----------- -------
Total liabilities and shareholders'
equity............................. $ 179,175 $ -- $ 99,373 $ 25,021 $ 150
---------- -------------- ----------- ----------- -------
---------- -------------- ----------- ----------- -------
<CAPTION>
PRO FORMA PRO FORMA
ACQUISITION PRO FORMA OFFERINGS AS
ADJUSTMENTS AS ADJUSTED ADJUSTMENTS ADJUSTED
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Current assets...................... $ (2,123 (2) $ 31,552 $ -- $ 31,552
Property and equipment.............. 262,150 (2) 458,639 -- 458,639
Deferred taxes...................... -- 11,835 -- 11,835
Other assets........................ (49,338 (2) 12,382 6,750 4) 19,132
------------- ------------- ------------- -------------
Total assets........................ $ 210,689 $ 514,408 $ 6,750 $ 521,158
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Current liabilities, excluding
current maturities................. $ -- $ 9,944 $ -- $ 9,944
Current maturities of long-term
debt............................... (9,162 (2) -- --
Long-term debt...................... 253,344 (2) 449,837 (126,534 ) 323,303
------------- ------------- -------------
-- --
------------- ------------- ------------- -------------
Total liabilities................... 244,182 459,781 (126,534 ) 333,247
------------- ------------- ------------- -------------
Stockholders' equity (deficit)...... (33,493 3) 54,627 133,284 (6) 187,911
--
------------- ------------- ------------- -------------
Total liabilities and shareholders'
equity............................. $ 210,689 $ 514,408 $ 6,750 $ 521,158
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
24
<PAGE>
NOTES TO UNAUDITED CONSOLIDATED PRO FORMA BALANCE SHEET
AT JUNE 30, 1996
(DOLLARS IN THOUSANDS)
The following explanations describe the assumptions used in determining the
pro forma adjustments necessary to present the pro forma financial position of
the Company after giving effect to the Transactions, the Offerings and the
consummation of the IPO.
1. Entry records the proceeds of the IPO and the application of the net
proceeds therefrom:
<TABLE>
<S> <C>
Net proceeds of IPO....................................................... $ 62,436
Other costs related to IPO................................................ (1,200)
---------
$ 61,236
---------
---------
</TABLE>
2. Entry records the effects of the Acquisitions.
<TABLE>
<CAPTION>
POA MEMPHIS/TUNICA ADDITIONAL
ACQUISITION ACQUISITION ACQUISITIONS TOTAL
----------- ---------------- ------------ -----------
<S> <C> <C> <C> <C>
Increase in long-term debt (including current
maturities).......................................... $ 166,942 $ 69,640 $ 7,600 $ 244,182
Changes in assets and liabilities resulting from
allocation of purchase price:
Current assets...................................... (2,123) (2,123)
Property and equipment.............................. 205,507 49,163 7,480 262,150
Other assets........................................ (49,338) (49,338)
Stockholders' equity................................ (12,896) (23,677) (120) (36,693)
----------- -------- ------------ -----------
$ 308,092 $ 95,126 $ 14,960 $ 418,178
----------- -------- ------------ -----------
----------- -------- ------------ -----------
</TABLE>
3. Entry to record 100,000 shares of common stock to be issued in connection
with the Memphis/ Tunica acquisition at an assumed price of $32:
<TABLE>
<S> <C>
Stockholders' equity..................................................... $ 3,200
---------
---------
</TABLE>
4.
<TABLE>
<S> <C>
Entry to record capitalized financing fees............................... $ 6,750
---------
---------
</TABLE>
5. Entry to record net reduction in long-term debt.
<TABLE>
<S> <C>
Proceeds of the Offering................................................. $ 160,000
Costs, expenses and other charges of the Offerings....................... (26,716)
Capitalized financing fees............................................... (6,750)
---------
Net reduction in long-term debt.......................................... $ 126,534
---------
---------
</TABLE>
6. Entry to record net increase in stockholders' equity from proceeds of the
Offerings.
<TABLE>
<S> <C>
Proceeds of the Offering................................................. $ 160,000
Costs, expenses and other charges of the Offerings....................... (26,716)
---------
Net increase in stockholders' equity..................................... $ 133,284
---------
---------
</TABLE>
25
<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
The selected financial data presented below as of and for the year ended
December 31, 1995 and the six months ended June 30, 1996 and 1995 are derived
from the Consolidated Financial Statements of the Company. The selected
financial data as of and for the years ended December 31, 1992, 1993, 1994 and
1995 are derived from the financial statements of the Company. Certain of such
financial statements were unaudited. The financial statements of the Company for
the three years in the period ended December 31, 1995 were audited by Price
Waterhouse LLP, independent accountants, as indicated in their report included
elsewhere in this Prospectus. The selected financial data as of and for the six
months ended June 30, 1995 and 1996 are derived from the combined financial
statements included herein and include all normal and recurring adjustments
necessary for a fair presentation of such data. The data set forth below should
be read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Consolidated Financial Statements,
including the Notes thereto, appearing elsewhere in this Prospectus. Due to the
significant development and acquisition of additional structures, the data set
forth below is not necessarily comparable on a year-to-year basis and data set
forth for certain periods is not indicative of results for the full year.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------
1991 1992 1993 1994 1995
------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Gross revenue..................... $21,435 $27,896 $28,710 $33,180 $38,101
Net revenues (1).................. 18,835 24,681 25,847 29,766 34,148
Direct advertising expenses....... 7,638 10,383 10,901 11,806 12,864
General and administrative
expenses......................... 3,515 3,530 3,357 3,873 4,645
Depreciation and amortization..... 5,530 7,817 8,000 7,310 7,402
Non cash compensation for common
stock warrants................... -- -- -- -- --
------- ------- ------- ------- -------
Operating income.................. 2,152 2,951 3,589 6,777 9,237
Interest expense.................. 6,599 9,591 9,299 11,809 12,894
Other (expense) income, net....... (53) 291 (351) (134) (46)
------- ------- ------- ------- -------
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................ (0.59) (0.83) (1.22) (0.67) (0.48)
Weighted average common and
equivalent shares outstanding.... 7,654 7,654 7,654 7,654 7,654
OTHER DATA:
Operating Cash Flow (3)........... $ 7,682 $10,768 $11,589 $14,087 $16,639
Operating Cash Flow Margin (4).... 40.8% 43.6% 44.8% 47.3% 48.7%
Capital expenditures.............. 2,047 2,352 2,004 4,668 5,620
<CAPTION>
SIX MONTHS
ENDED JUNE 30,
---------------
1995 1996
------- ------
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Gross revenue..................... $18,292 $29,366
Net revenues (1).................. 16,411 26,239
Direct advertising expenses....... 6,266 9,520
General and administrative
expenses......................... 2,233 3,086
Depreciation and amortization..... 3,538 4,674
Non cash compensation for common
stock warrants................... -- 9,000
------- ------
Operating income.................. 4,374 (41)
Interest expense.................. 6,342 8,441
Other (expense) income, net....... (25) (1,674)
------- ------
Loss before extra-
ordinary item (2)................ (1,993) (10,156)
Net loss.......................... (1,993) (10,156)
Net loss per share................ (0.26) (0.97)
Weighted average common and
equivalent shares outstanding.... 7,654 10,489
OTHER DATA:
Operating Cash Flow (3)........... $ 7,912 $13,633
Operating Cash Flow Margin (4).... 48.2% 52.0%
Capital expenditures.............. 2,521 2,943
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1996
YEAR ENDED DECEMBER 31, -------------------------
----------------------------------------------------- PRO FORMA AS ADJUSTED
1991 1992 1993 1994 1995 (6) (7)
--------- --------- --------- --------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital(5)............................. $ 2,365 $ 1,326 $ 1,730 $ 2,845 $ 4,195 $ 21,608 $ 21,608
Total assets................................... 71,682 65,754 61,816 68,253 71,050 514,408 521,158
Total long-term debt and other obligations..... 65,076 59,363 69,254 99,669 106,362 449,837 323,303
Redeemable preferred stock..................... 13,442 15,055 21,505
Common stockholders' equity (deficit).......... (11,450) (17,799) (32,157) (34,823) (38,526) 54,627 187,911
</TABLE>
- ------------------------------
(1) Net revenues are gross revenues less agency commissions.
(2) Extraordinary loss represents loss on early extinguishment of debt.
(3) "Operating Cash Flow" is operating income before depreciation and
amortization and other non cash charges. Operating Cash Flow is not
intended to represent net cash flow provided by operating activities as
defined by generally accepted accounting principles and should not be
considered as an alternative to net income (loss) as an indicator of the
Company's operating performance or to net cash provided by operating
activities as a measure of liquidity. The Company believes Operating Cash
Flow is a measure commonly reported and widely used by analysts, investors
and other interested parties in the media industry. Accordingly this
information has been disclosed herein to permit a more complete comparative
analysis of the Company's operating performance relative to other companies
in the media industry.
(4) "Operating Cash Flow Margin" is Operating Cash Flow stated as a percentage
of net revenues.
(5) 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 Transactions and
the application of the net proceeds from the IPO of $62.4 million.
(7) Represents pro forma amounts adjusted to give effect to the Offerings.
26
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion of the consolidated results of operations of the
Company for the three years ended December 31, 1995 and financial condition at
December 31, 1995 should be read in conjunction with the Consolidated Financial
Statements of the Company and the related notes included elsewhere in this
Prospectus.
Except as otherwise indicated, the following discussion relates to the
Company on an historical basis, without giving effect to the Acquisitions or the
Offerings.
GENERAL
The Company has grown significantly since 1989 through the acquisition of
outdoor advertising businesses and individual display faces in specific markets,
improvements in occupancy and advertising rates, and the development of new
display faces in existing markets. Between January 1, 1989 and August 31, 1996,
the Company spent in excess of $160 million to acquire additional display faces,
increasing the number of its display faces from approximately 500 in 1989 to
approximately 12,500 at August 31, 1996. During this period, the Company's net
revenues increased from $18.8 million in 1989 to $34.1 million in 1995. The
following table lists the Company's acquisitions since January 1, 1989:
<TABLE>
<CAPTION>
APPROXIMATE NUMBER AND TYPE
OF DISPLAY FACES ACQUIRED
------------------------------------------------
30-SHEET 8-SHEET
YEAR OF ACQUISITION MARKETS BULLETINS POSTERS POSTERS TOTAL
- ----------------------- ---------------------------------------------------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
1989................... Milwaukee, Chicago 270 -- -- 270
1990................... Chicago 12 -- -- 12
1991................... Indianapolis, Des Moines, Evansville, Chicago 421 2,480 140 3,041
1994................... Chicago, Milwaukee 20 -- 4,151 4,171
1995................... Chicago, Dallas 9 -- 1,127 1,136
1996................... Chicago, Minneapolis/St. Paul, Jacksonville 1,022 2,550 -- 3,572
----- ----- ----- ---------
Total.................................................................... 1,754 5,030 5,418 12,202
----- ----- ----- ---------
----- ----- ----- ---------
</TABLE>
The Company's acquisitions have been financed through bank borrowings and
the issuance of long-term debt and redeemable preferred stock (all of which has
been redeemed), as well as with internally-generated funds. The Acquisitions
will be financed, in part, from the proceeds of the Offerings and the New Credit
Facility. All acquisitions (including the Acquisitions) have been accounted for
using the purchase method of accounting, and consequently, operating results
from acquired operations are included from the respective dates of those
acquisitions. As a result of these acquisitions and the effects of consolidation
of operations following each acquisition, the operating performance of certain
markets and of the Company as a whole reflected in the Company's Consolidated
Financial Statements and other financial and operating data included herein are
not necessarily comparable on a year-to-year basis.
The Company recognized a one-time non-cash compensation charge of
approximately $9 million in the quarter ended June 30, 1996 relating to the
issuance of the Warrants under the 1996 Warrant Plan. See "Management -- The
1996 Warrant Plan."
27
<PAGE>
CERTAIN EFFECTS OF THE ACQUISITIONS
The Company currently owns approximately 12,500 advertising display faces in
eight metropolitan markets. Following consummation of each of the Acquisitions,
the Company will own approximately 21,114 advertising display faces located in
14 metropolitan markets. The following table sets forth the number of display
faces acquired or to be acquired in connection with the Acquisitions:
<TABLE>
<CAPTION>
APPROXIMATE NUMBER AND TYPE OF DISPLAY FACES
ACQUIRED
------------------------------------------------
30-SHEET 8-SHEET
MARKET BULLETINS POSTERS POSTERS TOTAL
- ------------------------------------------------------------------------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
MIDWEST:
Des Moines............................................................. -- 160 -- 160
Dallas................................................................. 245 -- -- 245
SOUTHEAST:
Orlando................................................................ 842 1,080 -- 1,922
Memphis/Tunica......................................................... 706 1,179 133 2,018
Chattanooga............................................................ 359 663 -- 1,022
Myrtle Beach........................................................... 729 455 -- 1,184
Palm Beach............................................................. 99 21 -- 120
Ocala.................................................................. 879 199 -- 1,078
East Coast area (FL)................................................... 567 -- -- 567
Gulf Coast area (FL)................................................... 444 -- -- 444
----- ----- ----- ---------
Total................................................................ 4,870 3,757 133 8,760
----- ----- ----- ---------
----- ----- ----- ---------
</TABLE>
Taking into effect the consummation of the Acquisitions, approximately 84%
of the Company's gross revenues are contracted for directly from local
advertisers. If the Acquisitions would have occurred on January 1, 1995, the
Company would have had net revenues of $121.0 million and Operating Cash Flow of
$57.9 million in 1995. The Company would have had net operating loss
carryforwards and other tax-deductible items arising from the Transactions
aggregating in excess of approximately $75 million as of December 31, 1995.
HISTORICAL RESULTS OF OPERATIONS
The following table presents certain operating statement items in the
Consolidated Statements of Operations as a percentage of net revenues:
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE
YEAR ENDED DECEMBER 31, 30
---------------------------------- ----------------------
1993 1994 1995 1995 1996
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net revenues............................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Direct advertising expenses................................ 42.2 39.7 37.7 38.2 36.3
General and administrative expenses........................ 13.0 13.0 13.6 13.6 11.8
----- ----- ----- ----- -----
Operating Cash Flow(1)..................................... 44.8 47.3 48.7 48.2 51.9
Depreciation and amortization.............................. 30.9 24.5 21.6 21.5 17.8
Non cash compensation for common stock warrants............ -- -- -- -- 34.3
----- ----- ----- ----- -----
Operating income........................................... 13.9 22.8 27.1 26.7 (.2)
Other expense, primarily interest.......................... 37.3 40.2 37.9 38.8 38.5
----- ----- ----- ----- -----
Net loss before extraordinary item......................... (23.4) (17.4) (10.8) (12.1) (38.7)
----- ----- ----- ----- -----
</TABLE>
- ------------------------
(1) As defined herein.
Revenues are a function of both the occupancy of the Company's display faces
and the rates that the Company charges for their use. The Company focuses its
sales effort on maximizing occupancy levels
28
<PAGE>
while maintaining rate integrity in its markets. Additionally, the Company
believes it is important to the overall sales effort to continually attempt to
develop new inventory in growth areas of its existing markets in order to
enhance overall revenues.
Net revenues represent gross revenues less commissions paid to advertising
agencies that contract for the use of advertising displays on behalf of
advertisers. Approximately 77% of the Company's gross revenues are contracted
for directly from local advertisers. Agency commissions on those revenues which
are contracted through agencies are typically 15% of gross revenues on local
sales and 16 2/3% of gross revenues on national sales. The Company considers
agency commissions as a reduction in gross revenues, and measures its operating
performance based upon percentages of net revenues rather than gross revenues.
Direct advertising expenses consist of the following five categories: lease,
production, sales, maintenance and illumination. The lease expense consists
mainly of rental payments to owners of the land underlying the signs. The
production category consists of all of the costs to produce advertising copy and
install it on the display faces. Sales expense consists mainly of the cost of
staffing a sales force to sell within a specific market. The maintenance
category includes minor repair and miscellaneous maintenance of the sign
structures and the illumination category consists mainly of electricity costs to
light the display faces. The majority of these direct expenses are variable
costs (other than lease costs) that will fluctuate with the overall level of
revenues. In 1995, these expenses amounted to the following approximate
percentages of net revenues: lease 14.2%, production 11.3%, sales 6.8%,
maintenance 3.3% and illumination 2.1%.
General and administrative expenses occur at both the market and corporate
levels. At the market level these expenses contain various items of office
overhead pertaining to both the personnel and the facility required to
administer a given market. The corporate general and administrative costs
represent staff and facility expenses for the executive offices and the
centralized accounting function. Both types of general and administrative
expenses are primarily fixed expenses in the operation of the business.
The Company had federal income tax net operating losses ("NOLs") of
approximately $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 SIX MONTH PERIODS ENDED JUNE 30, 1996 AND JUNE 30, 1995
Net revenues increased 59.9% to $26.2 million during the first six months of
1996 from $16.4 million in the corresponding 1995 period, reflecting higher
advertising rates and occupancy levels experienced primarily in the
Indianapolis, Des Moines and Evansville markets and the inclusion of the 1996
partial period of revenues from the acquisition of Ad-Sign, Inc. and Naegele.
Direct advertising expenses increased to $9.5 million in the first six
months of 1996 from $6.3 million in the 1995 period as a result of the higher
net revenues. As a percentage of net revenues, direct advertising expenses
decreased slightly to 36.3% in the first six months of 1996 compared to 38.2% in
the 1995 period as a result of economies of scale associated with increased
revenues.
General and administrative expenses increased to $3.1 million in the first
six months of 1996 from $2.2 million in the 1995 period primarily as a result of
increased payroll costs. As a percentage of net revenues, general and
administrative expenses decreased to 11.8% in the first six months of 1996 from
13.6% 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 72.3% to
$13.6 million in 1996 from $7.9 million in 1995.
29
<PAGE>
Depreciation and amortization expense for the first six months of 1996
increased to $4.7 million from $3.5 million in 1995 due to large increases in
the fixed assets offset by reduced depreciation of certain older fixed assets.
Non-cash compensation related to common stock warrants consisted of a $9.0
million charge arising from the issuance of common stock warrants in the Naegele
Acquisition (as hereafter defined).
Total interest expense in the first six months of 1996 increased to $8.4
million from $6.3 million in the 1995 period primarily as a result of larger
borrowings under an acquisition credit facility following the acquisition of
Ad-Sign, Inc. and Naegele.
The foregoing factors contributed to the Company's $10.2 million net loss in
the first six months of 1996 from a $2.0 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.
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.
30
<PAGE>
General and administrative expenses in 1994 increased to $3.9 million from
$3.4 million in 1993 due to the incremental payroll costs associated with
additional employees. As a percentage of net revenues, however, general and
administrative expenses remained flat at 13.0%.
As a result of the above factors, Operating Cash Flow increased by 21.6% to
$14.1 million in 1994 from $11.6 million in 1993.
Depreciation and amortization expenses decreased to $7.3 million (24.5% of
net revenues) in 1994 from $8.0 million (30.9% of the net revenues) in 1993 due
to scheduled depreciation of the fixed assets.
Total interest expense increased to $11.8 million in 1994 from $9.3 million
in 1993 as a result of the incremental interest associated with the offering of
the Existing Company Notes 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.
QUARTERLY COMPARISONS
The following table sets forth certain quarterly financial information of
the Company for each quarter of 1994 and 1995 and for the first and second
quarter of 1996. The information has been derived from the quarterly financial
statements of the Company which are unaudited but which, in the opinion of
management, have been prepared on the same basis as the financial statements
included herein and include all adjustments (consisting only of normal recurring
items) necessary for a fair presentation of the financial result for such
periods. This information should be read in conjunction with the Consolidated
Financial Statements and the Notes thereto and the other financial information
appearing elsewhere in this Prospectus. The operating results for any quarter
are not necessarily indicative of results for any future period.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30, DEC. 31,
1994 1994 1994 1994 1995 1995 1995 1995
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
STATEMENT OF
OPERATIONS DATA:
Net revenues....... $ 6,102 $ 7,803 $ 7,973 $ 7,888 $ 7,236 $ 9,175 $ 8,940 $ 8,797
Operating income... 924 2,333 2,002 1,518 1,319 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, JUNE 30,
1996 1996
----------- -----------
<S> <C> <C>
STATEMENT OF
OPERATIONS DATA:
Net revenues....... $ 8,427 $ 17,812
Operating income... 1,597 (1,638)
Net income(loss)... (2,008) (8,148)
PERCENTAGE OF NET
REVENUES:
Operating income... 19.0% (9.2)%
Net income
(loss)........... (23.8) (45.7)%
OTHER DATA:
Operating Cash
Flow(1).......... $ 3,629 $ 10,004
Operating Cash Flow
Margin(2)........ 43.1% 56.2%
</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.
31
<PAGE>
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.
The Company completed its initial public offering ("IPO") of 4,630,000
shares of its Common Stock (including 930,000 shares sold pursuant to exercise
of the Underwriters' over-allotment option) on July 26, 1996, resulting in
proceeds to the Company of $62.4 million. The Company intends to utilize a
portion of the net proceeds to redeem $9.5 million of the Existing Company Notes
prior to September 23, 1996 and has repaid a portion of the amounts outstanding
under the Existing Acquisition Credit Facility (as hereafter defined).
In connection with an acquisition consummated in April 1996, 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 "Existing Revolving Credit Facility") and (ii) provide an
additional extension of credit for purposes of acquisition financing (the
"Existing Acquisition Credit Facility", and together with the Existing Revolving
Credit Facility, the "Existing Credit Facilities") and, specifically, the
financing, in part, of the Naegele Acquisition (as hereafter defined). The
Lenders extended an acquisition term loan in the amount of $75 million and an
acquisition revolving credit line in the amount of $12.5 million for a total
commitment of $87.5 million, of which $84.5 million was drawn at the closing of
the Naegele Acquisition. In addition, the Lenders extended a working capital
revolving credit line in the amount of $12.5 million, of which no amount has
been drawn. In addition to the amounts drawn under the Existing 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.
In October 1996, the Company amended and restated the Existing Credit
Facilities which became the New Credit Facility. The New Credit Facility
provides for a total loan commitment of $300 million. Approximately $212.5
million of the New Credit Facility matures on September 30, 2003 with the
remaining amount maturing on September 30, 2004. Upon the occurrence of certain
triggering events, a portion of the New Credit Facility will convert to a term
loan. Such amounts may not be reborrowed. See "Description of Indebtedness and
Other Commitments"
Net cash provided by operating activities increased to $6.1 million for the
six months ended June 30, 1996 from $2.6 million for the 1995 period. Net cash
provided by operating activities increased to $7.0 million in 1995 from $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 $110.1 million for
the six months ended June 30, 1996 includes cash used for acquisitions of $107.1
million and other capital expenditures of $2.9 million. The Company's net cash
used in investing activities of $9.1 million for the year ended December 31,
1995 includes cash used for acquisitions of $1.9 million and other capital
expenditures of $5.6 million. Capital expenditures have been made primarily to
develop new structures in each of its markets. The Company intends to continue
to develop new structures in its markets and to consider other potential
acquisitions. Management established the New Credity Facility for the purpose of
financing acquisitions and capital expenditures relating to the development and
improvement of advertising structures. The Company believes that its cash from
operations, together with available borrowings under the New Credit Facility,
will be sufficient to satisfy its cash requirements, including anticipated
capital expenditures, for the foreseeable future. However, in the event cash
from operations, together with available funds under the New Credit Facility are
insufficient to satisfy its cash requirements, the Company may incur additional
indebtedness to finance its operations including, without limitation, additional
acquisitions.
32
<PAGE>
For the six months ended June 30, 1996, $104.1 million was provided by
financing activities primarily due to increased borrowings under the Existing
Credit Facilities and the sale of capital stock. For the six months ended June
30, 1995, net cash of $2.1 million was provided by financing activities,
primarily due to borrowings under the prior credit facility. For the years ended
December 31, 1995 and 1994, $2.1 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 of $50 million of the
Existing Company 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 Existing Company Notes accrue
interest at a rate of 14% per annum with cash payments thereon beginning on
January 1, 2000.
The Company intends to use a portion of the proceeds from the Offering to
repurchase in full the Existing Company Notes. As of the date of this
Prospectus, the aggregate principal amount of the outstanding Existing Company
Notes was approximately $37.5 million (with an accreted value of approximately
$25.5 million).
The Company expects to fund its capital expenditures primarily with cash
from operations and expects its capital expenditures to be primarily for
development of additional structures. The Company intends to utilize its cash
from operations to continue to develop new advertising structures in each of its
markets, and, as appropriate opportunities arise, to acquire additional outdoor
advertising operations in its existing markets, in geographically proximate
markets and in contiguous markets. The Company is also exploring the development
of other forms of out-of-home media, such as bus shelter advertising and transit
advertising that management believes would complement the Company's existing
outdoor operations. The restrictions imposed by the New Credit Facility and the
indenture governing the New Notes may limit the Company's use of cash from
operations for these purposes.
INFLATION
Inflation has not had a significant impact on the Company over the past
three years. The floating rate on the New Credit Facility could increase in an
inflationary environment, but management believes that because a significant
portion of the Company's costs are fixed, inflation will not have a material
adverse effect on its operations. However, there can be no assurance that a high
rate of inflation in the future will not have an adverse effect on the Company's
operations.
NEW ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has issued SFAS No. 121, ACCOUNTING
FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED
OF, which established a new accounting principle for accounting for the
impairment of certain loans, certain investments in debt and equity securities,
long-lived assets that will be held and used including certain identifiable
intangibles and goodwill related to those assets, and long-lived assets and
certain identifiable intangibles to be disposed of. While the Company has not
completed its evaluation of the impact that will result from adopting this
statement, it does not believe that adoption of the statement will have a
significant impact on the Company's financial position and results of
operations.
The Financial Accounting Standard 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 recognized a one-time non-cash compensation charge of
approximately $9 million in the quarter ended June 30, 1996 relating to the
issuance of the Warrants under the 1996 Warrant Plan. See "Management -- The
1996 Warrant Plan."
33
<PAGE>
BUSINESS
GENERAL
The Company is a leading outdoor advertising company operating approximately
21,114 advertising display faces in two large, regional operating areas: the
Midwest (Chicago, Minneapolis/St. Paul, Indianapolis, Milwaukee, Des Moines,
Evansville and Dallas) and the Southeast (Orlando, Jacksonville, Palm Beach,
Ocala and the East Coast and Gulf Coast areas of Florida, Memphis/Tunica,
Chattanooga, and Myrtle Beach).
INDUSTRY OVERVIEW
The outdoor advertising industry has experienced increased advertiser
interest and revenue growth in recent years. Outdoor advertising generated total
revenues of approximately $1.8 billion in 1995, or approximately 1.1% of the
total advertising expenditures in the United States, and the out-of-home
advertising industry generated revenues in excess of $3.0 billion in 1995,
according to estimates by the Outdoor Advertising Association of America (the
"OAAA"), the trade association for the outdoor advertising industry. Outdoor
advertising's 1995 revenue represent growth of approximately 8.2% over estimated
total revenues for 1994, which compares favorably to the growth of total U.S.
advertising expenditures of approximately 7.7% during the same period.
Advertisers purchase outdoor advertising for a number of reasons. Outdoor
advertising offers repetitive impact and a relatively low cost
per-thousand-impressions, a commonly used media measurement, as compared to
television, radio, newspapers, magazines and direct mail marketing. Accordingly,
because of its cost-effective nature, outdoor advertising is a good vehicle to
build mass market support. In addition, outdoor advertising can be used to
target a defined audience in a specific location and, therefore, can be relied
upon by local businesses concentrating on a particular geographic area where
customers have specific demographic characteristics. For instance, restaurants,
motels, service stations and similar roadside businesses may use outdoor
advertising to reach potential customers close to the point of sale and provide
directional information. Other local businesses such as television and radio
stations and consumer products companies may wish to appeal more broadly to
customers and consumers in the local market. National brand name advertisers may
use the medium to attract customers generally and build brand awareness. In all
cases, outdoor advertising can be combined with other media such as radio and
television to reinforce messages being provided to consumers.
The outdoor advertising industry has experienced significant change in
recent periods due to a number of factors. First, the entire "out-of-home"
advertising category has expanded to include, in addition to traditional
billboards and roadside displays, displays in shopping centers and malls,
airports, stadiums, movie theaters and supermarkets, as well as on taxis,
trains, buses, blimps and subways. Second, while the outdoor advertising
industry has experienced a decline in the use of outdoor advertising by tobacco
companies, it has increased its visibility with and attractiveness to local
advertisers as well as national retail and consumer product-oriented companies.
Third, the industry has benefitted significantly from improvements in production
technology, including the use of computer printing, vinyl advertising copy and
improved lighting techniques, which have facilitated a more dynamic, colorful
and creative use of the medium. This technological advance has permitted the
outdoor advertising industry to respond more promptly and cost effectively to
the changing needs of its advertising customers and make greater use of
advertising copy used in other media. Lastly, the outdoor advertising industry
has benefitted from the growth in automobile travel time for business and
leisure due to increased highway congestion and continued demographic shifts of
residences and businesses from the cities to outlying suburbs.
The outdoor advertising industry is comprised of several large outdoor
advertising and media companies with operations in multiple markets, as well as
many smaller and local companies operating a limited number of structures in a
single or few local markets. While the industry has experienced some
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<PAGE>
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.
OPERATING STRATEGY
The Company's objective is to be the leading provider of outdoor advertising
services in each of its two regional operating areas and to expand its presence
in attractive new markets. The Company believes that regional clusters provide
it with significant opportunities to increase revenue and achieve cost savings
by delivering to local and national advertisers efficient access to multiple
markets or highly targeted areas.
Management intends to implement the following operating strategy:
- MAXIMIZE RATES AND OCCUPANCY. Through continued emphasis on customer
sales and service, quality displays and inventory management, the Company seeks
to maximize advertising rates and occupancy levels in each of its markets. The
Company has recruited and trained a strong local sales staff supported by local
managers operating under specific, sales-based compensation targets designed to
obtain the maximum potential from the Company's display inventory.
- INCREASE MARKET PENETRATION. The Company seeks to expand operations
within its existing markets through new construction, with an emphasis on
painted bulletins, which generally command higher rates and longer term
contracts from advertisers than other types of display faces. In addition, the
Company historically has acquired, and intends to continue to acquire,
additional advertising display faces in its existing markets as opportunities
become available.
- PURSUE STRATEGIC ACQUISITIONS. In addition to improved penetration of
its existing markets, the Company also seeks to grow by acquiring additional
display faces in closely proximate new markets. Such new markets allow the
Company to capitalize on the operating efficiencies and cross-market sales
opportunities associated with operating in multiple markets within distinct
regions. The Company intends to develop new regional operating areas in regions
where attractive growth and consolidation opportunities exist.
- CAPITALIZE ON TECHNOLOGICAL ADVANCES. The Company seeks to capitalize on
technological advances that enhance its productivity and increase its ability to
effectively respond to its customer's needs. The Company's continued investment
in equipment and technology provides for greater ongoing benefits in the areas
of sales, production and operation.
- MAINTAIN LOW COST STRUCTURE. Through continued adherence to strict cost
controls, centralization of administrative functions and maintenance of low
corporate overhead, the Company seeks to maximize its Operating Cash Flow
Margin, which it believes to be among the highest in the industry. The Company
believes that its centralized administration provides opportunities for
significant operating leverage from further expansion in existing markets and
from future acquisitions.
- DEVELOP OTHER OUT-OF-HOME MEDIA. The Company seeks to develop other
forms of out-of-home media such as bus shelter or transit advertising in order
to enhance revenues in existing markets or provide access to new markets.
Through implementation of this business strategy, the Company has increased
its outdoor advertising presence from 500 display faces in a single market in
1988 to approximately 12,500 in its markets at August 31, 1996.
ACQUISITIONS
Consistent with its operating strategy, the Company has recently acquired
the assets or capital stock of three outdoor advertising companies and has
entered into an agreement to purchase the assets of an additional outdoor
advertising company. The Company believes that these acquisitions will
significantly
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<PAGE>
strengthen its market presence in the midwest and southeast United States and
will allow the Company to capitalize on the operating efficiencies and
cross-market sales opportunities associated with operating in closely proximate
markets.
THE POA ACQUISITION. In August 1996, the Company agreed to purchase OAH
pursuant to a merger of an indirect subsidiary of the Company with and into OAH.
As a result of the POA Acquisition, the Company acquired a total of
approximately 6,337 advertising display faces consisting of bulletins and
posters in five markets located in the southeast United States, including
Orlando, Ocala and Palm Beach, as well as the East Coast and Gulf Coast areas of
Florida, and Myrtle Beach and Chattanooga.
THE MEMPHIS/TUNICA ACQUISITION. In September 1996, the Company acquired the
Memphis/Tunica Option. Upon consummation of the Memphis/Tunica Acquisition, the
Company will acquire a total of approximately 2,018 advertising display faces
consisting of bulletins and posters in and around Memphis, Tennessee and Tunica
County, Mississippi.
THE ADDITIONAL ACQUISITIONS. In September 1996, the Company purchased
certain assets of Iowa Outdoor Displays and The Chase Company. As a result of
the Additional Acquisitions, the Company acquired approximately 160 advertising
display faces consisting primarily of posters in and around Des Moines and
approximately 245 advertising display faces consisting primarily of bulletins in
and around Dallas.
THE NAEGELE ACQUISITION. In April 1996, the Company acquired operations in
the Minneapolis/St. Paul and Jacksonville markets. In a stock purchase
transaction with NOA Holding Company (the "Naegele Acquisition"), the Company
acquired approximately 2,550 poster faces (of which approximately 1,455 are
located in the Minneapolis/St. Paul market and approximately 1,095 are located
in the Jacksonville market) and approximately 840 painted bulletin faces (of
which approximately 440 are located in the Minneapolis/St. Paul market and
approximately 400 are located in the Jacksonville market).
THE OTHER ACQUISITIONS. In April 1996, the Company acquired 4 painted
bulletin faces in the Chicago market from Paramount Outdoor, Inc. in an asset
purchase transaction. In March 1996, through an asset purchase transaction with
Image Media, Inc., the Company acquired 18 painted bulletin and painted wall
faces in the Chicago market. In a transaction with Ad-Sign, Inc. in January
1996, the Company acquired approximately 160 painted bulletin faces in the
Chicago market. In April 1995, the Company acquired approximately 6 painted
bulletin faces in the Chicago market pursuant to a stock purchase transaction
with O&B Outdoor, Inc. The Company has integrated the newly acquired faces from
these acquisitions into its existing Chicago operations.
In March 1995, the Company completed two acquisitions in the Dallas market.
In a stock purchase transaction with Harrington Associates, Inc., the Company
acquired approximately 740 junior (8-sheet) poster faces located in the Dallas
market. In a stock purchase transaction with Best Outdoor, the Company acquired
approximately 387 junior (8-sheet) poster faces in the Dallas market.
MARKETS
Each of the Company's markets generally possess demographic characteristics
that are attractive to national advertisers, allowing the Company to package its
displays in several of its markets in a single contract for advertisers in
national and regional campaigns. Each market also has unique local industries,
36
<PAGE>
businesses, sports franchises and special events that are frequent users of
outdoor advertising. The following sets forth certain information for each of
the Company's markets as of August 31, 1996 after giving effect to the
Acquisitions:
<TABLE>
<CAPTION>
% OF 1995
PRO FORMA 30-SHEET 8-SHEET
MARKET NET REVENUES BULLETINS POSTERS POSTERS
- --------------------------------------- 1995 --------------- ----------- ----------- -----------
PRO FORMA
NET REVENUES
-------------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
MIDWEST:
Chicago.............................. $ 16,579 13.7% 653 -- 3,646
Minneapolis/St. Paul................. 16,320 13.5 447 1,365 --
Indianapolis......................... 9,897 8.2 257 1,385 142
Milwaukee............................ 4,686 3.9 260 -- 321
Des Moines........................... 3,141 2.6 84 590 9
Evansville........................... 3,028 2.5 142 687 --
Dallas............................... 1,738 1.5 245 -- 1,201
SOUTHEAST:
Orlando.............................. 22,253 18.4 842 1,080 --
Jacksonville......................... 8,528 7.0 383 942 --
Palm Beach........................... 290 0.2 99 21 --
Ocala................................ 5,011 4.1 879 199 --
Memphis/Tunica*...................... 13,104 10.8 706 1,179 133
Chattanooga.......................... 4,582 3.8 359 663 --
Myrtle Beach......................... 7,931 6.6 729 455 --
East Coast area (FL)................. 2,784 2.3 567 -- --
Gulf Coast area (FL)................. 1,095 0.9 444 -- --
---------- ----- ----- ----- -----
Total.............................. $ 120,967 100.0% 7,096 8,566 5,452
---------- ----- ----- ----- -----
---------- ----- ----- ----- -----
<CAPTION>
TOTAL
DISPLAY
MARKET FACES
- --------------------------------------- ---------
<S> <C>
MIDWEST:
Chicago.............................. 4,299
Minneapolis/St. Paul................. 1,812
Indianapolis......................... 1,927
Milwaukee............................ 581
Des Moines........................... 683
Evansville........................... 829
Dallas............................... 1,446
SOUTHEAST:
Orlando.............................. 1,922
Jacksonville......................... 1,325
Palm Beach........................... 120
Ocala................................ 1,078
Memphis/Tunica*...................... 2,018
Chattanooga.......................... 1,022
Myrtle Beach......................... 1,184
East Coast area (FL)................. 567
Gulf Coast area (FL)................. 444
---------
Total.............................. 21,114**
---------
---------
</TABLE>
- ------------------------
* To be acquired in connection with the Memphis/Tunica Acquisition.
** Excludes 143 transit display faces located in Indianapolis.
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.
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<PAGE>
- TRANSIT ADVERTISING consists generally of posters and frames displayed on
the sides of public buses operating on city streets.
Billboards generally are mounted on structures owned by the outdoor
advertising company and located on sites that are either owned or leased by it
or on which it has acquired a permanent easement. Billboard structures are
durable, have long useful lives and do not require substantial maintenance. When
disassembled, they typically can be moved and relocated at new sites. The
Company's outdoor advertising structures are made of steel and other durable
materials built to withstand variable climates, including the rigors of the
midwestern climate. The Company expects its structures to last 15 years or more
without significant refurbishment.
LOCAL MARKET OPERATIONS
In each of its principal markets except Palm Beach, the Company maintains a
complete outdoor advertising operation including a sales office, a production,
construction and maintenance facility, a creative department equipped with
advanced technology, a real estate unit and support staff. The Company conducts
its outdoor advertising operations through these local offices, consistent with
senior management's belief that an organization with decentralized sales and
operations is more responsive to local market demand and provides greater
incentives to employees. At the same time, the Company maintains centralized
accounting and financial controls to allow it to closely monitor the operating
and financial performance of each market. Local general managers, who report
directly to the Company's President or a regional manager, are responsible for
the day-to-day operations of their respective markets and are compensated
according to the financial performance of such markets. In general, these local
managers oversee market development, production and local sales. The Company
intends to incorporate the operations acquired in the Acquisitions into this
operational structure with local offices handling the day-to-day operations and
centralized accounting and financial controls.
Although site leases (for land underlying an advertising structure) are
administered from the Company's headquarters in Chicago, each local office is
responsible for locating and ultimately procuring leases for appropriate sites
in its market. Site lease contracts vary in term but typically run from 10 to 20
years with various termination and renewal provisions. Each office maintains a
leasing department, with an extensive database containing information on local
property ownership, lease contract terms, zoning ordinances and permit
requirements. The Company has been very successful in developing new advertising
display face inventory in each of its markets based on utilizing these databases
and developing an experienced staff of lease teams. Each such team's sole
responsibility is the procurement of sites for new locations in each of the
Company's markets.
SALES AND SERVICE
The Company's sales strategy is to maximize revenues from local advertisers.
Accordingly, it maintains a team of sales representatives headed by a sales
manager in each of its markets. The Company devotes considerable time and
resources to recruiting, training and coordinating the activities of its sales
force. A sales representative's compensation is heavily weighted to individual
performance, and the local sales manager's compensation is tied to the
performance of his or her sales team. One sales representative, based in
Chicago, manages sales to national advertisers. In total, approximately 59 of
the Company's employees are significantly involved in sales and marketing
activities.
In addition to the sales staff, the Company has established fully staffed
and equipped creative departments in each of its principal markets except Palm
Beach. Utilizing technologically advanced computer hardware and software, the
staff is able to create original design copy for both local and national
accounts which has allowed the various creative departments to exchange work via
modem or over the Internet with each other or directly with clients or their
agencies. This ability has resulted in many fully staffed advertising agencies
turning to the Company for the creation of their outdoor campaigns. The Company
believes that its creative department's implementation of continuing
technological advances provides a significant competitive advantage in its sales
and service area.
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<PAGE>
CUSTOMERS
Advertisers usually contract for outdoor displays through advertising
agencies, which are responsible for the artistic design and written content of
the advertising as well as the choice of media and the planning and
implementation of the overall campaign. The Company pays commissions to the
agencies for advertising contracts that are procured by or through those
agencies. Advertising rates are based on a particular display's exposure (or
number of "impressions" delivered) in relation to the demographics of the
particular market and its location within that market. The number of
"impressions" delivered by a display is measured by the number of vehicles
passing the site during a defined period and is weighted to give effect to such
factors as its proximity to other displays, the speed and viewing angle of
approaching traffic, the national average of adults riding in vehicles and
whether the display is illuminated. The number of impressions delivered by a
display is verified by independent auditing companies.
The size and geographic diversity of the Company's markets allow it to
attract national advertisers, often by packaging displays in several of its
markets in a single contract to allow a national advertiser to simplify its
purchasing process and present its message in several markets. National
advertisers generally seek wide exposure in major markets and therefore tend to
make larger purchases. The Company competes for national advertisers primarily
on the basis of price, location of displays, availability and service.
The Company also focuses efforts on local sales, and approximately 84% of
the Company's gross revenues in 1995 were generated from local advertisers after
giving effect to the Acquisitions. Local advertisers tend to have smaller
advertising budgets and require greater assistance from the Company's production
and creative personnel to design and produce advertising copy. In local sales,
the Company often expends more sales efforts on educating customers regarding
the benefits of outdoor media and helping potential customers develop an
advertising strategy using outdoor advertising. While price and availability are
important competitive factors, service and customer relationships are also
critical components of local sales.
Tobacco revenues have historically accounted for a significant portion of
outdoor advertising revenues. Beginning in 1993, the leading tobacco companies
substantially reduced their expenditures for outdoor advertising due to a
declining population of smokers, societal pressures, consolidation in the
tobacco industry and price competition from generic brands. Since tobacco
advertisers often utilized some of the industry's prime inventory, the decline
in tobacco-related advertising expenditures made this space available for other
advertisers, including those that had not traditionally utilized outdoor
advertising. As a result of this decline in tobacco-related advertising revenues
and the increased use of outdoor advertising by other advertisers, the range of
the Company's advertisers has become quite diverse. The following table
illustrates the diversity of the Company's advertising base giving effect to the
Acquisitions:
1995 PRO FORMA NET REVENUES BY CATEGORY
<TABLE>
<CAPTION>
PERCENTAGE OF
NET REVENUES
---------------
<S> <C>
Travel/Entertainment.......................................................... 14.4%
Restaurant.................................................................... 9.9
Tobacco....................................................................... 9.9
Retail/Consumer Products...................................................... 9.8
Automotive & Related.......................................................... 8.0
Home Developer/Real Estate.................................................... 6.0
Advertising/Media............................................................. 4.0
Alcohol....................................................................... 3.6
Hotels/Motels................................................................. 3.0
Other......................................................................... 31.4
-----
Total..................................................................... 100.0%
-----
-----
</TABLE>
39
<PAGE>
PRODUCTION
The Company has internal production facilities and staff to perform the full
range of activities required to develop, create and install outdoor advertising
in all of its markets. Production work includes creating the advertising copy
design and layout, painting the design or coordinating its printing and
installing the designs on its displays. In addition, the Company's substantial
new development activity has allowed it to vertically integrate its own sign
fabrication ability so that new signs are fabricated and erected in-house. The
Company usually provides its full range of production services to local
advertisers and to advertisers that are not represented by advertising agencies,
since national advertisers and advertisers represented by advertising agencies
often use preprinted designs that require only installation. However, the
Company's creative and production personnel frequently are involved in
production activities even when advertisers are represented by agencies due to
the development of new designs or adaptation of copy from other media for use on
billboards. The Company's artists also assist in the development of marketing
presentations, demonstrations and strategies to attract new advertisers.
With the increased use of vinyl and pre-printed advertising copy furnished
to the outdoor advertising company by the advertiser or its agency, outdoor
advertising companies are becoming less responsible for labor-intensive
production work since vinyl and pre-printed copy can be installed quickly. The
vinyl sheets are reusable, thereby reducing the Company's production costs, and
are easily transportable. Due to the geographic proximity of the Company's
principal markets and the transportability of vinyl sheets, the Company can
shift materials among markets to promote efficiency. The Company believes that
this trend over time will reduce operating expenses associated with production
activities.
COMPETITION
The Company competes in each of its markets with other outdoor advertisers
as well as other media, including broadcast and cable television, radio, print
media and direct mail marketers. In addition, the Company also competes with a
wide variety of "out-of-home" media, including advertising in shopping centers
and malls, airports, stadiums, movie theaters and supermarkets, as well as on
taxis, trains, buses and subways. Advertisers compare relative costs of
available media and cost-per-thousand impressions, particularly when delivering
a message to customers with distinct demographic characteristics. In competing
with other media, outdoor advertising relies on its low
cost-per-thousand-impressions and its ability to repetitively reach a broad
segment of the population in a specific market or to target a particular
geographic area or population with a particular set of demographic
characteristics within that market.
The outdoor advertising industry is highly fragmented, consisting of several
large outdoor advertising and media companies with operations in multiple
markets as well as smaller and local companies operating a limited number of
structures in single or a few local markets. Although some consolidation has
occurred over the past few years, according to the OAAA there are approximately
1,000 companies in the outdoor advertising industry operating approximately
396,000 billboard displays. In several of its markets, the Company encounters
direct competition from other major outdoor media companies, including Outdoor
Systems, Inc., Eller Media, Inc. (formerly Patrick Media Group) and 3M National
Advertising Co. (a division of Minnesota Mining and Manufacturing Company), each
of which has a larger national network and greater total resources than the
Company. The Company believes that its emphasis on local advertisers and its
position as a major provider of advertising services in each of its markets and
in the midwest enable it to compete effectively with the other outdoor media
operators, as well as other media, both within those markets and in the midwest
region. The Company also competes with other outdoor advertising companies for
sites on which to build new structures. See "Risk Factors -- Competition."
GOVERNMENT REGULATION
The outdoor advertising industry is subject to governmental regulation at
the federal, state and local level. Federal law, principally the Highway
Beautification Act of 1965, encourages states, by the threat of withholding
federal appropriations for the construction and improvement of highways within
such
40
<PAGE>
states, to implement legislation to restrict billboards located within 660 feet
of, or visible from, interstate and primary highways except in commercial or
industrial areas. All of the states have implemented regulations at least as
restrictive as the Highway Beautification Act, including the prohibition on the
construction of new billboards adjacent to federally-aided highways and the
removal at the owner's expense and without any compensation of any illegal signs
on such highways. The Highway Beautification Act, and the various state statutes
implementing it, require the payment of just compensation whenever governmental
authorities require legally erected and maintained billboards to be removed from
federally-aided highways.
The states and local jurisdictions have, in some cases, passed additional
and more restrictive regulations on the construction, repair, upgrading, height,
size and location of, and, in some instances, content of advertising copy being
displayed on outdoor advertising structures adjacent to federally-aided highways
and other thoroughfares. Such regulations, often in the form of municipal
building, sign or zoning ordinances, specify minimum standards for the height,
size and location of billboards. In some cases, the construction of new
billboards or relocation of existing billboards is prohibited. Some
jurisdictions also have restricted the ability to enlarge or upgrade existing
billboards, such as converting from wood to steel or from non-illuminated to
illuminated structures. From time to time governmental authorities order the
removal of billboards by the exercise of eminent domain. Thus far, the Company
has been able to obtain satisfactory compensation for any of its structures
removed at the direction of governmental authorities, although there is no
assurance that it will be able to continue to do so in the future.
In recent years, there have been movements to restrict billboard advertising
of certain products, including tobacco and alcohol. No bills have become law at
the federal level except those requiring health hazard warnings similar to those
on cigarette packages and print advertisements. It is uncertain whether
additional legislation of this type will be enacted on the national level or in
any of the Company's markets.
In August 1996, the U.S. Food and Drug Administration issued final
regulations governing certain marketing practices in the tobacco industry. Among
other things, the regulations prohibit tobacco product billboard advertisements
within 1,000 feet of schools and playgrounds and require that tobacco product
advertisements on billboards be in black and white and contain only text. In
addition, one major tobacco manufacturer recently proposed federal legislation
banning 8-sheet billboard advertising and transit advertising of tobacco
products. A reduction in billboard advertising by the tobacco industry could
cause an immediate reduction in the Company's direct revenue from such
advertisers and would simultaneously increase the available space on the
existing inventory of billboards in the outdoor advertising industry. See
"Business--Customers" and "Risk Factors--Tobacco Industry Regulations."
Amortization of billboards has also been adopted in varying forms in certain
jurisdictions. Amortization permits the billboard owner to operate its billboard
as a non-conforming use for a specified period of time until it has recouped its
investment, after which it must remove or otherwise conform its billboard to the
applicable regulations at its own cost without any compensation. Amortization
and other regulations requiring the removal of billboards without compensation
have been subject to vigorous litigation in state and federal courts and cases
have reached differing conclusions as to the constitutionality of these
regulations. To date, regulations in the Company's markets have not materially
adversely affected its operations, except in the Jacksonville market, where the
Company has been subject to regulatory efforts and recently agreed to city
ordinances to remove a number of faces. On March 22, 1995, following litigation
over an ordinance and a municipal charter amendment, Naegele entered into
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an agreement with the City of Jacksonville to remove 711 billboard faces over a
twenty year period starting January 1, 1995 and ending December 31, 2014. The
resolution specifies the following removal schedule:
<TABLE>
<CAPTION>
30-SHEET 8-SHEET
CALENDAR YEARS BULLETINS POSTERS POSTERS TOTAL
- ------------------------------------------------------ ------------- ------------- ----------- -----
<S> <C> <C> <C> <C>
1995-1998............................................. 73 242 167 482
1999-2004............................................. 23 87 -- 110
2005-2014............................................. 23 96 -- 119
--- --- --- ---
119 425 167 711
--- --- --- ---
--- --- --- ---
</TABLE>
Under the agreement, Naegele and the City of Jacksonville have agreed on the
removal of 445 pre-selected faces, including 167 (100%) of its 8-sheet faces.
Management of the Company has control over the selection and removal of an
additional 155 faces. The remaining 111 faces to be removed will be selected by
the Company from a pool of faces identified by the City. While the number of
signs being taken down represents a large percentage of Naegele's plant in the
Jacksonville market, the Company believes that Jacksonville has been overbuilt
for a number of years, leading to low occupancy levels and low advertising
rates. The removal of a number of marginally profitable boards is expected to
put upward pressure on rates. Additionally, the removals are staggered over 20
years, with management having substantial input on which signs are removed and
some rights of substitution and rebuilding of outdoor advertising structures in
the Jacksonville market.
On February 1, 1991, Naegele entered into a consent judgment to settle a
complaint brought by the Minnesota Attorney General under Minnesota anti-trust
laws pursuant to which Naegele and its successors are prohibited from purchasing
outdoor advertising displays in the Minneapolis/St. Paul market from other
operators of outdoor advertising displays until February 1, 2001. The consent
judgment also prohibits the Company from enforcing certain covenants not to
compete and from entering into property leases in excess of 15 years. The
consent judgment does not affect the Company's ability to continue to develop
and build new advertising displays in the Minneapolis/St. Paul market.
Additionally, the Company can purchase displays from brokers or other
non-operators.
The outdoor advertising industry is heavily regulated and at various times
and in various markets can be expected to be subject to varying degrees of
regulatory pressure affecting the operation of advertising displays.
Accordingly, although the Company's experience to date is that the regulatory
environment has not adversely impacted the Company's business, other than in the
newly acquired Jacksonville market, no assurance can be given that existing or
future laws or regulations will not materially adversely affect the Company at
some time in the future.
OUTDOOR ADVERTISING PROPERTIES; OFFICE AND PRODUCTION FACILITIES
OUTDOOR ADVERTISING SITES. Giving effect to the Acquisitions, the Company
owns or has permanent easements on approximately 337 parcels of real property
that serve as the sites for its outdoor displays. The Company's remaining
approximately 12,376 advertising display sites are leased or licensed.
The Company's leases are for varying terms ranging from month-to-month or
year-to-year to terms of ten years or longer, and many provide for renewal
options. There is no significant concentration of displays under any one lease
or subject to negotiation with any one landlord. The Company believes that an
important part of its management activity is to manage its lease portfolio and
negotiate suitable lease renewals and extensions.
OFFICE AND PRODUCTION FACILITIES. The Company's principal executive and
administration offices are located in Chicago, Illinois in a 6,956-square foot
space leased by the Company. In addition, after giving effect to the
Acquisitions, the Company has an office and complete production and maintenance
facility in each of Addison, Illinois (40,000 square feet); Orlando (20,500
square feet); Memphis (24,844 square feet); Chattanooga (14,580 square feet);
Ocala (11,700 square feet); Myrtle Beach (14,792 square feet); Milwaukee (18,367
square feet); Indianapolis (23,648 square feet); Des Moines (15,320 square
42
<PAGE>
feet); Minneapolis/St. Paul (82,547 square feet); Jacksonville (16,000 square
feet); and Evansville (16,000 square feet) and a sales, real estate and
administration office in Dallas (2,000 square feet). The Indianapolis, Addison,
Orlando, Milwaukee, Jacksonville, Myrtle Beach, Chattanooga, Ocala and
Evansville facilities are owned and all other facilities are leased. The Company
considers its facilities to be well maintained and adequate for its current and
reasonably anticipated future needs.
EMPLOYEES
At June 30, 1996, the Company employed approximately 330 people, of whom
approximately 59 were primarily engaged in sales and marketing, 209 were engaged
in painting, bill posting and construction and maintenance of displays and the
balance were employed in financial, administrative and similar capacities. The
Milwaukee market has 15 employees who belong to a union and the Minneapolis/St.
Paul market has 29 employees who belong to unions. The Company considers its
relations with the unions and with its employees to be good.
43
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The table below sets forth certain information with respect to the directors
and executive officers of the Company.
<TABLE>
<CAPTION>
YEARS WITH THE
NAME AGE POSITION COMPANY
- ------------------------------ --- ------------------------------------------------------------ -------------------
<S> <C> <C> <C>
Daniel L. Simon*.............. 45 Chief Executive Officer, President and Director 23
Brian T. Clingen.............. 36 Vice President, Chief Financial Officer and Director 8
Paul G. Simon*................ 43 Vice President, Secretary and General Counsel 6
Michael J. Roche.............. 45 Director 2
Michael B. Goldberg........... 49 Director **
Frank K. Bynum, Jr............ 33 Director **
</TABLE>
- ------------------------
* Daniel L. and Paul G. Simon are brothers.
** Became a director in 1996.
Mr. Daniel Simon, a founder and a principal beneficial stockholder of the
Company, has been the President of the Company since 1989 and a director since
its formation. Mr. Simon has 23 years of experience in the outdoor advertising
industry and serves on the executive and legislative committees of the Outdoor
Advertising Association of America.
Mr. Clingen has served as Vice President and Chief Financial Officer of the
Company since December 1987 and as a director since 1990. From 1983 to 1987, Mr.
Clingen worked for Elmore Group ("Elmore"), a diversified property and service
company, and served as Chief Financial Officer of an Elmore subsidiary. Mr.
Clingen is a certified public accountant.
Mr. Paul Simon has been Vice President and General Counsel of the Company
since 1989 and has served as Secretary of the Company since July 1991. Mr. Simon
was in the private practice of law in Illinois from 1978 to 1989, specializing
in commercial litigation, general corporate matters, real estate and mergers and
acquisitions. Mr. Simon represented the Company as outside counsel from 1981 to
1989.
Mr. Roche has been National Marketing Manager (Licensed Businesses) for
Sears, Roebuck and Co. since 1985. Prior thereto, he was an Assistant Marketing
Manager from 1984 to 1985 and a National Sales Promotion Manager from 1980 to
1984 for Sears, Roebuck and Co. Mr. Roche has been a director of the Company
since November 1993.
Mr. 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.
Mr. Bynum has been a director of the Company since July, 1996. Mr. Bynum has
been a Vice President of Kelso & Company, L.P. since July 1991, and was an
Associate of Kelso & Company, L.P. from October 1987 to July 1991. He is a
director of Hosiery Corporation of America, Inc., IXL Holdings, Inc. 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.
44
<PAGE>
The Company has instituted a classified Board of Directors. 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. to nominate two persons for the Board of Directors to be voted
upon by the shareholders. Messrs. Goldberg and Bynum have been retained as
directors 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."
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 $ 224,379 $ 0 $ 1,000
President and Chief Executive Officer 1994 249,250 0 500
1993 187,439 0 0
Brian T. Clingen(1) ............................................ 1995 $ 145,128 $ 0 $ 1,000
Chief Financial Officer and Vice President 1994 145,852 0 500
1993 122,742 0 0
Paul G. Simon(1) ............................................... 1995 $ 158,176 $ 0 $ 1,000
Vice President, Secretary and General Counsel 1994 158,968 0 500
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.
45
<PAGE>
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. The 1996 Warrant Plan is 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 National Market (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. The Series I Warrants,
the Series II Warrants and the Series III Warrants are 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 123,530 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. As of the date of this Prospectus, Daniel L. Simon
holds 595,000 Series I Warrants, 700,000 Series II Warrants and 700,000 Series
III Warrants; Brian T. Clingen holds 105,006 Series I Warrants, 123,536 Series
II Warrants and 123,536 Series III Warrants; and Paul G. Simon holds 123,530
Series I Warrants. The Company recognized a one-time non-cash compensation
charge of approximately $9 million in the quarter ended June 30, 1996 relating
to the issuance of the Warrants under the 1996 Warrant Plan.
AUDIT COMMITTEE; COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors formed an Audit Committee in July 1996 which is
responsible for reviewing the Company's accounting controls and recommending to
the Board of Directors the engagement of the Company's outside auditors. The
members of the Company's Audit Committee are Daniel L. Simon, Michael J. Roche
and Frank K. Bynum.
The Board of Directors formed a Compensation Committee in July 1996 which is
responsible for reviewing and approving the amount and type of consideration to
be paid to senior management and for administering the 1996 Warrant Plan. See
"Management -- The 1996 Warrant Plan." The members of the Company's Compensation
Committee are 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.
46
<PAGE>
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 (prior to a
subsequent 16 for 1 stock split) 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
such individual shareholders as holders of Class B Common Stock and Class C
Common Stock of the Company. Pursuant to such agreements, 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, of which 2,500,000 were sold in the
IPO. See "Principal and Selling Shareholders." Pursuant to such agreements, the
annual consulting and advisory fee of $150,000 payable to Kelso & Company, L.P.
was terminated but Kelso & Company, L.P.'s reimbursement of expenses and
indemnification rights in connection therewith remained in effect. In connection
with the IPO, Kelso & Company, L.P. received a one-time fee of $650,000. In
addition, as a result of the reclassification, KIA V, KEP V and such individual
shareholders have the same rights as holders of Common Stock. In connection with
the reclassification, KIA V, KEP V and such 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 Existing
UOI Indenture and the Existing Company Indenture (each as defined herein) impose
limitations on the Company's ability to engage in such transactions. See
"Description of Indebtedness and Other Commitments."
47
<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................................. 9,334,008(1) 45.1% 500,000 8,584,008(2) 33.4%
321 North Clark Street
Chicago, Illinois 60610
Brian T. Clingen................................ -- (3) -- 250,000 -- (4) --
321 North Clark Street
Chicago, Illinois 60610
Paul G. Simon................................... -- (5) -- -- -- (5) --
321 North Clark Street
Chicago, Illinois 60610
Michael J. Roche................................ 2,000 -- (6) -- 2,000 -- (6)
333 Beverly Road, E5-312A
Hoffman Estates, Illinois 60179
Michael B. Goldberg (7)......................... 55,460 -- (6) -- 55,460 -- (6)
Director
Kelso & Company
320 Park Avenue, 24th Floor
New York, New York 10022
Frank K. Bynum, Jr. (7)......................... 30,688 -- (6) -- 30,688 -- (6)
Director
Kelso & Company
320 Park Avenue, 24th Floor
New York, New York 10022
Kelso Investment Associates V, L.P. (8)(9)...... 2,847,871 15.6 -- 2,847,871 12.3
Kelso Equity Partners V, L.P. (8)(9)............ 151,779 -- (6) -- 151,779 -- (6)
Joseph N. Schuchert (8)(10)..................... 2,999,650 16.4 -- 2,999,650 12.9
Frank T. Nickell (8)(9)......................... 3,134,879 17.2 -- 3,134,879 13.5
George E. Matelich (8)(10)...................... 3,063,293 16.8 -- 3,063,293 13.2
Thomas R. Wall, IV (8)(10)...................... 3,080,072 16.9 -- 3,080,072 13.3
All directors and executive officers as a group
(6 persons)................................... 9,422,156 45.5 750,000 8,672,156 33.7
</TABLE>
- ------------------------
(1) Daniel L. Simon's beneficial ownership includes 5,596,540 shares that he
owns directly, 88,000 shares held by The Simon Family Limited Partnership,
of which he is a general partner, 1,995,000 shares issuable to him upon
exercise of the Management Warrants, 1,178,860 shares over which he has
voting control pursuant to certain voting trust agreements with Brian T.
Clingen and Paul G.
48
<PAGE>
Simon, and 475,608 shares issuable to Brian T. Clingen and Paul G. Simon
upon exercise of the Management Warrants over which Daniel L. Simon has
voting control pursuant to certain voting trust agreements.
(2) Daniel L. Simon's beneficial ownership includes 5,096,540 shares that he
owns directly, 88,000 shares held by The Simon Family Limited Partnership,
of which he is a general partner, 1,995,000 shares issuable to him upon
exercise of the Management Warrants, 928,860 shares over which he has voting
control pursuant to certain voting trust agreements with Brian T. Clingen
and Paul G. Simon, and 475,608 shares issuable to Brian T. Clingen and Paul
G. Simon upon exercise of the Management Warrants over which Daniel L. Simon
has voting control pursuant to certain voting trust agreements.
(3) Brian T. Clingen owns 1,052,852 shares directly, 352,078 shares issuable to
him upon exercise of the Management Warrants, and 125,008 shares held by The
Clingen Family Limited Partnership of which he is a general partner, which
represent 8.2% of the Common Stock. The voting rights for such shares have
been granted to Daniel L. Simon pursuant to a voting trust agreement.
(4) Brian T. Clingen owns 802,852 shares directly, 352,078 shares issuable to
him upon exercise of the Management Warrants, and 125,008 shares held by The
Clingen Family Limited Partnership of which he is a general partner, which
represents 5.4% of the Common Stock. The voting rights for such shares have
been granted to Daniel L. Simon pursuant to a voting trust agreement.
(5) Paul G. Simon owns 1,000 shares directly and 123,530 shares issuable to him
upon exercise of the Management Warrants which represent less than 1% of the
Common Stock, the voting rights of which have been granted to Daniel L.
Simon pursuant to a voting trust agreement.
(6) Represents less than 1% of the Common Stock.
(7) Messrs. Goldberg and Bynum may be deemed to share beneficial ownership of
shares of Common Stock owned of record by KIA V by virtue of their status as
limited partners of the general partner of KIA V and as limited partners of
KEP V. Messrs. Goldberg and Bynum disclaim beneficial ownership of such
securities. Mr. Goldberg has been a director of the Company since April 1996
and Mr. Bynum became a director of the Company following consummation of the
IPO.
(8) The business address for such person(s) is c/o Kelso & Company, 320 Park
Avenue, 24th Floor, New York, New York 10022.
(9) KIA V and KEP V, due to their common control, could be deemed to
beneficially own each others shares, but each disclaims such beneficial
ownership.
(10) Messrs. Schuchert, Nickell, Matelich and Wall may be deemed to share
beneficial ownership of shares of Common Stock owned of record by KIA V and
KEP V, by virtue of their status as general partners of the general partner
of KIA V and as general partners of KEP V. 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.
49
<PAGE>
DESCRIPTION OF CAPITAL STOCK
As of the date of this Prospectus, the Company's authorized capital stock
consisted 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
The Company is authorized to issue 75,000,000 shares of Common Stock, $.01
par value per share. Following this Offering, 23,242,800 shares of Common Stock
will be issued and outstanding (assuming no exercise of the over-allotment
option and excluding 2,857,808 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 New Credit
Facility and the New 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.
50
<PAGE>
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. The 1996 Warrant
Plan is administered by the Compensation Committee of the Company. See
"Management -- The 1996 Warrant Plan."
THE NOTEHOLDER WARRANTS
GENERAL. In connection with the Company's sale of the Existing Company
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 Warrants
expire on July 1, 2004. The Noteholder Warrants entitled 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. In July 1996, a total of 612,800
Noteholder Warrants were exercised into Warrant Shares. A total of 387,200
Noteholder Warrants remain exercisable into Warrant Shares at any time.
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
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.
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, or (iii) the merger or consolidation of the
Company or UOI, subject to certain exceptions. 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.
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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.
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
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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.
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SHARES ELIGIBLE FOR FUTURE SALE
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
23,242,800 shares of Common Stock (excluding 862,500 shares of Common Stock
issuable upon the exercise of the Underwriters' over-allotment option, 2,857,808
shares of Common Stock issuable pursuant to the 1996 Warrant Plan and Noteholder
Warrants and 100,000 shares of Common Stock issuable upon consummation of the
Memphis/Tunica Acquisition). See "Capitalization" and "Description of Capital
Stock." Of these shares, the 5,750,000 shares (6,612,500 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. 7,130,000 shares issued in
connection with the IPO are freely tradable. The remaining 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 approximately 9,113,050
shares, have agreed not to offer, sell or otherwise dispose of any shares of
Common Stock until approximately 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 may in the future sell or otherwise
dispose of Common Stock, including additional distributions to their respective
partners.
KIA V and KEP V distributed approximately 406,350 shares of Common Stock to
certain of its partners in lieu of cash in conjunction with the IPO. 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 261,006 shares after giving effect to this Offering (including
shares issuable pursuant to the 1996 Warrant Plan and Noteholder Warrants)) 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 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.
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DESCRIPTION OF INDEBTEDNESS AND OTHER COMMITMENTS
The following is a description of the principal agreements which will govern
the Company following the consummation of the Transactions. The following
summaries are qualified in their entirety by reference to the agreement to which
each summary relates. See "Available Information." Defined terms used below and
not defined have the meanings set forth in the respective agreements.
THE NEW NOTES
The New Notes, which are offered in the Notes Offering, are to be issued
pursuant to the New UOI Indenture. The New UOI Indenture will provide for the
issuance of up to $200 million aggregate principal amount of the New Notes which
will be general unsecured obligations of UOI subordinate in right of payment to
all existing and future senior indebtedness of UOI that is not expressly
subordinated to the New Notes.
SECURITY. The obligations under the New Notes are not secured.
REDEMPTION. The New Notes will be redeemable at the option of UOI, in whole
or in part, at any time on or after the fifth anniversary of the date of
issuance at the redemption prices set forth in the New UOI Indenture plus
accrued and unpaid interest, if any, to the date of redemption. Also, until the
third anniversary of the date of issuance, UOI may redeem up to $70 million
aggregate principal amount of the New Notes with the net proceeds of a public
equity offering or an equity private placement by the Company, in each case
resulting in net cash proceeds of $100 million or more, at a premium over the
principal amount thereof, together with accrued and unpaid interest, if any, to
the date of redemption; provided that New Notes having an aggregate principal
amount of at least $130 million remain outstanding immediately after any such
redemption.
COVENANTS. The New UOI Indenture will contain covenants restricting or
limiting the ability of UOI and its Subsidiaries (as defined in the New UOI
Indenture) to, among other things, (i) pay dividends or make other restricted
payments, (ii) incur additional indebtedness or issue certain redeemable stock,
(iii) create liens, (iv) create dividend or other payment restrictions affecting
Subsidiaries, (v) enter into mergers or consolidations or make sales of all or
substantially all the assets of UOI, and (vi) enter into transactions with
affiliates. In addition, in the event of certain asset sales, UOI will be
required to use the proceeds to reinvest in UOI's business, to repay senior
indebtedness or to offer to purchase the New Notes at 100% of the principal
amount thereof, plus accrued and unpaid interest, if any, to the date of
purchase.
EVENTS OF DEFAULT. The New UOI Indenture will contain customary events of
default, including, without limitation, the following: (i) the failure to pay
principal or interest when due; (ii) certain defaults under agreements relating
to other indebtedness; (iii) the breach of any covenant in the New UOI
Indenture; (iv) the levy of certain judgments; and (v) certain bankruptcy,
reorganization and insolvency events. The occurrence of an event of default will
permit the holders of the New Notes to accelerate the New Notes and to pursue
other remedies.
CHANGE IN CONTROL. Upon a "change of control" (as defined in the New UOI
Indenture), each holder of the New Notes may require UOI to repurchase all or a
portion of such holder's New Notes at a purchase price equal to 101% of their
principal amount together with accrued and unpaid interest thereon, if any, to
the date of redemption.
THE EXISTING UOI NOTES
On March 2, 1994, UOI issued $65 million aggregate principal amount of the
Existing UOI Notes pursuant to an indenture between UOI and the United States
Trust Company of New York, as trustee (the "Existing UOI Indenture"). The
Existing UOI Notes mature on November 15, 2003 and are senior unsecured
obligations of UOI ranking on a parity with all existing and future indebtedness
of UOI that is not expressly subordinated to the Existing UOI Notes.
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<PAGE>
INTEREST. The Existing UOI Notes bear interest at the rate of 11% per
annum.
SECURITY. The obligations under the Existing UOI Notes are not secured.
REDEMPTION. The Existing 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, at the redemption prices (expressed as a percentage of principal amount)
set forth in the Existing UOI Indenture.
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 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
the Existing 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.
THE UOI DEBT TENDER OFFER. Pursuant to the UOI Debt Tender Offer, UOI
intends to solicit consents to modify or eliminate certain of the
above-described covenants.
CHANGE IN CONTROL. Upon a "change of control" (as defined in the Existing
UOI Indenture), each holder of the Existing 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.
THE EXISTING COMPANY NOTES
On June 23, 1994, the Company issued $50 million aggregate principal amount
of the Existing Company Notes and 50,000 Warrants to purchase 1,000,000 shares
of Common Stock pursuant to an indenture (the "Existing Company Indenture")
between the Company and the United States Trust Company of New York, as trustee.
The Existing Company 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 Existing Company 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 Existing Company Notes.
INTEREST. The Existing Company Notes were offered at a substantial discount
from their principal amount. From the date of issuance, the Existing Company
Notes accrete at the rate of 14% per annum although no cash interest will accrue
until July 1, 1999. The first interest payment date will be January 1, 2000.
SECURITY. The obligations under the Existing Company Notes are secured by a
pledge of all of the issued and outstanding shares of common stock of UOI.
REDEMPTION. The Existing Company Notes may be redeemed at the option of the
Company, in whole or in part, at any time and from time to time, at the
redemption prices (expressed as a percentage of principal amount) set forth in
the Existing Company Indenture.
COVENANTS. The Existing Company Indenture restricts the Company and its
subsidiaries from, among other things: (i) incurring indebtedness and allowing
subsidiaries to issue preferred stock; (ii) incurring liens or guaranteeing
obligations except for certain permitted liens with certain exceptions; (iii)
entering into mergers or consolidations; (iv) selling or otherwise disposing of
property, business or assets; (v) with certain exceptions, making loans or
investments; (vi) making optional payments or prepayments of indebtedness; (vii)
entering into transactions with affiliates; (viii) with certain exceptions,
entering into agreements prohibiting or limiting the ability of the Company to
create liens upon its
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property, assets or revenues in favor of the Existing Company 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.
THE COMPANY DEBT TENDER OFFER. Pursuant to the Company Debt Tender Offer,
the Company intends to solicit consents to modify or eliminate certain of the
above-described covenants.
CHANGE IN CONTROL. Upon a "change of control" (as defined in the Existing
Company Indenture), each holder of the Existing Company Notes may require the
Company to repurchase all or a portion of such holder's Existing Company Notes
at a purchase price equal to 101% of their accreted value on the date of
purchase.
NEW CREDIT FACILITY
On October 8, 1996, the Company entered into the New Credit Facility, the
terms and conditions of which are as set forth below:
REVOLVING CREDIT FACILITY
COMMITMENT; INTEREST. The Revolving Credit Facility is a revolving line of
credit facility providing for borrowings of up to $12.5 million that may be used
for general corporate purposes including working capital requirements.
Borrowings under the Revolving Credit Facility may be in the form of eurodollar
loans or announced base rate loans as determined by the Company. 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 September 30, 2004, unless extended, or upon the occurrence of a
"change of control" (as defined in the Credit Agreements). On each of these
dates, 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, 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
Existing Company Notes are repurchased 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. With respect to additional acquisitions, such additional
acquisitions require the consent of the lenders unless such acquisitions do not
exceed $50,000,000 in the aggregate or the Holdings Leverage Ratio (as defined
in the Credit Agreements) is less than 5.50 to 1.0. In addition, the Revolving
Credit Facility also requires UOI to maintain certain levels of Operating Cash
Flow and interest expense coverage, and limits UOI's capital expenditures to $10
million each fiscal year
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(in addition to additional permitted expenditures not in excess of the "basket"
amount set forth therein), which amount is increased annually to 105% of the
maximum amount for the immediately preceding twelve-month period.
CHANGE OF CONTROL. A "change of control" (as defined in the Credit
Agreements) of UOI constitutes an event of default permitting the lenders to
accelerate indebtedness under and terminate the Revolving Credit Facility.
ACQUISITION CREDIT FACILITY
COMMITMENT; INTEREST. The Acquisition Credit Facility consists of an
acquisition credit line in the amount of $287.5 million pursuant to which $75
million is available under a term loan facility available on the closing date
and $212.5 million is available under a revolving/term loan facility. The
Company drew an amount equal to approximately $285 million to finance the POA
Acquisition and for other corporate purposes. The $212.5 million revolving/term
loan facility may be reborrowed from time to time; the $75 million term loan may
not be reborrowed. Borrowings under the Acquisition Credit Facility may be in
the form of eurodollar loans or announced base rate loans as determined by the
Company. See "Use of Proceeds."
TERMINATION OF COMMITMENT. Upon the failure of certain events to occur
prior to October 1997, a total of $100 million under the $212.5 million
revolving/term loan may be converted to a term facility which may not be
reborrowed. The $212.5 million revolving/term loan matures on September 30, 2003
and the $75 million term loan matures on September 30, 2004, or upon the
occurrence of a "change of control" (as defined in the Credit Agreements). The
availability under the $212.5 million revolving/term loan terminates in
September, 1999.
SECURITY. The Company's obligations under the Acquisition Credit Facility
are secured by first priority liens (subject to certain permitted encumbrances)
on substantially all of the assets of UOI. In addition, 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 and its subsidiaries after the Existing Company Notes are repaid in full.
COVENANTS. Except to the extent any of such covenants conflict with the
terms of the Existing Company Notes or the Existing UOI 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. With respect to
additional acquisitions, such additional acquisitions require the consent of the
lenders unless such acquisitions do not exceed $50,000,000 in the aggregate or
the Holdings Leverage Ratio (as defined in the Credit Agreements) is less than
5.50 to 1.0. In addition, the Acquisition Credit Facility also requires UOI to
maintain certain levels of Operating Cash Flow and interest expense coverage,
and limits UOI's capital expenditures to $10 million in each fiscal year (in
addition to additional permitted expenditures not in excess of the "basket"
amount set forth therein), which amount is increased to 105% of the maximum
amount for the immediately preceding twelve-month period.
CHANGE OF CONTROL. A "change of control" (as defined in the Credit
Agreements) of UOI constitutes an event of default permitting the lenders to
accelerate indebtedness under and terminate the Acquisition Credit Facility.
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UNDERWRITING
Subject to the terms and conditions 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 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.............................................................................................. 5,750,000
-----------
-----------
</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 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 public
offering, the offering price and other selling terms may be changed by the
representatives of the Underwriters.
The Company has granted to the Underwriters an option, exercisable not later
than 30 days after the date of this Prospectus, to purchase up to 862,500
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 5,750,000, and the Company 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 5,750,000 shares are being offered.
In connection with the Offering, the Underwriters may engage in passive
market making transactions in the Common Stock on the Nasdaq National Market
immediately prior to the commencement of sales in the Offering in accordance
with Rule 10b-6A under the Exchange Act (as defined herein). Passive market
making consists of displaying bids on the Nasdaq National Market limited by the
bid prices of independent market makers and making purchases limited by such
prices and effected in response to order flow. Net purchases by a passive market
maker on each day are limited to a specified percentage of the passive market
maker's average daily trading volume in the Common Stock during a specified
period and must be discontinued when such limit is reached. Passive market
making may stabilize the market price of the Common Stock at a level above that
which might otherwise prevail and, if commenced, may be discontinued at any
time.
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 9,113,050 shares of
Common Stock have agreed not to offer, sell or otherwise dispose of any of such
Common Stock until approximately 180 days
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following the date of this Prospectus without the prior consent of the
representatives of the Underwriters. In connection with the IPO, KIA V and KEP V
distributed approximately 406,350 shares of Common Stock to certain of their
respective partners in lieu of cash. The recipients of such distributions agreed
with KIA V and the representatives of 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. Consent
to sales within the periods 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."
At the Company's request, the Underwriters have agreed to make available
shares of Common Stock for sale at the 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.
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, including in connection with the Acquisitions.
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 has from time to time represented Kelso & Company,
L.P., 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. Skadden, Arps, Slate, Meagher & Flom has been engaged by the Company to
represent it in connection with the Acquisitions.
EXPERTS
The Consolidated Financial Statements of the Company as of December 31, 1994
and 1995 and for each of the three years in the period ended December 31, 1995
in this Prospectus have been so included in reliance on the report of Price
Waterhouse LLP, independent accountants, given on the authority of said firm as
experts in auditing and accounting.
The Consolidated Financial Statements of NOA Holding Company at May 31, 1995
and 1994, and for each of the three years in the period ending May 31, 1995,
appearing in this Prospectus and Registration Statement have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
appearing elsewhere herein, and are included in reliance upon such report given
upon the authority of such firm as experts in accounting and auditing.
The combined financial statements of Tanner-Peck, LLC included in this
Prospectus and Registration Statement have been audited by BDO Seidman, LLP,
independent certified public accountants, to the extent and for the periods set
forth in their report appearing elsewhere herein, and are included in reliance
upon such report given upon the authority of said firm as experts in auditing
and accounting.
The Financial Statements of POA Acquisition Corporation at December 31, 1995
and 1994, and for each of the three years in the period ended December 31, 1995,
appearing in this Prospectus and Registration Statement have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
appearing elsewhere herein, and are included in reliance upon such report given
upon the authority of such firm as experts in accounting and auditing.
60
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and, in accordance
therewith files reports and other information with the Commission.
The Company has filed with the Commission a Registration Statement (which
term shall include all amendments thereto) on Form S-1 under the Securities Act,
with respect to the Common Stock offered hereby. This Prospectus, which
constitutes a part of the Registration Statement, does not contain all of the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission.
Statements contained in this Prospectus as to the contents of any contract,
agreement or other document referred to herein are not necessarily complete.
With respect to each report or other information filed with the Commission
pursuant to the Exchange Act, and such contract, agreement or document filed as
an exhibit to the Registration Statement, reference is made to such exhibit for
a more complete description, and each such statement is deemed to be qualified
in all respects by such reference. The Registration Statement and reports and
other information filed by the Company may be inspected, without charge, at the
offices of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and
at its regional offices at Seven World Trade Center, New York, New York 10048,
and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
materials may be obtained from the public reference section of the Commission at
its Washington address upon payment of the prescribed fee. The Commission
maintains a World Wide Web site that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission and the address of such site is http://www.sec.gov.
61
<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
NOA HOLDING COMPANY
Report of Independent Auditors of Ernst & Young LLP................................... F-16
Consolidated Balance Sheets........................................................... F-17
Consolidated Statements of Operations................................................. F-18
Consolidated Statements of Stockholders' Equity....................................... F-19
Consolidated Statements of Cash Flows................................................. F-20
Notes to Consolidated Financial Statements............................................ F-21
AD-SIGN
Report of Independent Accountants of Price Waterhouse LLP............................. F-27
Statement of Revenues and Direct Expenses............................................. F-28
Notes to the Statement of Revenues and Direct Expenses................................ F-29
POA ACQUISITION CORPORATION
Report of Independent Accountants of Ernst & Young LLP................................ F-30
Balance Sheets........................................................................ F-31
Statements of Operations.............................................................. F-32
Statements of Shareholders Equity..................................................... F-33
Statements of Cash Flows.............................................................. F-34
Notes to Financial Statements......................................................... F-35
TANNER-PECK, L.L.C.
Report of Independent Certified Public Accountants of BDO Seidman, LLP................ F-42
Combined Balance Sheets............................................................... F-43
Combined Statements of Income......................................................... F-44
Combined Statements of Changes in Members' Equity..................................... F-45
Combined Statements of Cash Flows..................................................... F-46
Summary of Accounting Policies........................................................ F-47
Notes to Combined Financial Statements................................................ F-49
</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
-------------- -------------- JUNE 30,
1996
------------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash............................................................. $ 15 $ 19 $ 59
Accounts receivable, less allowance for doubtful accounts of $106
in 1994 and 1995................................................ 4,313 5,059 9,654
Other receivables................................................ 185 201 563
Prepaid land rents............................................... 822 1,043 2,644
Prepaid insurance and other...................................... 859 1,029 1,594
-------------- -------------- ------------
Total current assets......................................... 6,194 7,351 14,514
-------------- -------------- ------------
Property and equipment, net........................................ 53,651 55,346 152,279
-------------- -------------- ------------
Other assets:
Noncompete agreements, net of accumulated amortization of $4,711
and $4,505...................................................... 1,615 1,995 1,426
Finance costs, net of accumulated amortization of $511 and
$1,171.......................................................... 5,437 5,113 7,434
Excess of cost over fair value assets acquired, net of
accumulated amortization of $184 and $230....................... 746 700 2,952
Other costs associated with acquisitions, net of accumulated
amortization of $569 and $686................................... 584 525 548
Deposits......................................................... 26 20 22
-------------- -------------- ------------
Total other assets........................................... 8,408 8,353 12,382
-------------- -------------- ------------
$ 68,253 $ 71,050 $ 179,175
-------------- -------------- ------------
-------------- -------------- ------------
LIABILITIES AND COMMON STOCKHOLDERS' DEFICIT
Current liabilities:
Current maturities of long-term debt............................. $ 58 $ 58 $ --
Accounts payable................................................. 1,469 1,225 1,281
Accrued interest................................................. 998 1,054 998
Deferred revenue................................................. 400 468 487
Accrued expenses................................................. 482 409 3,418
-------------- -------------- ------------
Total current liabilities.................................... 3,407 3,214 6,184
-------------- -------------- ------------
Long-term debt, less current maturities............................ 99,669 106,362 182,673
-------------- -------------- ------------
Common stockholders' deficit:
Common stock, $.01 par value, 1,500,000 shares authorized;
7,000,000 shares issued and outstanding at December 31, 1994 and
1995, 13,000,000 shares issued and outstanding at June 30,
1996............................................................ -- -- --
Additional paid in capital....................................... 1,451 1,451 31,451
Common stock warrants............................................ 2,500 2,500 11,500
Accumulated deficit.............................................. (38,774) (42,477) (52,633)
-------------- -------------- ------------
Total common stockholders' deficit........................... (34,823) (38,526) (9,682)
-------------- -------------- ------------
Commitment and contingencies (Notes 5 and 9)....................... -- -- --
-------------- -------------- ------------
$ 68,253 $ 71,050 $ 179,175
-------------- -------------- ------------
-------------- -------------- ------------
</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 SIX MONTHS ENDED
FOR THE YEARS ENDED DECEMBER 31, JUNE 30,
------------------------------------- --------------------------
1993 1994 1995 1995 1996
----------- ----------- ----------- ----------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Gross revenues.............................. $ 28,710 $ 33,180 $ 38,101 $ 18,292 $ 29,366
Less agency commissions..................... 2,863 3,414 3,953 1,881 3,127
----------- ----------- ----------- ----------- -------------
Net revenues............................ 25,847 29,766 34,148 16,411 26,239
----------- ----------- ----------- ----------- -------------
Operating expenses:
Direct advertising expenses............... 10,901 11,806 12,864 6,266 9,520
General and administrative expenses....... 3,357 3,873 4,645 2,233 3,086
Depreciation and amortization............. 8,000 7,310 7,402 3,538 4,674
Non cash compensation for common stock
warrants................................. -- -- -- -- 9,000
----------- ----------- ----------- ----------- -------------
22,258 22,989 24,911 12,037 26,280
----------- ----------- ----------- ----------- -------------
Operating income............................ 3,589 6,777 9,237 4,374 (41)
----------- ----------- ----------- ----------- -------------
Other (income) expense:
Interest expense, including amortization
of bond discount of $162, $1,818 and
$3,982................................... 6,625 9,836 12,234 6,007 8,113
Interest expense -- amortization of
deferred financing costs................. 511 464 660 335 328
Interest expense -- accretion of dividends
on redeemable preferred stock............ 2,163 1,509 -- -- --
Miscellaneous Acquisition related
expenditures............................. -- -- -- -- 1,750
(Gain) loss on disposal of assets and
other expenses........................... 351 134 46 25 (76)
----------- ----------- ----------- ----------- -------------
Total other expense..................... 9,650 11,943 12,940 6,367 10,115
----------- ----------- ----------- ----------- -------------
Net loss before extraordinary item.......... (6,061) (5,166) (3,703) (1,993) (10,156)
Extraordinary loss on early extinguishment
of debt.................................... (3,260) -- -- -- --
----------- ----------- ----------- ----------- -------------
Net loss.................................... $ (9,321) $ (5,166) $ (3,703) $ (1,993) $ (10,156)
----------- ----------- ----------- ----------- -------------
----------- ----------- ----------- ----------- -------------
Loss per common and equivalent share........ $ (1.22) $ (0.67) $ (0.48) $ (0.26) $ (0.97)
Weighted average number of shares........... 7,654,000 7,654,000 7,654,000 7,654,000 10,489,000
</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 SIX MONTHS
FOR THE YEARS ENDED DECEMBER 31,
ENDED JUNE 30,
--------------------------------- ---------------------
1993 1994 1995 1995 1996
---------- ---------- --------- --------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss........................................... $ (9,321) $ (5,166) $ (3,703) $ (1,993) $ (10,156)
Depreciation and amortization...................... 8,673 9,592 12,044 5,793 6,191
Costs related to acquisitions...................... -- -- -- -- 1,750
Non cash compensation for common stock warrants.... -- -- -- -- 9,000
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) (672) (1,254)
Prepaid land rents, insurance and other.......... (262) (223) (391) (73) (209)
Accounts payable and accrued expenses............ 741 (156) (317) (407) 866
Accrued interest................................. (253) 140 56 (44) (72)
Deferred revenue................................. -- 400 68 -- --
Other............................................ (220) -- 5 14 --
---------- ---------- --------- --------- ----------
Net cash from operating activities............. 4,122 4,908 7,000 2,618 6,116
---------- ---------- --------- --------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Gross capital expenditures......................... (2,862) (5,671) (5,620) (2,521) (2,943)
Payments for acquisitions.......................... -- (3,355) (1,925) (2,164) (107,106)
Proceeds from sale of property and equipment....... 858 1,003 -- --
Payment for consulting agreement................... -- -- (1,400) --
Other payments..................................... (32) (160) (124) -- (76)
---------- ---------- --------- --------- ----------
Net cash used in investing activities.......... (2,036) (8,183) (9,069) (4,685) (110,125)
---------- ---------- --------- --------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt........... 64,037 25,408 -- (147) 75,000
Principal payments of long-term debt............... (64,505) (272) (262) (52) (1,173)
Deferred financing costs........................... (3,560) (1,888) (336) --
Net borrowings under credit agreements............. 3,950 3,040 2,671 -- 222
Additional paid in capital......................... -- -- -- -- 30,000
Payment of prepayment fees......................... (1,272) -- -- -- --
Payment for redemption of preferred stock.......... -- (23,015) -- -- --
Payment for cancellation of outstanding warrants... (750) -- -- -- --
Other.............................................. -- -- -- 2,267 --
---------- ---------- --------- --------- ----------
Net cash from (used in) financing activities....... (2,100) 3,273 2,073 2,068 104,049
---------- ---------- --------- --------- ----------
NET INCREASE (DECREASE) IN CASH...................... (14) (2) 4 1 40
CASH, at beginning of period......................... 31 17 15 15 19
---------- ---------- --------- --------- ----------
CASH, at end of period............................... $ 17 $ 15 $ 19 $ 16 $ 59
---------- ---------- --------- --------- ----------
---------- ---------- --------- --------- ----------
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid during the period.................... $ 7,701 $ 7,885 $ 8,196 $ 4,095 $ 9,807
---------- ---------- --------- --------- ----------
---------- ---------- --------- --------- ----------
</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............ 122,384 $ 1,051 -- ($ 33,608) ($ 32,557)
Effect of stock split................... 6,877,616 -- -- -- --
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............ 7,000,000 1,451 2,500 (38,774) (34,823)
Net loss................................ -- -- -- (3,703) (3,703)
--------------- ----------- ----------- ------------- --------------
Balance at December 31, 1995............ 7,000,000 1,451 2,500 (42,477) (38,526)
Capital contribution (unaudited)........ 6,000,000 30,000 -- -- 30,000
Net loss (unaudited).................... -- -- -- (10,156) (10,156)
--------------- ----------- ----------- ------------- --------------
Balance at June 30, 1996 (unaudited).... 13,000,000 $ 31,451 $ 2,500 ($ 52,633) ($ 18,682)
--------------- ----------- ----------- ------------- --------------
--------------- ----------- ----------- ------------- --------------
</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)
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 June 30, 1996 and 1995 and for the
six months then ended has been prepared from the unaudited financial records of
the Company and, in the opinion of management, reflects all adjustments
necessary for a fair presentation of the financial position and results of
operations and of cash flows for the respective interim periods. All adjustments
were of a normal and recurring nature.
NOTE 3 -- PROPERTY AND EQUIPMENT:
Major classes of property and equipment consist of the following at December
31, 1994 and 1995:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1994 1995
--------- ---------
<S> <C> <C>
Outdoor advertising structures............................................................. $ 70,869 $ 76,340
Land and capitalized land lease costs...................................................... 2,167 2,232
Vehicles and equipment..................................................................... 3,751 4,712
Building and leasehold improvements........................................................ 3,019 3,150
Display faces under construction........................................................... 125 1,344
--------- ---------
79,931 87,778
Less accumulated depreciation.............................................................. 26,280 32,432
--------- ---------
Net property and equipment................................................................. $ 53,651 $ 55,346
--------- ---------
--------- ---------
</TABLE>
NOTE 4 -- LONG-TERM DEBT AND OTHER OBLIGATIONS:
Long-term debt consists of the following at December 31, 1994 and 1995:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1994 1995
--------- -----------
<S> <C> <C>
11% Senior Notes due 2003, net of discount of $902 and $839 (a)................ $ 64,098 $ 64,161
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 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.
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)
(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.
(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.
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)
(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 Ad-sign, Inc. Under this agreement, Universal purchased
approximately 160 display faces in the Chicago market in exchange for $12.5
million. The purchase price was paid in cash and was financed with borrowings
against the Acquisition Line of Credit.
NOTE 13 -- ACQUISITIONS AND FINANCING (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 -- ACQUISITIONS AND FINANCING (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.
In July 1996, the Company completed an initial public offering (IPO) of its
stock whereby the Company sold 4,630,000 shares of Common Stock at net proceeds
of $62,435,550. The proceeds were used to pay down on existing debt. In
conjunction with the IPO, the Company effected a 16-for-one stock split. The
accompanying financial statements and related notes thereto have been restated
to reflect the 16-for-one stock split for all periods presented.
In August 1996, the Company entered into an agreement to acquire all the
outstanding stock of Outdoor Advertising Holdings, Inc. for approximately $240
million. The Company expects fees and expenses associated with the deal to be
$10 million. As a result of the proposed stock purchase, Universal will acquire
signboards in the Southeast markets including Orlando, Chattanooga, Myrtle
Beach, Palm Beach, Ocala, and the East Coast and Gulf Coast areas of Florida.
The Company expects to finance this acquisition with bank borrowings. The
transaction is expected to close in October, 1996.
In September 1996, the Company acquired an option to purchase certain assets
of Tanner-Peck Outdoor for $5 million. The option is to purchase certain assets
located in and around Memphis, Tennessee and Tunica County, Mississippi during
the period from December 1, 1996 and December 31, 1996. The purchase price in
connection with purchase upon exercise of the option is approximately $71
million (including the price of the option) plus 100,000 shares of Common Stock
of the Company.
In September 1996, the Company purchased certain assets of Iowa Outdoor
Displays for approximately $1.8 million. As a result of the agreement, the
Company will acquire signboards in the Des Moines market.
Also in September 1996, the Company purchased certain assets of The Chase
Company for approximately $5.8 million. As a result of the agreement, the
Company will acquire signboards in the Dallas market.
The Company will finance the purchase price of certain of the Acquisitions
and the related refinancing of certain existing bank indebtedness of the Company
and will pay the fees and expenses associated with the Acquisitions in part
through an amended and restated revolving credit facility loan and an amended
and restated acquisition term loan of up to $300 million under the New Credit
Facility.
F-15
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
NOA Holding Company
We have audited the accompanying consolidated balance sheets of NOA Holding
Company as of May 31, 1994 and 1995, and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the three years in
the period ended May 31, 1995. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of NOA Holding
Company as of May 31, 1994 and 1995 and the consolidated results of its
operations and cash flows for each of the three years in the period ended May
31, 1995 in conformity with generally accepted accounting principles.
Ernst & Young LLP
Minneapolis, Minnesota
July 21, 1995
F-16
<PAGE>
NOA HOLDING COMPANY
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MAY 31,
--------------------
1994 1995
--------- --------- MARCH 31,
1996
------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash...................................................................... $ 1,619 $ 1,630 $ 906
Accounts receivable, net of allowance for doubtful accounts of $346,000 in
1994 and $338,000 in 1995................................................ 4,384 4,517 3,639
Other receivables......................................................... 256 262 126
Inventories............................................................... 267 282 153
Current portion of prepaid leases......................................... 1,183 1,098 1,059
Prepaid expenses.......................................................... 390 274 191
Other assets.............................................................. 150 35 210
--------- --------- ------------
Total current assets.................................................. 8,249 8,098 6,284
--------- --------- ------------
Long-term portion of prepaid leases......................................... 312 509 545
Property and equipment, net (Note 3)........................................ 23,562 22,357 14,422
Intangibles, net (Note 4)................................................... 17,505 12,374 5,715
--------- --------- ------------
Total assets.......................................................... $ 49,628 $ 43,338 $ 26,966
--------- --------- ------------
--------- --------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................................... $ 605 $ 650 $ 460
Revolving credit.......................................................... 200 -- --
Accrued interest.......................................................... 598 191 393
Other accrued expenses.................................................... 1,626 1,800 1,705
Deferred revenue.......................................................... 100 66 136
Current portion of long-term debt......................................... 6,000 608 91
--------- --------- ------------
Total current liabilities............................................. 9,129 3,315 2,785
--------- --------- ------------
Long-term debt (Note 5)..................................................... 29,657 30,324 5,072
Other long-term liabilities................................................. 577 480 521
STOCKHOLDERS' EQUITY (NOTES 8 AND 9)
Preferred stock, par value $.10 per share:
Authorized shares -- 1,000
Issued shares -- 1,000.................................................... -- -- --
Class A common stock, par value $.01 per share:
Authorized shares -- 200,000
Issued shares -- 81,693.70 in 1994 and 72,919.94 in 1995.................. 1 1 1
Class B common stock, par value $.01 per share:
Authorized shares -- 25,000
Issued shares -- 13,199.82 in 1994 and 6,172.16 in 1995................... -- -- --
Additional paid-in capital.................................................. 19,524 18,857 18,857
Retained deficit............................................................ (9,260) (9,639) (270)
--------- --------- ------------
Total stockholders' equity............................................ 10,265 9,219 18,588
--------- --------- ------------
Total liabilities and stockholders' equity............................ $ 49,628 $ 43,338 $ 26,966
--------- --------- ------------
--------- --------- ------------
</TABLE>
See notes to consolidated financial statements.
F-17
<PAGE>
NOA HOLDING COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
TEN MONTHS ENDED
YEAR ENDED MAY 31 MARCH 31,
------------------------------- --------------------
1993 1994 1995 1995 1996
--------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues............................................... $ 33,503 $ 33,784 $ 37,054 $ 30,369 $ 28,964
Less agency commissions and discounts.................. 4,394 4,082 4,553 3,730 3,570
--------- --------- --------- --------- ---------
Net revenue............................................ 29,109 29,702 32,501 26,639 25,394
Operating expenses:
Production........................................... 6,876 6,466 6,472 5,416 4,697
Real estate rental................................... 6,763 7,143 7,556 6,212 6,021
Selling.............................................. 2,364 2,773 2,545 2,108 1,803
General and administrative........................... 4,951 5,294 5,388 4,391 3,509
Depreciation and amortization........................ 6,726 6,816 7,201 6,589 5,073
--------- --------- --------- --------- ---------
27,680 28,492 29,162 24,716 21,103
--------- --------- --------- --------- ---------
Operating profit....................................... 1,429 1,210 3,339 1,923 4,291
Interest............................................... 3,613 3,479 3,062 2,601 1,769
Gain on sale of assets................................. -- -- -- -- (9,983)
--------- --------- --------- --------- ---------
Net income (loss) before income taxes.................. (2,184) (2,269) 277 (678) 12,505
Income taxes........................................... -- -- -- -- 2,441
--------- --------- --------- --------- ---------
Net income (loss)...................................... (2,184) (2,269) 277 (678) 10,064
Dividends on preferred stock........................... (594) -- -- -- (695)
--------- --------- --------- --------- ---------
Net income (loss) applicable to common shares.......... $ (2,778) $ (2,269) $ 277 $ (678) $ 9,369
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
See notes to consolidated financial statements.
F-18
<PAGE>
NOA HOLDING COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PREFERRED STOCK CLASS A COMMON CLASS B COMMON
STOCK STOCK ADDITIONAL
--------------- ---------------- ------------------ PAID-IN RETAINED
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT
------ ------ --------- ----- ---------- ------ --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at May 31, 1992................. 1,000 $-- 81,693.70 $ 1 13,199.82 $-- $19,228 $ (3,612)
Dividends declared.................... -- -- -- -- -- -- -- (594)
Net loss.............................. -- -- -- -- -- -- -- (2,184)
------ ------ --------- ----- ---------- ------ --------- --------
Balance at May 31, 1993................. 1,000 -- 81,693.70 1 13,199.82 -- 19,228 (6,390)
Dividends declared.................... -- -- -- -- -- -- -- (305)
Dividends in-kind..................... -- -- -- -- -- -- 296 (296)
Net loss.............................. -- -- -- -- -- -- -- (2,269)
------ ------ --------- ----- ---------- ------ --------- --------
Balance at May 31, 1994................. 1,000 -- 81,693.70 1 13,199.82 -- 19,524 (9,260)
Dividends in-kind..................... -- -- -- -- -- -- 961 (656)
Proceeds from issuance of stock....... -- -- -- -- 3,852.63 -- -- --
Stock redemptions relative to the sale
of Pony Panels....................... -- -- (7,599.32) -- (9,754.26) -- (1,372) --
Repurchases of stock.................. -- -- (1,174.44) -- (1,126.03) -- (270) --
Compensation expense on stock
issuances............................ -- -- -- -- -- -- 14 --
Net income............................ -- -- -- -- -- -- -- 277
------ ------ --------- ----- ---------- ------ --------- --------
Balance at May 31, 1995................. 1,000 $-- 72,919.94 $ 1 6,172.16 $ -- $18,857 $ (9,639)
Net income (unaudited)................ -- -- -- -- -- -- -- 9,369
------ ------ --------- ----- ---------- ------ --------- --------
Balance at March 31, 1996 (unaudited)... 1,000 $ 72,919.94 $ 1 6,172.16 $-- $18,857 $ (270)
------ ------ --------- ----- ---------- ------ --------- --------
------ ------ --------- ----- ---------- ------ --------- --------
</TABLE>
See notes to consolidated financial statements.
F-19
<PAGE>
NOA HOLDING COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
TEN MONTHS ENDED
YEAR ENDED MAY 31 MARCH 31,
------------------------------- --------------------
1993 1994 1995 1995 1996
--------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)........................................ $ (2,184) $ (2,269) $ 277 $ (678) $ 9,369
Adjustments to reconcile to net cash provided by
operating activities:
Depreciation and amortization.......................... 6,726 6,816 7,201 6,589 5,073
Gain on sale of assets................................. -- -- -- -- (9,983)
Deferred tax provision................................. 550
Barter revenue resulting from purchases of equipment... (108) -- -- -- --
Stock compensation expense............................. -- -- 14 -- --
Changes in operating assets and liabilities:
Accounts receivable.................................. (444) (57) (320) 118 (7)
Other current and noncurrent assets.................. (36) 628 98 66 (123)
Accounts payable..................................... 191 144 45 (108) --
Accrued expenses, deferred revenue and other......... 5 (477) (59) (231) (344)
--------- --------- --------- --------- ---------
Net cash provided by operating activities................ 4,150 4,785 7,256 5,756 4,535
--------- --------- --------- --------- ---------
INVESTING ACTIVITIES
Capital expenditures for signs........................... (928) (1,459) (1,636) (1,146) (1,164)
Proceeds from disposal of signs.......................... 150 301 51 26 106
Other capital expenditures............................... -- (242) (338) (293) (235)
Proceeds from the sale of assets......................... -- -- 542 542 21,784
--------- --------- --------- --------- ---------
Net cash used in investing activities.................... (778) (1,400) (1,381) (871) 20,491
--------- --------- --------- --------- ---------
FINANCING ACTIVITIES
Net borrowings from bank................................. -- 200 -- -- 1,500
Dividends paid........................................... (594) (296) -- -- --
Increase in preferred stock.............................. -- -- -- -- 540
Principal payments of bank debt.......................... (3,100) (3,043) (5,157) (4,357) (27,700)
Payments to revise credit agreement...................... -- -- (669) (668) --
Principal payments on notes payable...................... -- -- (38) -- (90)
--------- --------- --------- --------- ---------
Net cash used in financing activities.................... (3,694) (3,139) (5,864) (5,025) (25,750)
--------- --------- --------- --------- ---------
Net cash provided........................................ (322) 246 11 (140) (724)
Cash at beginning at of period........................... 1,695 1,373 1,619 1,619 1,630
--------- --------- --------- --------- ---------
Cash at end of period.................................... $ 1,373 $ 1,619 $ 1,630 $ 1,479 $ 906
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
Supplemental schedule of noncash operating and investing activities:
The Company sold the net assets of Pony Panels on August 31, 1994 as part
of a stock redemption. The book value of the net assets sold totaled
approximately $1,900,000.
The Company incurred long-term obligations of $270,000 for stock
redemptions made during the year ended May 31, 1995.
Purchases of equipment resulting from barter agreements totaled $108,000
for the year ended May 31, 1993. There were no such purchases in 1994 and
1995.
See notes to consolidated financial statements.
F-20
<PAGE>
NOA HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The accompanying financial statements consolidate the accounts of NOA
Holding Company (formerly McCarty Holding Company, Inc.) and its wholly-owned
subsidiary, Naegele Outdoor Advertising Company. All intercompany transactions
have been eliminated in consolidation.
REVENUE RECOGNITION
Advertising revenue is recognized monthly over the period in which
advertisement displays are posted on the advertising structures. A full month's
revenue is recognized in the first month of posting. The direct costs incurred
to produce the related advertisements are expensed as incurred. Payments
received in advance of billings are recorded as deferred revenue.
PROPERTY AND EQUIPMENT
Property and equipment are carried at cost. Maintenance, repairs and
renewals, which neither materially add to the value of the property, nor
appreciably prolong its life, are charged to expense as incurred.
Depreciation of property and equipment is provided on declining balance and
straight-line methods over useful lives of 3 to 25 years.
INTANGIBLE ASSETS
Intangibles assets are carried and are amortized on the straight-line method
over useful lives of 5 to 40 years. Goodwill represents the cost of acquired
businesses in excess of amounts assigned to tangible and intangible assets at
the date of acquisition.
INVENTORIES
Inventories consist principally of supplies and are stated at lower of cost
or market as determined on a first-in, first-out basis.
INCOME TAXES
Income taxes are computed in accordance with Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes".
BARTER TRANSACTIONS
The Company occasionally enters into agreements to trade advertising space
for goods or services. Prior to December 8, 1992, the Company did not record
such arrangements as revenue unless the items bartered for were capital items.
The impact on revenues and expense of barter transactions not recorded in fiscal
1993 was $164,000.
RECLASSIFICATION
Certain amounts previously reported in 1993 and 1994 have been reclassified
to conform to the 1995 presentation.
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-21
<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-22
<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-23
<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-24
<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-25
<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-26
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Universal Outdoor Holdings, Inc.
We have audited the accompanying statement of revenues and direct expenses
of Ad-Sign for the year ended December 31, 1995. This statement is the
responsibility of the company's management. Our responsibility is to express an
opinion on this statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statement of revenues and direct expenses
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the statement of revenues and
expenses. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the statement of revenues and direct expenses audited by us
presents fairly, in all material respects, the revenues and direct expenses of
Ad-Sign for the year ended December 31, 1995, in conformity with generally
accepted accounting principles.
PRICE WATERHOUSE LLP
June 14, 1996
Chicago, Illinois
F-27
<PAGE>
AD-SIGN
STATEMENT OF REVENUES AND DIRECT EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C>
Gross revenues..................................................... $ 2,804
Less agency commissions............................................ 224
---------
Net revenues..................................................... 2,580
---------
Direct expenses:
Direct advertising expenses...................................... 338
General and administrative expenses.............................. 402
Depreciation and amortization.................................... 454
---------
1,194
---------
Operating income................................................... $ 1,386
---------
---------
</TABLE>
See accompanying notes to the statement of revenues and direct expenses.
F-28
<PAGE>
AD-SIGN
NOTES TO THE STATEMENT OF REVENUES AND DIRECT EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1995
NOTE 1 -- BASIS OF PRESENTATION AND DESCRIPTION OF THE BUSINESS:
The Statement of Revenues and Direct Expenses for the year ended December
31, 1995 presents revenues from contracts for the 160 advertising display faces
acquired from Ad-Sign, Inc. by Universal Outdoor Holdings, Inc. (Universal) in
the first quarter of 1996. This financial statement excludes operating expenses
which are not directly related to the assets acquired by Universal. Although
Universal only acquired certain assets of Ad-Sign, Inc., this acquisition meets
the criteria for a "business acquired" in accordance with Regulation S-X, Rule
3-05 of the Securities Exchange Act of 1934.
Ad-Sign is an outdoor advertising company which owns and operates outdoor
advertising display faces principally in Chicago, Illinois. Ad-Sign sells
outdoor advertising space to national, regional and local advertisers.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES:
The preparation of the statement of revenues and direct expenses in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of revenues and
expenses during the reported period. Actual results could differ from those
estimates. The significant accounting policies used in the preparation of these
financial statements are as follows.
REVENUES AND DIRECT EXPENSES
Advertising revenues are generated from contracts with advertisers generally
covering periods of one to twelve months. Ad-Sign recognizes revenues ratably
over the contract term and defers customer prepayment of advertising fees. Costs
incurred for the production of outdoor advertising displays are recognized in
the initial month of the contract or as incurred during the contract period.
PREPAID LAND RENTS
Most of Ad-Sign's outdoor advertising structures are located on leased land.
Land rents are typically paid in advance for periods ranging from one to twelve
months. Prepaid land rents are expenses ratably over the related rental term.
NOTE 3 -- SUBSEQUENT EVENT:
In the first quarter of 1996, Ad-Sign, Inc. entered into an asset purchase
agreement with Universal Outdoor Holdings, Inc. Under this agreement, Universal
purchased 160 advertising display faces in the Chicago market for $12.5 million.
F-29
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
POA Acquisition Corporation
We have audited the accompanying balance sheets of POA Acquisition
Corporation as of December 31, 1995 and 1994, and the related statements of
operations, shareholder's equity, and cash flows for each of the three years in
the period ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of POA Acquisition Corporation
at December 31, 1995 and 1994, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1995 in
conformity with generally accepted accounting principles.
As discussed in Note 2 to the financial statements, the 1994 financial
statements have been restated to reflect the correction of an error in the
calculation of the provision for income taxes.
Ernst & Young LLP
Orlando, Florida
April 1, 1996, except for Note 16
as to which the date is
August 27, 1996
F-30
<PAGE>
POA ACQUISITION CORPORATION
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1995
-------------- JUNE 30
--------------
1994 1996
-------------- --------------
(RESTATED) (UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash........................................................... $ 727,690 $ 811,352 $ 2,873,233
Accounts receivable............................................ 4,482,520 5,631,320 6,207,868
Prepaid expenses............................................... 1,698,539 1,822,964 2,471,868
Prepaid income taxes........................................... 51,629 43,875 --
Deferred income taxes.......................................... 2,596,951 3,213,848 3,213,848
-------------- -------------- --------------
Total current assets......................................... 9,557,329 11,523,359 14,766,817
Deferred income taxes............................................ 14,269,374 11,835,410 10,730,410
Property, plant and equipment, net............................... 20,112,931 23,005,058 23,433,086
Other assets..................................................... 46,266,092 41,854,491 49,337,612
-------------- -------------- --------------
$ 90,205,726 $ 88,218,318 $ 98,267,925
-------------- -------------- --------------
-------------- -------------- --------------
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Accounts payable and accrued expenses.......................... $ 3,432,619 $ 2,992,112 $ 3,419,277
Current portion of long-term debt.............................. 8,061,214 9,109,419 9,109,419
-------------- -------------- --------------
Total current liabilities.................................... 11,493,833 12,101,531 12,528,696
Long-term debt, less current portion............................. 70,210,555 65,603,203 73,947,859
Shareholder's equity
Common stock, $.01 par value:
Authorized shares -- 2,000,000
Issued and outstanding shares -- 100 in 1995 and 1994........ 1 1 1
Additional paid-in capital..................................... 45,419,909 45,419,909 45,419,909
Accumulated deficit............................................ (36,918,572) (34,906,326) (33,628,540)
-------------- -------------- --------------
Total shareholder's equity................................... 8,501,338 10,513,584 11,791,370
-------------- -------------- --------------
$ 90,205,726 $ 88,218,318 $ 98,267,925
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
See accompanying notes.
F-31
<PAGE>
POA ACQUISITION CORPORATION
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
FOR THE YEARS ENDED DECEMBER 31, ENDED JUNE 30,
---------------------------------------------- ------------------------------
1993 1994 1995 1995 1996
-------------- -------------- -------------- -------------- --------------
(RESTATED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Advertising revenues........... $ 37,456,464 $ 41,737,266 $ 45,830,359 $ 21,563,122 $ 24,860,268
Less commissions and
discounts..................... (3,362,525) (3,865,492) (4,393,319) (2,047,289) (2,249,876)
-------------- -------------- -------------- -------------- --------------
34,093,939 37,871,774 41,437,040 19,515,833 22,610,392
-------------- -------------- -------------- -------------- --------------
Expenses:
Operating.................... 10,493,219 11,151,065 11,775,891 5,775,612 6,531,119
Selling, general and
administrative.............. 9,413,920 10,283,413 10,698,212 5,028,685 5,999,987
Amortization................. 4,853,633 5,208,589 5,061,849 2,540,689 2,540,689
Depreciation................. 2,871,608 2,878,346 2,545,182 1,231,195 1,461,016
-------------- -------------- -------------- -------------- --------------
27,632,380 29,521,413 30,081,134 14,576,181 16,532,811
-------------- -------------- -------------- -------------- --------------
Income from operations......... 6,461,559 8,350,361 11,355,906 4,939,652 6,077,581
-------------- -------------- -------------- -------------- --------------
Other income (expense):
Interest expense............. (5,866,923) (7,012,646) (7,346,241) (3,710,133) (3,691,754)
Loss on sale of a division... -- (494,824) -- -- --
Gain (loss) on disposal of
property and equipment,
net......................... (446,151) (329,056) (64,332) (155,276) 46,959
Interest and other income.... 167,360 24,412 42,244 -- --
-------------- -------------- -------------- -------------- --------------
(6,145,714) (7,812,114) (7,368,329) (3,865,409) (3,644,795)
-------------- -------------- -------------- -------------- --------------
Income before income taxes and
extraordinary item............ 315,845 538,247 3,987,577 1,074,243 2,432,786
Provision for income taxes:
Current...................... 100,158 37,572 158,264 42,600 96,500
Deferred..................... 478,263 1,256,910 1,817,067 489,400 1,108,500
-------------- -------------- -------------- -------------- --------------
578,421 1,294,482 1,975,331 532,000 1,205,000
-------------- -------------- -------------- -------------- --------------
Income (loss) before
extraordinary item............ (262,576) (756,235) 2,012,246 542,243 1,227,786
Extraordinary item:
(Loss) gain on early
extinguishment of debt, net
of income tax expense
(benefit) of ($147,350) and
$50,000..................... -- (244,552) -- -- 50,000
-------------- -------------- -------------- -------------- --------------
Net income (loss).............. $ (262,576) $ (1,000,787) $ 2,012,246 $ 542,243 $ 1,277,786
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
</TABLE>
See accompanying notes.
F-32
<PAGE>
POA ACQUISITION CORPORATION
STATEMENTS OF SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
TOTAL
COMMON PREFERRED ADDITIONAL ACCUMULATED SHAREHOLDER'S
STOCK STOCK PAID-IN CAPITAL DEFICIT EQUITY
--------- ------------ --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1993.......... $ 1 $ 12,237 $ 57,644,726 $ (28,262,869) $ 29,394,095
Net loss for 1993................. -- -- -- (262,576) (262,576)
--------- ------------ --------------- --------------- ---------------
Balances at December 31, 1993....... 1 12,237 57,644,726 (28,525,445) 29,131,519
Net loss for 1994 (restated)...... -- -- -- (1,000,787) (1,000,787)
Issuance of preferred stock....... -- 550,000 4,950,000 -- 5,500,000
Redemption of preferred stock..... -- (562,237) (17,174,817) -- (17,737,054)
Cumulative preferred stock
dividends........................ -- -- -- (7,392,340) (7,392,340)
--------- ------------ --------------- --------------- ---------------
Balance at December 31, 1994
(restated)......................... 1 -- 45,419,909 (36,918,572) 8,501,338
Net income for 1995............... -- -- -- 2,012,246 2,012,246
--------- ------------ --------------- --------------- ---------------
Balance at December 31, 1995........ 1 -- 45,419,909 (34,906,326) 10,513,584
Net income for the six months ended
June 30, 1996 (unaudited).......... -- -- -- 1,277,786 1,277,786
--------- ------------ --------------- --------------- ---------------
$ 1 $ -- $ 45,419,909 $ 33,628,540 $ 11,791,370
--------- ------------ --------------- --------------- ---------------
--------- ------------ --------------- --------------- ---------------
</TABLE>
See accompanying notes.
F-33
<PAGE>
POA ACQUISITION CORPORATION
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
FOR THE YEARS ENDED DECEMBER 31, ENDED JUNE 30
----------------------------------------- --------------------------
1993 1995 1995 1996
------------ ------------ ------------ ------------
1994
-------------
(RESTATED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)........................... $ (262,576) $ (1,000,787) $ 2,012,246 $ 542,243 $ 1,277,786
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Amortization.............................. 4,853,633 5,208,589 5,061,849 2,540,689 2,540,689
Depreciation.............................. 2,871,608 2,878,346 2,545,182 1,231,194 1,461,016
Deferred income taxes..................... 478,263 1,123,867 1,817,067 489,400 1,108,500
Loss on sale of division.................. 1,367,286 494,824 -- -- --
Loss on disposal of property and
equipment, net........................... 446,151 329,056 64,332 3,100 (46,959)
Provision for bad debts................... 122,694 375,190 64,285 -- --
Changes in operating assets and
liabilities:
Increase in accounts receivable......... (677,585) (523,087) (1,213,085) (418,229) (576,547)
Increase in prepaid expenses............ (68,365) (253,802) (124,425) (181,128) (652,406)
Decrease (increase) in prepaid income
taxes.................................. (78,843) (27,786) 7,754 -- 43,875
Decrease (increase) in other assets..... 862 (2,511,167) (500,248) -- --
(Increase) decrease in accounts payable
and accrued expenses................... 867,753 772,507 (440,507) 15,570 427,165
------------ ------------- ------------ ------------ ------------
Net cash provided by operating activities... 9,920,881 6,865,750 9,294,450 4,222,839 5,583,119
INVESTING ACTIVITIES
Proceeds from sale of division.............. -- 2,000,000 -- -- --
Proceeds from disposal of property and
equipment.................................. 160,450 101,463 227,854 155,276 367,500
Purchases of property, plant and
equipment.................................. (2,586,418) (1,787,528) (5,729,495) (777,279) (2,209,588)
Purchases of intangibles.................... -- -- (150,000) -- (10,023,806)
------------ ------------- ------------ ------------ ------------
Net cash (used in) provided by investing
activities................................. (2,425,968) 313,935 (5,651,641) (622,003) (11,865,894)
FINANCING ACTIVITIES
Proceeds from long-term borrowings.......... 133,500 83,023,442 4,500,000 1,000,000 13,147,633
Payments of long-term debt.................. (8,151,871) (70,696,101) (8,059,147) (4,029,691) (4,802,977)
Proceeds from issuance of preferred stock... -- 5,500,000 -- -- --
Redemption of preferred stock............... -- (17,737,054) -- -- --
Dividends paid.............................. -- (7,392,340) -- -- --
------------ ------------- ------------ ------------ ------------
Net cash used in financing activities....... (8,018,371) (7,302,053) (3,559,147) (3,029,691) 8,344,656
------------ ------------- ------------ ------------ ------------
Net increase (decrease) in cash............. (523,458) (122,368) 83,662 571,145 2,061,881
Cash at beginning of year................... 1,373,516 850,058 727,690 727,690 811,352
------------ ------------- ------------ ------------ ------------
Cash at end of year......................... $ 850,058 $ 727,690 $ 811,352 $ 1,298,835 2,873,233
------------ ------------- ------------ ------------ ------------
------------ ------------- ------------ ------------ ------------
</TABLE>
See accompanying notes.
F-34
<PAGE>
POA ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE 1 -- ORGANIZATION
On January 31, 1989, Outdoor Advertising Holdings, Inc. (Holdings)
contributed its shares of POA Acquisition Corporation (Company) common stock,
along with cash, to Peterson Acquisition, Inc. (Acquisition), a wholly-owned
subsidiary of Holdings. Acquisition immediately purchased the Company's
outstanding common shares under the terms of an Agreement and Plan of Merger
dated December 21,1988. Acquisition was subsequently merged into the Company and
its outstanding shares were converted into one hundred shares of the Company's
common stock.
The merger was accounted for as a purchase with a purchase price of
$33,279,550 (including acquisition costs of $4,448,023). Certain individuals,
who were former shareholders of the Company, own shares of Holdings and are
included in the management of Holdings and the Company. The Company allocated
the purchase price among the assets acquired and liabilities assumed, based upon
the respective fair values of the assets and liabilities, with the excess
purchase price recorded as goodwill.
The Company provides outdoor advertising services in the states of Florida,
South Carolina and Tennessee. Approximately 70% of the business is in the State
of Florida.
NOTE 2 -- RESTATEMENT OF PRIOR PERIOD FINANCIAL STATEMENTS
In October 1994, the Company sold certain assets, liabilities and the
business of its Orangeburg Division. In determining the gain or loss on the sale
for tax purposes, approximately $2,500,000 of goodwill was incorrectly included
in the calculation. The 1994 financial statements have been restated to reflect
the correction of this error resulting in a decrease in income before
extraordinary item and an increase in net loss of $956,000 from the amounts
previously reported.
NOTE 3 -- ACCOUNTING POLICIES
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost. Depreciation for financial
reporting purposes is computed by the straight-line method over the estimated
useful lives of the various classes of assets as follows:
<TABLE>
<S> <C>
Buildings...................................................... 28-30 years
Advertising structures......................................... 12 years
Equipment...................................................... 2-7 years
</TABLE>
The Company uses the accelerated Cost Recovery System and the Modified
Accelerated Cost Recovery System for income tax reporting purposes.
OTHER ASSETS
Loan costs incurred in connection with obtaining financing have been
deferred and are being amortized over the life of the loans. Goodwill represents
the excess of the cost of acquired businesses over the fair market value at
acquisition of the specifically identified assets.
Intangible assets are being amortized over the following periods:
<TABLE>
<S> <C>
Advertising structure leases.................................... 8-10 years
Goodwill........................................................ 40 years
Deferred loan costs............................................. 1-6 years
</TABLE>
F-35
<PAGE>
POA ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
NOTE 3 -- ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
The Company follows the liability method of accounting for income taxes.
Deferred income taxes relate to the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.
ADVERTISING REVENUE
Advertising revenue is recognized ratably on a monthly basis over the period
in which advertisement displays are posted on the advertising structures.
ADVERTISING STRUCTURE RENTALS
Advertising structure lease rentals are generally paid in advance and
charged to expense over the life of the lease.
INTEREST RATE SWAP AND INTEREST CAP AGREEMENTS
The Company has entered into interest rate swap and interest rate cap
agreements to effectively convert a portion of its variable-rate borrowings into
fixed-rate obligations. The amount to be received or paid related to these
agreements is recognized over the lives of the agreements as an adjustment to
interest expense.
BARTER TRANSACTIONS
The Company enters into agreements to provide outdoor advertising services
in exchange for various goods and services of their customers. Revenue
recognized from these transactions approximated $1,497,000, $830,000 and $0 in
1995, 1994 and 1993, respectively.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
FINANCIAL INSTRUMENTS
The carrying amounts of cash, accounts receivable, accounts payable and
long-term debt at December 31, 1995 approximate fair value.
ACCOUNTING STANDARD
In March 1995, the FASB issued Statement No. 121 ("SFAS No. 121"),
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," which requires impairment losses to be recorded on long-lived
assets used in operations when indicators of impairment are present and the
undiscounted cash flows estimated to be generated by those assets are less than
the assets' carrying amount. Statement 121 also addresses the accounting for
long-lived assets that are expected to be disposed of. As of December 31, 1995
there were no indications of impairment that would effect the carrying value of
assets.
INTERIM FINANCIAL INFORMATION
The interim financial information as of June 30, 1996 and 1995 and for the
six months then ended has been prepared from the unaudited financial records of
the Company and, in the opinion of management, reflects all adjustments
necessary for a fair presentation of the financial position and results of
operations and of cash flows for the respective interim periods. All adjustments
were of a normal and recurring nature.
F-36
<PAGE>
POA ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
NOTE 4 -- ACCOUNTS RECEIVABLE
Accounts receivable consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1995 1994
------------- -------------
<S> <C> <C>
Trade..................................................................... $ 5,701,472 $ 4,493,568
Employee notes and other.................................................. 463,300 458,119
------------- -------------
6,164,772 4,951,687
Less allowance for uncollectible accounts................................. (533,452) (469,167)
------------- -------------
$ 5,631,320 $ 4,482,520
------------- -------------
------------- -------------
</TABLE>
Included in employee notes and other are notes and accrued interest
aggregating $299,269 in 1995 and $279,473 in 1994 from common shareholders.
NOTE 5 -- PREPAID EXPENSES
Prepaid expenses consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1995 1994
------------- -------------
<S> <C> <C>
Lease rental payments..................................................... $ 1,261,795 $ 1,065,874
Maintenance supplies...................................................... 94,581 133,268
Other..................................................................... 466,588 499,397
------------- -------------
$ 1,822,964 $ 1,698,539
------------- -------------
------------- -------------
</TABLE>
NOTE 6 -- PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost and consist of the
following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------
1995 1994
--------------- ---------------
<S> <C> <C>
Land................................................................. $ 2,466,681 $ 2,466,681
Buildings............................................................ 2,074,084 2,011,256
Advertising structures............................................... 31,857,123 27,446,874
Equipment............................................................ 3,602,942 2,978,167
--------------- ---------------
40,000,830 34,902,978
Less accumulated depreciation........................................ (16,995,772) (14,790,047)
--------------- ---------------
$ 23,005,058 $ 20,112,931
--------------- ---------------
--------------- ---------------
</TABLE>
NOTE 7 -- OTHER ASSETS
Other assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------
1995 1994
--------------- ---------------
<S> <C> <C>
Goodwill............................................................. $ 45,239,949 $ 45,239,949
Advertising structure leases, at cost................................ 26,096,863 26,021,863
Non-compete and other, at cost....................................... 6,495,641 6,420,390
Deferred loan costs.................................................. 3,403,068 2,903,068
--------------- ---------------
81,235,521 80,585,270
Less accumulated amortization........................................ (39,381,027) (34,319,178)
--------------- ---------------
$ 41,854,494 $ 46,266,092
--------------- ---------------
--------------- ---------------
</TABLE>
F-37
<PAGE>
POA ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
NOTE 8 -- ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1995 1994
------------- -------------
<S> <C> <C>
Trade accounts payable.................................................... $ 1,285,008 $ 1,794,814
Accrued compensation and other............................................ 1,677,573 1,623,766
Accrued interest.......................................................... 29,531 14,039
------------- -------------
$ 2,992,112 $ 3,432,619
------------- -------------
------------- -------------
</TABLE>
NOTE 9 -- LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1995 1994
-------------- --------------
<S> <C> <C>
Notes payable to banks................................................. $ 74,500,000 $ 78,000,000
Other long-term debt................................................... 212,622 271,769
-------------- --------------
74,712,622 78,271,769
Less amounts due within one year....................................... (9,109,419) (8,061,214)
-------------- --------------
$ 65,603,203 $ 70,210,555
-------------- --------------
-------------- --------------
</TABLE>
In January 1994, the Company refinanced its notes payable to banks, paid off
the unsecured subordinated notes payable to investment banking firms and
redeemed the 14% Series A senior redeemable cumulative preferred stock with term
notes and revolving credit notes totaling $83,000,000 and $7,000,000,
respectively. Notes payable to banks are term notes and revolving credit notes
are secured by all assets and common stock of the Company. Interest is charged
on borrowings under the term notes and revolving credit notes at the Company's
discretion at either a Eurodollar base rate or an ABR rate determined in
accordance with the terms of the Credit Agreement. Interest on the term notes is
currently charged at a Eurodollar base rate determined at each interest renewal
period. The December 31, 1995 term notes consist of a $54,500,000 borrowing at
8.19% and a $20,000,000 borrowing at 10.94%. On December 29, 1995, the Company
amended its Credit Agreement to allow for an additional $50,000,000 line of
credit available for acquisitions. No borrowings under this amendment have
occurred. Long-term debt maturities over the next five years are approximately
as follows: 1996 -- $9,107,000: 1997 -- $11,051,000: 1998 -- $13,048,000: 1999
- -- $21,505,000: 2000 -- $20,000,000 and $0 thereafter.
The refinancing of the notes payable in 1994 resulted in an extraordinary
loss of $391,902 as a result of writing-off the unamortized portion of deferred
loan costs related to those borrowings.
The Company entered into interest rate swap and interest rate cap agreements
that expire in 1997 with a notional amount of $40,000,000 at December 31, 1995
to reduce the impact of changes in interest rates on its variable rate long-term
debt.
The counterpart to the agreements is a major financial institution. In the
event a counterparty fails to meet the terms of an interest rate swap or
interest rate cap agreement, the Company's exposure is limited to the interest
rate differential. Credit loss from counterparty nonperformance is not
anticipated.
The Company paid approximately $7,331,000, $7,570,000 and $4,301,000 in cash
for interest in 1995, 1994 and 1993, respectively.
F-38
<PAGE>
POA ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
NOTE 10 -- EMPLOYEE BENEFITS PLANS
The Company has a discretionary defined contribution plan which provides
retirement benefits to substantially all employees. The contributions made to
this plan were approximately $100,000 in 1995 and 1994, respectively and
$110,000 in 1993.
NOTE 11 -- INCOME TAXES
At December 31, 1995, the Company had federal and state net operating loss
carryforwards of approximately $43,600,000 for income tax purposes available to
offset future taxable income through 2006 to 2009. The Company was subject to
alternative minimum tax which is imposed at a 20% rate on the corporation's
alternative minimum taxable income in 1995. The alternative minimum tax expense
for 1995 was $132,800 and $100,158 for 1993. The tax paid will be allowed as a
credit carryover against regular tax in future periods. Net operating loss
carryforwards for alternative minimum tax purposes are approximately
$38,900,000. For financial reporting purposes, no valuation allowance has been
recognized to offset the deferred tax assets related to these carryforwards. The
tax benefit of any net operating losses which are not utilized will be
recognized as a current year expense in the year of expiration.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets as of December 31, 1995, are attributable to
the bad debt allowance, depreciation and amortization differences, alternative
minimum tax, and net operating loss carryforwards.
Components of the provision for income taxes for each year are as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-----------------------------------------
1995 1993
------------- 1994 -----------
-------------
(RESTATED)
<S> <C> <C> <C>
Current
Federal.................................................... $ 132,754 $ 11,522 $ 100,158
State...................................................... 25,510 26,050 --
------------- ------------- -----------
Total current................................................ $ 158,264 $ 37,572 $ 100,158
------------- ------------- -----------
------------- ------------- -----------
Deferred:
Federal.................................................... $ 1,532,587 $ 1,073,054 $ 432,500
State...................................................... 284,480 183,856 45,763
------------- ------------- -----------
Total deferred............................................... $ 1,817,067 $ 1,256,910 $ 478,263
------------- ------------- -----------
------------- ------------- -----------
</TABLE>
The provision for income taxes included in the statements of operations
differs from the amounts computed by applying the statutory rate to income
before income taxes as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------
1995 1993
------------- 1994 -----------
-------------
(RESTATED)
<S> <C> <C> <C>
Income tax expense at the statutory rate..................... $ 1,355,776 $ 183,004 $ 107,387
Goodwill..................................................... 387,017 942,732 481,136
Meals and entertainment...................................... 17,432 21,214 7,959
State taxes, net of federal benefit.......................... 204,593 138,538 30,204
Other........................................................ 10,513 8,994 (48,265)
------------- ------------- -----------
$ 1,975,331 $ 1,294,482 $ 578,421
------------- ------------- -----------
------------- ------------- -----------
</TABLE>
F-39
<PAGE>
POA ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
NOTE 11 -- INCOME TAXES (CONTINUED)
Components of deferred tax assets for each year are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1995
-------------- 1994
--------------
(RESTATED)
<S> <C> <C>
Current deferred tax assets:
Net operating loss carryforward...................................... $ 3,000,000 $ 2,444,000
Charitable contribution carryforward................................. 2,050 --
Prepaid expenses..................................................... (82,331) (114,184)
Bad debt allowance................................................... 254,347 176,407
Accrued liabilities.................................................. 39,782 90,728
-------------- --------------
Total current deferred tax assets...................................... $ 3,213,848 $ 2,596,951
-------------- --------------
-------------- --------------
Noncurrent deferred tax assets:
Property and equipment............................................... $ 141,450 $ 87,150
Intangible assets.................................................... (1,961,941) (2,224,357)
Alternative minimum tax credit....................................... 276,112 148,370
Net operating loss carryforward...................................... 13,391,143 16,269,565
State income taxes................................................... (11,354) (11,354)
-------------- --------------
$ 11,835,410 $ 14,269,374
-------------- --------------
-------------- --------------
</TABLE>
The Company paid income taxes of $149,000, $48,000 and $104,000 in 1995,
1994 and 1993, respectively.
NOTE 12 -- COMMITMENTS AND CONTINGENCIES
LEASES
The Company leases office space under various non-cancelable operating
leases. Minimum lease payments under these leases are approximately as follows:
1996 -- $151,000; 1997 -- $136,000 and $0 thereafter. The Company also leases
land for advertising structures under operating leases which are cancelable or
which have terms of less than one year.
Rent expense charged to operations amounted to approximately $7,461,000 in
1995, $6,947,000 in 1994 and $6,630,000 in 1993.
NOTE 13 -- PREFERRED STOCK
Holdings has issued various classes of preferred stock which provide for,
among other things, cumulative dividends which accrue quarterly whether or not
declared by the board of directors, and a liquidation value which includes
accrued dividends. This liquidation value amounted to approximately $70,711,000
at December 31, 1995 and $66,029,000 at December 31, 1994, of which
approximately $28,110,000 and $23,428,000, respectively, is accrued but unpaid
dividends. At December 31, 1995 Holdings had no assets, other than its
investment in the Company. The Holdings preferred stock does not contain
mandatory redemption features.
NOTE 14 -- ACQUISITIONS
During the year ended December 31, 1995, the Company acquired the assets of
three separate advertising entities. Under the terms of the transactions, the
Company acquired certain fixed assets, customer lists and advertising leases of
these entities for a combined total of $3,710,000. In connection with the
acquisition of the customer lists and advertising leases, intangible assets were
recorded at a total of $150,000. The customer lists and advertising leases were
assigned useful lives of three and ten years, respectively.
F-40
<PAGE>
POA ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
NOTE 15 -- SUBSEQUENT EVENTS
ACQUISITION
On March 29, 1996, the Company purchased the stock of a company that
provides outdoor advertising services for $710,000. The Acquisition has been
accounted for by the purchase method.
COMMITMENT
The Company has entered into an agreement to purchase the capital stock of a
company that provides outdoor advertising services. The purchase price is
$10,000,000 which will be financed with the Company's Term C notes. The Company
anticipates accounting for this Acquisition by the purchase method.
NOTE 16 -- SALE OF THE COMPANY
On August 27, 1996, the Company's parent, Holdings, entered into an
Agreement and Plan of Merger to which it agreed to sell the outstanding capital
stock of Holdings for approximately $240,000,000 in cash.
F-41
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Members
Tanner-Peck, L.L.C.
Memphis, Tennessee
We have audited the accompanying combined balance sheet of Tanner-Peck,
L.L.C. (the "Company") as of December 31, 1995, and the related combined
statements of income, changes in members' equity and cash flows for the year
then ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion of these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Tanner-Peck, L.L.C. as of
December 31, 1995, and the results of its operations and its cash flows for the
year then ended, in conformity with generally accepted accounting principles.
February 23, 1996, except for Note 8 which is
as of September 12, 1996
BDO Seidman, LLP
Memphis, TN
F-42
<PAGE>
TANNER-PECK, L.L.C.
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
1995
-------------- JUNE 30,
1996
--------------
(UNAUDITED)
<S> <C> <C>
ASSETS (NOTE 7):
Current
Cash and cash equivalents (Note 3)............................................. $ 2,175,396 $ 1,712,501
Trade accounts receivable (Note 2), less allowance for doubtful accounts of
$57,934 and $177,765.......................................................... 1,312,635 2,277,222
Other receivables.............................................................. 9,496 33,955
Prepaid expenses............................................................... 320,663 270,324
-------------- --------------
Total current assets............................................................. 3,818,190 4,294,002
Property and equipment, less accumulated depreciation
(Note 4)........................................................................ 21,197,368 20,726,722
-------------- --------------
$ 25,015,558 $ 25,020,724
-------------- --------------
-------------- --------------
LIABILITIES AND MEMBERS' EQUITY
Current liabilities:
Trade accounts payable......................................................... $ 412,834 $ 8,244
Accrued expenses............................................................... 213,181 262,886
Current maturities of long-term debt (Note 5).................................. 49,471 51,500
-------------- --------------
Total current liabilities........................................................ 675,486 322,630
Long-term debt, less current maturities (Note 5)................................. 1,134,849 1,108,420
Minority interest................................................................ 34,671 39,858
-------------- --------------
Total liabilities................................................................ 1,845,006 1,470,908
Commitments and contingencies (Note 7)...........................................
Members' equity (Note 1)......................................................... 23,170,552 23,549,816
-------------- --------------
$ 25,015,558 $ 25,020,724
-------------- --------------
-------------- --------------
</TABLE>
See accompanying summary of accounting policies and notes to financial
statements.
F-43
<PAGE>
TANNER-PECK, L.L.C.
COMBINED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE
FOR THE 30,
YEAR ENDED ------------------------------
DECEMBER 31, 1995 1995 1996
------------------- -------------- --------------
(UNAUDITED)
<S> <C> <C> <C>
Billboard revenue........................................... $ 8,099,188 $ 3,620,866 $ 7,717,336
Cost of sales............................................... (3,679,087) (1,627,763) (3,955,512)
------------------- -------------- --------------
Gross profit................................................ 4,420,101 1,993,103 3,761,824
Selling, general and administrative expenses................ (1,746,678) (665,149) (1,361,049)
------------------- -------------- --------------
Operating income............................................ 2,673,423 1,327,954 2,400,775
Interest expense............................................ (582,705) (280,099) (47,091)
Minority interest........................................... (14,080) (7,862) (5,188)
------------------- -------------- --------------
Net income.................................................. $ 2,076,638 $ 1,039,993 $ 2,348,496
------------------- -------------- --------------
------------------- -------------- --------------
Pro forma:
Historical net income..................................... $ 2,076,638 $ 1,039,993 $ 2,348,496
Pro forma income taxes (Note 6)........................... 801,000 401,000 901,000
------------------- -------------- --------------
Pro forma net income...................................... $ 1,275,638 $ 638,993 $ 1,447,496
------------------- -------------- --------------
------------------- -------------- --------------
</TABLE>
See accompanying summary of accounting policies and notes to financial
statements.
F-44
<PAGE>
TANNER-PECK, L.L.C.
COMBINED STATEMENTS OF CHANGES IN MEMBERS' EQUITY
<TABLE>
<CAPTION>
PAID-IN RETAINED
CAPITAL EARNINGS TOTAL EQUITY
-------------- ------------- --------------
<S> <C> <C> <C>
Members' equity, December 31, 1994................................ $ 1,343,946 $ -- $ 1,343,946
Net income for 1995............................................... -- 2,076,638 2,076,638
Capital contributions (Note 1).................................... 20,393,521 -- 20,393,521
Distributions to members.......................................... -- (643,553) (643,553)
-------------- ------------- --------------
Members' equity, December 31, 1995................................ $ 21,737,467 $ 1,433,085 $ 23,170,552
-------------- ------------- --------------
Unaudited:
Members equity, December 31, 1994............................... $ 1,343,946 $ -- $ 1,343,946
Net income for the six months ended June 30, 1995............... -- 1,039,993 1,039,993
Distributions for members....................................... -- (390,000) (390,000)
-------------- ------------- --------------
Members' equity June 30, 1995................................... 1,343,946 649,993 1,993,939
-------------- ------------- --------------
-------------- ------------- --------------
Members' equity, December 31, 1995.............................. $ 21,737,467 $ 1,433,085 $ 23,170,552
Net income for the six months ended June 30, 1996............... -- 2,348,496 2,348,496
Distributions to members........................................ -- (1,969,232) (1,969,232)
-------------- ------------- --------------
Members' equity, June 30, 1996.................................. $ 21,737,467 $ 1,812,349 $ 23,549,816
-------------- ------------- --------------
-------------- ------------- --------------
</TABLE>
See accompanying summary of accounting policies and notes to financial
statements.
F-45
<PAGE>
TANNER-PECK, L.L.C.
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
FOR THE JUNE 30,
YEAR ENDED ----------------------------
DECEMBER 31, 1995 1995 1996
------------------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................................. $ 2,076,638 $ 1,039,992 $ 2,348,496
Depreciation................................................ 579,977 238,071 762,210
Provision for bad debts..................................... 190,577 49,000 125,000
Minority interest........................................... 14,080 7,862 5,188
Gain on disposal of assets.................................. (1,176) -- --
Changes in operating assets and liabilities:
Trade accounts receivable................................. (549,837) (243,061) (1,089,587)
Prepaid expenses and other accounts receivables........... (149,182) (239,218) 25,880
Trade accounts payable.................................... 190,305 (200,061) (404,590)
Accrued expenses.......................................... 90,740 (99,557) 49,705
------------------- ------------- -------------
Net cash provided by operations......................... 2,442,122 553,028 1,822,302
------------------- ------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Memphis division of Naegele Outdoor Advertising
Company (Note 1)........................................... (14,020,096)
Capital expenditures........................................ (940,622) (559,382) (291,565)
Proceeds from sale of property and equipment................ 16,977 --
------------------- ------------- -------------
Net cash used for investing activities.................... (14,943,741) (559,382) (291,565)
------------------- ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash contributed by members (Note 1)........................ 20,393,521 -- --
Principal advances on long-term debt........................ 5,194,649 3,085,884 --
Principal payments on long-term debt........................ (10,318,097) (2,470,990) (24,400)
Distributions to members.................................... (643,553) (390,000) (1,969,232)
------------------- ------------- -------------
Net cash provided by (used for) financing activities.......... 14,626,520 224,894 (1,993,632)
------------------- ------------- -------------
Net increase (decrease) in cash and cash equivalents.......... 2,124,901 218,540 (462,895)
Cash and cash equivalents, at beginning of period............. 50,495 50,495 2,175,396
------------------- ------------- -------------
Cash and cash equivalents, at end of period................... $ 2,175,396 $ 269,035 $ 1,712,501
------------------- ------------- -------------
------------------- ------------- -------------
SUPPLEMENTAL DISCLOSURE:
Interest paid............................................... $ 97,029 $ 48,976 $ 47,088
------------------- ------------- -------------
------------------- ------------- -------------
</TABLE>
See accompanying summary of accounting policies and notes to financial
statements.
F-46
<PAGE>
TANNER-PECK, L.L.C.
SUMMARY OF ACCOUNTING POLICIES
<TABLE>
<S> <C>
GENERAL Tanner-Peck, L.L.C. was organized on January 12, 1995. Prior
to its organization as a limited liability company, the
entity conducted business as Tanner-Peck Outdoor Sign (Note
3).
BASIS OF COMBINATION The combined financial statements include the outdoor
advertising business of Tanner-Peck, L.L.C. (the "Company")
and TOA Enterprises, L.P. The ownership of TOA Enterprise,
L.P. includes a 5% minority interest which has been provided
for in the combined financial statements. These combined
financial statements do not include other assets or
liabilities of the individual member owners.
ACQUISITION Effective November 29, 1995, the Company acquired the assets
and assumed certain liabilities of the Memphis division of
Naegele Outdoor Advertising Company ("Naegele") (Note 1).
The acquisition was accounted for using the purchase method
of accounting. Accordingly, the assets acquired and
liabilities assumed were recorded at their respective
estimated fair values, and the results of operations of
Naegele since the acquisition data have been included in the
combined financial statements of the Company.
USE OF ESTIMATES The preparation of the Company's financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of
revenues and expenses during the reporting period. The most
significant of these estimates is the allowance for doubtful
accounts (Note 2).
REVENUE RECOGNITION The Company enters into contracts with its customers to
provide billboard and poster advertising for terms ranging
from one month to five years. Revenue under these contracts
is recognized each month as customers are invoiced for
leased advertising space provided.
PROPERTY, EQUIPMENT AND
DEPRECIATION Property and equipment are stated at cost. Depreciation is
computed using the straight-line method over the following
estimated useful lives:
Years
------------------------------------------------------------
Billboard structures 15
Machinery and equipment 7
Office furniture and equipment 7
Vehicles 7
------------------------------------------------------------
Leasehold improvements are amortized over the shorter of the
useful life of the improvement or the term of the lease.
</TABLE>
F-47
<PAGE>
TANNER-PECK, L.L.C.
SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
<TABLE>
<S> <C>
TAXES ON INCOME The combined companies are treated as a "pass through"
entity for income tax purposes. Accordingly, the companies
pay no taxes on income and each member, partner or
shareholder includes their portion of income in their
respective tax returns.
OPERATING LEASES The Company leases the sites upon which its billboards are
located under various operating lease agreements. In
general, these leases provide for monthly rental payments
and rental expense is recognized each month.
STATEMENTS OF CASH FLOWS For purposes of the statements of cash flows, the Company
classifies cash on hand and in checking and savings accounts
as cash equivalents.
</TABLE>
INTERIM FINANCIAL INFORMATION
The interim financial information as of June 30, 1996 and 1995 and for the
six months then ended has been prepared from the unaudited financial records of
the Company and, in the opinion of management, reflects all adjustments
necessary for a fair presentation of the financial position and results of
operations and of cash flows for the respective interim periods. All adjustments
were of a normal and recurring nature.
F-48
<PAGE>
TANNER-PECK, L.L.C.
NOTES TO COMBINED FINANCIAL STATEMENTS
NOTE 1 -- ACQUISITION AND RECAPITALIZATION
Effective November 29, 1995, the Company acquired most of the assets, and
assumed certain liabilities, of Naegele, an outdoor advertising business. The
acquisition was effectuated by the Company paying approximately $14 million cash
and assuming $133,000 in liabilities of Naegele as well as all of its operating
lease obligations. The purchase price has been allocated to the various assets
acquired based on their respective estimated fair values as follows:
<TABLE>
<S> <C>
Billboard structures.......................................... $12,536,306
Land.......................................................... 398,781
Office furniture and equipment................................ 369,673
Machinery and equipment....................................... 308,778
Leasehold improvement......................................... 279,701
Vehicles...................................................... 153,435
Other assets.................................................. 106,422
-----------
$14,153,096
-----------
-----------
</TABLE>
Concurrent with the acquisition, the Company was recapitalized by admitting
a new member to the Company, The Weatherley Tanner Trust (the "Trust"), and
receiving a capital contribution of $20,393,521 cash as follows (Note 7):
Mr. William B. Tanner $5,835,116
The Weatherley Tanner Trust $14,558,405
As part of the recapitalization, notes payable aggregating $5,500,000 were
paid in full upon the closing of the acquisition.
Pro forma sales and net income as if the acquisition had occurred as of
January 1, 1995 would have been as follows (unaudited):
<TABLE>
<S> <C>
Sales......................................................... $13,104,000
Net income.................................................... 98,000
</TABLE>
NOTE 2 -- TRADE ACCOUNTS RECEIVABLE
Trade accounts receivable arise from the leasing of advertising space on
billboards and posters which are primarily located in the Memphis, Tennessee
area. Accordingly, the collectibility of such receivables is largely dependent
upon the strength of the local economy.
Activity in the allowance for doubtful accounts is summarized as follows:
<TABLE>
<S> <C>
Balance -- January 1, 1995...................................... $ 30,466
Charged to expense.............................................. 190,577
Uncollected balances written off, net of recoveries............. (163,109)
---------
Balance -- December 31, 1995.................................... $ 57,934
---------
---------
</TABLE>
Future revenues under noncancellable advertising billboard lease contracts
for the next five years and thereafter are as follows at December 31, 1995:
<TABLE>
<S> <C>
1996........................................................... $7,950,000
1997........................................................... 2,475,000
1998........................................................... 1,500,000
1999........................................................... 850,000
2000........................................................... --
</TABLE>
F-49
<PAGE>
TANNER-PECK, L.L.C.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
NOTE 3 -- RELATED PARTY TRANSACTIONS
When Tanner-Peck, L.L.C. was organized on January 12, 1995, the owners of
the previous company, Tanner-Peck Outdoor Sign, elected not to include certain
land and the cost of a perpetual easement in the assets of Tanner-Peck, L.L.C.
The use of these assets (cost of $736,453) are necessary for the continued use
of the billboards located thereon. Rental expense for the use of these assets
was $36,283 for the year ended December 31, 1995.
The Company maintains certain bank accounts at United American Bank of
Memphis, a related entity through common ownership.
The Company also pays a member of the Company monthly rental payments of
$3,000 for office space used by the Company.
NOTE 4 -- PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1995
-------------- JUNE 30,
1996
--------------
(UNAUDITED)
<S> <C> <C>
Billboard structures................................................... $ 20,631,409 $ 20,698,819
Land................................................................... 398,781 398,781
Buildings.............................................................. 18,001 18,001
Office furniture and equipment......................................... 489,152 492,965
Machinery and equipment................................................ 335,478 340,782
Leasehold improvements................................................. 279,701 335,194
Vehicles............................................................... 225,353 303,595
-------------- --------------
22,377,875 22,588,137
Less accumulated depreciation.......................................... (1,344,327) (2,101,238)
-------------- --------------
21,033,548 20,486,899
Construction in progress............................................... 163,820 239,823
-------------- --------------
Net property and equipment............................................. $ 21,197,368 $ 20,726,722
-------------- --------------
-------------- --------------
</TABLE>
Construction in progress consists of billboards and related structures which
are under construction. The total cost of construction is not expected to be
significant and will be funded through operations.
NOTE 5 -- LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1995
-------------- JUNE 30,
1996
-------------
(UNAUDITED)
<S> <C> <C>
Unsecured note payable to a company, bearing interest at 8% per annum,
payable in monthly principal and interest payments of $10,861 through
October 2001 and a final payment of $755,178 due November 2001.......... $ 1,092,795 $ 1,070,982
Other notes payable, bearing interest at 8% per annum, payable in monthly
principal and interest payments of approximately $1,054 through October
2001 and a final payment of $51,990 due November 2001................... 91,525 88,938
-------------- -------------
1,184,320 1,159,920
Less current maturities.................................................. (49,471) (51,500)
-------------- -------------
Long-term debt........................................................... $ 1,134,849 $ 1,108,420
-------------- -------------
-------------- -------------
</TABLE>
F-50
<PAGE>
TANNER-PECK, L.L.C.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
NOTE 6 -- INCOME TAXES
The combined companies are treated as a "pass through" entity for income tax
purposes and pay no taxes on income. Instead, each individual member, partner or
shareholder includes their portion of income in their respective tax returns.
The pro forma income taxes shown on the accompanying combined statements of
income represent the income taxes that would have been reported had the Company
filed federal and state tax returns as a C Corporation.
The following summarizes pro forma income taxes:
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE SIX MONTHS ENDED
ENDED DECEMBER JUNE 30,
31, ------------------------
1995 1995 1996
-------------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Federal....................................................... $ 717,000 $ 359,000 $ 806,000
State......................................................... 84,000 42,000 95,000
-------------- ----------- -----------
Total....................................................... $ 801,000 $ 401,000 $ 901,000
-------------- ----------- -----------
-------------- ----------- -----------
</TABLE>
The pro forma income taxes differ from the amounts computed by applying the
maximum federal statutory rates as follows:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
FOR THE YEAR
ENDED DECEMBER ENDED JUNE 30,
31, --------------------
1995 1995 1996
--------------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C>
Provision for federal income taxes at statutory rates................ 34.0% 34.0% 34.0%
State taxes, net of federal benefit.................................. 4.0 4.0 4.0
Other................................................................ 0.6 0.6 0.4
------ --------- ---------
Pro forma income taxes............................................... 38.6% 38.6% 38.4%
------ --------- ---------
------ --------- ---------
</TABLE>
NOTE 7 -- COMMITMENTS AND CONTINGENCIES
The $20,393,521 cash capital contributions discussed in Note 1 were financed
by loans from a bank directly to the respective members or to intermediaries who
in turn loaned funds to the members. All of the Company's assets are pledged as
collateral for these loans.
The Company is subject to certain restrictive covenants under the loan
agreement which, among other things, limit future capital expenditures and
require the maintenance of certain minimum debt service coverage and leverage
ratios. One of the intermediaries, who controls a commercial bank by ownership
of a holding company, is subject to certain restrictive covenants as to the
commercial bank. The most significant of these covenants include the maintenance
of certain minimum capital ratios and a minimum allowance for loan and lease
losses. Moreover, the holding company and its commercial bank are precluded from
incurring additional indebtedness.
The approximates future minimum rental payments for noncancelable operating
leases having remaining terms in excess of one year as of December 31, 1995 are
as follows:
<TABLE>
<S> <C>
1996.......................................................... $ 3,300,000
1997.......................................................... 3,200,000
1998.......................................................... 2,800,000
1999.......................................................... 2,600,000
Thereafter.................................................... 12,300,000
</TABLE>
Rental expense under these operating leases was $1,581,467 for the year
ended December 31, 1995.
F-51
<PAGE>
TANNER-PECK, L.L.C.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
NOTE 7 -- COMMITMENTS AND CONTINGENCIES (CONTINUED)
The Company is a defendant in a number of lawsuits arising in the normal
course of business. In addition, there are several actions by certain
governmental agencies regarding permits and related matters. Management believes
that the ultimate outcome of these matters will not have a material effect on
the financial position or results of operations of the Company.
NOTE 8 -- SUBSEQENT EVENT
On September 12, 1996 the Company entered into an agreement with Universal
Outdoor Holdings, Inc. ("Universal") whereby Universal has the option to
purchase substantially all of the assets of the Company during the period from
December 1, 1996 to December 31, 1996 for approximately $71 million plus 100,000
shares of the common stock of Universal.
F-52
<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................................... 9
The Transactions............................... 13
Use of Proceeds................................ 15
Dividend Policy................................ 16
Price Range of Common Stock.................... 16
Capitalization................................. 17
Pro Forma Financial Information................ 18
Selected Consolidated Financial and Operating
Data......................................... 26
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... 27
Business....................................... 34
Management..................................... 44
Certain Transactions........................... 47
Principal and Selling Stockholders............. 48
Description of Capital Stock................... 50
Shares Eligible for Future Sale................ 54
Description of Indebtedness and Other
Commitments.................................. 55
Underwriting................................... 59
Certain Legal Matters.......................... 60
Experts........................................ 60
Available Information.......................... 61
Index to Consolidated Financial Statements..... F-1
</TABLE>
5,750,000 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.............................................. $ 78,381
NASD Filing Fee................................................... 23,230
Nasdaq Stock Market Listing Fee................................... 17,500
Printing and Engraving Expenses................................... 250,000
Legal Fees and Expenses........................................... 137,500
Accounting Fees and Expenses...................................... 150,000
Transfer Agent and Registrar Fees and Expenses.................... 15,000
Blue Sky Fees and Expenses (including legal fees)................. 20,000
Miscellaneous..................................................... 58,389
---------
Total......................................................... 750,000
---------
---------
</TABLE>
- ------------------------
* To be filed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law ("Delaware Law") and
Article XI of the Registrant's Bylaws provide for indemnification of the
Registrant's directors and officers to the maximum extent provided by Delaware
Law, which may include liabilities under the Securities Act.
Section 8 of the Underwriting Agreement provides for indemnification by the
Underwriters of directors, officers and controlling persons of the Company
against certain liabilities, including liabilities under the Securities Act,
under certain limited circumstances.
As permitted by Section 102(b) of the Delaware Law, the Certificate of
Incorporation provides that directors of the Company shall have no personal
liability to the Company or its stockholders for monetary damages for breach of
fiduciary duty as a director, except (i) for any breach of a director's duty of
loyalty to the Company or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or knowing violations of law,
(iii) under Section 174 of the Delaware Law, or (iv) for any transaction from
which a director derived an improper personal benefit.
The Company does not maintain directors' and officers' liability insurance.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Since January 1, 1993, the Company has issued the following securities which
were not registered under the Securities Act:
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. The 1996 Warrant
Plan is 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 which occurred in
July 1996) 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
II-1
<PAGE>
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 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. The Series I Warrants, the Series II Warrants and the Series III
Warrants are 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. Daniel L. Simon holds 595,000 Series I Warrants,
700,000 Series II Warrants and 700,000 Series III Warrants; Brian L. Clingen
holds 105,006 Series I Warrants, 123,536 Series II Warrants and 123,536 Series
III Warrants; and Paul G. Simon holds 123,530 Series I Warrants. The Company
recognized a one-time non-cash compensation charge of approximately $9 million
in the quarter 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 in connection with the IPO.
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 the Existing Company 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 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 was exercisable by WHS
upon the Company entering into a definitive agreement to issue shares of capital
stock through an underwritten public offering. In July, 1996, the WHS exercised
his option in full and received 67,600 shares of Common Stock of the Company.
Daniel L. Simon and Brian T. Clingen provided such shares to WHS pursuant to an
amendment to said Option Exchange Agreement.
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
II-2
<PAGE>
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 or (iii) the merger
or consolidation of the Company or UOI, subject to certain exceptions. 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>
<S> <C>
1.1 Form of Underwriting Agreement
2.1 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 (Commission 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 Agreement and Plan of Recapitalization between the Company, KIA V, KEP V and
certain stockholders of the Company
2.5 Agreement and Plan of Merger between UOI, Universal Acquisition Corp. and OAH
dated August 27, 1996
2.6 Option and Asset Purchase Agreement between UOI and the Memphis/Tunica Sellers
dated September 12, 1996
2.7 Form of Asset Purchase Agreement between UOI and Iowa Outdoor, Inc. dated
September 12, 1996
2.8 Asset Purchase Agreement between UOI and The Chase Company dated September 11,
1996
3.1 Third Amended and Restated Certificate of Incorporation
3.2 Second Amended and Restated Bylaws
4.1** Specimen Common Stock Certificate of the Company
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 Voting Trust Agreement among the Company, Daniel L. Simon and Paul G. Simon
10.1 Form of Amended and Restated Revolving Credit Agreement dated October, 1996
entered into among UOI, the various lending institutions from time to time
parties thereto, LaSalle National Bank, as Co-Agent and Bankers Trust Company,
as Agent
</TABLE>
II-3
<PAGE>
<TABLE>
<S> <C>
10.2 Form of Amended and Restated Acquisition Credit Agreement dated October, 1996
entered into among UOI, the various lending institutions from time to time
parties thereto, LaSalle National Bank, as Co-Agent and Bankers Trust Company,
as Agent.
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 Amendment to Option Exchange Agreement among the Company, UOI, Daniel L.
Simon, Brian T. Clingen and WHS
10.9 Fee Letter between the Company and Kelso & Company, L.P.
10.10 Registration Rights Agreement among the Company, KIA V, KEP V, Daniel L.
Simon, Brian T. Clingen and Paul G. Simon
10.11 Joint Management Agreement between UOI and the Memphis/Tunica Sellers
21.1 Subsidiaries of the Registrant
23.1* Consent of Price Waterhouse LLP
23.2* Consent of Ernst & Young LLP
23.3* Consent of Ernst & Young LLP
23.4* Consent of BDO Seidman, LLP
23.5 Consent of Winston & Strawn (contained in Exhibit 5.1)
24 Powers of Attorney (included on Signature Page)
</TABLE>
- ------------------------
* Previously filed.
** Filed with the Company's Registration Statement on Form S-1 dated July 23,
1996 (Commission File No. 333-5351) and incorporated herein by reference
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
II-4
<PAGE>
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 Amendment No. 2 to Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Chicago, State of Illinois, on the 9th day of October, 1996.
UNIVERSAL OUTDOOR HOLDINGS, INC.
By: *
-----------------------------------------
Daniel L. Simon
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Act, this Amendment No. 2 to
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
SIGNATURE TITLE DATE
- ---------------------------- ------------------------------ ------------------
* President and Chief Executive
- ---------------------------- Officer (Principal Executive October 9, 1996
Daniel L. Simon Officer) and Director
Vice President and Chief
* Financial Officer (Principal
- ---------------------------- Financial and Accounting October 9, 1996
Brian T. Clingen Officer) and Director
*
- ---------------------------- Director October 9, 1996
Michael J. Roche
*
- ---------------------------- Director October 9, 1996
Michael B. Goldberg
*
- ---------------------------- Director October 9, 1996
Frank K. Bynum
*By: /s/ PAUL G. SIMON
-------------------------
Paul G. Simon
ATTORNEY-IN-FACT
II-6
<PAGE>
LIST OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- ---------- ------------------------------------------------------------------------------------------------ -----
<S> <C> <C>
1.1 Form of Underwriting Agreement
2.1 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 (Commission 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 Agreement and Plan of Recapitalization between the Company, KIA V, KEP V and certain
stockholders of the Company
2.5 Agreement and Plan of Merger between UOI, Universal Acquisition Corp. and OAH dated August 27,
1996
2.6 Option and Asset Purchase Agreement between UOI and the Memphis/Tunica Sellers dated September
12, 1996
2.7 Form of Asset Purchase Agreement between UOI and Iowa Outdoor, Inc. dated September 12, 1996
2.8 Asset Purchase Agreement between UOI and The Chase Company dated September 11, 1996
3.1 Third Amended and Restated Certificate of Incorporation
3.2 Second Amended and Restated Bylaws
4.1** Specimen Common Stock Certificate of the Company
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 Voting Trust Agreement among the Company, Daniel L. Simon and Paul G. Simon
10.1 Form of Amended and Restated Revolving Credit Agreement dated October, 1996 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.
10.2 Form of Amended and Restated Acquisition Credit Agreement dated October, 1996 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.
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)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- ---------- ------------------------------------------------------------------------------------------------ -----
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)
<S> <C> <C>
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 Amendment to Option Exchange Agreement among the Company, UOI, Daniel L. Simon, Brian T. Clingen
and WHS
10.9 Fee Letter between the Company and Kelso & Company, L.P.
10.10 Registration Rights Agreement among the Company, KIA V, KEP V, Daniel L. Simon, Brian T. Clingen
and Paul G. Simon
10.11 Joint Management Agreement between UOI and the Memphis/Tunica Sellers
21.1 Subsidiaries of the Registrant
23.1* Consent of Price Waterhouse LLP
23.2* Consent of Ernst & Young LLP
23.3* Consent of Ernst & Young LLP
23.4* Consent of BDO Seidman, LLP
23.5 Consent of Winston & Strawn (contained in Exhibit 5.1)
24 Powers of Attorney (included on Signature Page)
</TABLE>
- ------------------------
* Previously filed.
** Filed with the Company's Registration Statement on Form S-1 dated July 23,
1996 (Commission File No. 333-5351) and incorporated herein by reference
<PAGE>
Exhibit 1.1
5,750,000 Shares
Universal Outdoor Holdings, Inc.
Common Stock
($.01 Par Value)
UNDERWRITING AGREEMENT
October __, 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")
and Daniel L. Simon and Brian T. Clingen (the "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 5,750,000 shares of the Company's Common Stock, $.01 par value (the "Firm
Shares"), of which 5,000,000 shares will be sold by the Company and 750,000
shares will be sold by the 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 Selling Shareholders are set forth opposite their names in Schedule II
hereto. The Company also proposes to sell at the Underwriters' option an
aggregate of up to 862,500 additional shares 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."
<PAGE>
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. 333-12457) 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 "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
2
<PAGE>
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 (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. ("UOI") pursuant to the indenture governing the Company's
Senior Secured Discount Notes due 2004 (the "Senior Indenture") and the
pledge of the issued and outstanding common stock of each subsidiary of UOI
pursuant to the Amended and Restated Acquisition Credit Facility and the
Amended and Restated Revolving Credit Facility (the "Credit Facility"),
each among the Company, LaSalle National Bank and Bankers Trust Company
(collectively, the "Existing Stock Pledges"); and no options, warrants or
other rights to purchase, agreements or other obligations to issue or other
rights to convert any obligations into shares of capital stock or ownership
interests in the Subsidiaries are outstanding.
(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. 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.
3
<PAGE>
(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; provided, however, that the
Company makes no representations or warranties as to information contained
in or omitted from the Registration Statement or the Prospectus, or any
such amendment or supplement, in reliance upon, and in conformity with,
written information furnished to the Company by or on behalf of any
Underwriter 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
4
<PAGE>
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
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.
5
<PAGE>
(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 (including for these purposes the assets of
the Memphis/Tunica Sellers (as defined in the Prospectus) to be sold
pursuant to the Option Agreement (as defined below) as if they were owned
by the Company or any of its Subsidiaries), rights, operations, condition
(financial or otherwise), or prospects of the Company and its Subsidiaries
taken as a whole, whether or not occurring in the ordinary course of
business, and there has not been any material transaction entered into or
any material transaction that is probable of being entered into by the
Company or the Subsidiaries, other than transactions in the ordinary course
of business and changes and transactions described in the Registration
Statement, as it may be amended or supplemented. The Company and the
Subsidiaries have no material contingent obligations which are not
disclosed in the Company's financial statements which are included in the
Registration Statement.
(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 under any agreement, lease, contract, indenture or other
instrument or obligation (including, but not limited to, the Credit
Facility, the Senior Indenture or the indenture with respect to UOI's 11%
Senior Notes due 2003 (the "UOI Indenture")) to which it is a party or by
which it, or any of its properties, is bound and which default is of
material significance in respect of the condition, financial or otherwise
of the Company and its Subsidiaries taken as a whole or the business,
management, properties, assets, rights, operations, condition (financial or
otherwise) or prospects of the Company and the Subsidiaries taken as a
whole. The execution and delivery of this Agreement and the consummation
of the transactions herein contemplated and the fulfillment of the terms
hereof will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed
of trust or other agreement or instrument to which the Company or any
Subsidiary is a party (including, but not limited to, the Credit Facility,
the Senior Indenture or the UOI Indenture), or of the Certificate of
Incorporation or By-laws of the Company as presently in effect or any
Subsidiary or any order, rule or regulation applicable to the Company or
any Subsidiary of any court or of any regulatory body or administrative
agency or other governmental body having jurisdiction.
6
<PAGE>
(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 requirements imposed by, all Federal, state, local and other
governmental authorities, all self-regulatory organizations and all courts
and other tribunals, in each case as required for the conduct of the
business in which it is engaged, and each such License is in full force and
effect, except to the extent that the failure to obtain any such License or
to make any such declaration or filing or satisfy any such requirement
would not have a material adverse effect on the earnings, business,
management, properties, assets, rights, operations, condition (financial or
otherwise) or prospects of the Company and its Subsidiaries, taken as a
whole.
(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.
7
<PAGE>
(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.
(xix) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (A) transactions
are executed in accordance with management's general or specific
authorization; (B) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (C) access
to assets is permitted only in accordance with management's general or
specific authorization; and (D) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(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 (A) Title IV of ERISA
with respect to termination of, or withdrawal from, any "pension plan" or
(B) Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended,
including the regulations and published interpretations thereunder (the
"Code"); and each "pension plan" for which the Company would have any
liability that is intended to be qualified under Section 401(a) of the Code
is so qualified in all material respects and nothing has occurred, whether
by action or by failure to act, which would cause the loss of such
qualification.
8
<PAGE>
(xxii) The Option and Asset Purchase Agreement , dated September
12, 1996, between the Company and the Memphis/Tunica Sellers (the "Option
Agreement") has been duly authorized, executed and delivered by the parties
thereto and constitutes a valid and binding agreement of the parties
thereto, enforceable against the parties thereto in accordance with its
terms, except to the extent that enforcement thereof may be limited by (A)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights generally and (B)
general principles of equity.
(xxiii) The Company confirms as of the date hereof that it is in
compliance with all provisions of Section 1 of Laws of Florida, Chapter 92-
198, AN ACT RELATING TO DISCLOSURE OF DOING BUSINESS WITH CUBA, and the
Company further agrees that if it commences engaging in business with the
government of Cuba or with any person or affiliate located in Cuba after
the date the Registration Statement becomes or has become effective with
the Commission or with the Florida Department of Banking and Finance (the
"Department"), whichever date is later, or if the information reported or
incorporated by reference in the Prospectus, if any, concerning the
Company's business with Cuba or with any person or affiliate located in
Cuba changes in any material way, the Company will provide the Department
notice of such business or change, as appropriate, in a form acceptable to
the Department.
(b) Each of the Selling Shareholders severally represents and
warrants as follows:
(i) Such Selling Shareholder now has and at the Closing Date (as such
date is hereinafter defined) will have good and marketable title to the
Firm 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 upon the
delivery of, against payment for, such Firm 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 to perform its obligations under
such Agreement. The execution and delivery of this Agreement and 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, or other
order of any court, regulatory body, administrative agency or other
governmental body (except as may be required under the Act, state securi-
9
<PAGE>
ties 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 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 to be sold
hereunder. The obligations of the Company and of each of the Selling
Shareholders shall be several and not joint.
(b) Payment for the Firm Shares to be sold hereunder is to be made by
wire transfer of same day funds to the Company for the shares to be sold by
it and by wire transfer of same day funds to each of the Selling
Shareholders for the shares to be sold by the Selling Shareholders, in each
case against delivery of certificates therefor to the Representatives for
the several accounts of the Underwriters. Such payment and delivery are to
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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 hereby grants 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 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,
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 certificates are to be delivered. 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. To the extent, if any, that
the option is exercised, payment for the Option Shares shall be made on the
Option Closing Date by wire transfer of same day funds to the
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Company against delivery of certificates therefor at the offices of Alex.
Brown & Sons Incorporated, 135 East Baltimore Street, Baltimore, Maryland.
The Company 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 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
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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 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
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therein, in the light of the circumstances existing at the time the
Prospectus is delivered to a purchaser, not misleading, or, if it is
necessary at any time to amend or supplement the Prospectus to comply with
any law, the Company promptly will prepare and file with the Commission an
appropriate amendment to the Registration Statement or supplement to the
Prospectus so that the Prospectus as so amended or supplemented will not,
in the light of the circumstances when it is so delivered, be misleading,
or so that the Prospectus will comply with the law.
(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 (A) hereunder, (B) to holders of the Noteholder Warrants (as defined
in the Registration Statement) upon the exercise of such Noteholder
Warrants, (C) to Daniel L. Simon, Brian T. Clingen and Paul G. Simon
pursuant to the Company's 1996 Warrant Plan and (D) as disclosed in the
Prospectus to the Memphis/Tunica Sellers, 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 or the Selling Shareholders otherwise than
hereunder or with the prior written consent of Alex. Brown & Sons
Incorporated.
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(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 Paul G. Simon and Kelso Investment
Associates V, L.P. and Kelso Equity Partners V, L.P. (the "Institutional
Shareholders") to furnish to you, on or prior to the date of this
agreement, a letter or letters, in form and substance 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 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 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.
(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.
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(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
for 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
(A) hereunder or (B) with the prior written consent of Alex. Brown & Sons
Incorporated.
(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.
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; 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 Supplemental 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 dis-
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bursements 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.
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
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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 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 incorporated 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 incorporated and is
validly existing as a corporation in good standing under the laws of
the jurisdiction of its incorporation, with corporate power and
authority to own or lease its properties and conduct its business as
described in the Registration Statement; the Company and each of the
Subsidiaries are duly qualified to transact business in all
jurisdictions in which the failure to qualify would have a materially
adverse effect upon the business of the Company taken as a whole; and
the outstanding shares of capital stock of each of the Subsidiaries
have been duly authorized and validly issued and are fully paid and
non-assessable and are owned by the Company or a Subsidiary; and, to
the best of such counsel's knowledge, the outstanding shares of
capital stock of each of the Subsidiaries is owned free and clear of
all liens, encumbrances and equities and claims except for the
Existing Stock Pledges, and no options, warrants or other rights to
purchase, agreements or other obligations to issue or other rights to
convert any obligations into any shares of capital stock or of
ownership interests in the Subsidiaries are outstanding.
(ii) The Company has authorized and outstanding capital stock as
set forth under the caption "Description of Capital Stock" 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 Com-
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pany pursuant to this Agreement have been duly authorized and, when
issued and delivered pursuant to this Agreement, will be validly
issued, fully paid and non-assessable; and the issuance or sale of
such Shares is not subject to any preemptive or similar rights.
(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 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 appear on their face to be
appropriately responsive in all material respects with the
requirements of the Act and the applicable rules and regulations
thereunder (except that such counsel need express no opinion as to the
financial or statistical data therein).
(vi) The statements in the Prospectus under the captions
"Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources,"
"Description of Indebtedness and Other Commitments," "Certain
Transactions," "Management -- The 1996 Warrant Plan," "Description of
Capital Stock," and "Shares Eligible for Future Sale," as
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such statements constitute a summary of the legal matters or documents
referred to therein or matters of law, fairly summarize in all
material respects the information required to be shown (except that
such counsel need express no opinion as to the financial or
statistical data therein).
(vii) Such counsel does not know of any contracts or other
documents of a character required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the
Registration Statement or the Prospectus which are not so described or
filed as required, and such contracts and documents as are summarized
in the Registration Statement or the Prospectus are fairly summarized
in all material respects.
(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 is bound.
(x) This Agreement has been duly authorized, executed and
delivered by the Company.
(xi) No approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or
other governmental body which has not been received or granted is
required in connection with the execution and delivery of this
Agreement and the consummation of the transactions herein contemplated
(other than as may be required by the NASD or as required by state
securities and Blue Sky laws as to which such counsel need express no
opinion).
(xii) The Company is not, and will not become, as a result of
the consummation of the transactions contemplated by this Agreement,
and application of the net proceeds therefrom as described in the
Prospectus, required to register as an investment company under the
1940 Act.
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(xiii) To the knowledge of such counsel, the execution and
delivery of this Agreement and the consummation of the sale of Shares
by each 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 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 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 Selling Shareholder has the full legal right, power and
authority to sell, assign, transfer and deliver the Shares to be sold
by such Selling Shareholder.
(xvi) This Agreement has been duly executed and delivered by
each Selling Shareholder.
(xvii) Upon delivery of certificates indorsed in blank
representing the Shares to be sold by the Selling Shareholders and
payment for such Shares 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 have
acquired their interest in good faith for purposes of the Uniform
Commercial Code, and that such Underwriters' rights are not limited by
subsection (4) of Section 8-302 of the Uniform Commercial Code).
(xviii) The Option Agreement has been duly authorized, executed
and delivered by the Company and constitutes a valid and binding
agreement of the Company, enforceable against the Company in
accordance with its terms, except to the extent that enforcement
thereof may be limited by (A) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating
to creditors' rights generally and (B) general principles of equity.
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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 material fact necessary in order to make the statements, in the
light of the circumstances under which they are made, not misleading
(except that such counsel need express no view as to financial statements,
schedules and statistical information therein). With respect to such
statement, Winston & Strawn may state that their belief is based upon the
procedures set forth therein, but is without independent check and
verification.
The Representatives shall also have received on the Closing Date 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 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
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case may be, contained an untrue statement of a material fact or omitted to
state a material fact, necessary in order to make the statements, in the
light of the circumstances under which they are made, not misleading
(except that such counsel need express no view as to financial statements,
schedules and statistical information therein). With respect to such
statement, Skadden, Arps, Slate, Meagher & Flom may state that their belief
is based upon the procedures set forth therein, but is without independent
check and verification.
(d) The Representatives shall have received at or prior to the
Closing Date from Skadden, Arps, Slate, Meagher & Flom a memorandum or
summary, in form and substance satisfactory to the Representatives, with
respect to the qualification for offering and sale by the Underwriters of
the Shares under the state securities or Blue Sky laws of such
jurisdictions as the Representatives may reasonably have designated to the
Company.
(e) The Representatives shall have received, on each of the dates
hereof, 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, Ernst & Young LLP and BDO Siedman, LLP confirming that they
are independent public accountants within the meaning of the Act and the
applicable published Rules and Regulations thereunder and stating that in
their opinion the financial statements and schedules examined by them and
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.
(f) 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 Registration
Statement has been issued, and no proceedings for
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<PAGE>
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.
(g) 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.
(h) The Firm Shares and Option Shares, if any, have been approved for
designation upon notice of issuance on the Nasdaq Stock Market.
(i) The Lockup Agreements are in full force and effect.
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<PAGE>
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.
INDEMNIFICATION.
(a) The Company 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 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
25
<PAGE>
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 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.
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<PAGE>
(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 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 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 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,
27
<PAGE>
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 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
28
<PAGE>
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 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
29
<PAGE>
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
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
30
<PAGE>
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 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: Alexander T. Daignault; with a copy to Alex. Brown & Sons
Incorporated, 135 East Baltimore Street, Baltimore, Maryland 21202.
Attention: General Counsel; if to the Company, to Universal Outdoor
Holdings, Inc., 321 North Clark Street, Suite 1010, Chicago, Illinois
60610, Attention: General Counsel; and if to the Selling Shareholders, c/o
Universal Outdoor Holdings, Inc., 321 North Clark Street, Suite 1010,
Chicago, Illinois 60610, Attention: Daniel J. Simon.
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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
(including for these purposes the assets of the Memphis/Tunica Sellers to
be sold pursuant to the Option Agreement as if they were owned by the
Company or any of its Subsidiaries), rights, operations, condition
(financial or otherwise) or prospects of the Company and its Subsidiaries
taken as a whole, whether or not 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
(c) as provided in Sections 6 and 9 of this Agreement.
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<PAGE>
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.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Maryland.
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<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:
---------------------------------------------------
Vice President and Chief Financial Officer
------------------------------------------------------
Daniel L.Simon
-------------------------------------------------------
Brian T. Clingen
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
UNDERWRITER Number of Firm Shares to be Purchased
----------- ------------------------------------
Alex. Brown & Sons Incorporated. . . . . . . . . .
Bear, Stearns & Co. Inc. . . . . . . . . . . . . .
Donaldson, Lufkin & Jenrette Securities Corporation
Total. . . . . . . . . . . . . . . . . . .5,750,000
---------
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<PAGE>
SCHEDULE II
SCHEDULE OF SELLING SHAREHOLDERS
Selling Shareholder Number of Firm Shares to be Sold
- ------------------- --------------------------------
Daniel L. Simon 500,000
Brian T. Clingen 250,000
Total 750,000
-------
36
<PAGE>
Exhibit 2.4
AGREEMENT AND PLAN OF RECAPITALIZATION
This Agreement and Plan of Recapitalization (the "Agreement") is made
and entered into as of July 26, 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 6, 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 own the shares of Class B Common Stock and Class C
Common
5
<PAGE>
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 3(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
shareholders of the Company (the "Class I Nominee"), and (ii)
6
<PAGE>
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 of a meeting of
holders of such shares as authorized
7
<PAGE>
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.
11
<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 Kelso Partners V, L.P.,
as general partner
By:
------------------------------
Name:
Title:
Date: July 26, 1996
KELSO EQUITY PARTNERS V, L.P.
By:
------------------------------
Name:
Title:
Date: July 26, 1996
STOCKHOLDERS
---------------------------------
William A. Marquard
Date: July 26, 1996
---------------------------------
David M. Roderick
Date: July 26, 1996
<PAGE>
---------------------------------
Michel Rapoport
Date: July 26, 1996
---------------------------------
George L. Shinn
Date: July 26, 1996
---------------------------------
Patricia Hetter Kelso
Date: July 26, 1996
---------------------------------
John F. McGillicuddy
Date: July 26, 1996
---------------------------------
John Rutledge
Date: July 26, 1996
<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
<PAGE>
Exhibit 2.5
AGREEMENT AND PLAN OF MERGER
AMONG
OUTDOOR ADVERTISING HOLDINGS, INC.
( THE "SELLER")
AND
UNIVERSAL OUTDOOR, INC.
( THE "PARENT")
AND
UNIVERSAL ACQUISITION CORP.
( THE "ACQUIROR")
DATED AUGUST 27, 1996
<PAGE>
TABLE OF CONTENTS
Page
I. THE MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Merger; Effective Time of the Merger. . . . . . . . . . . . . 1
1.2 Effects of the Merger . . . . . . . . . . . . . . . . . . . . 1
II. CONVERSION OF ACQUIROR'S AND SELLER'S STOCK; MERGER
CONSIDERATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Conversion. . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Dissenters' Rights. . . . . . . . . . . . . . . . . . . . . . 3
2.3 Schedules of Indebtedness, Reserve Amount, Stockholder
Notes, Merger Consideration and Working Capital . . . . . . . 5
2.4 Working Capital . . . . . . . . . . . . . . . . . . . . . . . 6
2.5 Payments at Closing . . . . . . . . . . . . . . . . . . . . . 6
III. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
IV. REPRESENTATIONS AND WARRANTIES OF THE SELLER AS TO ITSELF . . . . . . 15
4.1 Organization and Authority of The Seller. . . . . . . . . . . 15
4.2 Due Execution and Absence of Breach . . . . . . . . . . . . . 15
4.3 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . 15
4.4 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . 16
4.5 Business of the Seller. . . . . . . . . . . . . . . . . . . . 16
4.6 Stockholder Vote. . . . . . . . . . . . . . . . . . . . . . . 16
V. REPRESENTATIONS AND WARRANTIES OF THE SELLER AS TO THE
COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.1 Organization and Good Standing. . . . . . . . . . . . . . . . 17
5.2 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . 17
5.3 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . 17
5.4 Financial Statements. . . . . . . . . . . . . . . . . . . . . 18
5.5 No Undisclosed Liabilities. . . . . . . . . . . . . . . . . . 18
5.6 No Material Adverse Change; No Dividends. . . . . . . . . . . 18
5.7 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.8 Patents, Trademarks and Copyrights. . . . . . . . . . . . . . 19
5.9 Real Property; Leases of Real Property. . . . . . . . . . . . 19
5.10 Sign Location Leases. . . . . . . . . . . . . . . . . . . . . 21
5.11 Permits; Compliance with Laws . . . . . . . . . . . . . . . . 21
5.12 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 21
<PAGE>
5.13 Material Contracts. . . . . . . . . . . . . . . . . . . . . . 22
5.14 Title to Properties; Absence of Encumbrances. . . . . . . . . .22
5.15 Restrictions. . . . . . . . . . . . . . . . . . . . . . . . . 23
5.16 Litigation; Consents. . . . . . . . . . . . . . . . . . . . . 23
5.17 Environmental Matters . . . . . . . . . . . . . . . . . . . . 24
5.18 Labor Agreements. . . . . . . . . . . . . . . . . . . . . . . 24
5.19 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.20 Affiliate Transactions. . . . . . . . . . . . . . . . . . . . 27
5.22 Materiality . . . . . . . . . . . . . . . . . . . . . . . . . 27
VI. REPRESENTATIONS AND WARRANTIES OF THE PARENT AND THE ACQUIROR . . . . 27
6.1 Organization and Good Standing. . . . . . . . . . . . . . . . 27
6.2 Restrictions. . . . . . . . . . . . . . . . . . . . . . . . . 27
6.3 Litigation; Consents. . . . . . . . . . . . . . . . . . . . . 28
6.4 Execution and Effect of Agreement . . . . . . . . . . . . . . 28
6.5 Financing . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.6 Materiality . . . . . . . . . . . . . . . . . . . . . . . . . 28
VII. COVENANTS OF THE SELLER . . . . . . . . . . . . . . . . . . . . . . . 28
7.1 Access to Documents; Opportunity to Ask Questions. . . . . . 28
7.2 Maintenance of Insurance. . . . . . . . . . . . . . . . . . . 29
7.3 Conduct of Business . . . . . . . . . . . . . . . . . . . . . 29
7.4 Consents; Conditions Precedent. . . . . . . . . . . . . . . . 31
7.5 Hart-Scott-Rodino Filings . . . . . . . . . . . . . . . . . . 31
7.6 Supplemental Disclosure . . . . . . . . . . . . . . . . . . . 31
7.7 No Solicitation of Transactions . . . . . . . . . . . . . . . 31
7.8 Resignations. . . . . . . . . . . . . . . . . . . . . . . . . 32
7.9 Environmental Studies . . . . . . . . . . . . . . . . . . . . 32
7.10 Title Insurance . . . . . . . . . . . . . . . . . . . . . . . 32
7.11 Disclosure of Financial Information . . . . . . . . . . . . . 32
7.12 Non-Competition Agreements. . . . . . . . . . . . . . . . . . 32
7.13 Employment Contract . . . . . . . . . . . . . . . . . . . . . 32
7.14 Discharge of Indebtedness . . . . . . . . . . . . . . . . . . 33
7.15 Approval of Stockholders. . . . . . . . . . . . . . . . . . . 33
VIII. COVENANTS OF THE PARENT AND THE ACQUIROR. . . . . . . . . . . . . . . 33
8.1 Representations and Warranties. . . . . . . . . . . . . . . . 33
8.2 Consents; Conditions Precedent. . . . . . . . . . . . . . . . 33
8.3 Hart-Scott-Rodino Filings . . . . . . . . . . . . . . . . . . 33
8.4 Employee and Employee Plans . . . . . . . . . . . . . . . . . 34
8.5 Supplemental Disclosure . . . . . . . . . . . . . . . . . . . 34
IX. CONDITIONS PRECEDENT TO THE ACQUIROR'S OBLIGATION . . . . . . . . . . 34
9.1 Representations and Warranties True . . . . . . . . . . . . . 34
(ii)
<PAGE>
9.2 Covenants Performed . . . . . . . . . . . . . . . . . . . . . 34
9.3 No Legal Proceedings. . . . . . . . . . . . . . . . . . . . . 35
9.4 Compliance Certificate. . . . . . . . . . . . . . . . . . . . 35
9.5 Corporate Authority . . . . . . . . . . . . . . . . . . . . . 35
9.6 Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.7 Hart-Scott-Rodino . . . . . . . . . . . . . . . . . . . . . . 35
9.8 Indebtedness, Reserve Amount and Stockholder Note Schedules . 35
9.9 Stockholder Approval. . . . . . . . . . . . . . . . . . . . . 35
9.10 No Material Adverse Effect. . . . . . . . . . . . . . . . . . 35
9.11 Seller Affidavit. . . . . . . . . . . . . . . . . . . . . . . 35
9.12 Non-Competition Agreements. . . . . . . . . . . . . . . . . . 36
9.13 Employment Contract . . . . . . . . . . . . . . . . . . . . . 36
9.15 Environmental Matters . . . . . . . . . . . . . . . . . . . . 36
9.16 Working Capital and Cash. . . . . . . . . . . . . . . . . . . 36
9.17 Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . 36
9.18 Releases of Liens and Pledges . . . . . . . . . . . . . . . . 36
X. CONDITIONS PRECEDENT TO THE SELLER'S OBLIGATION . . . . . . . . . . . 36
10.1 Representations and Warranties True . . . . . . . . . . . . . 36
10.2 Covenants Performed . . . . . . . . . . . . . . . . . . . . . 36
10.3 No Legal Proceedings. . . . . . . . . . . . . . . . . . . . . 37
10.4 Compliance Certificate. . . . . . . . . . . . . . . . . . . . 37
10.5 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.6 Hart-Scott-Rodino . . . . . . . . . . . . . . . . . . . . . . 37
10.7 Stockholder Approval. . . . . . . . . . . . . . . . . . . . . 37
10.8 Evidence of Financing . . . . . . . . . . . . . . . . . . . . 37
10.9 Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . 37
XI. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
11.1 The Closing . . . . . . . . . . . . . . . . . . . . . . . . . 37
11.2 Closing Proceedings . . . . . . . . . . . . . . . . . . . . . 38
11.3 Deliveries at Closing . . . . . . . . . . . . . . . . . . . . 38
XII. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . 39
12.1 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . 39
XIII. NO BROKERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
XIV. SPECIFIC PERFORMANCE. . . . . . . . . . . . . . . . . . . . . . . . . 39
XV. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
XVI. FURTHER ASSURANCES. . . . . . . . . . . . . . . . . . . . . . . . . . 40
XVII. CONFIDENTIALITY; PRESS RELEASES . . . . . . . . . . . . . . . . . . . 40
17.1 Confidentiality Obligation of the Acquiror. . . . . . . . . . 40
(iii)
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17.2 Confidentiality Obligation of the Seller. . . . . . . . . . . 41
17.3 Disclosure Required by Law. . . . . . . . . . . . . . . . . . 41
17.4 Press Releases. . . . . . . . . . . . . . . . . . . . . . . . 41
XVIII. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
XIX. ENTIRE AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . 43
XX. SUCCESSORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
XXI. SECTION HEADINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . 43
XXII. APPLICABLE LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
XXIII. EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
XXIV. SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
XXV. COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
XXVI. SCHEDULE DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . 44
XXVII. PARTIES IN INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . 44
(iv)
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LIST OF SCHEDULES
SCHEDULES
- ---------
Schedule 4.2 - Due Execution and Absence of Breach
Schedule 4.3 - Capitalization
Schedule 4.4 - Ownership of Interests in Other Companies
Schedule 4.5 - Liabilities of Seller
Schedule 5.5 - Undisclosed Liabilities
Schedule 5.6 - Exceptions to Material Adverse Change Provision
Schedule 5.7 - Taxes
Schedule 5.8 - Patents, Trademarks and Copyrights
Schedule 5.9 - Real Property; Leases of Real Property
Schedule 5.11 - Permits, Compliance with Law
Schedule 5.12 - Insurance
Schedule 5.13 - Material Contracts
Schedule 5.14 - Title to Properties; Absence of Encumbrances
Schedule 5.15 - Restrictions
Schedule 5.16 - Litigation; Consents
Schedule 5.17 - Environmental Matters
Schedule 5.18 - Labor Agreements
Schedule 5.19 - ERISA
Schedule 5.20 - Affiliate Transactions
Schedule 5.21 - Transfer of Assets
Schedule 6.3 - Litigation; Consents (Parent and/or Acquiror)
Schedule 7.3 - Committed Capital Expenditures
(v)
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger is entered into as of August 27, 1996
by and among Universal Outdoor, Inc., a corporation organized under the laws of
Illinois (the "Parent"), Universal Acquisition Corp., a corporation organized
under the laws of Delaware and a wholly owned subsidiary of the Parent (the
"Acquiror"), Outdoor Advertising Holdings, Inc., a Delaware corporation
("Seller") and Boston Ventures Management, Inc., a Massachusetts corporation.
INTRODUCTION
The Seller is the owner of all of the issued and outstanding shares of
common stock of POA Acquisition Corporation, a Delaware corporation (the
"Company").
The Company is in the business of owning and operating outdoor
advertising businesses.
The respective Boards of Directors of the Parent, the Acquiror and the
Seller have approved the acquisition of the Seller by the Parent by means of the
merger of the Acquiror with and into the Seller with the Seller continuing as
the surviving corporation of the merger as provided herein (the "Merger").
The Board of Directors of the Seller has (i) determined that the terms of
the Merger are fair to and in the best interests of the stockholders of the
Seller; (ii) approved this Agreement and the transactions contemplated hereby;
and (iii) resolved to recommend approval of the Merger and adoption of this
Agreement by such stockholders.
NOW, THEREFORE, in order to prescribe the terms and conditions of the
Merger, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
I. THE MERGER.
1.1 MERGER; EFFECTIVE TIME OF THE MERGER. Subject to the terms and
conditions of this Agreement, the Acquiror will be merged with and into the
Seller in accordance with the General Corporation Law of the State of Delaware
(the "Delaware Statute"). A Certificate of Merger (the "Delaware Merger
Certificate") shall be filed in accordance with the Delaware Statute and the
provisions of this Agreement on the Closing Date. The Merger shall become
effective upon acceptance of such filing by the Delaware Secretary of State (the
time of acceptance of such filing is referred to as the "Effective Time").
1.2 EFFECTS OF THE MERGER. At the Effective Time, (a) the separate
existence of the Acquiror shall cease and the
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Acquiror shall be merged with and into the Seller with the Seller continuing as
the surviving corporation of the Merger (the "Surviving Corporation"), (b) the
Certificate of Incorporation of the Seller as amended and restated by the
Delaware Merger Certificate shall be the Certificate of Incorporation of the
Surviving Corporation, (c) the Bylaws of the Acquiror as in effect immediately
prior to the Effective Time shall be the Bylaws of the Surviving Corporation,
(d) the directors of the Acquiror immediately prior to the Effective Time shall
be the initial directors of the Surviving Corporation, each to hold office in
accordance with the Certificate of Incorporation and Bylaws of the Surviving
Corporation, and, the officers of the Acquiror immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation, in
each case until their respective successors are duly elected or appointed (as
the case may be) and qualified, (e) the name of the Surviving Corporation shall
be Outdoor Advertising Holdings, Inc., and (f) the Merger shall, from and after
the Effective Time, have all the effects provided by applicable law.
II. CONVERSION OF ACQUIROR'S AND SELLER'S STOCK; MERGER
CONSIDERATION.
2.1 CONVERSION.
(a) As of the Effective Time, by virtue of the Merger and
without any additional action on the part of any holder of shares of the
Seller's Series B Preferred Stock, each share of Series B Preferred Stock of the
Seller issued and outstanding immediately prior to the Effective Time (other
than any Dissenters' Shares) and any accrued and unpaid dividends in respect
thereof shall be converted into the right to receive its pro rata portion (based
on the number of shares of Series B Preferred Stock including Dissenters' Shares
which are shares of Series B Preferred Stock) of the Series B Preferred Stock
Merger Consideration, payable upon surrender of the certificate representing
such shares to the Disbursing Agent as set forth in Section 2.6 hereof and as
otherwise set forth herein.
(b) As of the Effective Time, by virtue of the Merger and
without any additional action on the part of any holder of shares of the 15%
Preferred Stock of the Seller, each share of 15% Preferred Stock of the Seller
issued and outstanding immediately prior to the Effective Time (other than any
Dissenters' Shares) and any accrued and unpaid dividends in respect thereof
shall be converted into the right to receive its pro rata portion (based on the
number of shares of 15% Preferred Stock including Dissenters' Shares which are
shares of 15% Preferred Stock) of the 15% Preferred Stock Merger Consideration,
payable upon surrender of the certificate representing such shares to the
Disbursing Agent as set forth in Section 2.6 hereof and as otherwise set forth
herein.
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(c) As of the Effective Time, by virtue of the Merger and
without any additional action on the part of any holder of shares of 8%
Preferred Stock of the Seller, each share of 8% Preferred Stock of the Seller
issued and outstanding immediately prior to the Effective Time (other than any
Dissenters' Shares) and any accrued and unpaid dividends in respect thereof
shall be converted into the right to receive its pro rata portion (based on the
number of shares of 8% Preferred Stock including Dissenters' Shares which are
shares of 8% Preferred Stock) of the 8% Preferred Stock Merger Consideration,
payable upon surrender of the certificate representing such shares to the
Disbursing Agent as set forth in Section 2.6 hereof and as otherwise set forth
herein.
(d) As of the Effective Time, by virtue of the Merger and
without any additional action on the part of any holder of shares of Common
Stock of the Seller, each share of Common Stock of the Seller issued and
outstanding immediately prior to the Effective Time (other than any Dissenters'
Shares) shall be converted into the right to receive its pro rata portion (based
on the number of shares of Common Stock including Dissenters' Shares which are
shares of Common Stock) of the Common Stock Merger Consideration, payable upon
surrender of the certificate representing such shares to the Disbursing Agent as
set forth in Section 2.6 hereof and as otherwise set forth herein.
(e) As of the Effective Time, by virtue of the Merger and
without any additional action on the part of any holder of shares of common
stock of the Acquiror, each share of common stock of the Acquiror issued and
outstanding immediately prior to the Effective Time shall be converted into one
validly issued, fully paid and nonassessable share of common stock of the
Surviving Corporation.
(f) Notwithstanding the foregoing, the amount of Series B
Preferred Stock Merger Consideration, 15% Preferred Stock Merger Consideration,
8% Preferred Stock Merger Consideration or Common Stock Merger Consideration
payable to any holder of Series B Preferred Stock, 15% Preferred Stock, 8%
Preferred Stock or Common Stock, as the case may be, who has issued a promissory
note to the Seller in consideration or partial consideration for his, her or its
shares of such stock, shall be reduced by the principal of and interest on such
note outstanding as of the Effective Time, all such notes shall be cancelled as
of the Effective Time, and the Aggregate Merger Consideration payable by the
Acquiror shall be reduced by the aggregate amount of the principal of and
interest on such notes as provided in Section 2.2(c).
2.2 DISSENTERS' RIGHTS.
(a) Notwithstanding the provisions of Section 2.1,
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shares of Series B Preferred Stock, 15% Preferred Stock, 8% Preferred Stock and
Common Stock which are issued and outstanding immediately prior to the Effective
Time and which are held by holders of such shares who have not voted in favor of
the Merger and with respect to which appraisal rights shall have been properly
demanded in accordance with Section 262 of the Delaware Statute ("Dissenters'
Shares") shall not be converted as provided above in Section 2.1 but shall be
converted into the right to receive from the Surviving Corporation such
consideration as is determined to be due with respect to such Dissenters' Shares
pursuant to the provisions of the Delaware Statute, except that any Dissenters'
Shares held by holders of shares who shall have failed to perfect or shall have
effectively withdrawn or lost their rights to appraisal of such shares under the
Delaware Statute shall be treated as set forth in Section 2.1 and thereupon
deemed to have been converted into and to have become exchangeable for, as of
the Effective Time, the right to receive the consideration in accordance with
Section 2.1, without interest thereon, upon surrender of the certificate or
certificates formerly representing such shares to the Surviving Corporation
pursuant to the terms of this Agreement.
(b) The Seller shall give the Acquiror (i) prompt written notice
of any written demands for appraisals, withdrawals or demands for appraisal and
any other instruments in respect thereof received by the Seller and (ii) the
opportunity, to direct all negotiations and proceedings with respect to demands
for appraisal under Section 262 of the Delaware Statute. The Seller will not
voluntarily make any payment with respect to any demands for appraisal and will
not except with the prior written consent of the Acquiror, settle or offer to
settle any such demands.
(c) The Aggregate Merger Consideration shall be reduced for
purposes of Section 2.5(b) and Section 2.6 by the aggregate amount of the
following reductions: (i) the Series B Preferred Stock Merger Consideration
shall be reduced by an amount equal to the portion of the Series B Preferred
Stock Merger Consideration attributable to Dissenters' Shares which are shares
of Series B Preferred Stock; (ii) the 15% Preferred Stock Merger Consideration
shall be reduced by an amount equal to the portion of the 15% Preferred Stock
Merger Consideration attributable to Dissenters' Shares which are shares of 15%
Preferred Stock; (iii) the 8% Preferred Stock Merger Consideration shall be
reduced by an amount equal to the portion of the 8% Preferred Stock Merger
Consideration attributable to Dissenters' Shares which are shares of 8%
Preferred Stock; (iv) the Common Stock Merger Consideration shall be reduced by
an amount equal to the portion of the Common Stock Merger Consideration
attributable to Dissenters' Shares which are shares of Common Stock; and (v) the
aggregate principal of and interest outstanding as of the Effective Time with
respect to promissory
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notes issued by the Stockholders of the Seller in consideration or partial
consideration of the issuance of shares of Series B Preferred Stock, 15%
Preferred Stock, 8% Preferred Stock or Common Stock to such Stockholders and
such reduction shall be allocated in accordance with Section 2.1(f) hereof.
2.3 SCHEDULES OF INDEBTEDNESS, RESERVE AMOUNT, STOCKHOLDER NOTES,
MERGER CONSIDERATION AND WORKING CAPITAL.
(a) The Seller will prepare and deliver to the Acquiror five
days prior to the Closing Date an estimate of the Indebtedness which will be
outstanding on the Closing Date and on the day prior to the Closing Date a
schedule of the Indebtedness as of the Closing Date.
(b) The Seller will prepare and deliver to the Acquiror five
days prior to the Closing Date an estimate of the Seller's and the Stockholders'
fees and expenses arising out of, incurred or to be incurred in connection with
the transactions contemplated by this Agreement (including, without limitations,
fees and expenses of their counsel, accountants, financial advisors and CIBC
Wood Gundy Securities Corp. and bonuses and other incentives payable to James A.
McLaughlin, Jr., Robert Vann and David Schuenemeyer and other employees in
respect of the calendar year ended December 31, 1996), and on the day prior to
the Closing Date, a schedule as of the Closing Date of such fees and expenses
including invoices, receipts, bills or other statements detailing such amounts
(the total such amount, the "Reserve Amount"). The Stockholders severally agree
to indemnify and hold harmless, the Parent, the Company and the Surviving
Corporation from and against any and all liabilities to which such entities may
be subjected following the Closing Date in connection with Seller's and the
Stockholders' fees and expenses arising out of, incurred or to be incurred in
connection with the transactions contemplated by this Agreement.
(c) The Seller will prepare and deliver to the Acquiror five
days prior to the Closing Date a schedule showing the outstanding principal of
and interest which will have accrued as of the Effective Time with respect to
promissory notes issued to the Seller by holders of Series B Preferred Stock,
15% Preferred Stock, 8% Preferred Stock and Common Stock, as the case may be, in
consideration or partial consideration of the issuance of shares of such stock
to the holders thereof.
(d) The Seller will prepare and deliver to the Acquiror five
days prior to the Closing Date a schedule showing the amount of each of the
Series B Preferred Stock Merger Consideration, the 15% Preferred Stock Merger
Consideration, the 8% Preferred Stock Merger Consideration and the Common Stock
Merger Consideration.
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2.4 WORKING CAPITAL. At the Closing Date, the Company will have
Working Capital of at least $5,000,000 and cash of $750,000. Any cash in excess
of $750,000 may be used by the Company to discharge Indebtedness in accordance
with Section 7.14 herein. The Seller will prepare and deliver to the Acquiror
five days prior to the Closing Date a schedule showing Working Capital as of
such date (the "Working Capital Schedule"). The Acquiror and the Parent shall
have the opportunity to participate in the preparation of such schedule and to
comment on and review such schedule. The parties hereto shall use their best
efforts to resolve any disputes with respect to the Working Capital Schedule
prior to the Effective Time. "Working Capital" shall mean the difference
between (i) consolidated current assets (but excluding cash) and
(ii) consolidated current liabilities (but excluding the current portion of
long-term debt). The Working Capital Schedule shall be prepared in accordance
with GAAP based upon the books and records of the Company.
2.5 PAYMENTS AT CLOSING. At the Effective Time, the Parent shall
make the following payments by wire transfer of immediately available funds:
(a) The Acquiror shall pay the Indebtedness outstanding on the
Closing Date to such persons and in such amounts as the Seller shall direct in
writing.
(b) The Acquiror shall pay to the Disbursing Agent the Aggregate
Merger Consideration, after giving effect to the reductions pursuant to Section
2.2(c). The Aggregate Merger Consideration, after giving effect to the
reductions pursuant to Section 2.2(c) shall be disbursed by the Disbursing Agent
in accordance with Section 2.6 of this Agreement.
2.6 DISBURSING AGENT; DISBURSEMENT OF AGGREGATE MERGER CONSIDERATION.
(a) DISBURSEMENT OF AGGREGATE MERGER CONSIDERATION.
After the Effective Time, the Disbursing Agent shall disburse the amount
received pursuant to Section 2.5(b) as follows:
(i) The Disbursing Agent shall pay to CIBC Wood Gundy
Securities Corp. the Wood Gundy Fee.
(ii) The Disbursing Agent shall deposit the Reserve Amount
(less the Wood Gundy Fee) in an interest-bearing account for application to the
payment of fees and expenses and other costs arising out of or incurred by the
Seller and its stockholders in connection with the Merger and the transactions
contemplated by this Agreement, including, those fees, expenses and other costs
referred to in Section 2.3(b) which have not been paid prior to the Effective
Time. At such time, not later than six months following the Closing Date, that
the Disbursing Agent
6
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determines, in its sole discretion, that the remainder of the Reserve Amount is
no longer required to be maintained by the Disbursing Agent to satisfy such
fees, expenses and costs, the amount then being retained by the Disbursing
Agent, together with interest earned thereon, shall be remitted to the holders
of the Seller's Common Stock immediately before the Effective Time (other than
to holders of Dissenters' Shares which are Common Stock). Each such holder
shall be entitled to receive the amount to be so disbursed, multiplied by a
fraction of which the numerator is the number of shares of the Seller's Common
Stock held by such holder immediately prior to the Effective Time and the
denominator is the number of outstanding shares of the Seller's Common Stock
(other than Dissenters' Shares which are shares of Common Stock) immediately
prior to the Effective Time.
(iii) The Disbursing Agent shall remit to each holder of the
Seller's Series B Preferred Stock (other than to holders of Dissenters' Shares
which are shares of Series B Preferred Stock), upon surrender to the Disbursing
Agent of the certificates representing such shares, an amount equal to (i) the
Series B Preferred Stock Merger Consideration, after giving effect to any
reductions set forth in Section 2.2, multiplied by (ii) a fraction of which the
numerator is the number of shares of the Seller's Series B Preferred Stock held
by such holder immediately prior to the Effective Time and the denominator is
the number of outstanding shares of the Seller's Series B Preferred Stock (other
than Dissenters' Shares which are shares of Series B Preferred Stock)
immediately prior to the Effective Time.
(iv) The Disbursing Agent shall remit to each holder of the
Seller's 15% Preferred Stock (other than to holders of Dissenters' Shares which
are shares of 15% Preferred Stock), upon surrender to the Disbursing Agent of
the certificates representing such shares, an amount equal to (i) the 15%
Preferred Stock Merger Consideration, after giving effect to any reductions set
forth in Section 2.2, multiplied by (ii) a fraction of which the numerator is
the number of shares of the Seller's 15% Preferred Stock held by such holder
immediately prior to the Effective Time and the denominator is the number of
outstanding shares of the Seller's 15% Preferred Stock (other than Dissenters'
Shares which are shares of 15% Preferred Stock) immediately prior to the
Effective Time.
(v) The Disbursing Agent shall remit to each holder of the
Seller's 8% Preferred Stock (other than to holders of Dissenters' Shares which
are shares of 8% Preferred Stock), upon surrender to the Disbursing Agent of the
certificates representing such shares, an amount equal to (i) the 8% Preferred
Stock Merger Consideration after giving effect to any reductions set forth in
Section 2.2, multiplied by (ii) a fraction of which the numerator is the number
of shares of the Seller's 8%
7
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Preferred Stock held by such holder immediately prior to the Effective Time and
the denominator is the number of outstanding shares of the Seller's 8% Preferred
Stock (other than Dissenters' Shares which are shares of 8% Preferred Stock)
immediately prior to the Effective Time.
(vi) The Disbursing Agent shall remit to each holder of the
Seller's Common Stock (other than to holders of Dissenters' Shares which are
shares of Common Stock), upon surrender to the Disbursing Agent of the
certificates representing such shares, an amount equal to (i) the Common Stock
Merger Consideration, after giving effect to any reductions set forth in Section
2.2 multiplied by (ii) a fraction of which the numerator is the number of shares
of the Seller's Common Stock held by such holder immediately prior to the
Effective Time and the denominator is the number of outstanding shares of the
Seller's Common Stock (other than Dissenters' Shares which are shares of Common
Stock) immediately prior to the Effective Time.
(vii) Notwithstanding the foregoing, the amount to be received
by any Stockholder pursuant to the preceding clauses (iii)-(vi) shall, if
applicable, be reduced as provided in Section 2.1 (f).
(b) RELIANCE ON SELLER'S BOOKS AND RECORDS. The Disbursing Agent
shall be fully protected in relying on, and is fully entitled to rely on the
books and records of the Seller to determine the names and addresses of and the
numbers of shares held by the holders of the Seller's Series B Preferred Stock,
15% Preferred Stock, 8% Preferred Stock or Common Stock.
(c) RELATIVE TO DISBURSING AGENT. (i) The Disbursing Agent shall be
protected in acting upon any written notice, statement, certificate, waiver,
consent or other instrument or document which the Disbursing Agent believes to
be genuine.
(ii) It is understood and agreed that the duties of the
Disbursing Agent hereunder are purely ministerial in nature and that the
Disbursing Agent shall not be liable for any error or judgment, or for any act
done or step taken or omitted in good faith, or for anything which the
Disbursing Agent may do or refrain from doing in connection with this Agreement,
except that the Disbursing Agent shall be liable for its own gross negligence or
willful misconduct. In no event shall the Disbursing Agent be required to
account for any application of funds subsequent to disposition thereof in
accordance with this Agreement by the Disbursing Agent. The Disbursing Agent
shall not be liable for any consequential or incidental damages arising from its
actions hereunder.
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(iii) The Disbursing Agent may consult with and obtain advice
from legal counsel in the event of any dispute or question as to the
construction of any of the provisions hereof or the Disbursing Agent's duties
hereunder. The Disbursing Agent shall incur no liability and shall be fully
protected in acting in accordance with the opinion of its legal counsel. The
Disbursing Agent shall not be responsible in any manner whatsoever for any
failure or inability of any of the other parties hereto, or anyone else, to
perform or comply with any provisions of this Agreement or any other agreement
or undertaking.
(iv) If at any time the Disbursing Agent shall be in doubt as
to any of its duties under this Agreement, the Disbursing Agent may apply to a
court of competent jurisdiction for a determination of such duties, and the
Disbursing Agent shall incur no liability therefor.
(v) If at any time the Disbursing Agent shall receive
conflicting notices, claims, demands or instructions with respect to the
Aggregate Merger Consideration, the Reserve Amount and the interest earned
thereon, or if for any other reason it shall be unable in good faith to
determine the party or parties to whom the Aggregate Merger Consideration, the
Reserve Amount and the interest earned thereon are to be distributed, the
Disbursing Agent may refuse to make such disbursement until the Disbursing Agent
is directed by a final order of a court of competent jurisdiction (in an action
brought by the Disbursing Agent or by any other person), whereupon the
Disbursing Agent shall make such disbursement in accordance with such order.
(vi) The Disbursing Agent shall act solely as the
representative of the Stockholders, and any action taken by the Disbursing Agent
as contemplated by this Agreement shall be for the benefit of, at the direction
of and as agent for the Stockholders. Neither the Parent, the Acquiror, the
Seller, the Company nor the Surviving Corporation shall be responsible or liable
for any actions of the Disbursing Agent or for any costs or expenses associated
with the Disbursing Agent and its actions hereunder. Any and all such
liabilities shall be liabilities of the Stockholders. Any action of the
Disbursing Agent involving incurrence of expense to third parties shall be paid
or reimbursed out of the Reserve Amount to the extent funds are therein
available, and otherwise shall be paid by the Stockholders. All other costs and
expenses associated with the Disbursing Agent and its actions hereunder shall be
paid by the Stockholders. The Stockholders agree to indemnify and hold
harmless, the Parent, the Company and the Surviving Corporation from and against
any and all liabilities to which such entities may be subjected to by reason of
any Losses associated with the Disbursing Agent and its actions or inactions.
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(vii) Promptly following the disbursement of the Aggregate
Merger Consideration pursuant to Section 2.6 hereof, the Disbursing Agent shall
deliver to the Surviving Corporation the certificates formerly representing
shares of capital stock of the Seller surrendered to the Disbursing Agent by the
Stockholders in accordance with Section 2.6.
III. DEFINITIONS.
As used in this Agreement, the following terms shall have the indicated
meanings:
"ACQUIROR" shall mean Universal Acquisition Corp., a corporation organized
under the laws of Delaware.
"AFFILIATED GROUP" means any group of corporations with respect to which a
Consolidated Tax Return was, or was required to have been, filed.
"AGGREGATE MERGER CONSIDERATION" shall mean $240,000,000, MINUS an amount
equal to the Indebtedness outstanding as of the Closing Date.
"BALANCE SHEET" shall mean the unaudited consolidated financial statements
of the Company for the month and year to date ended June 30, 1996.
"BALANCE SHEET DATE" shall mean June 30, 1996.
"BEST EFFORTS" shall mean reasonable good faith efforts but shall in no
event require the commencement of litigation against any third party or the
payment of any fees to any third party.
"BUSINESS DAY" shall mean any weekday on which commercial banks in both
Boston, Massachusetts and New York, New York are open. Any action, notice or
right which is to be exercised or lapses on or by a given date which is not a
Business Day may be taken, given or exercised, and shall not lapse, until the
end of the next Business Day.
"CLOSING" has the meaning specified in Article XI of this Agreement.
"CLOSING DATE" has the meaning specified in Article XI of this Agreement.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMMON STOCK" shall mean, collectively, the Seller's Class A Voting Common
Stock, $.01 par value per share, and the Seller's Class B Non-Voting Common
Stock, $.01 par value per share.
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"COMMON STOCK MERGER CONSIDERATION shall mean the Aggregate Merger
Consideration MINUS the sum of the Series B Preferred Stock Merger
Consideration, the 15% Preferred Stock Merger Consideration, the 8% Preferred
Stock Merger Consideration and the Reserve Amount.
"COMPANY" shall mean POA Acquisition Corporation, a Delaware corporation.
"COMPANY PLAN" has the meaning specified in Section 5.19 of this Agreement.
"CONFIDENTIALITY AGREEMENT" shall mean that certain Confidentiality
Agreement dated June 11, 1996 among the Seller, the Company, the Parent and
Boston Ventures Management, Inc. with respect to, among other things, the
treatment of confidential information regarding the Company.
"CONSOLIDATED TAX RETURN" shall mean any Tax Return required to be filed by
any consolidated, combined, unitary or similar group of corporations for federal
or state income tax purposes.
"DELAWARE CERTIFICATE" has the meaning specified in Section 1.1 of this
Agreement.
"DELAWARE STATUTE" has the meaning specified in Section 1.1 of this
Agreement.
"DISBURSING AGENT" shall mean Boston Ventures Management, Inc., a
Massachusetts corporation.
"8% PREFERRED STOCK" shall mean the Seller's 8% Cumulative Preferred Stock,
$.01 par value per share.
"8% PREFERRED STOCK MERGER CONSIDERATION shall mean the aggregate amount
equal to the sum of the Liquidation Values of each share of 8% Preferred Stock
outstanding on the Closing Date, determined in accordance with the Seller's
Certificate of Incorporation as in effect immediately prior to the Effective
Time.
"ENCUMBRANCES" shall mean any lien, security interest, mortgage, pledge,
hypothecation, easement or conditional sale or other title retention agreement;
provided, however, that Encumbrances shall not include any Permitted
Encumbrance.
"ENVIRONMENTAL LAWS" shall mean any applicable federal, state, or local
law, ordinance, regulation, order or permit pertaining to the environment,
natural resources or public or employee health or safety as presently in effect.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
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"15% PREFERRED STOCK" shall mean the Seller's 15% Cumulative Redeemable
Preferred Stock, $.01 par value per share.
"15% PREFERRED STOCK MERGER CONSIDERATION" shall mean the aggregate amount
equal to the sum of the Liquidation Values of each share of 15% Preferred Stock
outstanding on the Closing Date, determined in accordance with the Seller's
Certificate of Incorporation as in effect immediately prior to the Effective
Time.
"FINANCIAL STATEMENTS" shall mean the audited Consolidated Financial
Statements of the Company as at December 31, 1994 and December 31, 1995 and the
related audited Consolidated Statements of Operations, Stockholders' Equity and
Cash Flows of the Company for the years then ended, certified by Ernst & Young
LLP and the unaudited Consolidated Financial Statements of the Company as at
June 30, 1996 and the related unaudited Consolidated Statements of Operations,
Stockholders' Equity and Cash Flows of the Company for the month and year to
date ending June 30, 1996.
"HART-SCOTT-RODINO ACT" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"HAZARDOUS MATERIALS" shall mean hazardous wastes as presently defined by
the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section 609 et.
seq., as amended, and regulations promulgated thereunder and hazardous
substances as presently defined by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Section 9601 et. seq., as
amended ("CERCLA" or "Superfund") and regulations promulgated thereunder and
petroleum and petroleum products and any pollutants, contaminants, hazardous
wastes, substances or constituents, toxic or dangerous substances, or related
materials defined a such or any other similar designation in, or otherwise
subject to regulation under, Environmental Laws.
"INDEBTEDNESS" shall mean as at any date of determination, the sum of the
following items of the Seller, the Company and its Subsidiaries, if any,
determined on a consolidated basis: (i) obligations of the Seller, the Company
and its Subsidiaries created, issued or incurred for borrowed money, including
all fees and obligations thereunder, including, without limitation, any
prepayment or termination fees arising or which will arise out of the prepayment
of such Indebtedness prior to its maturity as a result of the transactions
contemplated hereby or otherwise and termination or prepayment fees arising out
of the early termination of interest rate swap and other interest rate
protection agreements, (ii) obligations of the Company and its Subsidiaries to
pay the deferred purchase or acquisition price of property or services, other
than trade or accounts payable arising, and accrued expenses incurred, in the
ordinary course of business, and (iii) capital lease obligations of the Company
and its Subsidiaries, if any.
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"LOSSES" means any liability, loss, claim, deficiency, damage, payment
(including, without limitation, those arising out of any demand, settlement or
judgment relating to any legal, equitable or arbitration action or proceeding),
cost or expense (including reasonable attorneys' fees) incurred by the Parent,
the Company or the Surviving Corporation or any of their respective officers,
directors, affiliates, employees or agents.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on the
business, operations, assets, or condition (financial or otherwise) of the
Company and its Subsidiaries, taken as a whole, excluding any effect or
potential effect resulting from or relating to any enacted or proposed statute
or regulation relating to the advertising of tobacco or tobacco products.
"MATERIAL LEASE" OR "MATERIAL LEASES" has the meaning specified in Section
5.9 of this Agreement.
"MERGER" has the meaning specified in Section 1.1 of this Agreement.
"MULTIEMPLOYER PLAN" has the meaning specified in Section 5.19 of this
Agreement.
"PERMITTED ENCUMBRANCE" shall mean: (a) Encumbrances imposed by any
governmental authority for taxes, assessments or charges not yet due and payable
or which are being contested in good faith and by appropriate proceedings if
adequate reserves with respect thereto are maintained on the books of the
Company or its Subsidiaries in accordance with generally accepted accounting
principals; (b) carriers, warehousemen's, mechanics', materialmen's, repairmen's
or other like Encumbrances arising in the ordinary course of business which are
not overdue for a period of more than 30 days or which are being contested in
good faith and by appropriate proceedings, if adequate reserves with respect
thereto are maintained on the books of the Company or its Subsidiaries, in
accordance with generally accepted accounting principles; (c) pledges or
deposits in connection with worker's compensation, unemployment insurance and
other social security legislation; (d) deposits to secure the performance of any
or all of the following: bids, trade contracts (other than for borrowed money),
leases, statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature incurred in the ordinary course of business;
and (e) easements, rights-of-way, restrictions and other similar encumbrances on
real property incurred in the ordinary course of business and encroachments
(whether or not in the ordinary course of business) which, in the aggregate, are
not substantial in amount, and which do not in any case materially detract from
the value of the property subject thereto or interfere with the ordinary conduct
of the business thereon.
"PARENT" shall mean Universal Outdoor, Inc., a corporation organized under
the laws of Illinois.
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"RESERVE AMOUNT" shall have the meaning set forth in Section 2.3(b).
"SELLER" shall mean Outdoor Advertising Holdings, Inc., a Delaware
corporation.
"SERIES B PREFERRED STOCK" shall mean the Seller's Series B Senior
Redeemable Preferred Stock, $.01 par value per share.
"SERIES B PREFERRED STOCK MERGER CONSIDERATION" shall mean the aggregate
amount equal to the sum of the Liquidation Values of each share of Series B
Preferred Stock outstanding on the Closing Date, as determined in accordance
with the Seller's Certificate of Incorporation in effect immediately prior to
the Effective Time.
"SIGN LOCATION LEASE" shall mean any lease, license or other agreement
between the Company or any Subsidiary and any person pursuant to which the
Company or such Subsidiary has obtained the right to erect, place and maintain
outdoor advertising sign structures on any ground space, roof or wall space or
upon any other improvement to real estate.
"STOCKHOLDER" shall mean a holder of the Seller's Series B Preferred Stock,
15% Preferred Stock, 8% Preferred Stock or Common Stock, and "STOCKHOLDERS"
shall mean all such holders.
"SUBSIDIARY" means any entity of which the Company has the power to
exercise 50% or more of the voting rights.
"SURVIVING CORPORATION" has the meaning specified in Section 1.2 of this
Agreement.
"TAX" OR "TAXES" means all taxes, charges, fees, imposts, levies or other
assessments, including, without limitation, all net income, gross income,
franchise, profits, gross receipts, capital, sales, use, ad valorem, value
added, transfer, transfer gains, inventory, capital stock, license, withholding,
payroll, employment, social security, unemployment, excise, severance, stamp,
recording, occupation, real or personal property, and estimated taxes, water,
rent and sewer service charges, customs duties, fees, assessments and charges of
any kind whatsoever, together with any interest and any penalties, fines,
additions to tax or additional amounts thereon, imposed by any taxing authority
(federal, state, local or foreign) and shall include any transferee liability in
respect of Taxes.
"TAX RETURN" means all returns, declarations, reports, estimates,
information returns, schedules and statements required to be filed in respect of
any Taxes.
"WARN ACT" shall mean the Workers Adjustment and Retraining Notification
Act of 1988 and any similar state or local plant closing law.
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"WOOD GUNDY FEE" means an amount equal to $2,025,000.
IV. REPRESENTATIONS AND WARRANTIES OF THE SELLER AS TO ITSELF.
The Seller hereby represents and warrants to the Parent and the Acquiror
that:
4.1 ORGANIZATION AND AUTHORITY OF THE SELLER. The Seller is a
corporation duly organized and validly existing under the laws of the State of
Delaware and has full corporate power and authority to own, lease and operate
its properties and carry on its business as it is now being conducted. The
Seller is not qualified as a foreign corporation in any jurisdiction. The
Seller has full corporate power and authority to execute and deliver this
Agreement, to consummate the transactions contemplated hereby and otherwise to
perform its obligations hereunder. The copies of the Seller's Certificate of
Incorporation and By-Laws (together with all amendments thereto) which have been
previously delivered or made available to the Acquiror are correct and complete.
4.2 DUE EXECUTION AND ABSENCE OF BREACH. This Agreement and the
performance of the transactions contemplated hereby have been duly authorized by
and this Agreement has been validly executed and delivered by, the Seller and,
subject to the approval of the Stockholders of the Seller required by the
Delaware Statute, constitutes the valid and legally binding obligation of the
Seller, enforceable against the Seller in accordance with its terms. Except as
set forth in SCHEDULE 4.2, the execution, delivery and performance by the Seller
of this Agreement and the transactions contemplated hereby will not: (i) violate
or conflict with any provision of the Certificate of Incorporation or Bylaws of
the Seller; (ii) result in the breach of, or constitute a default (with or
without notice or lapse of time, or both) under, or violate or conflict with any
provision of, or result in (or give rise to a right of) termination or
acceleration of (a) any debt instrument, indenture, mortgage agreement or other
instrument, understanding or arrangement to which the Seller is a party or by
which its assets are bound or (b) any judgment, order, injunction, law, rule,
ordinance, regulation or decree by which the Seller is bound or by which its
assets are bound or affected, or (iii) result in the imposition of any lien or
security interest on any of the assets of the Seller or impair the Seller's
ability to perform its obligations under this Agreement.
4.3 CAPITALIZATION. The authorized capital stock of the Seller
consists of (i) 2,500,000 shares of Class A Voting Common Stock, $.01 par value
per share, of which 2,153,646.20 shares are outstanding as of the date hereof,
(ii) 2,500,000 shares of Class B Non-Voting Common Stock, $.01 par value per
share, of which 256,137.9 shares are outstanding as of the date hereof, (iii)
1,500,000 shares of Series B Preferred Stock, of which 1,500,000 shares are
outstanding as of the date hereof,
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(iv) 376,154 shares of 15% Preferred Stock, of which 320,167.9 shares are
outstanding as of the date hereof, and (v) 2,549,714 shares of 8% Preferred
Stock, of which 2,438,903.20 shares are outstanding as of the date hereof. All
of the outstanding shares of capital stock of the Seller have been validly
issued and are fully paid and non-assessable and have not been issued in
violation of any preemptive rights, although certain of such shares have been
paid for in whole or in part by the delivery of promissory notes to the Seller
which will be due and payable as of the Effective Time, as described in SCHEDULE
4.3. All of the issued and outstanding shares of capital stock of the Company
are owned beneficially and of record by the Seller. Except as set forth in
SCHEDULE 4.3, there is no existing option, warrant, call, commitment or other
security or agreement of any kind to which the Seller or any direct or indirect
subsidiary thereof is a party or by which any of their assets are subject
requiring, and there are no convertible securities of the Seller outstanding
which upon conversion would require, the issuance of any additional shares of
capital stock of the Seller or other securities convertible into shares of
capital stock or any debt or equity security of the Seller of any kind.
4.4 SUBSIDIARIES. The only Subsidiary of the Seller is the Company.
Upon payment of the Indebtedness, the Seller will own all of the outstanding
shares of capital stock of the Company, free and clear of all Encumbrances. All
of the issued and outstanding shares of capital stock of the Company have been
validly issued and are fully paid and nonassessable and have not been issued in
violation of any preemptive rights. Except for the ownership interests set
forth in SCHEDULE 4.4, none of the Seller, the Company or the Subsidiaries owns,
directly or indirectly, any capital stock or other ownership interest in any
corporation, partnership, business association, joint venture or other entity or
is obligated to make any capital contribution to or other investment in any
other person.
4.5 BUSINESS OF THE SELLER. Except for liabilities of the Seller set
forth in SCHEDULE 4.5 hereof, since the date of its formation Seller has not
incurred any obligations or liabilities, nor engaged in any business or
activities (other than the holding of the capital stock of the Company) of any
type or kind whatsoever or, except as set forth in SCHEDULE 4.5 hereof, entered
into any agreements or arrangements with any person or entity. The only asset
of the Seller is 100 shares of the Class A Common Stock of the Company and an
account receivable owed to the Seller by the Company in the amount of $320,766.
4.6 STOCKHOLDER VOTE.
(a) Pursuant to the provisions of the Restated Certificate of
Incorporation of the Seller, the Bylaws of the Seller and the Delaware Statute
and any other applicable law, the only approval of holders of capital stock of
the Seller required to approve the Merger and to approve and adopt this
Agreement and transactions contemplated hereby is the approval of a majority of
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the holders of issued and outstanding shares of Class A Voting Common Stock of
the Seller.
(b) The Board of Directors of the Seller has (i) approved this
Agreement and the transactions contemplated hereby, (ii) determined that the
terms of the Merger are in the best interests of the Stockholders and (iii)
resolved to recommend the approval of the Merger and the adoption of this
Agreement and the consummation of the transactions contemplated herein to the
Stockholders.
V. REPRESENTATIONS AND WARRANTIES OF THE SELLER AS TO THE
COMPANY.
The Seller hereby represents and warrants to the Parent and the Acquiror
that:
5.1 ORGANIZATION AND GOOD STANDING. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, and has full corporate power and authority to own its
properties and carry on its business as it is now being conducted. The Company
and each of its Subsidiaries is duly qualified as a foreign corporation and is
in good standing under the laws of (i) each jurisdiction in which it owns real
property and (ii) each other jurisdiction in which the conduct of its business
or the ownership of its assets requires such qualification, except where such
failures to be so qualified, in the aggregate, would not have a Material Adverse
Effect. The copies of the Company's Certificate of Incorporation and By-Laws
(together with all amendments thereto) which have been previously delivered or
made available to the Acquiror are correct and complete.
5.2 CAPITALIZATION. The authorized capital stock of the Company
consists of (i) 100 shares of Class A Common Stock, par value $.01 per share, of
which 100 shares are outstanding as of the date hereof, (ii) 1,223,713 shares of
Series A Senior Redeemable Preferred Stock, $.01 par value per share, none of
which is outstanding and (iii) 550,000 shares of 14% Cumulative Preferred Stock,
$.01 par value per share, none of which is outstanding. There is no existing
option, warrant, call, commitment or other security or agreement of any kind to
which the Company or any of its Subsidiaries is a party or by which any of their
assets are subject requiring, and there are no convertible securities of the
Company or any of its Subsidiaries outstanding which upon conversion would
require, the issuance of any additional shares of capital stock of the Company
or any of its Subsidiaries or other securities convertible into shares of
capital stock or any debt or equity security of the Company or any of its
Subsidiaries of any kind.
5.3 SUBSIDIARIES. The only Subsidiaries of the Company are Harry
Moody Outdoor Advertising, Inc., a Florida corporation, and POZ Outdoor
Advertising of St. Lucie County, Inc., a Florida corporation. Each of such
Subsidiaries is a
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corporation duly organized, validly existing and in good standing under the laws
of the state of its incorporation, and each has full corporate power and
authority to own its properties and to carry on its business as it is now being
conducted. Upon payment of the Indebtedness, the Company will own all of the
outstanding shares of capital stock of each of the Subsidiaries, free and clear
of all Encumbrances.
5.4 FINANCIAL STATEMENTS. The Seller has delivered to the Acquiror
copies of the Financial Statements. The Financial Statements have been prepared
in accordance with the books and records of the Company and the Subsidiaries as
of the dates and for the periods indicated, have been prepared in accordance
with generally accepted accounting principles and in conformity with the
practices consistently applied by the Company in the immediately preceding
fiscal periods, and, with respect to the unaudited interim financial statements,
subject to normal year-end audit adjustments and the absence of footnotes,
present fairly the consolidated financial position, results of operations and
cash flows of the Company and its Subsidiaries as at the dates and for the
periods indicated.
5.5 NO UNDISCLOSED LIABILITIES. At the Balance Sheet Date, the
Company and its Subsidiaries had no indebtedness or liabilities (whether
accrued, absolute, contingent or otherwise, and whether due or to become due)
except for those set forth on the Balance Sheet or disclosed on SCHEDULE 5.5.
Except as set forth in the Balance Sheet, the Company and its Subsidiaries have
no material indebtedness or liability other than (i) immaterial liabilities
incurred since the Balance Sheet Date, or (ii) disclosed on SCHEDULE 5.5.
5.6 NO MATERIAL ADVERSE CHANGE; NO DIVIDENDS. Since the Balance
Sheet Date, there has been no Material Adverse Effect, and no event has occurred
which may reasonably be expected to result in a Material Adverse Effect. Since
the Balance Sheet Date, (i) the Company has conducted its business in the
ordinary course, consistent with past practices and, except as disclosed on
SCHEDULE 5.6, has taken no action of the type described in the second sentence
of Section 7.3 hereof, and (ii) no dividends or distributions have been declared
or paid on or made with respect to the shares of capital stock or other equity
interests of the Company nor, except as set forth in SCHEDULE 5.6 hereof, have
any such shares or equity interests been repurchased or redeemed.
5.7 TAXES. Except as set forth on SCHEDULE 5.7 hereto, (a) all Tax
Returns required to be filed by or on behalf of the Seller, the Company or any
Affiliated Group of which the Seller or the Company is or was a member are true,
complete and correct and have been duly filed with the appropriate taxing
authorities in all jurisdictions in which such Tax Returns are required to be
filed, and all amounts shown on such Tax Returns (including interest and
penalties) as due from the Seller or the Company and its Subsidiaries have been
fully and timely paid or
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are adequately provided for on the Balance Sheet and (b) no waivers of statutes
of limitation have been given or requested with respect to the Seller, the
Company or its Subsidiaries in connection with any Taxes or Tax Returns with
respect to the Company or such Subsidiaries. Except as set forth on
SCHEDULE 5.7 hereto, all deficiencies asserted or assessments made with respect
to Taxes or Tax Returns of the Seller, the Company or its Subsidiaries have been
fully paid, and there are no unpaid deficiencies asserted or assessments made by
any taxing authority against the Seller, the Company or its Subsidiaries.
Neither the Seller, the Company nor any of its Subsidiaries (i) has made
payments, is obligated to make any payments, or is a party to any agreement that
under certain circumstances could obligate them to make any payments that will
not be deductible under Code Section 280G, (ii) is a party to any Tax allocation
or sharing agreement, (iii) has filed a consent under Code Section 341(f)
concerning collapsible corporations, or (iv) has any deferred intercompany
income or gains or excess loss accounts within the meaning of Treasury
Regulation Section 1.1502 ET. SEQ. (or any similar provisions of state law).
Except as set forth on SCHEDULE 5.7, neither the Seller, the Company nor any of
its Subsidiaries has undergone or will undergo an "ownership change" within the
meaning of Code Section 382(g)(1) since the date that Seller acquired the
Company through and including the Closing Date (excluding any ownership change
which occurs as a result of the acquisition of all of the capital stock of the
Seller by Parent under this Agreement).
5.8 PATENTS, TRADEMARKS AND COPYRIGHTS. SCHEDULE 5.8 hereto contains
a complete and correct list of each material patent, trademark, trade name,
service mark and copyright owned or used by the Company and its Subsidiaries and
pending applications therefor, and each license or other agreement relating
thereto. Except as set forth on SCHEDULE 5.8 hereto, each of the foregoing is
owned by the Company or its Subsidiaries, free and clear of all Encumbrances.
There have been no claims asserted in writing which are still pending, that any
of the foregoing is invalid or conflicts with the asserted rights of others,
which would, in the aggregate, reasonably be likely to result in a Material
Adverse Effect. The Company and its Subsidiaries possess all patents, patent
licenses, trade names, trademarks, service marks, brand marks, brand names,
copyrights, know-how, formulas and other proprietary and trade rights necessary
for the conduct of their respective businesses as now conducted, except for
those the absence of which, in the aggregate, would not be reasonably likely to
result in a Material Adverse Effect. To the knowledge of the Seller, the use by
the Company of such rights in the conduct of its business as now conducted does
not violate the rights of any third party, except for such violations which, in
the aggregate, would not be reasonably expected to have a Material Adverse
Effect.
5.9 REAL PROPERTY; LEASES OF REAL PROPERTY. As of the Closing, the
Company or one of its Subsidiaries will have good, valid and marketable fee
simple title to each piece of real property set forth on SCHEDULE 5.9 hereto as
owned by the Company
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or one of its Subsidiaries (the "Owned Real Properties"). Except for Sign
Location Leases, SCHEDULE 5.9 hereto contains a complete and correct list in all
material respects of all leases, subleases, license agreements or other rights
of possession or occupancy of real property to which the Company or a Subsidiary
is a party (as tenant, occupier or possessor) pursuant to which the current net
annual rent payable by the Company currently exceeds $25,000 (each such lease or
agreement, a "Material Lease" and collectively the "Material Leases"). All of
the Material Leases are in full force and effect. Complete and correct copies
of each Material Lease have been furnished or made available to Acquiror.
Except as disclosed on SCHEDULE 5.9 hereto, no consent is required of any
landlord or other third party to any Material Lease to consummate the
transactions contemplated hereby, and upon consummation of the transactions
contemplated hereby, each Material Lease will continue to entitle the Company or
its Subsidiaries to the use and possession of the real property specified in
such Material Leases and for the purposes for which such real property is now
being used by the Company or its Subsidiaries. Except as set forth in such
Schedule, neither the Company nor any of its Subsidiaries is in default (or with
notice or lapse of time or both will be in default) or has received written
notice of default within the past 18 months (other than such notices of
immaterial defaults which are no longer outstanding) under any such Material
Lease, and to the best of Seller's knowledge, on the date hereof, there exists
no uncured default or any event which could give rise to a default thereunder by
any third party, which in either case would be reasonably likely to result in a
Material Adverse Effect. Except as disclosed on SCHEDULE 5.9, none of Seller,
the Company or any of its Subsidiaries is aware of any circumstance involving a
dispute, oral modification, misunderstanding, forbearance program or intention
to terminate the relationship thereunder (either at present or in the future)
regarding or in relation to any Material Lease or Sign Location Lease. Each
Material Lease and Sign Location Lease has been entered into on terms
substantially consistent with industry standards and practices with respect to
all matters the subject thereof. The properties leased by the Company or one of
its Subsidiaries pursuant to a Material Lease and the Owned Real Properties are
collectively referred to herein as the "Real Properties". Neither the Company
nor any of its Subsidiaries has received any written notice or communication
advising it of any general or special assessment relating to any of the Real
Properties. To the knowledge of Seller, except as disclosed in SCHEDULE 5.9,
there are no (i) plans by any governmental authority which may result in the
imposition of any special assessment relating to any of the Real Properties;
(ii) condemnation or eminent domain proceedings pending or threatened against
any of the Real Properties by any governmental authority; (iii) variances,
special exceptions, conditions or agreements pertaining to any of the Real
Properties imposed on or granted by or entered into by the Company or any of its
Subsidiaries, which are enforceable by any national, state, county or municipal
government, agent or body, any neighborhood or civic group, or any similar body;
(iv) written notices from any national, city,
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county, or other governmental authority which have been received by the Company
or any of its Subsidiaries requiring or calling attention to the need for any
work, repair, construction, alteration or installation on, or in connection
with, any of the Real Properties; (v) any material structural defects in any of
the buildings constituting part of the Real Properties nor any material defects
in any system supporting such a building.
5.10 SIGN LOCATION LEASES. The Seller has delivered to the Acquiror a
schedule of Sign Location Leases (the "Lease Schedule"). The description of the
terms of each Sign Location Lease on each Lease Schedule is correct, except for
such minor irregularities, errors or omissions which would not be reasonably
likely to result in a Material Adverse Effect.
5.11 PERMITS; COMPLIANCE WITH LAWS. The Company and its Subsidiaries
have all necessary permits, licenses and governmental authorizations required
for the ownership or occupancy of their properties and assets and the carrying
on of their respective businesses, except for failures to have any such permit,
license or governmental authorization which, in the aggregate, would not be
reasonably likely to result in a Material Adverse Effect. Except as set forth
on SCHEDULE 5.11, the Company is, not in violation of, or, to the Seller's
knowledge, is under investigation with respect to or has been threatened to be
charged with or given notice that the continued operation of any assets does or
will violate, any applicable judgment, order, injunction, law, rule, ordinance,
regulation or decree of any federal, state, local or foreign governmental
authority (it being agreed that "legal non-conforming" signs shall not be in
violation of this sentence because they are "legal non-conforming") except for
such violations which, individually or in the aggregate, would not be reasonable
likely to result in a Material Adverse Effect; provided, that, in determining
whether the loss of any sign or signs would be reasonable likely to result in a
Material Adverse Effect, any rights arising therefrom to obtain or erect
replacement signs shall be taken in account.
5.12 INSURANCE. SCHEDULE 5.12 hereto contains a materially complete
and correct list of all policies of insurance of any kind or nature covering the
Company and the Subsidiaries, including, without limitation, policies of life,
fire, theft, employee fidelity and other casualty and liability insurance, and
such policies are in full force and effect. Except as set forth on SCHEDULE
5.12, there is no claim pending nor has there been a claim made since January 1,
1994 under any of such policies or bonds as to which coverage has been
questioned, denied or disputed by the underwriters of such policies or bonds or
in respect of which such underwriters have reserved their rights. The Company
and the Subsidiaries, to the Seller's knowledge, have complied with the terms
and conditions of all such policies and bonds. Such policies will remain in
effect immediately following Closing. All workers compensation insurance is in
full force and effect and no notice of any cancellation will respect to such
insurance has been received. Complete and correct copies of each
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such policy have been furnished or made available to the Acquiror.
5.13 MATERIAL CONTRACTS. Except as set forth on SCHEDULE 5.13 hereto,
neither the Company nor any Subsidiary is a party to any (i) material contract
not made in the ordinary course of business; (ii) contract for the employment of
any officer or employee; (iii) contract for the future purchase of materials,
supplies, services, merchandise or equipment not capable of being fully
performed or not terminable within a period of one year from the date hereof or
in excess of normal operating requirements; (iv) agreement for the sale or lease
of any of its assets other than in the ordinary course of business; (v) contract
or commitment for capital expenditures in excess of $100,000; (vi) lease of
machinery or equipment involving annual payments in excess of $100,000; (vii)
loan agreement, promissory note issued by it, guarantee, subordination or
similar type of agreement; (viii) stock option, retirement, severance, pension,
bonus, profit sharing, group insurance, medical or other fringe benefit plan or
program providing employee benefits; (ix) consulting agreement; (x) municipal or
other governmental franchise agreements; (xi) agreement with a labor union or
labor association; (xii) agreement providing for indemnification of any other
parties; or (xiii) agreement restricting the Company's or any of its
Subsidiaries' ability to conduct business generally (or any type of business) in
any location. Complete and correct copies of each such agreement have been
furnished or made available to the Acquiror. Except as set forth in
SCHEDULE 5.13 hereto, to the Seller's knowledge, all of the foregoing
agreements, leases, and other documents are valid, binding and in full force and
effect, and the Company and its Subsidiaries have performed all of the
obligations required to be performed by them to date and are not in default (or
with notice or lapse of time or both will be in default) under any of the
agreements, leases, contracts or other documents to which any of then is a party
listed on SCHEDULE 5.13, other than for those failures to perform and defaults
which, in the aggregate, would not be reasonably likely to result in a Material
Adverse Effect. Except as set forth in SCHEDULE 5.13 hereto, to the Seller's
knowledge, no party with whom the Company or a Subsidiary has such a scheduled
agreement is in default (or with notice of lapse of time or both will be in
default) thereunder, which default, in the aggregate, would be reasonably likely
to result in a Material Adverse Effect. Except as disclosed herein or in
SCHEDULE 5.13 hereto, neither the Company nor any Subsidiary is a party to any
non-competition or similar agreement which restricts in any material way the
current operation of their businesses taken as a whole.
5.14 TITLE TO PROPERTIES; ABSENCE OF ENCUMBRANCES. The Company and
its Subsidiaries have good and marketable title to their properties and assets
shown as owned on the Balance Sheet and as acquired since the Balance Sheet Date
(except for assets disposed of in the ordinary course of business since the
Balance Sheet Date), free and clear of any and all Encumbrances,
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except as set forth in SCHEDULE 5.14 thereto and except for Permitted
Encumbrances.
5.15 RESTRICTIONS. Except as set forth in SCHEDULE 5.15 hereto,
neither the execution or delivery of this Agreement nor the consummation of the
transactions contemplated hereby, will (after the giving of notice, the passage
of time, or both) violate or conflict with or result in a breach of, or result
in the termination of or give rise to a right of termination of, or accelerate
the performance required by, or require any consent of any party thereto or
thereunder, any terms of any agreement to which the Company or any Subsidiary is
a party or to which any of their assets are subject or constitute a default
thereunder, or result in the creation of any Encumbrance upon any of their
respective assets, except for such conflicts, breaches, rights of termination or
acceleration, defaults and Encumbrances that in the aggregate would not be
reasonably likely to result in a Material Adverse Effect, nor will it violate
any of the provisions of the Company's Certificate of Incorporation or By-Laws
or the charter or bylaws of any of the Subsidiaries or violate any judgment,
order, injunction, law, rule, ordinance, regulation or decree by which any of
them is bound or to which any of their assets are subject.
5.16 LITIGATION; CONSENTS. Except as disclosed in SCHEDULE 5.16
hereto, there is no action, suit, proceeding or formal governmental inquiry or
investigation pending against the Seller or the Company which seeks to restrain
or, prohibit or otherwise challenges the consummation, legality or validity of
the transactions contemplated hereby. Except as disclosed in SCHEDULE 5.16
hereto, there is no action, suit, proceeding or formal governmental inquiry or
investigation pending against the Seller, the Company or, to the Seller's
knowledge, any of the Subsidiaries, other than those which, if the relief
requested were granted, (without taking into account any insurance coverage
thereof) would not, in the aggregate, be reasonably likely to result in a
Material Adverse Effect. Except as set forth in Section 4.6 or Section 7.5 or
as set forth in SCHEDULE 5.16 hereto, and except with respect to local
governmental permits or licenses, no consent, approval, waiver, registration,
application, permit, license, action, filing, notice or authorization of or to
any governmental authority is required in connection with the execution and
delivery of this Agreement or the consummation of any of the transactions
contemplated hereby except for those required in connection with the proposed
name change of the Surviving Corporation, the financing to be obtained by the
Parent and the Acquiror in connection with the transactions contemplated hereby,
including, without limitation, to effectuate the Merger, to pay the transaction
fees and expenses associated therewith and to provide working capital to the
Surviving Corporation on a going forward basis (the "Financing") or as required
by reason of facts pertaining specifically to the Parent or the Acquiror.
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5.17 ENVIRONMENTAL MATTERS. Except as disclosed in SCHEDULE 5.17
hereto, to the Seller's knowledge (i) the operations of the Company and its
Subsidiaries are in compliance with applicable Environmental Laws, except for
such noncompliance which is not reasonably likely to result in a Material
Adverse Effect, (ii) neither the Company nor any of its Subsidiaries is subject
to any judicial or administrative proceeding or has received a claim by any
person alleging the violation of or liability under any Environmental Law or
regarding any Hazardous Materials on any real property owned or leased by the
Company or any of its Subsidiaries (which, in the case of real property leased
by the Company or its Subsidiaries for the sole purpose of having a sign
thereon, arises from the Company's or its Subsidiary's activities or from the
sign, including its construction or maintenance), which proceeding or claim is
reasonably likely to result in a Material Adverse Effect, (iii) neither the
Company nor any of its Subsidiaries has received any written notice or request
for information from any governmental authority or other person alleging that it
is a potentially responsible party at any Superfund site or analogous site
subject to listing, investigation or remediation under another Environmental
Law, (iv) neither the Company nor any of its Subsidiaries has caused or
permitted its operations (X) to be used to generate, manufacture, transport,
treat, store, handle, dispose or process Hazardous Materials or other dangerous
or toxic substances, or solid wastes except in compliance with Environmental
Laws, or (Y) to release, spill, leak, emit, discharge, dispose or dump any
Hazardous Material that has gone onto or offsite of any real property owned or
eased by the Company or any of its Subsidiaries, in any quantity which is
reasonably likely to result in a Material Adverse Effect, (v) the Company and
its Subsidiaries have no knowledge that any person or entity has in the past
utilized any real property owned or leased by the Company or its Subsidiaries in
a manner which has created any Hazardous Material on or offside of such
property, and (vi) the Seller has delivered to the Buyer each environmental
investigation, study, audit, test, review or other analysis relating to the Real
Properties of which the Seller or the Company has knowledge.
5.18 LABOR AGREEMENTS. (a) Except as set forth in SCHEDULE 5.18
hereto, neither the Company nor any of its Subsidiaries is a party to any labor
or collective bargaining agreement and there are no labor or collective
bargaining agreements which pertain to employees of the Company or any of its
Subsidiaries.
(b) Except as set forth in SCHEDULE 5.18 hereto, there are no
pending or, to the Seller's knowledge, threatened strikes, work stoppages,
slowdowns, lockouts, grievances, arbitrations or other material labor disputes
against the Company or any of its Subsidiaries.
(c) Except as set forth in SCHEDULE 5.18 hereto, there are no
pending or, to the Seller's knowledge,
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threatened complaints, charges or claims against the Company or any Subsidiary
filed with any public or governmental authority, arbitrator or court based upon
the employment or termination of employment by the Company or any Subsidiary of
any individual, which, in the aggregate, would be reasonably likely to result in
a Material Adverse Effect.
(d) Except as set forth in SCHEDULE 5.18 hereto, to the Seller's
knowledge the Company and its Subsidiaries are in compliance with all laws,
regulations and orders relating to the employment of labor, including all such
laws, regulations and orders relating to wages, hours, WARN Act, collective
bargaining, discrimination, civil rights, safety and health, workers'
compensation and the collection and payment of withholding and/or social
security taxes and any similar tax, except for such non-compliance as would not
be reasonably likely to result in a Material Adverse Effect.
(e) Except as set forth in SCHEDULE 5.18 hereto, none of the
Company or any of its Subsidiaries has any written personnel policy applicable
to employees.
(f) Except as set forth in SCHEDULE 5.18 hereto, to the Seller's
knowledge, no union organization campaign is presently in progress or has
occurred in the past three years and no representations question exists with
respect to the employees of the Company or any of its Subsidiaries.
5.19 ERISA. (a) SCHEDULE 5.19 hereto sets forth all material
"employee benefit plans", as defined in Section 3(3) of ERISA and each bonus,
deferred compensation, stock option, incentive compensation, severance, change
of control and other similar plans, policies and arrangements, maintained by the
Company and its Subsidiaries or to which the Company or its Subsidiaries
contributed or are obligated to contribute thereunder for current or former
employees of the Company and such Subsidiaries (the "Company Plans"). SCHEDULE
5.19 hereto separately identifies each Company Plan which is a multiemployer
plan, as defined in Section 3(37) of ERISA ("Multiemployer Plan").
(b) True, correct and complete copies of the following
documents, with respect to each of the Company Plans (other than the
Multiemployer Plans), have been made available or delivered to the Acquiror by
the Seller: (i) any plans and related trust documents, and amendments thereto;
(ii) the most recent Forms 5500; (ii) the last Internal Revenue Service
determination letter, if applicable; and (iv) summary plan descriptions.
(c) The Company Plans intended to qualify under Section 401 of
the Code are so qualified and the trusts maintained pursuant thereto are exempt
from federal income taxation under Section 501 of the Code, and nothing has
occurred with respect to the operation of the Company Plans which could
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cause the loss of such qualification or exemption or the imposition of any
liability, penalty or tax under ERISA or the Code which is reasonably likely to
result in a Material Adverse Effect.
(d) The Company Plans have been maintained in accordance with
their terms and with all provisions of the Code and ERISA (including rules and
regulations thereunder) and other applicable federal and state laws and
regulations, except where the failure to so maintain would not be reasonably
likely to result in a Material Adverse Effect.
(e) No liability under Title IV of ERISA has been incurred by
the Company or its Subsidiaries within the past six years that has not been
satisfied in full, and no condition exists that presents a material risk to the
Company or its Subsidiaries of incurring a liability under such Title. With
respect to each of the Company Plans that is subject to Title IV of ERISA, the
present value of accrued benefits under such plan, based upon the actuarial
assumptions used for funding purposes in the most recent actuarial report
prepared by such plan's actuary with respect to such plan, did not, as of its
latest valuation date, exceed the then current value of the assets of such plan
allocable to such accrued benefits.
(f) With respect to any Multiemployer Plan, (i) neither the
Company nor any of its Subsidiaries has, in the past six years, made or suffered
a "complete withdrawal" or a "partial withdrawal," as such terms are
respectively defined in sections 4203 and 4205 of ERISA, (ii) no event has
occurred that presents a material risk of a partial withdrawal, (iii) neither
the Company nor its Subsidiaries has any contingent liability under section
4204 of ERISA, and no circumstances exist that present a material risk that any
such plan will go into reorganization, and (iv) the aggregate withdrawal
liability of the Company and its Subsidiaries, computed as if a complete
withdrawal by the Company and its Subsidiaries had occurred under each such plan
on the date hereof, would not exceed $100,000.
(g) Except as disclosed on SCHEDULE 5.19, no Company Plan
provides benefits, including without limitation death or medical benefits, with
respect to current or former employees after retirement or other termination of
service (other than coverage mandated by applicable law or benefits, the full
cost of which is borne by the current or former employee of beneficiary). There
are no pending, threatened or anticipated claims by or on behalf of any Company
Plan, by any employee or beneficiary covered under any such plan, or otherwise
involving any such plan (other than routine claims for benefits).
(h) Except as set forth on SCHEDULE 5.19, the consummation of
the transactions contemplated by this Agreement will not (i) entitle any current
or former employee or officer of the Company or its Subsidiaries to severance
pay, unemployment compensation or any other payment, except as expressly
provided
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in this Agreement or (ii) accelerate the time of payment or vesting, or increase
the amount of compensation due any such employee or officer.
5.20 AFFILIATE TRANSACTIONS. SCHEDULE 5.20 sets forth all contracts,
agreements and arrangements in effect on or after January 1, 1995 between the
Seller, the Company and the Subsidiaries, on the one hand, and the Stockholders
and any affiliates of the Stockholders (excluding the Seller, the Company and
the Subsidiaries), on the other. All such contracts, agreements and
arrangements have been entered into on an arms-length basis and are commercially
reasonable.
5.21 TRANSFER OF ASSETS. Except as set forth in SCHEDULE 5.21, no
Material Lease, Sign Location Lease or other contract, agreement, lease,
understanding or document to which the Company or any of its Subsidiaries is a
party or to which any of their assets are subject contains any provisions or
terms regarding the sale, transfer or conveyance of, or contains any option to
sell, transfer or convey, any asset or right of the Company or any of its
Subsidiaries, including without limitation, sign structures, any permits,
licenses or governmental authorizations in connection therewith or any rights to
operate a sign structure as presently operated.
5.22 MATERIALITY. The representations and warranties set forth in
this Article V would in the aggregate be true and correct even without the
materiality exceptions or qualifications contained therein except for such
exceptions and qualifications which, in the aggregate for all such
representations and warranties, are not, and could not be reasonably expected to
have, a Material Adverse Effect.
VI. REPRESENTATIONS AND WARRANTIES OF THE PARENT AND THE ACQUIROR.
The Parent and the Acquiror hereby represent and warrant to the Seller as
follows:
6.1 ORGANIZATION AND GOOD STANDING. The Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Illinois, and has full corporate power and authority to own its properties and
carry on its business as it is now being conducted. The Acquiror is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, and has full corporate power and authority to own
its properties and carry on its business as it is now being conducted.
6.2 RESTRICTIONS. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby will not conflict with
or result in a breach of any terms of any agreement to which the Parent or the
Acquiror is a party, nor will it violate any of the provisions of the Parent's
or the Acquiror's organizational documents or By-Laws, except for such
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conflicts or breaches which would not have a material adverse effect on the
ability of the Parent or the Acquiror to consummate the transactions
contemplated hereby.
6.3 LITIGATION; CONSENTS. There is no action, suit, proceeding or
formal governmental inquiry or investigation pending against the Parent or the
Acquiror which seeks to restrain or prohibit or otherwise challenges the
consummation, legality or validity of the transaction contemplated hereby, and,
except as set forth in SCHEDULE 6.3 hereto and Section 8.3 hereof, no consent,
approval or authorization of any governmental authority on the part of the
Parent or the Acquiror is required in connection with the execution and delivery
of this Agreement or the consummation of any of the transactions contemplated
hereby, except for such consents, approvals or authorizations as would be
required in connection with the Financing or by reason of the regulatory status
of the Seller, the Company or any of its Subsidiaries or by any facts
specifically relating thereto.
6.4 EXECUTION AND EFFECT OF AGREEMENT. Each of the Parent and the
Acquiror has the corporate power and authority to enter into this Agreement, and
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Parent and the Acquiror. This Agreement has
been duly executed and delivered by each of the Parent and the Acquiror and
constitutes the legal, valid and binding obligation of the Parent and the
Acquiror, enforceable against each of them in accordance with its terms.
6.5 FINANCING. The Acquiror has, or will have access to, sufficient
funds and financing to pay the Aggregate Merger Consideration and the
Indebtedness on the Closing Date.
6.6 MATERIALITY. The representations and warranties set forth in
this Article VI would in the aggregate be true and correct even without the
materiality exceptions or qualifications contained therein except for such
exceptions and qualifications which, in the aggregate for all such
representations and warranties, are not, and would not be reasonably expected to
have, a material adverse effect on the ability of the Parent or the Acquiror to
consummate the transactions contemplated hereby.
VII. COVENANTS OF THE SELLER.
The Seller hereby covenants and agrees that:
7.1 ACCESS TO DOCUMENTS; OPPORTUNITY TO ASK QUESTIONS. From and
after the date hereof and until the Closing Date, the Seller shall and shall
cause the Company to give reasonable access to offices and other facilities and
properties of the Seller and the Company and to make available for inspection by
the Acquiror or its representatives, upon reasonable advance notice and during
normal business hours, the
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Seller's and the Company's corporate or comparable records, books of account,
tax records, contracts and all other documents reasonably requested by the
Acquiror, its managerial employees, counsel and auditors in order to permit the
Acquiror and such representatives to make reasonable inspection and examination
of the business and affairs of the Company, including, but not limited to, a
review of the estimations of Indebtedness, the Reserve Fund, the Stockholder
notes, merger consideration contemplated by Section 2.3 hereof and the Working
Capital Schedule contemplated by Section 2.4 hereof. The Seller shall further
cause the managerial employees, counsel and regular independent certified public
accountants of the Company to be available upon reasonable advance notice to
answer questions of the Acquiror's representatives concerning the business and
affairs of the Company and shall further cause them to make available all
relevant books and records in connection with such inspection and examination.
7.2 MAINTENANCE OF INSURANCE. From and after the date hereof and
until the Closing Date, the Seller shall cause the Company and its Subsidiaries
to use its Best Efforts to maintain in full force and effect all of their
presently existing insurance coverage or insurance comparable to such existing
coverage.
7.3 CONDUCT OF BUSINESS. From and after the date hereof and until
the Closing Date, the Seller shall, and shall cause the business of the Seller,
the Company and the Subsidiaries to be conducted in the ordinary course,
consistent with the present conduct of its business and to preserve and maintain
its business and operations, including all material leases, contracts and
arrangements and the goodwill of its employees, customers, suppliers and others
having a relationship with the Seller, the Company or any of its Subsidiaries.
During such period of time, except upon the prior written consent of the
Acquiror, the Seller shall not and shall cause the Company not to: (a) amend its
Certificate of Incorporation or By-Laws or comparable organizational documents,
(b) issue any additional shares of capital stock or securities convertible into
capital stock or issue, sell or grant any option or right to acquire or
otherwise dispose of or commit to dispose of any of its authorized but unissued
capital stock, or other corporate securities or securities convertible into
capital stock, (c) declare or pay any dividends or make any other distribution
in cash or property on its capital stock or other equity interests, (d)
repurchase or redeem or otherwise acquire any shares of its stock or other
equity interests, except pursuant to agreements with employees requiring
repurchase in the event of death or disability heretofore executed and delivered
if such repurchase is made only as of the last date permitted for such
repurchase and if such repurchase is funded by the incurrence of Indebtedness,
in any case at a price not to exceed a dollar amount per share equal to the
consideration payable for such class of share pursuant to this Agreement,
(e) voluntarily incur any obligation or liability, except for Indebtedness and
current
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obligations and liabilities incurred in the ordinary course of business,
(f) enter into any employment agreement or become liable for any bonus, profit-
sharing or incentive payment to any of its employees, officers or directors,
except pursuant to presently existing plans, arrangements or agreements
disclosed herein or in a schedule hereto, (g) mortgage, pledge, or otherwise
encumber any part of its assets, tangible or intangible, except Permitted
Encumbrances, (h) sell, transfer, dispose of or acquire any (1) signs (other
than as a result of completing work-in-progress) and (2) other properties or
assets, tangible or intangible, other than, in the case of clause (2), in the
ordinary course of business consistent with past practice, (i) make any material
changes in its customary method of operations, including marketing and pricing
policies and maintenance of business premises, fixtures, furniture and equipment
and its accounting policies, (j) enter into any collective bargaining agreement,
(k) merge or consolidate with any corporation, acquire control or acquire any
capital stock or other securities or assets of any other corporation or business
entity (other than an amount of assets which is neither material to the Seller,
the Company or a Subsidiary, as the case may be, on the one hand, or to such
corporation or business entity, on the other), or take any steps incident to or
in furtherance of any such actions whether by entering into an agreement
providing therefor or otherwise, (1) modify, amend or cancel any of its existing
leases or enter into any contracts, agreements, leases or understandings, other
than in the ordinary course of business, (m) pay, discharge, settle or otherwise
satisfy any claim, litigation, liability or obligation except in the ordinary
course of business and consistent with past practice, (n) make any Tax election
or settle or compromise any Tax liability or file any federal income tax return
prior to the last day (including extensions) prescribed by law, in the case of
any of the foregoing, material to the business, financial condition or results
of operations of the Seller, the Company or any Subsidiary, (o) enter into any
transaction, arrangement or agreement with any affiliate (other than those in
existence on the date hereof), (p) factor or sell any accounts receivable of the
Company or any Subsidiary, (q) extend the average life of accounts payable
beyond the average life in effect at the Balance Sheet Date other than in the
ordinary course of business consistent with past practice, (r) adopt a plan of
complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization, (s) establish, adopt,
enter into, amend or terminate any collective bargaining, bonus, profit sharing,
thrift, compensation, stock option, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any director,
officer or employees, (t) make any capital expenditure in excess of $100,000,
either individually or in the aggregate, other than capital expenditures
committed to as of the date of this Agreement (which such committed capital
expenditures in excess of $75,000 are set forth on Schedule 7.3), (u) enter into
any
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agreement to do any of the foregoing, or (v) take any other action which would
cause any of the representations and warranties made by the Seller in this
Agreement not to be true and correct in all material respects on and as of the
Closing Date with the same force and effect as if such representations and
warranties had been made on and as of the Closing Date.
7.4 CONSENTS; CONDITIONS PRECEDENT. From and after the date hereof
and until the Closing Date, the Seller shall cause the Company to use its Best
Efforts to obtain the consents of those parties indicated on SCHEDULES 5.9 and
5.16 and any other consents required in connection with the transactions
contemplated hereby and to cause the Company to use its Best Efforts to cause
the conditions precedent to the consummation of the transactions contemplated
hereby to be satisfied.
7.5 HART-SCOTT-RODINO FILINGS. Within ten days after the date of
this Agreement, the Seller shall, and shall cause the Company to, make all
required filings as promptly as possible with the Federal Trade Commission and
the U.S. Department of Justice-Antitrust Division pursuant to the Hart-Scott-
Rodino Act, and shall, and shall cause the Company to, cooperate with the
Acquiror in connection with such filings.
7.6 SUPPLEMENTAL DISCLOSURE. The Seller will promptly inform the
Acquiror in writing of any fact or circumstance known to the Seller that would
constitute a breach of the Seller's representations or warranties or would cause
any of the conditions to either party's obligations to consummate the
transactions contemplated under this Agreement not to be fulfilled.
7.7 NO SOLICITATION OF TRANSACTIONS. The Seller shall not and shall
cause the Company and each of its Subsidiaries (and each of their respective
directors, officers, employees, advisors, representatives, agents or affiliates)
not to, directly or indirectly,encourage, engage in, solicit or initiate any
discussions or negotiations with, or provide any information to (except, that in
the event the Parent or the Acquiror shall be obligated by law to publicly
disclose (and does so disclose) that this Agreement exists, the Seller may
provide information to other persons for the sole purposes of advising them of
the existence of this Agreement), or negotiate or enter into any agreement or
agreement in principle with any other person, entity or group, with respect to a
sale of the Seller, the Company or any of its Subsidiaries, their assets or
capital stock or any similar transaction. The Seller shall, and shall cause the
Company and each of its Subsidiaries (and each of their respective directors,
officers, employees, advisors, representatives, agents or affiliates) to, notify
the Acquiror of any action taken by any person in connection with the foregoing
sentence and shall provide the Acquiror with any information, written or oral,
obtained by such party in connection therewith.
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7.8 RESIGNATIONS. Effective as of the Closing Date, the directors
and officers of the Seller and the Company shall resign from their positions as
directors and officers of the Seller and the Company. Such resignations shall
not constitute terminations of employment. The Acquiror shall, at its sole
discretion, make offers of employment to such directors and officers as it
wishes to retain.
7.9 ENVIRONMENTAL STUDIES. The Seller shall give access to the Real
Properties to the Parent (and such individuals designated by the Parent) to the
extent required to complete Phase I, Phase II and any other environmental
studies (the "Environmental Studies") of the following properties and such other
Real Properties of the Seller, the Company or any of its Subsidiaries as the
Parent shall reasonably request: (i) Corporate Headquarters, Orlando, Florida,
(ii) Orlando Facility, Orlando, Florida, (iii) Myrtle Beach Facility, Myrtle
Beach, South Carolina, (iv) Chattanooga Facility, Chattanooga, Tennessee, (v)
Ocala Facility, Ocala, Florida, (vi) Palm Beach Facility, Palm Beach, Florida,
(vii) East Coast Facility, Melbourne, Florida, (viii) Gulf Coast Facility,
Brooksville, Florida and (ix) the Myrtle Beach property owned by the Company and
leased to a camera shop at which environmental test borings are currently being
conducted.
7.10 TITLE INSURANCE. Upon ten days notice from the Parent, the
Seller shall deliver to the Parent any document with respect to any of the Real
Properties which the Parent shall reasonably request so that the Parent may
obtain title insurance or a survey in a form customary to the state which is the
location of the property to which such insurance policy or survey shall apply.
7.11 DISCLOSURE OF FINANCIAL INFORMATION. The Seller agrees to
provide such financial information as the Parent may reasonably request with
respect to the Seller, the Company and its Subsidiaries, in connection with,
among other things, obtaining the Financing, and that such financial information
may be disclosed by the Parent or the Acquiror to the extent reasonably
appropriate including, without limitation, in connection with obtaining the
Financing, capital market transactions and any filings required pursuant to
applicable law.
7.12 NON-COMPETITION AGREEMENTS. The Seller shall execute and use its
Best Efforts to cause Robert Vann and David Schuenemeyer to execute a Non-
Competition Agreement substantially in the form attached hereto as Exhibit 8.13
which shall provide for a two-year period non-compete containing terms and
provisions substantially similar to Section 7 (Confidentiality Obligations) and
Section 8 (Non-Competition) of the Employment Contract by and between the
Company and James A. McLaughlin, Jr., dated January 1, 1993 (the "Employment
Contract").
7.13 EMPLOYMENT CONTRACT. The Seller agrees to cause the Company to,
and James A. McLaughlin, Jr., agrees to,
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amend the Employment Contract such that, effective as of the Closing Date,
(i) Section 7 (Confidentiality Obligations) and Section 8 (Non-Competition)
shall be applicable to all markets operated by the Company as of December 31,
1996 except the Palm Beach Market and shall survive through December 31, 1998,
(ii) any obligations for payment in respect of the year ended December 31, 1996,
other than salary compensation, payable to James A. McLaughlin, Jr. thereunder
shall be payable by the Stockholders, (iii) any obligations for salary
compensation payable to James A. McLaughlin, Jr. thereunder shall be payable by
the Surviving Corporation, (iv) the provisions of Section 3.2(b)(3) shall be
deleted and be of no further force and effect, and (v) all other obligations,
rights, covenants and agreements contained therein shall expire on December 31,
1996.
7.14 DISCHARGE OF INDEBTEDNESS. Notwithstanding the provisions of
Section 7.3, during the period between the date hereof and the Closing Date, the
Company may incur Indebtedness and pay Indebtedness and interest thereon,
subject to Section 2.4 hereof.
7.15 APPROVAL OF STOCKHOLDERS. The Seller shall circulate a Consent
of Stockholders as soon as practicable for the purpose of consenting to this
Agreement and all other actions contemplated hereby which require the approval
of the Stockholders. The Seller's Board of Directors shall recommend to the
Stockholders approval of the Merger, this Agreement and the actions contemplated
hereby.
VIII. COVENANTS OF THE PARENT AND THE ACQUIROR.
The Parent and the Acquiror hereby covenant and agree that:
8.1 REPRESENTATIONS AND WARRANTIES. From and after the date hereof
and until the Closing Date, the Parent and the Acquiror will not take any action
which would cause any of the representations and warranties made by them in this
Agreement not to be true and correct in all material respects on and as of the
Closing Date with the same force and effect as if such representations and
warranties had been made on and as of the Closing Date.
8.2 CONSENTS; CONDITIONS PRECEDENT. From and after the date hereof
and until the Closing Date, the Parent and the Acquiror shall use its Best
Efforts to obtain any consents required pursuant to SCHEDULE 6.3 hereto and any
other consents required hereunder in connection with the transactions
contemplated hereby and to cause the conditions precedent to the consummation of
the transactions contemplated hereby to be satisfied.
8.3 HART-SCOTT-RODINO FILINGS. Within ten days after the date of
this Agreement, the Parent and the Acquiror shall make all required filings as
promptly as possible with the
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Federal Trade Commission and the U.S. Department of Justice-Antitrust Division
pursuant to the Hart-Scott-Rodino Act, and it shall cooperate with the Seller
and the Company in connection with such filings.
8.4 EMPLOYEE AND EMPLOYEE PLANS. As of the Closing Date, each
employee of the Company and of its Subsidiaries shall remain an employee of the
Company or such Subsidiary, on the same terms and conditions of employment as
were applicable to such employees immediately prior to the Closing Date, and the
Parent and the Acquiror shall cause the Company and such Subsidiaries to
continue to be bound by any employment agreement or arrangement to which it is a
party with respect to any such employee in accordance with and subject to the
terms thereof and the Surviving Corporation shall be liable for salary
compensation of Robert Vann and David Schuenemeyer through December 31, 1996.
The Parent and the Acquiror shall honor all of the Company's bonus and incentive
compensation agreements with employees of the Company and its Subsidiaries
disclosed on Schedule 5.19 in respect of the fiscal year ending December 31,
1996, provided, however, the Parent and the Acquiror shall have no obligation to
honor such bonus and incentive compensation agreements as they relate to James
A. McLaughlin, Jr., Robert Vann or David W. Schuenemeyer.
8.5 SUPPLEMENTAL DISCLOSURE. The Parent and the Acquiror will
promptly inform the Seller in writing of any fact or circumstance known to the
Parent or the Acquiror that would constitute a breach of the Parent's or the
Acquiror's representations or warranties or would cause any of the conditions to
either party's obligations to consummate the transactions contemplated under
this Agreement not to be fulfilled.
IX. CONDITIONS PRECEDENT TO THE ACQUIROR'S OBLIGATION.
The obligation of the Acquiror to consummate the Merger and the
transactions contemplated by this Agreement is, at the option of the Acquiror,
subject to the satisfaction or waiver of the following conditions:
9.1 REPRESENTATIONS AND WARRANTIES TRUE. Each of the
representations and warranties of the Seller contained in Articles IV and V
hereof shall be true and correct in all respects as of the date hereof and as of
the Closing Date with the same force and effect as though the same had been made
on and as of the Closing Date, except for those given as of a particular date,
which shall be true and correct in all respects as of such date, and except for
changes permitted or contemplated hereby.
9.2 COVENANTS PERFORMED. The Seller shall have performed and
complied in all material respects with the covenants and provisions in this
Agreement required herein to be
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performed or complied with by the Seller between the date hereof and the Closing
Date.
9.3 NO LEGAL PROCEEDINGS. No action or proceeding shall have been
instituted against the Parent, the Acquiror, the Seller or the Company before
any court or other governmental body seeking to restrain or prohibit the
consummation of the transactions contemplated hereby, which in the reasonable
opinion of the Parent and the Acquiror makes it inadvisable to consummate such
transactions.
9.4 COMPLIANCE CERTIFICATE. The Acquiror shall have received a
certificate to the effect set forth in Sections 9.1 and 9.2 above, dated the
Closing Date, signed by James A. McLaughlin, Jr., the President of Seller and
James A. McLaughlin, Jr. the President of the Company.
9.5 CORPORATE AUTHORITY. The Acquiror shall have received a
certificate of a duly authorized officer of the Seller, dated the Closing Date,
setting forth resolutions of the Board of Directors and votes of the
Stockholders of the Seller generally authorizing the signing of agreements and
certifying that such resolutions were duly adopted and have not been rescinded
or amended as of the Closing Date.
9.6 CONSENTS. The consents of all persons who are parties to the
agreements with the Seller or the Company identified on SCHEDULES 5.9 or 5.16
with an asterisk (*) shall have been obtained, and signed copies thereof shall
have been delivered to the Acquiror.
9.7 HART-SCOTT-RODINO. The waiting periods under the Hart-Scott-
Rodino Act shall have expired.
9.8 INDEBTEDNESS, RESERVE AMOUNT AND STOCKHOLDER NOTE SCHEDULES. The
Seller shall have provided to the Acquiror the schedules of Indebtedness,
Reserve Amount, Stockholder notes and merger consideration specified in Section
2.3 of this Agreement and the Working Capital Schedule specified in Section 2.4
of this Agreement.
9.9 STOCKHOLDER APPROVAL. The Stockholders of the Seller shall have
approved the Merger and the transactions contemplated by this Agreement in
accordance with the Delaware Statute.
9.10 NO MATERIAL ADVERSE EFFECT. Since the Balance Sheet Date, there
shall not have occurred any event, change or development which individually or
in the aggregate, has had or is reasonably likely to have a Material Adverse
Effect.
9.11 SELLER AFFIDAVIT. The Seller shall have delivered to the Parent
an affidavit, dated as of the Closing Date, that is satisfactory to the Parent
and which satisfies the
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requirements of Code Section 1445(b)(3) and Treasury Regulation Section 1.1445-
2(c)(3)(i).
9.12 NON-COMPETITION AGREEMENTS. The Seller and each of the
Stockholders who is a senior executive or manager of the Seller, the Company or
any Subsidiary shall have delivered to the Parent an executed Non-Competition
Agreement consistent with the provisions of Section 7.12 hereof.
9.13 EMPLOYMENT CONTRACT. The Employment Contract shall have been
amended as contemplated by Section 7.13 hereof.
9.15 ENVIRONMENTAL MATTERS. The Parent and the Acquiror shall have
determined in good faith that the aggregate liabilities (including clean-up and
remedial costs) associated with any matters disclosed in the Environmental
Reports would not equal or exceed $2 million; PROVIDED, HOWEVER, that the
Stockholders may elect to cure any such matters disclosed or otherwise satisfy
any potential liabilities disclosed, in each case, in a manner reasonably
acceptable to the Parent and the Acquiror.
9.16 WORKING CAPITAL AND CASH. As of the Closing Date, the Company
shall have Working Capital of at least $5,000,000 and cash of $750,000 and shall
have received a certificate of the Chief Financial Officer of the Company to the
effect of the foregoing.
9.17 LEGAL OPINION. The Acquiror shall have received an opinion of
Choate, Hall & Stewart, counsel for the Seller, dated the Closing Date and in
form and substance reasonably satisfactory to the Acquiror and its counsel.
9.18 RELEASES OF LIENS AND PLEDGES. The Acquiror and the Parent shall
have received evidence satisfactory to them that all liens on the Company's
assets and pledges of the Company's and the Subsidiaries' stock held by the
several lenders pursuant to the Amended and Restated Credit Agreement among the
Company, the several lenders and the Canadian Imperial Bank of Commerce, New
York Agency, as Agent dated as of December 29, 1995 will be released upon
payment of the Indebtedness.
X. CONDITIONS PRECEDENT TO THE SELLER'S OBLIGATION.
The obligation of the Seller to consummate the Merger and the transactions
contemplated by this Agreement on the Closing Date is subject to the
satisfaction or waiver of the following conditions:
10.1 REPRESENTATIONS AND WARRANTIES TRUE. Each of the representations
and warranties of the Parent and the Acquiror contained in Article VII hereof
shall be true and correct in all respects as of the Closing Date with the same
force and effect as though the same had been made on and as of
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the Closing Date, except for changes therein permitted or contemplated hereby.
10.2 COVENANTS PERFORMED. The Parent and the Acquiror shall have
performed and complied in all material respects with the covenants and
provisions in this Agreement required herein to be performed or complied with by
the Parent and the Acquiror between the date hereof and the Closing Date.
10.3 NO LEGAL PROCEEDINGS. No action or proceeding, shall have been
instituted against the Parent, the Acquiror, the Seller or the Company before
any court or other governmental body, seeking to restrain or prohibit the
consummation of the transactions contemplated hereby, which in the reasonable
opinion of the Seller makes it inadvisable to consummate such transactions.
10.4 COMPLIANCE CERTIFICATE. The Seller shall have received a
certificate to the effect set forth in Sections 10.1 and 10.2 above, dated the
Closing Date, signed by a duly authorized officer of each of the Parent and the
Acquiror.
10.5 AUTHORITY. The Seller shall have received a certificate of a
duly authorized officer of each of the Parent and the Acquiror, dated the
Closing Date, setting forth the resolutions of the Board of Directors of each of
the Parent and the Acquiror and the votes of stockholders of the Acquiror
authorizing the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby, and certifying that such resolutions were
duly adopted and have not been rescinded or amended as of the Closing Date.
10.6 HART-SCOTT-RODINO. The waiting periods under the Hart-Scott-
Rodino Act shall have expired.
10.7 STOCKHOLDER APPROVAL. The stockholders of the Acquiror shall
have approved the Merger and the transactions contemplated by this Agreement in
accordance with the Delaware Statute.
10.8 EVIDENCE OF FINANCING. The Parent shall have provided evidence
reasonably satisfactory to the Seller and the Company that the Parent has funds
or financing available to consummate the transactions contemplated by this
agreement.
10.9 LEGAL OPINION. The Acquiror shall have received an opinion of
Winston & Strawn, special counsel for the Parent and the Acquiror, dated the
Closing Date, in form and substance reasonably satisfactory to the Seller and
its counsel.
XI. CLOSING.
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11.1 THE CLOSING. The closing hereunder (herein called the "Closing")
shall take place at the offices of Skadden, Arps, Slate, Meagher & Flom, 919
Third Avenue, New York, New York, at 10:00 A.M. on October 11, 1996 or, if
later, the date that is five (5) Business Days after each of the conditions
precedent to the Closing shall have been satisfied or waived, but not later than
the close of business on November 14, 1996, unless otherwise mutually agreed to
in writing by the Acquiror and the Seller. The date of the Closing is referred
to in this Agreement as the "Closing Date".
11.2 CLOSING PROCEEDINGS. All proceedings to be taken and all
documents to be executed and delivered by the Seller in connection with the
consummation of the transactions contemplated hereby shall be reasonably
satisfactory in form and substance to the Acquiror and its counsel. All
proceedings to be taken and all documents to be executed and delivered by the
Parent or the Acquiror in connection with the consummation of the transactions
contemplated hereby shall be reasonably satisfactory in form and substance to
the Seller and its counsel. All proceedings to be taken and all documents to be
executed and delivered by all parties at the Closing shall be deemed to have
been taken and executed simultaneously and no proceedings shall be deemed taken
nor any documents executed or delivered until all have been taken, executed and
delivered.
11.3 DELIVERIES AT CLOSING.
(a) At the Closing, the Seller shall deliver, or shall cause to be
delivered, to the Acquiror, the following:
(i) The documents required by Sections 9.4, 9.5, 9.6, 9.15 and
9.16 hereof.
(iii) An incumbency certificate setting forth the names of
officers of the Seller who are authorized to execute this Agreement and all
documents executed by the Seller pursuant hereto, together with their respective
signatures, signed by a duly authorized officer of the Seller.
(b) At the Closing, the Acquiror shall deliver the following:
(i) To the Disbursing Agent, the Aggregate Merger
Consideration.
(ii) To the creditors specified by the Seller on the day prior
to the Closing, an amount equal to the Indebtedness.
(iii) The documents required by Sections 10.4, 10.5 and 10.9
hereof.
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(iv) An incumbency certificate setting forth the names of
officers of the Parent and the Acquiror who are authorized to execute this
Agreement and all documents executed by the Parent and the Acquiror pursuant
hereto, together with their respective signatures, signed by a duly authorized
officer of Acquiror.
(c) At the Closing, each of the Seller, the Parent, the Acquiror and
the Stockholders shall deliver all other documents, instruments and writings
required to be delivered by such party at or prior to the Closing Date pursuant
to this Agreement.
XII. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
12.1 SURVIVAL. The parties hereto agree that none of the
representations and warranties contained in Article IV, Article V or Article VI
of the Agreement shall survive the Closing hereunder.
XIII. NO BROKERS.
The Seller and its Stockholders represent to the Parent and the Acquiror
that the only dealings with any broker or finder in connection with the
transactions contemplated by this Agreement are with CIBC Wood Gundy Securities
Corp. and that the only fee, expense or amount due in connection therewith is
the Wood Gundy Fee. The Parent and the Acquiror represent to the Seller that
they respectively have had no dealings with any broker or finder in connection
with the transactions contemplated by this Agreement. The Stockholders of the
Seller severally agree to indemnify and hold the Parent, the Company and the
Surviving Corporation harmless from and against any and all liability to which
the Parent, the Company and the Surviving Corporation may be subjected by reason
of any broker's, finder's or similar fee with respect to the transactions
contemplated by this Agreement to the extent such fee is attributable to any
action undertaken by or on behalf of the Seller. The Parent and the Acquiror
agree to indemnify and hold the Stockholders of the Seller harmless from and
against any and all liability to which such Stockholders or the Seller may be
subjected by reason of any broker's, finder's or similar fee with respect to the
transactions contemplated by this Agreement to the extent such fee is
attributable to any action undertaken by or on behalf of the Parent or the
Acquiror.
XIV. SPECIFIC PERFORMANCE.
The parties hereto acknowledge that irreparable damage would result if this
Agreement is not specifically enforced. Therefore, the rights and obligations
of the parties under this Agreement, including, without limitation, their
respective rights and obligations to consummate the Merger, shall be enforceable
by a decree of specific performance issued by any court of competent
jurisdiction, and appropriate injunctive relief may be applied
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for and granted in connection therewith. Such remedies shall, however, be
cumulative and not exclusive and shall be in addition to any other remedies
which any party may have under this Agreement or otherwise.
XV. TERMINATION.
Anything contained in this Agreement to the contrary notwithstanding, this
Agreement may be terminated:
(a) At any time on or prior to the Closing Date, by the mutual
consent in writing of the Acquiror and the Seller; or
(b) By either the Acquiror or the Seller if the Closing shall not
have occurred before November 15, 1996 (or such later date as may be agreed upon
in writing by the parties hereto).
(c) By the Parent and the Acquiror, within two business days after
delivery by the Seller of the Schedules to this Agreement in accordance with
Article XXVI hereof, in the event that such Schedules disclose any matters
which, in the aggregate, would in the reasonable judgment of the Parent, be
reasonably likely to result in a Material Adverse Effect other than any which
were disclosed to the Parent in the draft of this Agreement delivered on
August 9, 1996.
In the event that this Agreement shall be terminated pursuant to this
Article XV, all further obligations of the parties under this Agreement (other
than Articles XIII, XVII and XXIII) shall terminate without further liability of
either party to the other unless such party has (i) willfully failed to have
performed its obligations hereunder or (ii) knowingly made a material
misrepresentation on any matter set forth herein.
XVI. FURTHER ASSURANCES.
Subject to the terms and conditions herein provided, each of the parties
hereto agrees to use 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 to fulfill
the conditions to the parties' obligations hereunder and to consummate and make
effective the transactions contemplated by this Agreement, including, without
limitation, making all required filings and applications (including those
filings required under the Hart-Scott-Rodino Act) and complying with or
responding to any requests by governmental agencies and obtaining all consents,
approvals, orders, waivers, licenses, permits and authorizations required in
connection with the transactions contemplated hereby. If at any time prior to,
on or after the Closing Date 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
40
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by the other party for such purposes or otherwise to consummate and make
effective the transactions contemplated hereby.
XVII. CONFIDENTIALITY; PRESS RELEASES.
17.1 CONFIDENTIALITY OBLIGATION OF THE ACQUIROR. As more specifically
set forth in the Confidentiality Agreement, the Acquiror agrees to keep
proprietary information regarding the Company confidential and agrees that it
will only use such information in connection with the transactions contemplated
by this Agreement and that it will not disclose any of such information other
than (a) to the Acquiror's directors, officers, employees, representatives, and
agents who are or may be involved with the transactions contemplated by this
Agreement, (b) to the extent such information presently is or hereafter becomes
available on a non-confidential basis from a source other than the Seller or the
Company, (c) to the extent disclosure is required by law, regulation or judicial
order by any governmental authority, (d) as contemplated by Section 7.11 hereof
and (e) as may in the Acquiror's judgment be appropriate in light of it (and its
Parent) having publicly trading securities, including pursuant to meetings with
analysts.
17.2 CONFIDENTIALITY OBLIGATION OF THE SELLER. The Seller agrees to
keep proprietary information regarding the Parent and the Acquiror confidential
and agrees that it will only use such information in connection with the
transactions contemplated by this Agreement and not disclose any of such
information other than (a) to the Seller's or to the Company's directors,
officers, employees, representatives and agents who are involved with the
transactions contemplated by this Agreement, (b) to the extent such information
presently is or hereafter becomes available on a non-confidential basis from a
source other than the Parent or the Acquiror, and (c) to the extent disclosure
is required by law, regulation or judicial order by any governmental authority.
17.3 DISCLOSURE REQUIRED BY LAW. Prior to any disclosure required by
interrogatory, subpoena, discovery motion, civil investigative demand or other
judicial order the Acquiror or the Seller, as the case may be, shall advise the
other of such requirement so that it may seek a protective order.
17.4 PRESS RELEASES. Prior to Closing, neither the Acquiror nor the
Seller shall make any press release or public announcement in connection with
the transaction contemplated hereby without the prior written consent of the
other party or, if required by law, without having used its Best Efforts to
consult with the other parties prior thereto.
XVIII. NOTICES.
Any notices or other communications required or permitted hereunder, shall
be sufficiently given if in writing and
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personally delivered or sent by registered or certified mail, postage prepaid,
return receipt requested, or sent by facsimile, addressed as follows or to such
other address as the parties shall have given notice of pursuant hereto:
In the case of the Parent or the Acquiror:
Universal Outdoor, Inc.
321 North Clark Street
Suite 1010
Chicago, Illinois 60601
Attention: Paul G. Simon, Esq.
Telecopy: (312) 664-8371
Kelso & Company
320 Park Avenue
24th floor
New York, New York 10022
Attention: James J. Connors, Esq.
Telecopy: (212) 223-2379
With a copy to:
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attention: Leland E. Hutchinson, Esq.
Telecopy: (312) 558-5700
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attention: Lou R. Kling, Esq.
Telecopy: (212) 735-2000
In the case of the Seller or the Stockholders:
Richard C. Wallace
Boston Ventures Management, Inc.
21 Custom House Street
Boston, MA 02110
Telecopy: 617-737-3709
and
Roslyn G. Daum, Esq.
Choate, Hall & Stewart
Exchange Place
53 State Street
Boston, MA 02109-2891
Telecopy: 617-248-4000
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In the case of Boston Ventures Management, Inc.:
Richard C. Wallace
Boston Ventures Management, Inc.
21 Custom House Street
Boston, MA 02110
Telecopy: 617-737-3709
With copies to:
Roslyn G. Daum, Esq.
Choate, Hall & Stewart
Exchange Place
53 State Street
Boston, MA 02109-2891
Telecopy: 617-248-4000
XIX. ENTIRE AGREEMENT.
This Agreement and the Confidentiality Agreement represent the entire
understanding and agreement between the parties hereto with respect to the
subject matter hereof and supersede all prior agreements and understandings
relating to such subject matter. This Agreement can be amended, supplemented or
changed, and any provision hereof can be waived, only by written instrument
making specific reference to this Agreement signed by the parties against which
enforcement of any such amendment, supplement, modification or waiver is sought.
XX. SUCCESSORS.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective heirs, successors and assigns; provided,
however, that this Agreement and all rights and obligations hereunder may not be
assigned or transferred by the Acquiror (other than to Daniel L. Simon, Kelso &
Company or any of their, the Parent's or the Acquiror's affiliates) without the
prior written consent of the Seller, or by the Seller without the prior written
consent of the Acquiror.
XXI. SECTION HEADINGS.
The section headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
XXII. APPLICABLE LAW.
This Agreement shall be governed by, construed and enforced in accordance
with law of the State of Delaware, without regard to the principles thereof
relating to conflict of laws.
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XXIII. EXPENSES.
Subject to the provisions of Article XV and Section 2.3(b), whether or not
the transactions contemplated hereby are consummated, the parties hereto shall
pay their own respective expenses.
XXIV. SEVERABILITY.
If at any time subsequent to the date hereof, any provision of this
Agreement shall be held by any court of competent jurisdiction to be illegal,
void or unenforceable, such provision shall be of no force and effect, but the
illegality or unenforceability of such provision shall have no effect upon and
shall not impair the enforceability of any other provision of this Agreement.
XXV. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which taken together shall constitute
one and the same instrument.
XXVI. SCHEDULE DISCLOSURE.
The Seller agrees to furnish complete Schedules required by this Agreement
to the Parent and the Acquiror no later than the close of business on August 30,
1996. The parties agree that the inclusion of any item on a schedule to this
Agreement does not constitute an acknowledgement that such item is material or
would be reasonably likely to result in a Material Adverse Effect.
XXVII. PARTIES IN INTEREST.
This Agreement shall be binding upon and inure solely to the benefit of
each party hereto and its affiliates and nothing in this Agreement, express or
implied, is intended by or shall confer upon any other person any rights,
benefits or remedies of any nature whatsoever under or by any reason of this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
ACQUIROR:
UNIVERSAL ACQUISITION CORP.
By:
--------------------------------
Name:
Title:
PARENT:
UNIVERSAL OUTDOOR, INC.
By:
--------------------------------
Name:
Title:
SELLER:
OUTDOOR ADVERTISING HOLDINGS, INC.
By:
--------------------------------
James A. McLaughlin, President
DISBURSING AGENT AND AGENT:
BOSTON VENTURES MANAGEMENT, INC.
By:
--------------------------------
Name:
Title:
<PAGE>
Exhibit 2.6
- --------------------------------------------------------------------------------
OPTION AND ASSET PURCHASE AGREEMENT
BY AND AMONG
TANNER.PECK LLC
TOA ENTERPRISES, L.P.
WILLIAM B. TANNER
WBT OUTDOOR, INC.
THE WEATHERLEY TANNER TRUST
TANNER ACQUISITION CORPORATION
AND
UNIVERSAL OUTDOOR, INC.
DATED AS OF SEPTEMBER 12, 1996
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
PURCHASE AND SALE OF ASSETS
AND ASSUMPTION OF LIABILITIES. . . . . . . . . . . 1
Section 1.1 BUYER OPTION . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 PURCHASE AND SALE. . . . . . . . . . . . . . . . . . . . . 2
Section 1.3 CONSIDERATION. . . . . . . . . . . . . . . . . . . . . . . 6
Section 1.4 CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 1.5 DELIVERIES BY THE SELLERS. . . . . . . . . . . . . . . . . 8
Section 1.6 DELIVERIES BY THE BUYER. . . . . . . . . . . . . . . . . . 8
Section 1.7 PRORATION PAYMENT. . . . . . . . . . . . . . . . . . . . . 9
Section 1.8 ACCOUNTS RECEIVABLES . . . . . . . . . . . . . . . . . . . 10
Section 1.9 LEASES . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND TANNER . . . . 11
Section 2.1 ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.2 AUTHORIZATION. . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.3 INTERESTS IN OTHER ENTITIES. . . . . . . . . . . . . . . . 12
Section 2.4 CONSENTS AND APPROVALS; NO VIOLATIONS. . . . . . . . . . . 13
Section 2.5 FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . 13
Section 2.6 ABSENCE OF UNDISCLOSED LIABILITIES . . . . . . . . . . . . 14
Section 2.7 ABSENCE OF ADVERSE AND OTHER CHANGES . . . . . . . . . . . 14
Section 2.8 TITLE, OWNERSHIP AND RELATED MATTERS . . . . . . . . . . . 16
Section 2.9 PROPERTIES AND ASSETS NECESSARY FOR CONDUCT
OF BUSINESS. . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.10 LEASES. . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.11 DISPLAYS. . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.12 INTANGIBLE PROPERTY . . . . . . . . . . . . . . . . . . . 18
Section 2.13 LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.14 COMPLIANCE WITH APPLICABLE LAW; PERMITS . . . . . . . . . 19
Section 2.15 CERTAIN CONTRACTS AND ARRANGEMENTS. . . . . . . . . . . . 19
Section 2.16 INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 2.17 EMPLOYEE BENEFIT PLANS. . . . . . . . . . . . . . . . . . 21
Section 2.18 TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 2.19 ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . . 24
Section 2.20 CERTAIN FEES. . . . . . . . . . . . . . . . . . . . . . . 25
Section 2.21 AFFILIATE TRANSACTIONS. . . . . . . . . . . . . . . . . . 25
Section 2.22 LABOR AGREEMENTS. . . . . . . . . . . . . . . . . . . . . 26
Section 2.23 DISCLOSURE. . . . . . . . . . . . . . . . . . . . . . . . 26
Section 2.24 ACQUISITION FOR INVESTMENT. . . . . . . . . . . . . . . . 27
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE
CONSENTING PARTIES. . . . . . . . . . . . . . 28
Section 3.1 ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . 28
Section 3.2 AUTHORIZATION; CONSENT . . . . . . . . . . . . . . . . . . 28
Section 3.3 INTERESTS IN THE ASSETS. . . . . . . . . . . . . . . . . . 28
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE
PARENT AND THE BUYER . . . . . . . . . . . . . 29
Section 4.1 ORGANIZATION AND AUTHORITY OF THE PARENT AND
THE BUYER. . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 4.2 CONSENTS AND APPROVALS; NO VIOLATIONS. . . . . . . . . . . 29
Section 4.3 LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 4.4 CERTAIN FEES . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE V
COVENANTS. . . . . . . . . . . . . . . . 31
Section 5.1 CONDUCT OF THE BUSINESS. . . . . . . . . . . . . . . . . . 31
Section 5.2 ACCESS TO INFORMATION; CONFIDENTIALITY . . . . . . . . . . 31
Section 5.3 REGULATORY COMPLIANCE. . . . . . . . . . . . . . . . . . . 32
Section 5.4 CONSENTS; ASSIGNMENTS. . . . . . . . . . . . . . . . . . . 33
Section 5.5 REASONABLE BEST EFFORTS. . . . . . . . . . . . . . . . . . 34
Section 5.6 NON-COMPETITION. . . . . . . . . . . . . . . . . . . . . . 34
Section 5.7 PRESS RELEASES . . . . . . . . . . . . . . . . . . . . . . 35
Section 5.8 EMPLOYEES. . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 5.9 ENVIRONMENTAL STUDIES; TITLE . . . . . . . . . . . . . . . 36
Section 5.10 SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 5.11 SUPPLEMENTAL DISCLOSURE . . . . . . . . . . . . . . . . . 38
Section 5.12 NO SOLICITATION OF TRANSACTIONS . . . . . . . . . . . . . 38
ARTICLE VI
CERTAIN TAX MATTERS . . . . . . . . . . . . . 38
Section 6.1 NO WITHHOLDING . . . . . . . . . . . . . . . . . . . . . . 38
Section 6.2 ALLOCATION OF CONSIDERATION. . . . . . . . . . . . . . . . 39
Section 6.3 SELLERS RESPONSIBILITY . . . . . . . . . . . . . . . . . . 39
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ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE PARTIES . . . . . . . . 39
Section 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION. . . . . . . . . . . 39
Section 7.2 CONDITIONS TO OBLIGATIONS OF THE SELLERS . . . . . . . . . 40
Section 7.3 CONDITIONS TO OBLIGATIONS OF THE PARENT AND
THE BUYER. . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER. . . . . . . . . . . 42
Section 8.1 TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . 42
Section 8.2 PROCEDURE AND EFFECT OF TERMINATION. . . . . . . . . . . . 42
Section 8.3 AMENDMENT, MODIFICATION AND WAIVER . . . . . . . . . . . . 43
ARTICLE IX
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION . . . . . . . 43
Section 9.1 SURVIVAL . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 9.2 SELLERS' AGREEMENT TO INDEMNIFY. . . . . . . . . . . . . . 43
Section 9.3 NOTICE AND OPPORTUNITY TO DEFEND . . . . . . . . . . . . . 44
Section 9.4 OPTION PAYMENT . . . . . . . . . . . . . . . . . . . . . . 45
Section 9.5 RIGHT OF SET-OFF . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE X
DEFINITIONS . . . . . . . . . . . . . . . 46
ARTICLE XI
MISCELLANEOUS. . . . . . . . . . . . . . . 56
Section 11.1 FURTHER ASSURANCES. . . . . . . . . . . . . . . . . . . . 56
Section 11.2 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 11.3 SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . 58
Section 11.4 BINDING EFFECT; ASSIGNMENT. . . . . . . . . . . . . . . . 58
Section 11.5 NO THIRD PARTY BENEFICIARIES. . . . . . . . . . . . . . . 58
Section 11.6 INTERPRETATION. . . . . . . . . . . . . . . . . . . . . . 58
Section 11.7 ARBITRATION . . . . . . . . . . . . . . . . . . . . . . . .59
Section 11.8 JURISDICTION AND CONSENT TO SERVICE . . . . . . . . . . . 60
Section 11.9 ENTIRE AGREEMENT. . . . . . . . . . . . . . . . . . . . . .60
Section 11.10 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . 61
Section 11.11 SPECIFIC PERFORMANCE . . . . . . . . . . . . . . . . . . 61
Section 11.12 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . 61
Section 11.13 BULK SALES LAWS. . . . . . . . . . . . . . . . . . . . . 62
Section 11.14 EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . 62
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EXHIBITS
EXHIBIT A - Form of Bill of Sale
EXHIBIT B - Form of Undertaking
EXHIBIT C - Form of Real Property Lease Assignments
EXHIBIT D - Form of TP LLC Excluded Properties Lease
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DISCLOSURE SCHEDULE
SECTION
- -------
Section 1.2 - Certain Assets of the Sellers
Section 2.3 - Interests in Other Entities
Section 2.4 - Exception to Consents and Approvals;
No Violations Provision
Section 2.5 - Financial Statements
Section 2.6 - Undisclosed Liabilities
Section 2.7 - Exception to Absence of Adverse and
Other Changes Provision
Section 2.8 - Title; Ownership and Related Matters
Section 2.10 - Leases
Section 2.12 - Intangible Property
Section 2.13 - Litigation
Section 2.14 - Compliance with Applicable Law
Section 2.15 - Certain Contracts and Arrangements
Section 2.16 - Insurance
Section 2.17 - Employee Benefit Plans
Section 2.18 - Taxes
Section 2.19 - Environmental Matters
Section 2.21 - Affiliate Transactions
Section 2.22 - Labor Agreements
Section 5.6 - Non-Competition
Section 7.3 - Consents and Renewals
BUYER DISCLOSURE SCHEDULE
SECTION
- -------
Section 4.2 - Exception to Consents and Approvals; No Violations Provision
Section 6.2 - Allocation of Consideration
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OPTION AND ASSET PURCHASE AGREEMENT
OPTION AND ASSET PURCHASE AGREEMENT, dated as of September 12, 1996,
by and among Tanner.Peck LLC ("TP LLC"), a Tennessee limited liability company,
TOA Enterprises, L.P. ("TOA," and together with TP LLC, the "Sellers"), a
Tennessee limited partnership, William B. Tanner ("Tanner"), WBT Outdoor, Inc.
("WBT"), a Tennessee corporation, The Weatherley Tanner Trust (the "Trust," and
together with Tanner and WBT, the "Consenting Parties"), Tanner Acquisition
Corporation (the "Buyer"), a Delaware corporation, and Universal Outdoor, Inc.
(the "Parent"), an Illinois corporation.
WHEREAS, pursuant to the terms and conditions of this Agreement, the
Sellers desire to grant to the Buyer the option to buy, and the Buyer desires,
at its sole discretion, upon exercise of such option to cause the Sellers to
sell to the Buyer, the Assets of the Sellers.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions hereinafter
set forth, and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
AND ASSUMPTION OF LIABILITIES
Section 1.1 BUYER OPTION. Subject to the terms and conditions of
this Agreement, the Buyer shall have the right, at its sole discretion, during
the period from December 1, 1996 to December 31, 1996 (the "Option Exercise
Period") to purchase from each of the Sellers the Assets pursuant to Section 1.2
hereof and to consummate the other transactions contemplated hereby to occur at
the Closing (the "Option") for the consideration set forth in Section 1.3
hereof. In the event that the Buyer wishes to exercise the Option, the Buyer
shall deliver to TP LLC written notice (an "Advance Notice") at least ten and no
more than forty five days prior to the Buyer's intended date of exercise of the
Option. The Advance Notice shall state that the Buyer intends to exercise
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such Option and shall specify the date on which the Buyer intends to exercise
the Option (the "Option Exercise Date"). Notwithstanding the foregoing, the
Advance Notice shall be revocable by the Buyer, in its sole discretion, at
any time prior to the Option Exercise Date by delivery to TP LLC of a written
notice of such revocation. After any such revocation of the Advance Notice,
the Buyer may subsequently re-deliver an Advance Notice so long as such
subsequent Advance Notice is delivered to TP LLC prior to December 31, 1996.
In the event that the Buyer has not revoked the Advance Notice, or if so, in
the event the Buyer has re-delivered an Advance Notice, in either case, the
Buyer shall be deemed to have exercised the Option on the Option Exercise
Date. As soon thereafter as practicable and subject to satisfaction or
waiver of the conditions set forth in Article VII, each of the Sellers shall
convey, transfer, sell and assign and the Buyer shall purchase and acquire
the Assets on the terms and conditions set forth herein. Notwithstanding the
foregoing, if this Agreement is terminated pursuant to Section 8.1, the Buyer
shall cease to have the right to exercise the Option, and any Advance Notice
which shall have been delivered pursuant to this Section 1.1 shall be void
and of no effect.
Section 1.2 PURCHASE AND SALE.
(a) Subject to the terms and conditions of this Agreement, in
the event that the Option is exercised by the Buyer, at the Closing, each of the
Sellers will sell, convey, assign, transfer and deliver or cause to be sold,
conveyed, assigned, transferred and delivered to the Buyer, and the Buyer will
purchase, acquire and accept from each of the Sellers, all of such Sellers'
respective rights, title and interests in and to the Assets as set forth in
Section 1.2 of the Disclosure Schedule, free and clear of all Liens, other than
Permitted Liens, including, without limitation, the following:
(i) all personal property owned and used in the
operation of the existing bulletin, junior poster, eight-sheet painted
walls or any other outdoor advertising displays (the "Displays") as
are more fully described by location in Section 1.2(a)(i) of the
Disclosure Schedule, including all sign struc-
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tures and any fixtures and leasehold interests in sign structures, and all
lights, electrical hook ups, catwalks and other appurtenant equipment
related thereto;
(ii) all of the real property owned in fee (the "Owned
Real Property") and any rights in and to all facilities, easements,
rights-of-way, licenses, permits and other appurtenances thereunto
belonging and all buildings, facilities, structures, fixtures,
leasehold and other improvements located thereon;
(iii) all of the rights and incidents of ownership in
and to all leases, including Sign Location Leases for the locations
listed on Section 1.2(a)(iii) of the Disclosure Schedule and all
leases and subleases for real property and any rights in and to all
easements, rights-of-way, licenses, permits and other appurtenances
thereon belonging and all buildings, facilities, structures, fixtures
and leasehold improvements located thereon and any prepaid ground
rents thereunder;
(iv) all rights and entitlement in and to the
advertising contracts (the "Advertising Contracts") related to the
Business;
(v) all necessary and requisite consents, permits,
licenses, franchises, approvals or authorizations (including any
vegetation removal permits) of any governmental or regulatory agency
or authority, including in respect of the Tanner Owned Properties
(collectively, the "Permits");
(vi) any complete or partially complete Displays and
any Sign Location Leases, Advertising Contracts or Permits, as well as
any perfected or partial right, title, interest, or expectancy in any
location where either of the Sellers has planned, contemplated or
worked upon the possibility of outdoor advertising at any time prior
to the date of this Agreement but which have not yet been con-
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structed (as more fully described in Section 1.2(a)(v) of the Disclosure
Schedule);
(vii) all accounts and other receivables and prepaid
expenses arising after the Closing;
(viii) all raw materials, work-in process, finished
goods, supplies and other inventories and fixtures and the leasehold
improvements, plant and equipment located on any of the Real
Properties;
(ix) all rights in, to and under all other contracts,
licenses, leases, commitments, purchase orders, entitlement and other
agreements, whether oral or written;
(x) all rights under any non-compete agreements,
including those set forth in Section 1.2(a)(x) of the Disclosure
Schedule;
(xi) all customer lists of whatever nature;
(xii) all trademarks, trade names, service marks,
service names, logos, assumed names, copyrights, patents,
registrations and applications for the foregoing, trade secrets and
confidential business information (including ideas, research and
development, know-how, technical data, designs, drawings and
specifications) and all licenses thereof, and all other intellectual
property rights and other proprietary rights (together, the
"Intangible Property");
(xiii) all of the books and records of (A) the Sellers
and (B) Tanner in so far as such books and records relate to the
Business, in each case including, but not limited to, all files,
computer generated or stored data, advertising and customer
information, correspondence, memoranda, telephone numbers and
listings, personnel and payroll records and the like and all books and
records in connection with or to any extent relating to
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Taxes (including without limitation accounting and tax records and
information pertaining to events occurring prior to or after the
Closing Date) (collectively, the "Books and Records"); PROVIDED,
HOWEVER, that the Buyer will keep the Books and Records available for
use and copying by the Sellers for a period of 3 years after the
Closing;
(xiv) all other files, indices, market research studies,
surveys, reports, analyses and similar information;
(xv) all other assets and property, including sign
panels, computer hardware and software, machinery, equipment,
furniture, office equipment, communications equipment, vehicles,
storage tanks, spare and replacement parts, fuel and other tangible
property, to the extent used in the Business;
(xvi) all deposits from customers held;
(xvii) all cash after the Closing;
(xviii) all rights, claims, credits, causes of action,
condemnation proceedings or rights of set-off against third parties;
(xix) the goodwill in or arising from the Assets or the
Business; and
(xx) all other assets reflected on the Balance Sheet or
acquired after June 30, 1996 which would be reflected on a balance
sheet prepared in accordance with GAAP.
(b) Such sale, assignment, transfer and delivery of the Assets
will be effected by delivery by the Sellers to the Buyer of (i) the Bills of
Sale (each Seller shall deliver a Bill of Sale to transfer that portion of the
Assets owned by each such Seller), (ii) the Lease Assignments, (iii) the Deeds,
and (iv) the Other Instruments.
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(c) Notwithstanding anything to the contrary contained in
paragraphs (a) or (b) of this Section 1.2, the following assets shall be
considered Excluded Assets: (i) the consideration delivered by the Buyer
pursuant to this Agreement; (ii) all tax refunds (including any interest
thereon) and all tax credits and deductions for the period prior to and
including the date hereof; (iii) the ownership interest, whether in fee simple,
perpetual easement or the like, in the real property owned by TP LLC set forth
in Section 1.2(c)(iii) of the Disclosure Schedule (the "TP LLC Excluded
Properties"); (iv) Tanner's ownership interest in the forty-five properties
owned by Tanner (the "Tanner Owned Properties") set forth in Section 1.2(c)(iv)
of the Disclosure Schedule; (v) the computers, facsimile machines, seven
cellular phones, and the like owned by WBT Media but located on the Real
Property (as more fully described in Section 1.2(c)(v) of the Disclosure
Schedule); (vi) the three motor vehicles set forth in Section 1.2(c)(vi) of the
Disclosure Schedule; (vii) the accounts receivables and the cash of the Business
as of the Closing; (viii) the structure related to the Sweeney/Tanner Lease
(board number 218 on Section 1.2(a)(i) of the Disclosure Schedule); and (ix) the
structure related to the Moriarty/Tanner Lease (board number 137 on Section
1.2(a)(i) of the Disclosure Schedule).
(d) Anything contained in this Agreement to the contrary
notwithstanding, this Agreement shall not, unless and until, and to the extent
the Buyer notifies the Sellers otherwise, constitute an agreement to assign any
right, title or interest in, to or under any contract, license, lease,
commitment, sales order, purchase order or other agreement or any claim or right
to any benefit arising thereunder or resulting therefrom if an attempted
assignment thereof, without the consent of a third party thereto, would
constitute a breach thereof, or in any way adversely affect the rights of the
Buyer or the respective Seller thereunder, and such consent is not obtained.
Section 1.3 CONSIDERATION.
(a) Subject to the terms and conditions of this Agreement, in
consideration of granting the Option, the Buyer will deliver or cause to be
delivered to TP LLC on the date hereof $5,000,000 in cash by wire
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transfer of immediately available funds to such bank account as shall be
specified by TP LLC prior to the date hereof (the "Option Payment"), which
amount, subject to the provisions of Article IX hereof, shall be
non-refundable irrespective of whether the Buyer shall exercise the Option.
(b) Subject to the terms and conditions of this Agreement, the
consideration for the Assets to be acquired shall be (i) $65,880,000 in the
event that the Closing occurs on or prior to December 31, 1996 and $65,885,000
in the event that the Closing occurs on or after January 1, 1997, in each case,
in cash, plus or minus the Proration Payment as calculated pursuant to Section
1.7 hereof (the "Cash Purchase Price"); (ii) the Option Payment; (iii) 100,000
duly authorized and issued shares of common stock, par value $.01 per share, of
the Parent (the "Shares", and collectively with the Cash Purchase Price, the
"Purchase Price"); and (iv) assumption of liabilities consummated pursuant to
the Undertaking.
(c) The Purchase Price and the Option Payment will be delivered
to TP LLC for its account and for the account of TOA, PROVIDED however that such
portion of the Purchase Price and the Option Payment shall be deemed received by
TP LLC on its own behalf and on behalf of TOA allocated $3,720,000 to TOA for
all of its Assets (representing $60,000 per face of TOA located on each TOA Sign
Location Lease and Display) and the balance to TP LLC. The Sellers shall
indemnify and hold harmless the Parent, the Buyer and the Indemnitees from and
against any and all liabilities arising from or in connection with such
allocation.
Section 1.4 CLOSING. The Closing shall take place as promptly as
practicable, and in any event not later than the tenth business day following
the receipt of clearance under the HSR Act and the satisfaction or waiver of all
of the conditions to Closing set forth in Article VII hereof, at 9:00 a.m.,
local time, on the Closing Date, at the offices of Baker, Donelson, Bearman &
Caldwell, 165 Madison Avenue, Memphis, Tennessee, or at such other place and
time as the parties may agree; PROVIDED, HOWEVER, that the Buyer and the Sellers
shall immediately following receipt of the Advance Notice proceed to complete
all items necessary to proceed to
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Closing, including, but not limited to, filing under the HSR Act as contemplated
by Section 5.3 hereof.
Section 1.5 DELIVERIES BY THE SELLERS. At the Closing, the Sellers
will deliver or cause to be delivered to the Buyer the following:
(a) the Deeds;
(b) the Lease Assignments;
(c) the duly executed Bills of Sale;
(d) a duly executed Undertaking;
(e) the Other Instruments, if any;
(f) the Books and Records;
(g) the certificates of the Sellers signed by the Chief Manager
of TP LLC and the general partner of TOA, respectively, referred to in Section
7.3 hereof;
(h) appropriate authorizations for each Seller for the
transactions contemplated hereby consisting of (i) with respect to TP LLC, a
consent of the Members and a certificate of the Chief Manager and (ii) with
respect to TOA, a certificate of the General Partner and a consent of the
necessary Partners;
(i) an opinion of counsel to the Sellers, dated as of the
Closing Date, in form and substance reasonably satisfactory to the Buyer; and
(j) all other documents, instruments and writings required to be
delivered by the Sellers at or prior to the Closing pursuant to this Agreement
or otherwise required in connection herewith. All such documents, instruments
and writings to be delivered by the Sellers at the Closing shall be in form and
substance reasonably satisfactory to the Buyer.
Section 1.6 DELIVERIES BY THE BUYER.
At the Closing, the Buyer will deliver or cause to be delivered
to the Sellers the following:
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(a) the Cash Purchase Price, delivered by wire transfer of
immediately available funds to such bank account as shall be specified by TP LLC
prior to the Closing;
(b) stock certificates representing the Shares;
(c) a duly executed Undertaking assuming the Assumed Liabilities
and holding harmless the Sellers from such Assumed Liabilities;
(d) the Other Instruments, if any;
(e) the certificate of the Buyer signed by an officer of the
Buyer referred to in Section 7.2 hereof;
(f) all other documents, instruments and writings required to be
delivered by the Parent or the Buyer at or prior to the Closing pursuant to this
Agreement or otherwise required in connection herewith; and
(g) an opinion of counsel to the Buyer dated as of the Closing
Date, in form and substance reasonably satisfactory to TP LLC.
Section 1.7 PRORATION PAYMENT.
(a) Within 15 days after the Closing, the Buyer shall prepare
and deliver to the Sellers a statement (the "Statement") setting forth the
prepaid leases and prepaid expenses (together, the "Prorated Assets"), the
accounts payable, accrued liabilities and other current liabilities (together,
the "Prorated Liabilities") of the Business as of the Closing and the capital
expenditures made from the date hereof to the date of the Closing (and approved
pursuant to the Joint Management Agreement) (the "Capital Expenditures"). The
preparation of the Statement shall be, in all material respects, in accordance
with GAAP. Following the date of the Closing, each of the Buyer and the Sellers
shall give the other party and any independent auditors of such other party
access at all reasonable times to the properties, books, records and personnel
of the Business for purposes of preparing and reviewing the Statement. The
Sellers shall have 15 days following delivery to the
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Sellers of the Statement during which to notify the Buyer of any dispute of
any item contained in the Statement, which notice shall set forth in
reasonable detail the basis for such dispute. If the Sellers fail to notify
the Buyer of any such dispute within such 15-day period, the Statement shall
be deemed to be the final Statement (the "Final Statement"). In the event
that the Sellers shall so notify the Buyer of any dispute, the Buyer and the
Sellers shall cooperate in good faith to resolve such dispute as promptly as
possible.
(b) If the Buyer and the Sellers are unable to resolve any such
dispute within 15 days of the Sellers' delivery of notice of a dispute, such
dispute shall be resolved by an independent accounting firm (the "Accounting
Firm") reasonably acceptable to the Buyer and TP LLC (on behalf of the Sellers),
and such determination shall be final and binding on the parties. If the Buyer
and TP LLC cannot mutually agree on the identity of the Accounting Firm, the
Buyer and TP LLC shall each submit to the other party's independent auditor the
name of a big six accounting firm which does not at the time and has not in the
prior two years provided services to any of the Sellers or the Buyer or the
Parent or any of their respective affiliates, and the Accounting Firm shall be
selected by lot from these two firms by the independent auditors of the two
parties. Any expenses relating to the engagement of the Accounting Firm shall
be shared equally by the Buyer and the Parent, on the one hand, and the Sellers,
on the other. The Accounting Firm shall be instructed to use every reasonable
effort to perform its services within 15 days of submission of the Statement to
it and, in any case, as promptly as practicable after such submission. The
Statement, as modified by resolution of any disputes by the Buyer and the
Sellers or by the Accounting Firm, shall be the Final Statement.
(c) To the extent that the sum of the Prorated Assets existing
as of the Closing Date and the Capital Expenditures exceeds the Prorated
Liabilities of the Business as of the Closing Date, Buyer shall pay the
difference to TP LLC for the account of the Sellers, and to the extent that the
Prorated Liabilities of the Business which arose on or prior to the Closing Date
exceed the sum of the Prorated Assets existing as of the Closing Date and the
Capital Expenditures, the Sellers shall pay the difference to the Buyer (such
payment being referred
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to herein as the "Proration Payment"). The Proration Payment shall be made as
soon as practicable following the determination of the Final Statement, shall be
paid by wire transfer of immediately available funds to an account designated by
the payee at least two business days prior to the payment, and shall be an
adjustment to the Purchase Price.
(d) The Parent's and the Buyer's rights to indemnification
pursuant to Article IX hereof shall not be deemed to limit, supersede or
otherwise affect the Buyer's or the Sellers' rights to a Proration Payment
pursuant to this Section 1.7.
Section 1.8 ACCOUNTS RECEIVABLES. Within 15 days after the Closing,
the Buyer shall prepare and deliver to TP LLC a statement setting forth all
accounts receivables of the Business existing on the Closing Date
("Receivables"). Notwithstanding anything to the contrary in this Agreement,
the parties acknowledge and agree that the Receivables shall remain the property
of TP LLC, but shall be collected by the Buyer. Any proceeds collected, from
the original account customer/contracting party or its assignee, without further
discounting excluding finance charges, on account of the Receivables, shall
remain the property of TP LLC. If the Buyer receives payment of any of the
Receivables following the date of the Closing, the Buyer shall within thirty
days of receipt notify TP LLC of its receipt of these funds and pay over such
funds to TP LLC. If following Closing Date either TP LLC or the Buyer receives
commingled funds which include payments for both TP LLC and the Buyer, then the
party who received the funds shall tender to the other party such other party's
portion of the received commingled funds within thirty days of its receipt of
such funds.
Section 1.9 LEASES.
(a) Simultaneously with the Closing, Tanner and the Buyer shall
enter into leases with respect to each of the Tanner Owned Properties (the
"Tanner Owned Property Leases") which shall provide for, among other things, a
term of 40 years renewable at the option of either party (or its successor or
assign) and shall provide for rent abatements equal in the aggregate to $250,000
per year for the first two years. The Tanner
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Owned Property Leases shall supersede any existing leases in respect of Tanner
Owned Properties and any such pre-existing leases shall terminate following the
Closing.
(b) Simultaneously with the Closing, TP LLC and the Buyer shall
enter into leases in respect of each of the TP LLC Excluded Properties (the "TP
LLC Excluded Properties Leases"), substantially in the form attached hereto as
Exhibit D, which shall provide for, among other things, a term of 40 years
renewable at the option of either party with rent to be paid at the rate of $0
in each month of the first three years and $11,425 per month thereafter.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND TANNER
Each of the Sellers and Tanner jointly and severally represent and
warrant to the Buyer and the Parent on the date hereof and on the Closing Date:
Section 2.1 ORGANIZATION. TP LLC is a limited liability company and
TOA is a limited partnership, both of which are duly organized, validly existing
and in good standing under the laws of the State of Tennessee and have all
requisite power and authority to own, lease and operate the properties owned,
leased and operated by them and to carry on the operations of the Business as
now being conducted by them. Each of the Sellers is duly qualified or licensed
and in good standing to do business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification necessary. TP LLC and TOA have previously made
available to the Buyer complete and correct copies of their certificate of
formation and operating agreement (the "LLC Agreement") or partnership agreement
(the "TOA Agreement").
Section 2.2 AUTHORIZATION. Each of the Sellers has full power and
authority to execute and deliver this Agreement and the Related Agreements and
to consummate the transactions contemplated hereby and thereby. The execution
and delivery of this Agreement and the Related Agreements and the consummation
of the transactions contemplated hereby and thereby have been duly and
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validly authorized by all necessary action on the part of each of the
Sellers, and no other proceedings on the part of either Seller is necessary
to authorize the execution, delivery and performance of this Agreement and
the Related Agreements or the consummation of the transactions contemplated
hereby and thereby. This Agreement has been duly executed and delivered by
each Seller and constitutes, and when executed and delivered, each of the
Related Agreements to be executed and delivered by either Seller pursuant
hereto will constitute, a valid and binding obligation of such Seller,
enforceable against such Seller in accordance with its terms.
Section 2.3 INTERESTS IN OTHER ENTITIES. Except as set forth in
Section 2.3 of the Disclosure Schedule, each of the Sellers, directly or
indirectly, (i) has no interest in the outstanding stock of any corporation or
in any partnership, joint venture, limited liability company or other entity and
(ii) is not party to nor is it bound by any agreement, understanding, contract
or commitment relating to an interest in any such entity or the Sellers'
investment therein or which would require such Seller to make any investment
therein. Neither of the Sellers holds any assets other than Assets used in
connection with the Business to be conveyed to the Buyer pursuant to this
Agreement. Neither of the Sellers has or has had a Controlled Affiliate.
Section 2.4 CONSENTS AND APPROVALS; NO VIOLATIONS. Except for
applicable requirements of the HSR Act, and as set forth in Section 2.4 of the
Disclosure Schedule, neither the execution and delivery of this Agreement or the
Related Agreements nor the consummation by the Sellers of the transactions
contemplated hereby and thereby will (a) conflict with or result in any breach
of any provision of the LLC Agreement or the TOA Agreement or any other
organizational document of either Seller; (b) require any filing with, or the
obtaining of any permit, license, action waiver, authorization, consent, filing,
registration or approval of, any governmental or regulatory authority, PROVIDED,
HOWEVER, that no representation in this clause (b) is made by reason of facts
pertaining specifically to the Parent or the Buyer or by reason of the
Financing; (c) result in a breach of, or constitute a default (whether by notice
or lapse of time or by both) under, or violate or conflict with or give rise to
any right of amendment, termination, can-
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cellation or acceleration, or to a loss of any benefit to which either Seller is
entitled, or require any consent to assign, under any of the terms, conditions
or provisions of, any note, mortgage, other evidence of indebtedness, guarantee,
license, agreement, lease or other contract, instrument or obligation to which
either Seller is party or to which either Seller or any of the Assets are bound
(or result in the imposition of any Lien upon any of the Assets); or (d) violate
or conflict with any order, injunction, decree, statute, rule or regulation
applicable to either Seller or to the Assets.
Section 2.5 FINANCIAL STATEMENTS. Section 2.5 of the Disclosure
Schedule contains true and accurate copies (collectively, the "Financial
Statements") of (i) audited consolidated balance sheets (including notes
thereto) for the years ended December 31, 1995, and December 31, 1994 and
related statements of earnings for the periods then ended for the Sellers, and
(ii) an unaudited consolidated balance sheet and statement of earnings as of
June 30, 1996 of the Sellers (the "Balance Sheet"), except that lease expenses
are understated by $127,500. The Financial Statements have been prepared in
accordance with GAAP, consistently applied (other than for statements of cash
flows and footnotes otherwise required by GAAP) and have been prepared on a
basis consistent with the financial and other books and records of the Business.
The Financial Statements fairly present the financial position and the results
of operations of the Sellers as of the respective dates and periods thereof,
subject in the case of interim financial statements to normal year-end
adjustments.
Section 2.6 ABSENCE OF UNDISCLOSED LIABILITIES. Except for
liabilities and obligations (a) incurred since June 30, 1996 in the ordinary
course of business and consistent with past practice, (b) disclosed in Section
2.6 of the Disclosure Schedule, and (c) provided for in the Balance Sheet (in
relation to the Business) and the Sellers have no material liabilities or
obligations of any kind whatsoever (whether direct, indirect, accrued or
contingent) and there is no existing condition or situation which could
reasonably be expected to result in any such liabilities or obligations.
Section 2.7 ABSENCE OF ADVERSE AND OTHER CHANGES. Except as set
forth in Section 2.7 of the
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Disclosure Schedule or as otherwise contemplated by this Agreement, since June
30, 1996, (a) there has not been any event or occurrence which has resulted in
or could reasonably be expected to result in, a material adverse change in the
Business or in the business, assets, results of operations, prospects or
condition (financial or otherwise) of either Seller, (b) the Business has been
conducted in the ordinary course consistent with past practices, and (c) there
has not been (i) any increase in the compensation of or other benefits payable
to any of the officers or employees of the Business, except such increases as
are granted in the ordinary course of business in accordance with its customary
practices (which shall include normal periodic
performance reviews and related compensation and benefit increases), (ii) any
incurrence, assumption or guarantee by either Seller in connection with the
Business of any indebtedness for borrowed money; (iii) any creation or other
incurrence of any Lien (other than a Permitted Lien) on any Asset; (iv) any
transaction or commitment made, or any contract or agreement entered into, by
either Seller in connection with the Business (including with respect to the
acquisition or disposition of any assets) or any relinquishment by either Seller
in connection with the Business of any contract or other right, in either case,
other than in the ordinary course of TP LLC's business and for fair
consideration; (v) any change in any method of accounting or accounting practice
by either Seller; (vi) any (A) employment, deferred compensation, severance,
retirement or other similar agreement entered into with any employee of the
Business (or any amendment to any such existing agreement), (B) grant of any
severance or termination pay to any such employee or (C) any loan or advance to
any employee of the Business, to the extent outstanding on the date hereof;
(vii) any material change in the methods of operation of the Business; (viii)
any loss or damage to the properties of the Business or the Assets in excess of
$10,000; (ix) any capital expenditures (or series of related capital
expenditures) in excess of $200,000 in the period from July 1, 1996 through the
date hereof by either Seller in connection with the Business; (x) any
acceleration, termination, modification, or cancellation of any contract,
agreement, lease, license or understanding by either Seller in connection with
the Business, outside of the ordinary course of TP LLC's business consistent
with past practice; (xi) any capital investment in, or any loan to, any other
Person by either
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Seller in connection with the Business; (xii) any delay or postponement of the
payment of any accounts payable or other liabilities or obligations by either
Seller in connection with the Business, except in the ordinary course of
business consistent with past practice; (xiii) any cancellation, waiver or
release of any right or claim by either Seller in connection with the Business,
except in the ordinary course of business consistent with past practice; (xiv)
any grant or any license or sublicense of any rights under or with respect to
any Intangible Property; (xv) any transaction with, payment to or repurchase of
any interest in (or any amounts in respect of interests in), any Member or
Partner or affiliate of either of the Sellers; (xvi) any settlement or payment
of any amount to any other Person with respect to any liability or obligation,
outside the ordinary course of TP LLC's business; (xvii) any non-cash dividend,
distribution or allocation to any Member or Partner in respect of such Member's
or Partner's interest in either Seller; or (xviii) any agreement or any
commitment to take any of the actions described in this Section 2.7.
Section 2.8 TITLE, OWNERSHIP AND RELATED MATTERS.
(a) Section 2.8(a) of the Disclosure Schedule sets forth a list
and briefly describes (and specifies the owner of) all Real Property owned (and
any options to purchase) by each Seller in connection with the Business, and any
title insurance policies and surveys with respect thereto, and any Liens
thereon.
(b) As of the Closing, the Sellers will have, and will deliver
to the Buyer, good and marketable title to, or in the case of any leased Real
Property, has, and will deliver a valid fee simple or leasehold interest in, all
of the Assets, in each case free and clear of all Liens, except for Permitted
Liens.
(c) There are no material defects in the physical condition of
buildings, structures, and other improvements included within the Real Property
(the "Improvements") that would interfere with the use or occupancy of the
Improvements in the ordinary conduct of the Business. The Improvements have
access to all utility services that are necessary for and currently used in the
conduct of the Business. Neither of the Sellers has re-
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ceived notice, nor has knowledge of, any pending, threatened or contemplated
condemnation proceeding, or of any sale or other disposition in lieu of
condemnation, affecting the Real Property. There are no leases, subleases,
licenses, concessions or other agreements, written or oral, granting to any
party or parties the right of use of occupancy of any portion of any Real
Property and there are no outstanding options or rights of first refusal to
purchase any Real Property or interest therein owned by the Sellers. No
condemnation or eminent domain proceeding against any of the Real Properties
is pending or threatened or any other matter affecting adversely the current
use, occupancy or value thereof. Neither of the Sellers has received any
written notice of any violation of any law, regulation or ordinance relating
to (i) the physical condition of the Improvements or (ii) the current use of
the Real Property. Each parcel of Real Property abuts on or has direct
vehicular access to a public road.
Section 2.9 PROPERTIES AND ASSETS NECESSARY FOR CONDUCT OF BUSINESS.
The Assets to be transferred to the Buyer pursuant to this Agreement are the
properties and assets (i) owned by each of the Sellers, (ii) used in connection
with the Business, and (iii) necessary to permit the Business to be conducted as
currently conducted or as contemplated to be conducted by the Sellers or which
has been used in the conduct of the Business. Section 1.2 of the Disclosure
Schedule sets forth all assets owned by the Sellers described in the preceding
sentence, all of which shall be conveyed to the Buyer pursuant hereto.
Section 2.10 LEASES. Section 2.10 of the Disclosure Schedule sets
forth a true, complete and correct list, as of the date hereof, of all Leases
(including Sign Location Leases), the name of the lessor or sublessor, the
primary lease term and any title insurance policies and the commitments and
surveys with respect thereto and any Liens thereon and a brief description
thereof. True and complete copies of the Leases and all written riders,
addenda, amendments and any other agreements and all title policies to the
commitments and surveys in either Seller's possession relating thereto have
been made available to the Buyer. Except as set forth in Section 2.10 of the
Disclosure Schedule, each Seller party to a Lease has a valid leasehold
interest in
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such Lease free and clear of all Liens, other than Permitted Liens. No
consent is required (or the requirement for the same has been waived in
writing prior to the date hereof by the Buyer) of any landlord or other third
party to any Lease to consummate the transactions contemplated hereby and
upon consummation of the transactions contemplated hereby, each Lease will
continue to entitle the respective Seller to the use and possession of the
real property specified in such Leases and for the purposes for which such
real property is now being used by the Sellers. Neither of the Sellers is in
default beyond any applicable notice or grace period and has not received
written notice of default still outstanding on the date hereof under any such
Lease, and to the best of each of the Sellers' knowledge, there exists no
uncured default thereunder by any third party. With respect to any Leases
whereon there exists a Display, unless otherwise set forth in Section 2.10 of
the Disclosure Schedule, said Display is owned by the Seller indicated in
Section 2.10 of the Disclosure Schedule and is conveyed in accordance with
this Agreement. Upon request from the Buyer, each Seller shall use its best
efforts to obtain an estoppel certificate from the lessor or sublessor under
any Lease for which the Buyer requests such Seller to obtain such estoppel
certificate. Neither of the Sellers is aware of any circumstances involving
a dispute, oral modification, misunderstanding, forebearance program or
intention to terminate the relationship thereunder (either at present or in
the future) regarding or in relation to any Lease. Each Lease has been
entered into on terms substantially consistent with industry standards and
practices with respect to the subject matters thereof.
Section 2.11 DISPLAYS. The Displays and all related equipment are in
good working order and repair, and comply with all applicable building codes,
zoning or other promulgations of entities having jurisdiction over the
construction and maintenance of the Displays and are fit for intended purpose in
accordance with industry standards. There are at least 2012 Displays faces
being purchased by the Buyer.
Section 2.12 INTANGIBLE PROPERTY. Section 2.12 of the Disclosure
Schedule hereto contains a complete and correct list of the Intangible Property
used by either Seller in connection with the Business, and each
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license or other agreement relating thereto. Each of the Intangible
Properties is owned by the Seller indicated in Section 2.12 of the Disclosure
Schedule and is owned free and clear of all Liens. There has been no claim
asserted in writing, which is still pending, or otherwise threatened, that
any of the foregoing is invalid or conflicts with the asserted rights of
others, or otherwise challenging such Seller's ownership or use thereof. The
Sellers possess all Intangible Property necessary for the conduct of the
Business as currently conducted. The use by the Sellers of such rights does
not violate the rights of any third party.
Section 2.13 LITIGATION. Except as set forth in Section 2.13 of the
Disclosure Schedule, there is no claim, action or proceeding pending or
threatened against either Seller or any of their respective operations by or
before any court, governmental or regulatory authority.
Section 2.14 COMPLIANCE WITH APPLICABLE LAW; PERMITS.
(a) Neither of the Sellers is in violation of, nor has been
threatened to be charged with or given notice of any violation of, or to the
best of such Seller's knowledge, is under investigation with respect to, any
applicable laws, ordinances, rules and regulations of any federal, state, local
or foreign governmental authority, except as set forth in Section 2.14 of the
Disclosure Schedule.
(b) To the best of the Sellers' knowledge, the Sellers have
obtained all necessary Permits (including, without limitation, vegetation
removal permits) and other federal, state and local authorizations necessary to
allow the continued presence of the Displays where located; all applicable fees
for such Permits have been paid; all such Permits are valid and in effect and
are fully transferable; and neither the execution nor the consummation of this
Agreement and the transactions contemplated hereby will terminate any Permit.
Section 2.15 CERTAIN CONTRACTS AND ARRANGEMENTS. Section 2.15 of the
Disclosure Schedule sets forth the following agreements to which either Seller
is a party in connection with the Business, (i) any agreements relating to
indebtedness for borrowed money (wheth-
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er incurred, assumed, guaranteed or secured by any asset), (ii) all
Advertising Contracts, (iii) any agreement (or group of related agreements)
for the lease of personal property to or from any Person providing for lease
payments in excess of $10,000 per annum, (iv) any agreement (or group of
related agreements) for the purchase or sale of raw materials, commodities,
supplies, products, or other personal property, or for the furnishing or
receipt of services, the performance of which will extend over a period of
more than one year, result in a material loss to either Seller, or involve
consideration in excess of $25,000, (v) any agreement concerning a
partnership or joint venture, (vi) any agreement concerning confidentiality
or non-competition, (vii) any profit sharing, stock option, stock purchase,
stock appreciation, deferred compensation, severance, or other material plan
or arrangement for the benefit of the current or former employees of the
Business, (viii) any collective bargaining agreement, (ix) any agreement for
the employment of any individual on a full-time, part-time, consulting, or
other basis providing annual compensation in excess of $1,000 or providing
severance benefits, (x) any agreement under which it has advanced or loaned
any amount to any of the employees or affiliates of either Seller, (xi) any
agreement providing for indemnification of or by either Seller, (xii) any
non-compete agreement applicable to either Seller, (xiii) any agreement by
either Seller providing products or services to any Person for consideration
other than cash or receiving consideration from any Person in products or
services in lieu of cash, and (xiv) any other agreement (or group of related
agreements) the performance of which involves consideration in excess of
$10,000 (such contracts and agreements, together with the Leases, the Sign
Location Lease and the Insurance Policies, the "Material Agreements"). TP
LLC has delivered to the Buyer a correct and complete copy of each written
Material Agreement and a written summary setting forth the terms and
conditions of each oral Material Agreement. Except as set forth in Section
2.15 of the Disclosure Schedule, all Material Agreements are valid, binding
and enforceable in accordance with their terms and will continue to be so on
identical terms immediately following the consummation of the transactions
contemplated by this Agreement and the Related Agreements, and neither the
Sellers nor, to the best knowledge of each Seller, any other party thereto,
is in default under any of such agreements, nor, to the best knowledge of
each Seller,
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has any event or circumstance occurred that, with notice or lapse of time or
both, would constitute any event of default by either Seller or any other
party thereto.
Section 2.16 INSURANCE. Section 2.16 of the Disclosure Schedule sets
forth a complete and accurate list of all policies and fidelity bonds (including
their respective expiration dates) of fire, liability, product liability,
worker's compensation, and other forms of insurance presently in effect with
respect to the Business and its operations (the "Insurance Policies"). There is
no claim pending under any of such policies or bonds as to which coverage has
been questioned, denied or disputed by the underwriters of such policies or
bonds or in respect of which such underwriters have reserved their rights. All
premiums payable under all such policies and bonds have been timely paid and
each Seller has otherwise complied fully with the terms and conditions of all
such policies and bonds, as applicable. Such policies of insurance and bonds
(or other policies and bonds providing substantially similar insurance coverage)
have been in effect since January 1, 1995 and remain in full force and effect.
Such policies and bonds are of the type and in amounts customarily carried by
Persons conducting businesses similar to the Business.
Section 2.17 EMPLOYEE BENEFIT PLANS.
(a) Section 2.17(a) of the Disclosure Schedule contains a true
and complete list of each bonus, deferred compensation, incentive compensation,
stock purchase, stock option, severance or termination pay, hospitalization or
other medical, life or other insurance, supplemental unemployment benefits,
profit-sharing, pension, or retirement plan, program, agreement or arrangement,
and each other employee benefit plan, program, agreement or arrangement,
sponsored, maintained or contributed to or required to be contributed to by
either Seller or any ERISA Affiliate for the benefit of any employee or
terminated employee of either Seller or any ERISA Affiliate, whether formal or
informal and whether legally binding or not (the "Plans"). Neither any Seller
nor any ERISA Affiliate has any formal plan or commitment, whether legally
binding or not, to create any additional Plan or modify or change any existing
Plan that would affect any employee or terminated employee of either Seller or
any ERISA Affiliate.
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(b) With respect to each Plan, TP LLC has heretofore delivered
to the Buyer true and complete copies of each of the following documents: (i) a
copy thereof (including all amendments thereto); (ii) a copy of the most recent
annual report, if required under ERISA; (iii) a copy of the most recent
actuarial report, if required under ERISA; (iv) a copy of the most recent report
prepared with respect thereto in accordance with Statement of Financial
Accounting Standards No. 87, Employer's Accounting for Pensions; (v) a copy of
the most recent Summary Plan Description; (vi) if the Plan is funded through a
trust or any third party funding vehicle, a copy of the trust or other funding
agreement (including all amendments thereto); and (vii) the most recent
determination letter received from the Internal Revenue Service with respect to
each Plan that is intended to be qualified under section 401 of the Code.
(c) To the best knowledge of each Seller, there has been no
termination or partial termination, withdrawal or partial withdrawal with
respect to any of the Plans that either Seller maintains or contributes to or
has maintained or contributed to. Neither any Seller nor any ERISA Affiliate
has incurred any material liability under Title IV of ERISA with respect to any
of the Plans, other than liability for premiums due the Pension Benefit Guaranty
Corporation, which payments have been made or will be made when due. Neither
any Seller nor any ERISA Affiliate contributes to or is required to contribute
to a "multiemployer plan," as such term is defined in ERISA Section 3(37). Each
of the Plans has been operated and administered in all material respects in
accordance with applicable laws, including but not limited to ERISA and the
Code.
(d) No amounts payable under the Plans will fail to be
deductible for federal income tax purposes by virtue of section 280G of the
Code. The consummation of the transactions contemplated by this Agreement will
not (i) entitle any current or former employee or officer of the Business to
severance pay, unemployment compensation or any other payment or (ii) accelerate
the time of payment or vesting, or increase the amount of compensation due any
such employee or officer. There are no pending, threatened or anticipated
claims by or on behalf of any Plan, by any employee or beneficiary cov-
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ered under any such Plan, or otherwise involving any such Plan (other than
routine claims for benefits).
Section 2.18 TAXES. (a) Each Seller (i) has timely filed or will
timely file all Tax Returns required to be filed by each such Seller on or prior
to the Closing Date (including extensions of time to file), and all such Tax
Returns are true, correct and complete, (ii) has timely paid (or adequately
provided for on the Balance Sheet) all Taxes that are due or claimed to be due
from such person by any Tax Authority with respect to periods (or any portion
thereof) ending on or before the Closing Date, and (iii) is not required to file
any state Tax Returns other than as set forth in Section 2.18 of the Disclosure
Schedule.
(b) No Tax is required to be withheld by the Buyer from the
Purchase Price or the Option Payment as a result of the transfers contemplated
by this Agreement or the Related Agreements. The Buyer will not be liable for
any Tax of any of the Sellers, Members or any Partner as a result of the
transactions contemplated hereby.
(c) No deficiency for any Taxes has been proposed, asserted or
assessed against either of the Sellers which has not been resolved and paid in
full; none of the Sellers has received any notice of deficiency or assessment
from any Tax Authority with respect to liability for Taxes of a Member relating
to income of TP LLC, or a Partner relating to the liability of TOA which has not
been resolved and paid in full; no member, partner, officer, director, or
employee responsible for Tax matters of TP LLC or TOA expects any Tax Authority
to propose, assert, or assess any additional Taxes for any period for which Tax
Returns have been filed; neither the Sellers, any Partner, nor any Member has
signed or filed any written requests, agreements, consents or waivers to extend
any statutory period of limitations with respect to Taxes of either of the
Sellers.
(d) No audit or other proceeding by any Tax Authority is
presently pending with respect to any Taxes or Tax Return of the Sellers. There
are no liens, security interests or other encumbrances for Taxes upon any of the
assets of either of the Sellers other than liens, security interests or other
encumbrances for Taxes
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not yet due or payable. From the date of their formation, TP LLC and TOA have
at all times each been classified as a partnership for all Tax purposes; TP LLC,
TOA and each Member and Partner have filed all forms and taken all actions
necessary to maintain such status (and to so qualify and maintain such status in
Tennessee and any other state where such qualification is necessary). Neither
TP LLC, TOA nor any Member or Partner has taken or will have taken or permitted
any action, or omitted to take any action, which action or omission could result
in the loss of TP LLC's or TOA's classification as a partnership for any period
on or before the Closing Date.
Each of the Sellers has complied (and until the Closing will comply) in all
material respects with all applicable laws, rules and regulations relating to
the payment and withholding of Taxes (including, without limitation, withholding
of Taxes pursuant to Sections 1441 and 1442 of the Code or similar provisions
under any foreign laws) and has, within the time and in the manner prescribed by
law, withheld from employee wages and paid over to the proper governmental
authorities all amounts required to be so withheld and paid over under all
applicable law.
(e) Neither of the Sellers is a party to, is bound by, nor has
any obligation under any Tax sharing, indemnity, or similar contract or
arrangement, or is liable for the Taxes of any other person. No power of
attorney has been granted by the Sellers with respect to any matter relating to
Taxes which is currently in force. No assumed liability or indebtedness of TP
LLC or TOA is an obligation to make a payment that would not be deductible under
Section 280G of the Code.
Section 2.19 ENVIRONMENTAL MATTERS. Except as set forth in Section
2.19 of the Disclosure Schedule: (a) (i) each of the Sellers is in substantial
compliance with all Environmental Permits, and with all applicable Environmental
Laws and no notice, notification, demand, request for information, citation,
summons, complaint or order has been issued, no complaint has been filed, no
penalty has been assessed and no investigation or review (collectively,
"Environmental Notices") is pending, or to the best of either Sellers'
knowledge, threatened by any governmental entity or other Person with respect to
any (A) alleged violation by either Seller of any Environmental Law or liability
thereunder or (B) alleged failure by either Seller to have any Environmental
Permit; (ii) nei-
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ther of the Sellers has received any written request for information, or has
been notified that it is a potentially responsible party, under the federal
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended, or any similar state law with respect to any on-site or off-site
location; and (iii) there have been no discharges, emissions or releases of
Hazardous Substances which are or were reportable under Environmental Laws by
either Seller and neither of the Sellers has liability (and has not handled or
disposed of any substance, arranged for the disposal of any substance, exposed
any employee or other individual to any substance or condition, or owned or
operated any property in any matter that could form the
basis for any present or future action, suit, proceeding, investigation, charge,
complaint, claim or demand against either Seller, which could reasonably be
expected to result in any liability) for any damage to any site, location, or
body of water, for any illness or personal injury to any employee or other
individual, or for any reason under any Environmental Law.
(b) There has been no environmental investigation, study, audit,
test, review or other analysis (including all Phase I environmental assessments)
conducted of which either Seller has knowledge in relation to any Real Property
which has not been delivered to the Buyer prior to the date hereof. Except as
set forth in Section 2.19 of the Disclosure Schedule, neither of the Sellers is
subject to any judgment, decree or order relating to compliance with, or the
cleanup of regulated substances under, any applicable Environmental Law.
Section 2.20 CERTAIN FEES. Neither of the Sellers has (i) employed
any financial advisor or finder, or (ii) incurred any liability for any
financial advisory or finders' fees, in each case in connection with this
Agreement or the Related Agreements or the transactions contemplated hereby or
thereby.
Section 2.21 AFFILIATE TRANSACTIONS. Section 2.21 of the Disclosure
Schedule sets forth all contracts, agreements and arrangements in effect on or
after January 1, 1996 between any Seller (including any Members, Partners,
affiliates or associates of any Seller), on the one hand, and any other Seller
(including any Members, Partners, affiliates or associates of any Seller)
("Affiliate
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Transactions"). All such contracts, agreements and arrangements have been
entered into on an arms-length basis and are commercially reasonable. Except as
set forth in Section 2.21 of the Disclosure Schedule, no Member, Partner,
affiliates or associates of any Seller has any direct, indirect or beneficial
ownership of any real or personal property which is in any way involved with or
related to the operation of the Displays or any other Real Property to be
conveyed pursuant to the terms of this Agreement. Since June 30, 1996, no
payment, compensation, loan, advance or distribution has been made to either
Seller (including any Members, Partners, affiliates or associates of any Seller)
by any other Seller (including any Members, Partners, affiliates or associates
of any Seller) on account of or in connection with the Business except for
compensation paid to employees of the Business in the ordinary course of
business consistent with past practices.
Section 2.22 LABOR AGREEMENTS. Neither of the Sellers is a party to
any labor or collective bargaining agreement and there are no labor or
collective bargaining agreements which pertain to employees of the Business.
There are no pending or, to either Sellers' knowledge, threatened strikes, work
stoppages, slowdowns, lockouts, grievances, arbitrations or other labor disputes
against the Business. There are no pending or, to either Sellers' knowledge,
threatened complaints, charges or claims against either Seller with any public
or governmental authority, arbitrator or court based upon the employment or
termination of employment by either Seller of any individual. Each Seller (i)
is in compliance with all laws, regulations and orders relating to the
employment of labor, including all such laws, regulations and orders relating to
wages, hours, collective bargaining, discrimination, civil rights, safety and
health, workers' compensation and the collection and payment of withholding
and/or social security taxes and any similar tax and (ii) is not and has not
been for the past two (2) years engaged in any unfair labor practice. Neither
of the Sellers has a written personnel policy applicable to employees, except as
set forth in Section 2.22 of the Disclosure Schedule. No union organization
campaign is presently in progress or has occurred in the past three (3) years
and no representation question exists with respect to the employees of the
Business.
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Section 2.23 DISCLOSURE. No representation or warranty made by
either Seller in this Agreement nor any statement or certificate already
furnished or to be furnished by either Seller in connection with the
transactions contemplated hereby, contain any known untrue statement of or fails
to state a material fact necessary in order to make the statements not
misleading.
Section 2.24 ACQUISITION FOR INVESTMENT. Each Seller who will
receive Shares as consideration hereunder represents that (i) it is acquiring
the Shares for its own account, for investment purposes only and not with a view
to the resale or distribution thereof or with any present intention of
distributing or selling any of the Shares; (ii) it has authority to make the
representations contained in this Article II; (iii) it has sufficient knowledge
and experience in financial and business matters so as to be capable of
evaluating the merits and risks of its investment in the Shares and is capable
of bearing the economic risk of such investment, including a complete loss of
the investment in the Shares; (iv) it is an "accredited investor" within the
meaning of Rule 501 of Regulation D of the Securities Act or is a savings and
loan association or a similar institutional investor; (v) it is acquiring all
the Shares to be acquired by it hereunder with no view or intention to offer for
sale any of the Shares in a manner which would violate federal or state
securities laws; subject, however, to any requirement of law that the
disposition of its property shall at all times be and remain within its control;
(vi) that it is aware that the Shares have not been registered under the
Securities Act and may not be offered or sold within the United States to, or
for the account or benefit of, United States Persons, except as provided below;
and (viii) it has received all information it has requested in connection with
its execution of this Agreement and its purchase of the Shares, and has been
given the opportunity and right to meet, and to ask questions and receive
answers from, the representatives of the Parent and to investigate and inquire
into all aspects of the Parent and the terms and conditions of the purchase of
the Shares.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE
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CONSENTING PARTIES
Each of the Consenting Parties jointly and severally represent and
warrant to the Buyer and the Parent on the date hereof and on the Closing Date
as follows:
Section 3.1 ORGANIZATION. Tanner, WBT and the Trust are individuals,
corporations or trusts, as the case may be, duly formed, validly existing and in
good standing under the laws of their respective states of incorporation or
formation, as the case may be, and have full power (corporate, trust or
otherwise) and authority to own, lease and operate the properties owned, leased
and operated by them and to carry on their businesses as presently conducted and
are duly qualified to do business and are in good standing in each jurisdiction
in which the property owned, leased or operated by them or the nature of the
business conducted by them makes such qualification necessary.
Section 3.2 AUTHORIZATION; CONSENT. Each of the Consenting Parties
has full power and authority to execute and deliver this Agreement and the
Related Agreements and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the Related
Agreements and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized and consented to by all necessary
action on the part of each of the Consenting Parties, and no other proceedings
on the part of any such Consenting Party are necessary to authorize the
execution, delivery and performance of this Agreement and the Related Agreements
or the consummation of the transactions contemplated hereby and thereby.
Section 3.3 INTERESTS IN THE ASSETS. Except as otherwise
specifically provided for in this Agreement, none of the Consenting Parties (i)
has any right, title or interest whatsoever in or to any of the Assets or (ii)
operates, conducts or has any interest, directly or indirectly, in a business
which provides outdoor advertising services or in any manner competes with the
Business; PROVIDED, THAT, the WBT Media business shall be deemed not to be in
competition with the Business; it being understood that Tanner, WBT Media, Buyer
and Parent will work together to avoid any potential conflicts or
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overlaps in respect of clients and shall use their best efforts to maintain the
client relationships of the Business.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE
PARENT AND THE BUYER
The Parent and the Buyer jointly and severally represent and warrant
to each of the Sellers on the date hereof and as of the Closing Date as follows:
Section 4.1 ORGANIZATION AND AUTHORITY OF THE PARENT AND THE BUYER.
(a) Each of the Parent and the Buyer is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation. Each of the Parent and the Buyer has heretofore
delivered to TP LLC complete and correct copies of its respective certificate of
incorporation and by-laws as currently in effect.
(b) Each of the Parent and the Buyer has the corporate and other
power and authority to execute and deliver this Agreement and the Related
Agreements and consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the Related Agreements and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized by the Board of Directors of each of the Parent and the
Buyer and no other corporate or other proceedings on the part of either of the
Parent or the Buyer are necessary to authorize the execution, delivery and
performance of this Agreement and the Related Agreements or the consummation of
the transactions contemplated hereby or thereby. This Agreement has been duly
executed and delivered by each of the Parent and the Buyer and constitutes, and
when executed and delivered each of the Related Agreements to be executed and
delivered by each of the Parent and the Buyer pursuant hereto will constitute, a
valid and binding obligation of each of the Parent and the Buyer, enforceable
against each of the Parent and the Buyer in accordance with its terms.
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Section 4.2 CONSENTS AND APPROVALS; NO VIOLATIONS. Except for
applicable requirements of the HSR Act and as set forth in Section 4.2 of the
Buyer's Disclosure Schedule, neither the execution and delivery of this
Agreement or the Related Agreements nor the consummation by the Parent or the
Buyer of the transactions contemplated hereby and thereby will (a) conflict with
or result in any breach of any provision of the certificate of incorporation or
by-laws of the Parent or the Buyer; (b) require on the part of the Parent or the
Buyer any material filing with, or the obtaining of any material permit,
license, action, waiver, authorization, consent, filing, registration or
approval of, any governmental or regulatory authority; (c) result in a material
breach of, or constitute a material default under, or violate or conflict with
or give rise to any material right of amendment, termination, cancellation or
acceleration, or to a loss of any benefit to which the Parent or the Buyer is
entitled, under any of the terms, conditions or provisions of any note,
mortgage, other evidence of indebtedness, guarantee, license, agreement, lease
or other contract, instrument or obligation to which the Parent or the Buyer is
a party or by which the Parent or the Buyer or any of the assets of the Parent
or the Buyer may be bound or (d) violate or conflict with any order, injunction,
decree, statute, rule or regulation applicable to the Parent or the Buyer,
excluding from the foregoing clauses (b), (c) and (d) such requirements,
defaults, rights or violations which (X) become applicable as a result of any
acts or omissions by, or any facts specifically relating to, either of the
Sellers, (Y) would not have a material adverse effect on the ability of the
Parent or the Buyer to consummate the transactions contemplated hereby, or (Z)
are or become necessary in connection with the financing to be obtained by the
Parent and the Buyer in connection with the transactions contemplated hereby,
including without limitation, to pay transaction fees and expenses associated
therewith and to provide working capital on a going forward basis (the
"Financing").
Section 4.3 LITIGATION. There is no claim, action or proceeding
pending or, to the best knowledge of the Parent or the Buyer, threatened against
either of the Parent or the Buyer which challenges the validity of this
Agreement or the Related Agreements, or the ability of the Parent or of the
Buyer to consummate the transactions
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contemplated hereby and thereby, by or before any court, governmental or
regulatory authority.
Section 4.4 CERTAIN FEES. Neither the Parent nor the Buyer has
employed any financial advisor or finder or incurred any liability for any
financial advisory or finders' fees in connection with this Agreement or the
Related Agreements or the transactions contemplated hereby and thereby.
ARTICLE V
COVENANTS
Section 5.1 CONDUCT OF THE BUSINESS. Each of the Sellers agrees
that, during the period from the date of this Agreement to the Closing, it shall
operate the Business in the ordinary course consistent with past practice and
will use its best efforts to keep its business and properties substantially
intact, including its present operations, physical facilities, working
conditions and business relationships. Without limiting the generality of the
foregoing, neither of the Sellers nor the Consenting Parties (with respect to
the Business) shall take any action of the type contemplated by Section 2.7 of
this Agreement or; PROVIDED, HOWEVER, that the Sellers may enter into and
perform their obligations under the Joint Management Agreement (the "Joint
Management Agreement") between the Sellers and Universal Outdoor Management
Company, Inc., dated the date hereof.
Section 5.2 ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) Between the date of this Agreement and the Closing, each of
the Sellers shall (i) give to the Parent and the Buyer and their respective
authorized representatives access to all books, records, offices and other
facilities and properties of the Business; (ii) permit the Parent and the Buyer
to make such inspections thereof as the Parent and the Buyer may reasonably
request; and (iii) cause the officers of each of the Sellers to furnish each of
the Parent and the Buyer with such financial and operating data and other
information with respect to the business and properties of the Business as the
Parent and the Buyer may from time to time request.
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(b) All information concerning either Seller or the Business
furnished or provided by the Sellers, to either of the Parent or the Buyer or
their respective representatives (whether furnished before or after the date of
this Agreement) shall be kept confidential by the Seller, and until the Closing,
by the Buyer or the Parent; PROVIDED, THAT the Parent and its affiliates may
disclose any information to the extent such disclosure is required in connection
with any capital market transaction, any filings required pursuant to applicable
law or required by federal or state securities laws.
(c) Each of the Sellers agrees to keep proprietary information
regarding the Sellers, the Buyer and the Parent confidential and following the
Closing will keep proprietary information regarding the Sellers, the Buyer and
the Parent confidential and agree that they will only use such information in
connection with the transactions contemplated by this Agreement and not disclose
any of such information, except to the extent disclosure is required in
connection with the financing or required by law, regulation or judicial order
by any governmental authority.
(d) Each of the Sellers agrees that so long as any books and
records relating to the Business remain in existence and available and have not
otherwise been delivered to the Buyer, the Buyer and the Parent shall have the
right to inspect and to make copies of the same at any time during normal
business hours for any proper purpose, and that, to the extent any such books
and records have not otherwise been delivered to the Buyer, any such Seller will
not destroy or dispose of any books or records relating to the Business existing
as of the Closing Date without first offering to provide such books or records
to the Buyer.
(e) Each of the Sellers shall deliver or make available to the
Buyer any documents which the Buyer shall request in order that the Buyer may
obtain title insurance on surveys for each of the Real Properties.
Section 5.3 REGULATORY COMPLIANCE.
(a) Immediately following the delivery of Advance Notice to TP
LLC as contemplated by Section 1.1
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hereof, the parties hereto shall make all necessary filings, including,
without limitation, those required under the HSR Act, applicable United
States or foreign antitrust laws and applicable state laws, in order to
facilitate prompt consummation of the transactions contemplated hereby and by
the Related Agreements. In addition, each of the Sellers and the Buyer will
use its reasonable best efforts (including, without limitation, payment of
any required fees), and will cooperate fully with the other to (i) comply as
promptly as practicable with all governmental requirements applicable to the
transactions contemplated by this Agreement and the Related Agreements and
(ii) obtain promptly all approvals, permits, orders or other consents of any
applicable governmental authorities necessary for the consummation of the
transactions contemplated by this Agreement and the Related Agreements. Each
of the parties hereto will furnish to the other party such necessary
information and reasonable assistance as such other party may reasonably
request in connection with the foregoing.
(b) Each of the Sellers and the Buyer will coordinate and
cooperate fully with the other in exchanging such information and providing such
assistance as the other may reasonably request in connection with the foregoing
and in seeking early termination of any applicable waiting periods under the HSR
Act or in connection with other regulatory approvals and consents. Each of the
Sellers and the Buyer agrees to respond promptly to and comply fully with any
request for additional information or documents under the HSR Act. Each of the
Sellers will provide the Buyer with copies of all correspondence, filings or
communications (or memoranda setting forth the substance thereof) between such
Seller or any of its representatives, on the one hand, and any governmental
agency or authority or members of their respective staffs, on the other hand,
with respect to this Agreement and the transactions contemplated hereby.
Section 5.4 CONSENTS; ASSIGNMENTS. Each of the Sellers and the Buyer
will use their respective best efforts to obtain any consent, approval or
amendment required to novate and/or assign all agreements, leases, licenses and
other rights of any nature whatsoever relating to the Assets; PROVIDED, HOWEVER,
that except for filing and other administrative charges, the Buyer shall not be
obligated to pay any consideration therefor to the
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third party from whom such consents, approvals and amendments are requested.
In the event and to the extent that the Buyer and the Sellers are unable to
obtain any such required consent, approval or amendment, or if any attempted
assignment would be ineffective or would adversely affect the rights of any
Seller with respect to any Asset so that the Buyer would not in fact receive
all the rights with respect to such Asset, the Sellers and the Buyer will
cooperate (to the extent permitted by law or the terms of any applicable
agreement) in a mutually agreeable arrangement under which the Buyer would,
to the extent possible, obtain the benefits and assume the obligations with
respect to such Asset, in accordance with this Agreement, including
sub-contracting, sub-licensing, or sub-leasing to the Buyer, or under which
such Seller would enforce for the benefit of the Buyer, with the Buyer
assuming such Seller's obligations, any and all rights of such Seller against
a third party thereto. Such Seller shall, without further consideration
therefor, pay and remit to the Buyer promptly all monies, rights and other
considerations received in respect of the Buyer's performance of such
obligations. If and when any such consent shall be obtained or such
agreement, lease, license or other right shall otherwise become assignable or
able to be novated, such Seller shall promptly assign and novate all its
rights and obligations thereunder to the Buyer without payment of further
consideration and the Buyer shall, without the payment of any further
consideration therefor, assume such rights and obligations and such Seller
shall be relieved of any and all liability hereunder.
Section 5.5 REASONABLE BEST EFFORTS. Upon the terms and subject to
the conditions herein provided, each of the parties hereto agrees to use its
reasonable best efforts to take or cause to be taken all action, to do or cause
to be done, and to assist and cooperate with the other party hereto in doing,
all things necessary, proper or advisable under applicable laws and regulations,
to consummate and make effective, in the most expeditious manner practicable,
the transactions contemplated by this Agreement and the Related Agreements.
Section 5.6 NON-COMPETITION.
(a) Each of the Sellers and Tanner agree that from the date
hereof through the Closing Date (ex-
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cept with respect to the Business) and for a period of five full years from the
Closing Date, neither they nor any of their respective members, partners (except
for Jerry Peck) or affiliates shall: (i) engage, either directly or indirectly,
as a principal or for its own account or solely or jointly with others, or as
stockholders, members, partners or the like (other than through the ownership of
not more than 5% of the outstanding voting securities of any publicly-traded
entity), in any business that competes with the Business or the business of the
Buyer as it exists on the Closing Date in any jurisdiction where the Business is
conducted or advertised on the Closing Date or within a 250 mile square radius
thereof; or (ii) affirmatively solicit, other than through a general
solicitation, the employment of any employee of the Business as of the Closing
Date, except that TP LLC shall have the right to solicit the employment of those
employees listed in Section 5.6 of the
Disclosure Schedule.
(b) If any provisions contained in this Section 5.6 shall for
any reason be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provisions
of this Section 5.6, but this Section 5.6 shall be construed as if such invalid,
illegal or unenforceable provisions had never been contained herein. It is the
intention of the parties that if any of the restrictions or covenants contained
herein is held to cover a geographic area or to be for a length of time which is
not permitted by applicable law, or in any way construed to be too broad or to
any extent invalid, such provision shall not be construed to be null, void and
of no effect, but to the extent such provision would be valid or enforceable
under applicable law, a court of competent jurisdiction shall construe and
interpret or reform this Section 5.6 to provide for a covenant having the
maximum enforceable geographic area, time period and other provisions (not
greater than those contained herein) as shall be valid and enforceable under
such applicable law. Each of the Sellers acknowledges that the Buyer would be
irreparably harmed by any breach of this Section 5.6 and that there would be no
adequate remedy at law or in damages to compensate the Buyer for any such
breach. Each of the Sellers agrees that the Buyer shall be entitled to
injunctive relief requiring specific performance
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by such Seller of this Section 5.6, and each of the Sellers consents to the
entry of an order thereof.
Section 5.7 PRESS RELEASES. Prior to Closing, none of the Sellers
nor the Buyer shall make any press release or public announcement in connection
with the transactions contemplated hereby without the prior written consent of
the other or, if required by law, without prior consultation with the other.
Section 5.8 EMPLOYEES. As of the Closing, the Buyer shall offer to
continue the employment, effective the day after the Closing Date, of such
persons who are active employees of the Business on the Closing Date, as it
shall elect in its sole discretion. The Buyer will not adopt or assume, at and
as of the Closing, any of the Plans maintained nor any trust, insurance
contract, annuity contract, or other funding arrangement established with
respect thereto. The Buyer will not ensure that the Plans treat employment with
the Business prior to the Closing Date the same as employment from and after the
Closing Date for purposes of eligibility, vesting, and benefit accrual.
Furthermore, in order to preserve the Assets and the relationships of the
Business with employees and clients, the Buyer agrees, for a period of five full
years from the Closing Date, not to directly or indirectly (other than as agent
or representative of any third party) employ David Hogue in connection with the
Business and in the event that Buyer breaches this provision, Buyer shall pay
$1,000,000 to the Sellers as liquidated damages.
Section 5.9 ENVIRONMENTAL STUDIES; TITLE. Each of the Sellers shall
allow the Buyer (and any Person designated by the Buyer) access to the Real
Properties to the extent necessary to conduct Phase I, Phase II and any other
environmental studies and surveys and title reports, as the Buyer may request
(the "Environmental Studies"). In the event that such Environmental Studies
determine that a potential liability in excess of $500,000 exists or may exist
on any of the properties, the Buyer may, at its sole option, either (i)
terminate this Agreement and receive a full refund of the Option Payment or (ii)
remove such property from the Assets to be acquired and make a corresponding
reduction to the Purchase Price; PROVIDED, HOWEVER, THAT, the Sellers may elect
to cure any such environmental liabilities or
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otherwise satisfy any potential liabilities, in each case, in a manner
reasonably acceptable to the Parent and the Buyer.
Section 5.10 SHARES.
(a) Each Seller who will receive Shares as consideration
hereunder agrees that the following restrictive legends will be placed on
certificates representing any or all of the Shares and that transfer of any or
all of the Shares may be refused by the Parent's transfer agent unless the
Shares for which transfer is sought are registered under the Securities Act and
all other applicable federal securities or blue sky laws or unless such Seller
provides information satisfactory to the Buyer that such registration is not
required:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS
ON TRANSFER AND CERTAIN OTHER CONDITIONS.
NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION
OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT (A)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933 AND THE RULES AND REGULATIONS IN EFFECT THEREUNDER AND ALL APPLICABLE
STATE SECURITIES OR "BLUE SKY" LAWS (SUCH FEDERAL AND STATE LAWS, THE
"SECURITIES LAWS") OR (B) IF THE BUYER HAS BEEN FURNISHED WITH AN OPINION
OF COUNSEL FOR THE HOLDER, WHICH OPINION AND COUNSEL SHALL BE REASONABLY
SATISFACTORY TO THE BUYER, TO THE EFFECT THAT SUCH TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM THE
PROVISIONS OF THE SECURITIES LAWS."
The Shares being delivered pursuant to this Agreement shall not be transferable
by either Seller except (A) (i) pursuant to an effective registration statement
under the Securities Act, (ii) pursuant to Rule 144, or any successor rule,
under the Securities Act or (iii) upon receipt by the Parent of a written
opinion of counsel reasonably satisfactory to the Parent that is knowledgeable
in securities laws matters, to the effect that the proposed transfer is exempt
from the registration requirements of the Securities Act and relevant state
securities laws and
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(B) following notice to the transferee of any restrictions on the transfer of
such Shares.
(b) No later than May 31, 1997, Parent shall prepare and file
with the Securities and Exchange Commission a registration statement in regard
to the Shares. Parent shall use its best efforts to have the registration
statement declared effective under the Securities Act as promptly as practicable
after such filing. Parent shall also take any action reasonably required to be
taken under any applicable state securities laws in connection with the
registration and qualification of the Shares.
(c) In consideration of the Parent registering the Shares
pursuant to paragraph (b) of this Section 5.10, the Sellers agree not to offer,
sell, sell short or otherwise dispose of the Shares or other capital stock of
the Parent, or any securities convertible, exchangeable or exercisable for
common stock of the Parent for a period of 180 days following the date of any
registration of shares of Common Stock of the Parent. Sellers shall cause any
party to whom they transfer the Shares to agree to the foregoing in writing as a
condition to such transfer.
Section 5.11 SUPPLEMENTAL DISCLOSURE. Each of the Sellers will
promptly inform the Buyer in writing of any fact or circumstance known to such
Seller that would constitute a breach of any representations or warranties
contained in Article II or would cause any of the conditions to either party's
obligations to consummate the transactions contemplated under this Agreement not
to be fulfilled.
Section 5.12 NO SOLICITATION OF TRANSACTIONS. Each of the Sellers
shall not, and shall cause each of their Members, Partners, officers, employees,
advisors, representatives, agents or affiliates not to, directly or indirectly,
encourage, engage in, solicit or initiate any discussions or negotiations with,
or provide any information to, or negotiate or enter into any agreement or
agreement in principle with, any other person, entity or group, with respect to
a sale of the Business, assets or membership interests in connection therewith
or any similar transaction. Each of the Sellers shall, and shall
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cause their Members, Partners, officers, employees, advisors,
representatives, agents or affiliates to, notify the Buyer of any action
taken by any person in connection with the foregoing sentence and shall
provide the Buyer with any information, written or oral, obtained by such
party in connection therewith.
ARTICLE VI
CERTAIN TAX MATTERS
Section 6.1 NO WITHHOLDING. The Buyer agrees to pay the Seller the
Purchase Price without reduction for any amounts in respect of any potential
withholding or other Taxes and the Sellers agree to indemnify and hold harmless
the Buyer and the Parent from any liability which may be asserted or arise from
the determination of any Taxing Authority that any amounts were required to be
withheld from the Purchase Price.
Section 6.2 ALLOCATION OF CONSIDERATION. No later than 15 days after
the Closing Date, the Sellers shall make available to the Buyer, or provide the
Buyer with access to, all information necessary to the Buyer's preparation of
Section 6.2 of the Buyer Disclosure Schedule described hereafter. The Buyer
shall prepare Section 6.2 of the Buyer Disclosure Schedule which shall allocate
the Consideration (which in Buyer's sole discretion constitutes an amount paid
to acquire the Assets for federal, state or local income tax purposes) among the
assets and to the non-compete provisions provided for in Section 5.6 hereof in
accordance with the fair market value of such assets and provisions. No later
than 90 days after the Closing Date, the Buyer shall deliver Schedule 6.2 of the
Buyer Disclosure Schedule to Sellers. The Buyer and the Sellers shall each
report the transactions contemplated under this Agreement for all federal, state
and local income tax and all other purposes (including, without limitation, for
purposes of Section 1060 of the Code) as set forth on Section 6.2 of the Buyer
Disclosure Schedule. The Buyer and the Sellers shall each, and TP LLC and TOA
shall use their best efforts to cause the Members and Partners to, timely file a
Form 8594 (and any similar forms required under state or local Tax law) in
accordance with the requirements of Section 1060 of the Code (or state or local
Tax law, as the case may be) and
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this Section 6.2. Notwithstanding anything contained herein to the contrary,
no more than $300,000 of the consideration shall be allocated to the
non-compete agreement contemplated by Section 5.6 hereof.
Section 6.3 SELLERS RESPONSIBILITY. Sellers shall be jointly and
severally responsible for all sales, use, transfer, transfer gains, recording,
ad valorem, stamp, and any similar Tax, fee or duty arising out of and in
connection with or attributable to the transactions effected pursuant to this
Agreement.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE PARTIES
Section 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION. The respective
obligations of each party to consummate the transactions contemplated herein is
subject to the satisfaction at or prior to the Closing of the following
conditions:
(a) The Buyer shall have exercised the Option in accordance with
the provisions of Section 1.1 hereof and any Advance Notice delivered pursuant
thereto shall not have been revoked unless a subsequent Advance Notice shall
have been delivered.
(b) Any waiting periods applicable to the transactions
contemplated by this Agreement under applicable United States and foreign
antitrust or trade regulation laws and regulations, including, without
limitation, under the HSR Act, shall have expired or been terminated and all
governmental authorizations or approvals required in connection with the
transactions contemplated by this Agreement shall have been obtained or given.
(c) No statute, rule or regulation shall have been enacted,
entered, promulgated or enforced by any court or governmental authority and
there shall not be in effect any judgement, order, injunction or decree of any
court of competent jurisdiction which prohibits or restricts the consummation of
the transactions contemplated hereby.
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(d) No proceeding by any Person which is reasonably likely to
have any of the effects contemplated in clause (c) of this Section 7.1 shall be
pending.
Section 7.2 CONDITIONS TO OBLIGATIONS OF THE SELLERS. The
obligations of the Sellers to consummate the transactions contemplated herein
are further subject to the satisfaction (or waiver) at or prior to the Closing
of the following conditions:
(a) The representations and warranties of the Parent and the
Buyer contained in Article IV of this Agreement shall be true and correct in all
respects at the date hereof and as of the Closing Date, as if made at and as of
the date hereof.
(b) Each of the Parent and the Buyer shall have performed in all
material respects its respective obligations under this Agreement required to be
performed by it at or prior to the Closing pursuant to the terms hereof; and TP
LLC shall have received a certificate from the Parent and the Buyer signed by an
authorized officer of each of the Parent and the Buyer to the effect of this
paragraph and of paragraph (a) of this Section 7.2.
Section 7.3 CONDITIONS TO OBLIGATIONS OF THE PARENT AND THE BUYER.
The obligations of the Parent and the Buyer to consummate the transactions
contemplated hereby are further subject to the satisfaction (or waiver) at or
prior to the Closing of the following conditions:
(a) The representations and warranties of the Sellers and the
Consenting Parties contained in this Agreement shall be true and correct in all
material respects at the date hereof and as of the Closing Date.
(b) Each of the Sellers shall have performed in all material
respects each of its obligations under this Agreement required to be performed
by it at or prior to the Closing pursuant to the terms hereof; and the Buyer
shall have received a certificate from TP LLC, signed by the Chief Manager of TP
LLC, and from TOA, signed by the general partner of TOA, to the effect of this
paragraph and of paragraph (a) of this Section 7.3.
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(c) All consents or renewals listed on Section 7.3 of the
Disclosure Schedule and marked with an asterisk shall have been obtained on
terms and conditions satisfactory to the Buyer.
(d) No statute, rule or regulation shall have been enacted,
entered, promulgated or enforced by any court or governmental authority and
there shall not be in effect any judgement, order, injunction or decree of any
court of competent jurisdiction, which would restrain, prohibit or otherwise
interfere with the effective operation or enjoyment by the Buyer of all or any
substantial portion of the Assets, and no proceeding by any Person which is
reasonably likely to have any of the foregoing effects shall be pending.
(e) The Sellers shall have provided evidence satisfactory to the
Buyer that any Liens on the Assets have been released as of the time of Closing.
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
Section 8.1 TERMINATION. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned:
(a) by the Buyer, upon notice to TP LLC of its intention not to
exercise the Option;
(b) at any time, by mutual written consent of the parties
hereto;
(c) by either the Buyer or TP LLC, if, an Advance Notice shall
not have been delivered prior to December 31, 1996; or
(d) by either the Buyer or TP LLC, if, consummation of the
transactions contemplated hereby would violate any nonappealable final order,
decree or judgment of any court or governmental body having competent
jurisdiction;
PROVIDED, THAT, no party may terminate this Agreement pursuant to clauses (c) or
(d) above, if such party is,
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at the time of any such attempted termination, in breach of any term hereof.
Section 8.2 PROCEDURE AND EFFECT OF TERMINATION. In the event of the
termination of this Agreement and the abandonment of the transactions
contemplated hereby pursuant to Section 8.1 hereof, written notice thereof shall
forthwith be given by the party so terminating to the other party and this
Agreement shall terminate and the transactions contemplated hereby shall be
abandoned, without further action. If this Agreement is terminated pursuant to
Section 8.1 hereof, there shall be no liability or obligation hereunder on the
part of either of the Sellers or the Buyer or any of their respective directors,
officers, employees, affiliates, controlling persons, agents or representatives,
unless such Seller or the Buyer, as the case may be, has (i) willfully failed to
have performed its obligations hereunder or (ii) knowingly made a
misrepresentation of any matter set forth herein.
Section 8.3 AMENDMENT, MODIFICATION AND WAIVER. This Agreement may
be amended, modified or supplemented at any time only by written agreement of TP
LLC and the Buyer. Any failure of either of the Sellers on the one hand, or the
Buyer or the Parent, on the other hand, to comply with any term or provision of
this Agreement may be waived, with respect to the Buyer or the Parent, by TP LLC
and, with respect to the Sellers, by the Buyer, by an instrument in writing
signed by or on behalf of the appropriate party, but such waiver or failure to
insist upon strict compliance with such term or provision shall not operate as a
waiver of, or estoppel with respect to, any subsequent or other failure to
comply.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
Section 9.1 SURVIVAL. The parties hereto agree that (i) the
covenants and agreements contained in this Agreement and the representations and
warranties contained in Sections 2.2, 2.9, 2.20, 2.21 2.24, 3.1, 3.2 and 3.3
shall survive without limitation, (ii) the representations and warranties
contained in Sections
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2.14, 2.17, 2.18 and 2.19 shall survive until 90 days after the expiration of
the applicable statute of limitations with respect to the subject matter
thereof, and (iii) the representations and warranties contained in Article II
(other than Sections 2.2, 2.9, 2.14, 2.17, 2.18, 2.19, 2.20, 2.21 and 2.24)
shall survive until eighteen months following the Closing Date.
Section 9.2 SELLERS' AGREEMENT TO INDEMNIFY.
(a) Subject to the terms and conditions set forth herein, from
and after the Closing, the Sellers and Tanner shall jointly and severally
indemnify and hold harmless the Parent, the Buyer and the Indemnitees from and
against all Damages. The Sellers' and Tanner's obligation to indemnify the
Indemnitees for Damages pursuant to this Section 9.2(a) is subject to the
following limitations: (i) no indemnification shall be made by the Sellers or
Tanner for Damages arising solely from clause (i) of the definition of Damages
set forth in Article X hereof unless the aggregate amount of such Damages
exceeds $500,000 and then to the full extent of all such Damages; and (ii) in no
event shall the Sellers' or Tanners' aggregate obligation to indemnify the
Indemnitees exceed the Purchase Price.
(b) Subject to the terms and conditions set forth herein, from
and after the Closing, the Consenting Parties shall jointly and severally
indemnify and hold harmless the Parent, the Buyer and the Indemnitees from and
against all Consenting Party Damages. The Consenting Parties obligation to
indemnify the Indemnitees for Consenting Party Damages pursuant to this Section
9.2(b) is subject to the following limitations: (i) no indemnification shall be
made by the Consenting Parties for Consenting Party Damages arising solely from
clause (i) of the definition of Consenting Party Damages set forth in Article X
hereof unless the aggregate amount of such Consenting Party Damages exceeds
$100,000 and then to the full extent of all such Consenting Party Damages; and
(ii) in no event shall the Consenting Parties' aggregate obligation to indemnify
the Indemnitees exceed the Purchase Price.
Section 9.3 NOTICE AND OPPORTUNITY TO DEFEND. If an event occurs
that entitles an Indemnitee, or that an Indemnitee believes entitles it, to
indemnification
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pursuant to this Article IX, the Indemnitee shall promptly notify TP LLC. If
the claim for indemnification arises out of a claim by a third party, such
notice shall occur within 15 days of the Indemnitee's receipt of written notice
of such claim; PROVIDED, HOWEVER, that the failure to so notify TP LLC shall not
relieve either of the Sellers or the Consenting Parties, as the case may be, of
their obligations hereunder, except to the extent that the Sellers or the
Consenting Parties, as the case may be, are actually prejudiced by such failure.
TP LLC shall have the right to undertake, conduct and control the defense
thereof by so notifying the Indemnitee in writing, provided that TP LLC (i)
states that the settlement or defense of the claim will be conducted at all
times in good faith and in a reasonable manner (and so conducts it), (ii)
acknowledges in writing the obligation to indemnify the Indemnitee in accordance
with the terms contained in this Agreement, and (iii) promptly reimburses the
Indemnitee for all out-of-pocket expenses incurred as a result of the assumption
by TP LLC of control of such settlement or defense. If TP LLC provides written
notice to the Indemnitee that it elects to defend such claim, TP LLC shall be
obligated to defend such claim, at its own expense and by counsel chosen by it
and reasonably satisfactory to the Indemnitee. In the event TP LLC elects to
provide the defense of such claim pursuant to this Section 9.3, the Indemnitee
shall cooperate fully with TP LLC and its counsel in the defense of such claim
and shall be entitled to full access to information with respect thereto and to
participate in the defense thereof at its own cost and expense. Any compromise,
settlement or offer of settlement of such claim by TP LLC shall require the
prior written consent of the Indemnitee, which consent shall not be unreasonably
withheld and unless such consent is obtained, TP LLC shall continue the defense
of such claim; PROVIDED, HOWEVER, that if the Indemnitee refuses its consent to
a bona fide offer of settlement that TP LLC wishes to accept and that involves
no payment by the Indemnitee not paid by the Sellers or the Consenting Parties,
as the case may be, and further involves no limitation on the future conduct of
the Business as presently conducted, TP LLC may reassign the defense of such
claim to the Indemnitee, who may then continue to pursue the defense of such
matter, free of any participation by TP LLC, at the sole cost and expense of the
Indemnitee. In such event, the obligation of the Sellers and the Consenting
Parties, as the case
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may be, with respect thereto shall not exceed the amount of the offer of
settlement that the Indemnitee refused to accept plus the costs and expenses of
the Indemnitee prior to the date TP LLC notified the Indemnitee of the offer of
settlement. If TP LLC does not elect to defend any such claim, it shall
nevertheless have the right of full access to information with respect thereto
and to participate in such defense at its sole cost and expense and shall remain
liable for any indemnification obligations pursuant to this Agreement.
Section 9.4 OPTION PAYMENT. In addition to any other rights pursuant
to applicable law, at any time prior to the Closing Date, the Buyer shall be
entitled to the immediate return of the Option Payment in the event (i) any
representation or warranty contained in Article II, Section 3.1 or Section 3.2
hereof shall be untrue as of the date such representation or warranty was made
and shall in the reasonable judgement of the Buyer be reasonably likely to
result in Damages which in the aggregate exceed $1,000,000; PROVIDED, HOWEVER,
THAT, the Sellers may elect to cure any such breach of a representation or
warranty contained in Article II hereof or otherwise satisfy any liabilities
related thereto, in each case, in a manner reasonably acceptable to the Parent
and the Buyer, (ii) any representation or warranty contained in Section 3.3
hereof shall be untrue in any respect or (iii) as contemplated by Section 5.9
hereof. Any dispute in connection with the foregoing shall be resolved in
accordance with the dispute provisions set forth in Section 11.7 hereof.
Section 9.5 RIGHT OF SET-OFF.
(a) Notwithstanding any other provision of this Agreement or any
other agreement, instrument, or undertaking, it is understood and agreed that
Buyer shall have the right to set off the amount of any Damages or Consenting
Party Damages, as the case may be, against any sums of money (including the
lease payments under the Tanner Owned Property Leases and the TP LLC Excluded
Property Leases) at any time or from time to time payable or deliverable to the
Sellers or Tanner, as the case may be, or their respective heirs, beneficiaries,
personal and legal representatives or assigns pursuant to this Agreement, by the
Buyer or the Parent (or their respective successor or assign), based upon the
Buyer's or the
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Parent's reasonable estimate of the amount of such Damages or Consenting Party
Damages.
(b) For all federal income tax purposes, any payment made
pursuant to this Section 9.5 shall be treated as if Buyer made the payment in
respect of the lease (or otherwise) and that the Sellers or Tanner, as the case
may be, made a deemed payment to the Buyer in respect of the Damages which is
treated as an adjustment to the Purchase Price.
ARTICLE X
DEFINITIONS
For the purposes of this Agreement, the following terms shall have the
following respective meanings:
"Accounting Firm" shall have the meaning set forth in Section 1.7 (b)
hereof.
"Advance Notice" shall have the meaning set forth in Section 1.1
hereof.
"Advertising Contracts" shall have the meaning set forth in Section
1.2(a)(iv) hereof.
"Affiliate" shall have the meaning set forth in Rule 12b-2 of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended.
"Affiliate Transactions" shall have the meaning set forth in Section
2.21 hereof.
"Agreement" means this agreement, dated as of September 12, 1996,
together with any amendments thereto, by and among the Sellers, the Parent and
the Buyer.
"Assets" means all of the properties, contracts and other assets (of
every kind, nature, character and description, whether real, personal or mixed,
whether tangible or intangible, whether accrued, contingent or otherwise and
wherever situated), goodwill and business as a going concern of the Business,
all as of the Closing Date, other than the Excluded Assets.
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"Assumed Liabilities" means (a) all obligations of either Seller under
any Lease, Permit, Advertising Contract or title documents to Owned Real
Property which is specifically identified in this Agreement as being transferred
to the Buyer, (b) the $1,100,000 Belz/Curtis Outdoor Advertising Company 8%
promissory note; (c) the $75,000 Perim Corporation 8% promissory note, and (d)
any other liabilities and obligations of either Seller set forth in the
Disclosure Schedule under an express statement to the effect that the definition
of Assumed Liabilities will include the liabilities and obligations so disclosed
and that the Buyer shall assume such liability or obligation. Notwithstanding
the foregoing, it is understood and agreed by the parties hereto that the
Assumed Liabilities shall not include any other liabilities or obligations of
the Sellers or of the Business not specifically identified in clauses (a)
through (d) of this definition. Without limiting the generality of the
foregoing, the Assumed Liabilities shall specifically exclude, among other
things, (a) any liability of either Seller with respect to Taxes, (b) any
liability of either Seller for any Taxes arising in connection with the
consummation of the transactions contemplated hereby (including any Taxes
arising in connection with the Sellers' transfer of Assets), (c) any liability
of either Seller for the unpaid Taxes of any Person other than such Seller under
any provision of Tax law or by contract or otherwise, (d) any obligation of
either Seller to indemnify any Person by reason of the fact that such Person was
a director, officer, employee, or agent of such Seller or was serving at the
request of such Seller as a partner, trustee, director, officer, employee, or
agent of another entity (whether such indemnification is for judgments, damages,
penalties, fines, costs, amounts paid in settlement, losses, expenses, or
otherwise and whether such indemnification is pursuant to any statute, charter
document, bylaw, agreement, or otherwise), (e) any liability of either Seller
for costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby, (f) any obligation of either Seller under this
Agreement, (g) any liability attributable to or incurred in connection with the
Plans for the benefit of any current or former employee of the Business, (h) any
obligations and liabilities relating to Excluded Assets, except for the on-going
obligation of the Buyer to comply with the provisions in the Tanner Owned
Property Leases and the TP LLC Excluded Properties Leases or
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(i) any liabilities with respect to any litigation arising before, or related to
events occurring prior to, the Closing.
"Balance Sheet" shall have the meaning set forth in Section 2.5
hereof.
"Bills of Sale" means the duly executed bills of sale, substantially
in the form attached hereto as Exhibit A, which each Seller will deliver to the
Buyer effecting the sale, assignment, transfer and delivery of that portion of
the Assets, owned by each such Seller.
"Books and Records" shall have the meaning set forth in Section
1.2(a)(xiii) hereof.
"Business" means the business of owning and operating an outdoor
advertising business as presently conducted by TP LLC and TOA in Memphis,
Tennessee, and the surrounding area including, but not limited to, Shelby
County, Fayette County, Tipton County and Hardin County, Tennessee, and Desoto
County, Tunica County and Acorn County, Mississippi, and Crittenden County and
Marion County, Arkansas, including, without limitation, any and all assets owned
by either of the Sellers and used in connection therewith.
"Buyer" shall have the meaning set forth in the introduction hereto.
"Buyer Disclosure Schedule" means the disclosure schedule document
being delivered to the Sellers by the Buyer in connection herewith.
"Capital Expenditures" shall have the meaning set forth in Section
1.7(a) hereof.
"Cash Purchase Price" shall have the meaning set forth in Section
1.3(b) hereof.
"Closing" means the closing of the transactions contemplated by this
Agreement.
"Closing Date" means the date of the Closing.
"Code" means the Internal Revenue Code of 1986, as amended (or any
successor law thereto).
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"Consenting Parties" shall have the meaning set forth in the
introduction hereto.
"Consenting Party Damages" means all liability, demands, claims,
actions or causes of actions, assessments, losses, damages, costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses)
asserted against or incurred by any Indemnitee as a result of or arising out of
(i) a breach of any representation or warranty contained in Article III of this
Agreement as of the applicable date provided for therein and (ii) the breach of
any covenant or agreement of any of the Consenting Parties contained herein.
"Consideration" shall have the meaning set forth in Section 1.3(b).
"Controlled Affiliate" means any corporation, partnership, entity or
other person that directly, or indirectly through one or more intermediaries, is
or has been controlled by either of the Sellers or under common control with the
person specified and any of the Sellers.
"Damages" means all liability, demands, claims, actions or causes of
actions, assessments, losses, damages, costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses) asserted against or
incurred by any Indemnitee as a result of or arising out of (i) a breach of any
representation or warranty contained in Article II of this Agreement as of the
applicable date provided for therein, (ii) the breach of any covenant or
agreement of either of the Sellers contained herein, (iii) except as otherwise
expressly provided herein, any liabilities and obligations not to be assumed by
the Buyer as provided in the Undertaking, (iv) any liability arising out of or
in connection with the process undergone by the Sellers and their financial
advisors in connection with any attempts to sell the Business or any interests
therein, and (v) the failure to perform any covenant or agreement of either of
the Sellers.
"Deeds" means limited warranty deeds (or the statutory equivalent
thereof with covenants against grantor's acts only), in recordable form, with
respect to the Owned Real Property.
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"Disclosure Schedule" means the disclosure schedule document being
delivered to the Buyer by the Sellers in connection herewith.
"Displays" shall have the meaning set forth in Section 1.2(a)(i)
hereof.
"Environmental Laws" means any and all applicable federal, state, local
and foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, judicial orders, decrees, codes, injunctions, permits, consent
decrees, consent orders and governmental restrictions, now in effect, relating
to human health, the environment or to emissions, discharges or releases of
pollutants, contaminants, Hazardous Substances or wastes into the environment,
including without limitation ambient air, surface water, ground water or land,
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants, contaminants,
Hazardous Substances or wastes or the clean-up or other remediation thereof.
"Environmental Notices" shall have the meaning set forth in Section
2.19(a) hereof.
"Environmental Permits" means all permits licenses, authorizations,
certificates and approvals of governmental authorities relating to or required
by Environmental Laws and necessary or proper for the Business as currently
conducted.
"Environmental Studies" shall have the meaning set forth in Section
5.9 hereof.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall mean any trade or business which together with
any Seller would be deemed a "single employer" within the meaning of section
4001 of ERISA.
"Excluded Assets" means those assets, enumerated in Section 1.2(c),
which are expressly excluded from the Assets to be sold, conveyed, assigned, and
trans-
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ferred to the Buyer and from the assets owned by either of the Sellers.
"Final Statement" shall have the meaning set forth in Section 1.7(a)
hereof.
"Financial Statements" shall have the meaning set forth in Section 2.5
hereof.
"Financing" shall have the meaning set forth in Section 4.2 hereof.
"GAAP" means U.S. generally accepted accounting principles.
"Hazardous Substances" means any toxic, radioactive, caustic or
otherwise hazardous substance, including petroleum, its derivatives, by-products
and other hydrocarbons, or any substance having any constituent elements
displaying any of the foregoing characteristics, including, without limitation,
any substance regulated under Environmental Laws.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Improvements" shall have the meaning set forth in Section 2.8(c)
hereof.
"Indemnitees" means the Parent, the Buyer and their respective
directors, officers, employees, affiliates, controlling persons, agents and
representatives and their successors and assigns.
"Insurance Policies" shall have the meaning set forth in Section 2.16
hereof.
"Intangible Property" shall have the meaning set forth in Section
1.2(a)(xii).
"Joint Management Agreement" shall mean the Joint Management
Agreement, dated as of the date hereof, between the Sellers and Universal
Outdoor Management Company.
"LLC Agreement" shall have the meaning set forth in Section 2.1
hereof.
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"Lease Assignments" means all appropriate documents for the assignment
(in form suitable for filing, registration or recording, if the applicable
agreement would permit such assignment to be filed, registered or recorded) of
rights in the Leases.
"Leases" means the TP LLC Leases and the TOA Leases.
"Liens" means all mortgages, pledges, security interests, liens,
charges, options, easements, rights-of-way or other encumbrances of any nature
whatsoever, excluding licenses or rights to third parties.
"Material Agreements" shall have the meaning set forth in Section 2.15
hereof.
"Member" shall mean any Person holding a membership interest in TP
LLC.
"Option" shall have the meaning set forth in Section 1.1 hereof.
"Option Exercise Date" shall have the meaning set forth in Section 1.1
hereof.
"Option Exercise Period" shall have the meaning set forth in Section
1.1 hereof.
"Option Payment" shall have the meaning set forth in Section 1.3(a)
hereof.
"Other Instruments" means such other duly executed, good and
sufficient instruments of conveyance, transfer and assignment as the parties
shall deem necessary to convey to the Buyer all of each of the Sellers' rights,
title and interests in and to the appropriate Assets.
"Owned Real Property" shall have the meaning set forth in Section
1.2(a)(ii) hereof.
"Parent" shall have the meaning set forth in the introduction hereto.
"Partner" shall mean a general or limited partner of TOA.
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"Permits" shall have the meaning set forth in Section 1.2(a)(v)
hereof.
"Permitted Liens" means (i) mechanics', carriers', workers',
repairers', materialmens', warehousemens' and other similar Liens arising or
incurred in the ordinary course of business which are Liens for work in progress
which are not past due or otherwise reflected on the Balance Sheet and (ii)
recorded easements, covenants and other restrictions which do not impair the
current use, occupancy, value, or the marketability of title.
"Person" means and includes an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a government
or any department or agency thereof.
"Plans" shall have the meaning set forth in Section 2.17(a) hereof.
"Prorated Assets" shall have the meaning set forth in Section 1.7(a)
hereof.
"Prorated Liabilities" shall have the meaning set forth in Section
1.7(a) hereof.
"Proration Payment" shall have the meaning set forth in Section 1.7(c)
hereof.
"Purchase Price" shall have the meaning set forth in Section 1.3(b)
hereof.
"Real Property" means the Owned Real Property and all real property
leased pursuant to a Lease and all buildings, structures and improvements
located thereon, fixtures contained thereon and appurtenances thereto and
easements and other rights relating thereto.
"Receivables" shall have the meaning set forth in Section 1.8 hereof.
"Related Agreements" means those other agreements and instruments
required to be executed pursuant to this Agreement.
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"Securities Act" means the Securities Act of 1933, as amended.
"Sellers" shall have the meaning set forth in the introduction hereto.
"Shares" shall have the meaning set forth in Section 1.3(b) hereof.
"Sign Location Leases" means the TP LLC Sign Location Leases and the
TOA Sign Location Leases.
"Statement" shall have the meaning set forth in Section 1.7(a) hereof.
"Tanner" shall have the meaning set forth in the introduction hereto.
"Tanner Owned Properties" shall have the meaning set forth in Section
1.2(c) hereof.
"Tanner Owned Property Leases" shall have the meaning set forth in
Section 1.9(a) hereof.
"Tax Authority" includes the Internal Revenue Service and any state,
local, foreign or other governmental authority responsible for the
administration of any Taxes.
"Tax Return" means any declaration, estimate, return, report,
information statement, schedule or other document (including any related or
supporting information) with respect to Taxes that is required to be filed with
any Tax Authority.
"Taxes" mean all federal, provincial, territorial, state, municipal,
local, domestic, foreign or other taxes, imposts, rates, levies, assessments and
other charges including, without limitation, ad valorem, capital, capital stock,
customs duties, disability, documentary stamp, employment, estimated, excise,
fees, franchise, gains, goods and services, gross income, gross receipts, import
duties, income, intangible, inventory, license, mortgage recording, net income,
occupation, payroll, personal property, production, profits, property, real
property, recording, rent, sales, severance, sewer, social security, stamp,
transfer, transfer gains, unem-
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ployment, use, value added, water, windfall profits, and withholding, together
with any interest, additions, fines or penalties with respect thereto or in
respect of any failure to comply with any requirement regarding Tax Returns and
any interest in respect of such additions, fines or penalties and shall include
any transferee liability in respect of any and all of the above.
"TOA" shall have the meaning set forth in the introduction hereto.
"TOA Agreement" shall have the meaning set forth in Section 2.1
hereof.
"TOA Leases" means all leases or subleases of real property under
which TOA is a lessee or lessor and the TOA Sign Location Leases.
"TOA Sign Location Leases" shall mean any lease, license or other
agreement between TOA and any Person pursuant to which TOA has obtained the
right to erect, place and maintain outdoor advertising sign structures on any
ground space, roof or wall space or upon any other improvement to real estate.
"TP LLC" shall have the meaning set forth in the introduction hereto.
"TP LLC Excluded Properties" shall have the meaning set forth in
Section 1.2(c) hereof.
"TP LLC Excluded Properties Leases" shall have the meaning set forth
in Section 1.9(b) hereof.
"TP LLC Leases" means all leases or subleases of real property under
which TP LLC is a lessee or lessor and the TP LLC Sign Location Leases.
"TP LLC Sign Location Leases" shall mean any lease, license or other
agreement between TP LLC and any person pursuant to which TP LLC has obtained
the right to erect, place and maintain outdoor advertising sign structures on
any ground space, roof or wall space or upon any other improvement to real
estate.
"Treasury Regulation" means any regulation promulgated under the Code.
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"Trust" shall have the meaning set forth in the introduction hereto.
"Undertaking" means the duly executed undertaking, substantially in
the form attached hereto as Exhibit B, whereby the Buyer will assume and agree
to pay and discharge the Assumed Liabilities.
"WBT" shall have the meaning set forth in the introduction hereto.
ARTICLE XI
MISCELLANEOUS
Section 11.1 FURTHER ASSURANCES. From time to time after the Closing
Date, at the request of either party hereto and at the expense of such party,
the parties hereto shall execute and deliver to such requesting party such
documents and take such other action as such requesting party may reasonably
request in order to consummate more effectively the transactions contemplated
hereby.
Section 11.2 NOTICES. All notices, requests, demands, waivers and
other communications required or permitted to be given under this Agreement
shall be in writing and may be given by any of the following methods: (a)
personal delivery; (b) facsimile transmission; (c) registered or certified mail,
postage prepaid, return receipt requested; or (d) overnight delivery service.
Notices shall be sent to the appropriate party at its address or facsimile
number given below (or at such other address or facsimile number for such party
as shall be specified by notice given hereunder):
If to the Parent or the Buyer, to:
Universal Outdoor, Inc.
321 North Clark Street
Suite 1010
Chicago, Illinois 60601
Attention: Paul G. Simon
Telecopy: (312) 664-8071
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and
Kelso & Company
320 Park Avenue
24th floor
New York, New York 10022
Attention: James J. Connors
Telecopy: (212) 223-2379
with a copy to:
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attention: Leland E. Hutchinson, Esq.
Telecopy: (312) 558-5700
and
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attention: Lou R. Kling, Esq.
Telecopy: (212) 735-2000
If to either of the Sellers, to:
Tanner.Peck, L.L.C.
4330 Chickasaw Road
Memphis, Tennessee 38117
Attention: William B. Tanner,
Chief Manager
Telecopy: (901) 767-8211
with a copy to:
Johnson, Grusin, Kee & Surprise, P.C.
780 Ridge Lake Blvd., Suite 202
Memphis, TN 38120
Attention: Martin A. Grusin, Esq.
Telecopy: (901) 682-3590
All such notices, requests, demands, waivers and communications shall be deemed
received upon (i) actual receipt thereof by the addressee, (ii) actual delivery
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thereof to the appropriate address, or (iii) in the case of a facsimile
transmission, upon transmission thereof by the sender and issuance by the
transmitting machine of a confirmation slip that the number of pages
constituting the notice have been transmitted without error. In the case of
notices sent by facsimile transmission, the sender shall contemporaneously mail
a copy of the notice to the addressee at the address provided for above.
However, such mailing shall in no way alter the time at which the facsimile
notice is deemed received.
Section 11.3 SEVERABILITY. Should any provision of this Agreement
for any reason be declared invalid or unenforceable, such decision shall not
affect the validity or enforceability of any of the other provisions of this
Agreement, which remaining provisions shall remain in full force and effect and
the application of such invalid or unenforceable provision to persons or
circumstances other than those as to which it is held invalid or unenforceable
shall be valid and enforced to the fullest extent permitted by law.
Section 11.4 BINDING EFFECT; ASSIGNMENT. This Agreement and all of
the provisions hereof shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and permitted assigns.
Neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned, directly or indirectly, including, without limitation, by
operation of law, by any party hereto without the prior written consent of the
other parties hereto; PROVIDED, HOWEVER, that the Buyer may transfer or assign,
in whole or from time to time in part, to Daniel L. Simon, Kelso & Company or
one or more of any of their affiliates, the right to purchase all or a portion
of the Assets but no such transfer or assignment shall relieve the Buyer of its
obligations hereunder.
Section 11.5 NO THIRD PARTY BENEFICIARIES. This Agreement is solely
for the benefit of the Sellers and their successors and permitted assigns, with
respect to the obligations of the Parent and the Buyer under this Agreement, and
for the benefit of the Parent and the Buyer, and their respective successors and
permitted assigns, with respect to the obligations of the Sellers, under this
Agreement, and this Agreement shall not be deemed to confer upon or give to any
other third party
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any remedy, claim, liability, reimbursement, cause of action or other right.
Section 11.6 INTERPRETATION. The article and section headings
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the parties and shall not in any way affect the meaning
or interpretation of this Agreement.
Section 11.7 ARBITRATION. Each of the parties hereto agrees to
submit to binding arbitration any and all differences and disputes which may
arise between them, their heirs, successors, assigns, employees, officers,
directors, affiliates, subsidiaries, or shareholders which are related to this
Agreement. Prior to initiating arbitration, the parties shall first meet face-
to-face to effect a resolution of the differences. Any differences which the
parties are unable to resolve in said face-to-face meeting shall be heard and
finally settled at a mutually agreed upon location by the parties, by binding
arbitration in accordance with the Commercial Rules of the American Arbitration
Association. If the parties do not agree upon a location, the arbitration
proceeding shall be conducted in St. Louis, Missouri. Any award entered in any
such arbitration shall be final, binding, and may be entered and enforced in any
court of competent jurisdiction. The arbitrator shall make such orders, conduct
and schedule all proceedings in connection with the arbitration so that final
arbitration commences no less than thirty (30) days and concludes no later than
seventy-five (75) days after a party files the initial notice of arbitration,
and so that the final arbitration award is made and delivered to the parties
within ninety (90) days after the filing of the initial notice of arbitration.
The cost of such arbitration shall be apportioned as determined by the
arbitrator, in any manner determined by him/her based upon the fault or lack
thereof by the respective parties. If the cost of such arbitration is not
apportioned by the arbitrator, then the cost shall be borne equally between the
Buyer and the Sellers. Nothing herein contained shall be construed as
preventing any party from instituting legal or equitable action in any
jurisdiction against any of the other parties for temporary or similar
provisional relief to the full extent permitted under the laws applicable to
this Agreement, or any such other written agreement between the parties or the
performance hereof or thereof
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or otherwise pending final settlement of any dispute, difference or question by
arbitration. Any such provisional relieve may be modified or amended in any way
by the arbitrator at any time after his appointment.
Section 11.8 JURISDICTION AND CONSENT TO SERVICE. The Sellers, the
Parent and the Buyer (a) agree that any suit, action or proceeding arising out
of or relating to this Agreement will be brought solely in the federal courts of
the State of Missouri, sitting in the City of St. Louis, Missouri; (b) consent
to the exclusive jurisdiction of each such court in any suit, action or
proceeding relating to or arising out of this Agreement; (c) waive any objection
which it may have to the laying of venue in any such suit, action or proceeding
in any such court, and (d) agree that service of any court paper may be made in
any manner as may be provided under applicable laws or court rules governing
service of process in such court.
Section 11.9 ENTIRE AGREEMENT. Except for this Agreement, the
Disclosure Schedule, the Buyer Disclosure Schedule and the Exhibits and other
documents referred to herein or delivered pursuant hereto which form a part
hereof constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all other prior agreements and
understandings, both written and oral, between the parties or any of them with
respect to the subject matter hereof.
Section 11.10 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware (regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof) as to all matters, including but not limited to matters of
validity, construction, effect, performance and remedies.
Section 11.11 SPECIFIC PERFORMANCE. The parties acknowledge and
agree that any breach of the terms of this Agreement would give rise to
irreparable harm for which money damages would not be an adequate remedy and
accordingly the parties agree that, in addition to any other remedies, each
shall be entitled to enforce the
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terms of this Agreement by a decree of specific performance without the
necessity of proving the inadequacy of money damages as a remedy.
Section COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
Section 11.13 BULK SALES LAWS. The Buyer and each of the Sellers
each hereby waive compliance by each such Seller with the provisions of the
"bulk sales", "bulk transfer" or similar laws of any state.
Section 11.14 EXPENSES. Except as otherwise provided herein, all
costs and expenses incurred in connection with this Agreement shall be paid by
the party incurring such cost or expense except that the Buyer, on the one hand,
and the Sellers, on the other, shall share equally the costs of the applicable
filing fee in connection with the HSR Act filings referred to in Section 5.3
hereof.
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the Sellers, the Consenting
Parties, the Parent and the Buyer as of the date first above written.
TANNER PECK L.L.C.
By:
----------------------------
Name:
Title:
TOA ENTERPRISES, L.P.
By:
----------------------------
Name:
Title:
-------------------------------
WILLIAM B TANNER
WBT OUTDOOR, INC.
By:
----------------------------
Name:
Title:
THE WEATHERLEY TANNER TRUST
By:
----------------------------
Name:
Title:
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TANNER ACQUISITION CORPORATION
By:
----------------------------
Name:
Title:
UNIVERSAL OUTDOOR, INC.
By:
----------------------------
Name:
Title:
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Exhibit 2.7
FORM OF
ASSET PURCHASE AGREEMENT
THIS AGREEMENT, made and entered into this ______ day of______, 1996, by
and among MOUNTAIN MEDIA, INC., a Pennsylvania corporation doing business as
Iowa Outdoor Displays ("IOD") and ROBERT H. LAMBERT, ("Lambert")(IOD and Lambert
are collectively referred to as "Seller") and UNIVERSAL OUTDOOR, INC., an
Illinois corporation, ("Buyer").
W I T N E S S E T H :
In consideration of the respective representations, warranties and
covenants contained in this Agreement and other good and valuable consideration,
the sufficiency and receipt of which is hereby acknowledged, Buyer and Seller
agree as follows:
l. Transfer of Assets.
1.1 Buyer agrees that at the Closing it shall acquire all of the
business and assets of Seller, whether disclosed or undisclosed,
wherever located, which are used in the outdoor advertising business
in the market described in Exhibit 1.1, ("Market"), including, but not
limited to, those assets listed on Exhibits or Schedules attached to
this Agreement ("Assets"), and Seller agrees to transfer, assign,
convey and deliver to Buyer all of the Assets, in exchange solely for
the consideration specified under the provisions of Section 1.4 herein
("Purchase Price"), plus the assumption of certain obligations of
Seller as specified.
1.2 The consideration payable by Buyer, as specified in Section 1.1,
includes any applicable sales taxes or other taxes imposed upon the
transfer of the Assets to Buyer.
1.3 The Assets shall include, but shall not be limited to, the
following, all of which are located in the Market:
1.3.1 All interest in and to real property as described on
Exhibit 1.3.1 including all leasehold interests of Seller in
and to real property, and all easements and licenses,
including prepaid ground rents.
1.3.2 All sign structures, whether owned or leased, and any
fixtures and leasehold
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interests in sign structures, and all lights, electrical
hook ups, catwalks and other appurtenant equipment in the
Market which are described in Exhibit 1.3.2.
1.3.3 All rights and entitlement of Seller in and to
advertising contracts which are listed in Exhibit 1.3.3.
1.3.4 All other contract rights and entitlements related to
the business of Seller, whether oral or written in excess of
$5,000, including those set forth in 1.3.4.
1.3.5 All rights and obligations of Seller in and to sign
constructions. All such rights and a list of any
contractors are listed in Exhibit 1.3.5. For purposes of
this subsection "sign constructions" shall mean any
locations as to which Seller has a perfected or partial
right or expectancy to construct signs.
1.3.6 All governmental permits, licenses, approvals or
authorizations necessary for Seller to conduct its outdoor
business within the Market. Seller shall cooperate with
Buyer in the assignment and transfer to Buyer of all such
governmental permits, licenses, approvals or authorizations,
including state and local sign permits. All such sign
permits and all other material permits, licenses, approvals
or authorizations are listed in Exhibit 1.3.1 and 1.3.6.
1.3.7 All other assets and property of Seller used in the
Market in Seller's outdoor advertising business, such as
motor vehicles, office equipment and machinery, sign panels,
lighting fixtures, furniture, inventories of raw materials,
supplies, customer lists, business records, and work in
progress. A list of all other material assets is set out in
Exhibit 1.3.7.
1.3.8 All deposits from customers held by Seller arising from
transactions in the Market. A list of all deposits from
customers is set forth in Exhibit 1.3.8.
1.3.9 All telephone numbers and listings used by Seller in
the Market. Seller will not change said telephone numbers.
A list of all
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telephone numbers and listings is attached as Exhibit 1.3.9.
1.3.10 [Intentionally Deleted]
1.3.11 Data regarding lessors, advertisers and other business
data in machine-readable form.
1.3.12 All accounts receivables and prepaid expenses of IOD
attached as Exhibit 1.3.12.
1.4 Buyer shall pay to Seller a Purchase Price for the Assets of: (a)
One Million Seven Hundred Twenty-Five Thousand Dollars ($1,725,000) in
cash or by wire transfer at Closing at Seller's direction as shown on
Exhibit 1.4(a) and (b) Seventy-Five Thousand Dollars ($75,000) payable
into escrow pursuant to the terms of the Escrow Agreement attached
Exhibit 1.4(b). The Purchase Price set forth herein is subject to the
following adjustments:
1.4.1 [Intentionally Deleted]
1.4.2 Minus the amounts which will credit Buyer for the
following:
1.4.2.1 $1000 for the Construction of one face on
Route 48, Shenandoah.
1.4.2.2 Any advertising services delivered after Closing
for which Seller has already received payment as
reflected on Exhibit 1.3.8.
1.4.3 Other than as provided for in Section 1.4.2, all items
of income and expense listed below relating to the Assets
will be prorated as of the Closing Date, with Seller liable
to the extent such items relate to any time period up to and
including the Closing Date, and Buyer liable to the extent
such items relate to periods on or subsequent to the Closing
Date: (a) personal property, real estate, occupancy and
water taxes, if any, on or with respect to the Assets; (b)
rents, taxes and other items payable by Seller under any
contract to be assigned to or assumed by Buyer; (c) the
amount of sewer rents and charges for water, telephone,
electricity and other utilities and fuel; and (d)
[Intentionally Deleted] (e) all
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items paid or payable on or after the Closing Date under any
of the Assumed Obligations (as such term is defined in
Section 4.1 herein) to the extent not specifically
referenced in clauses (a) - (d) above which are normally
prorated in connection with similar transactions;
The net aggregate amount of the prorations described in
(a) - (d) shall be added to or subtracted from the base
amount payable by Buyer to Seller on the Closing Date. If
current payments with respect to items to be prorated
pursuant to this Section 1.4.3 are not ascertainable on or
before the Closing Date, such payments shall be prorated on
the basis of the most recently ascertainable bill therefor
and shall be reprorated between Seller and Buyer when the
current bills with respect to such items have been issued
and a cash settlement shall be made within thirty (30) days
thereafter.
The prorated items known to the parties at Closing are
as listed on Exhibit 1.4.3
1.5 The Purchase Price will be paid by Buyer plus or minus the
amount, if any, by which the Purchase Price is adjusted pursuant to
subsection 1.4 of this Agreement
1.6 The parties hereto agree that the allocated Asset values attached
hereto, designated Exhibit 1.6, fairly and accurately represent the
respective values of the Asset categories of Seller purchased by Buyer
pursuant to the Asset Agreement.
1.7 At the Closing, Seller shall execute the Non-Competition, Non-
Solicitation and Non-Disclosure Agreement substantially in the form
set forth in Exhibit 1.7(a).
If Seller violates this Section 1.7 and the Non-competition, Non-
Solicitation and Non-Disclosure Agreement referenced herein, and Buyer
obtains a final judgment or arbitration award or a settlement is
reached with Seller for damages as a result of this violation, Buyer
may offset the amount of this judgment, arbitration award or
settlement against any amounts owed by Buyer. "Final" shall mean any
judgment for which no appeal has been filed during the thirty (30)
days following the entry of the judgment order. Provided, however,
Buyer's
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claim shall not be limited to the amount of any offset available.
1.8 After the Closing, Buyer shall have the right to use the name
Iowa Outdoor Displays and all other trade names used by Seller in the
Market. Buyer shall also have the right for one year from the Closing
Date to endorse the name Iowa Outdoor Displays to all checks which,
pursuant to the terms of this Agreement, are the property of Buyer.
2. Representations and Warranties of Seller. Seller represents and warrants
to Buyer as an inducement to Buyer to purchase the Assets of Buyer pursuant
to the terms of this Agreement as follows:
2.1 IOD is a Pennsylvania corporation, duly organized, validly
existing and in good standing under the laws of that state, and has
the corporate power to own its property and carry on its business as
now being conducted, and to execute and deliver the Asset Purchase
Agreement and any other agreements to be entered into by Seller in
connection with the Asset Purchase Agreement.
2.2 Seller is properly qualified as a foreign corporation to do
business in the jurisdictions listed in the attachment hereto
designated as Exhibit 2.2. These are the only jurisdictions where
Seller is required to be qualified as a foreign corporation in order
to conduct business in the Market.
2.3 To the best of Seller's knowledge, except as set forth on Exhibit
2.3, there are no violations of applicable laws or regulations,
including, but not limited to, zoning regulations and building permits
or other permits related to sign structures have occurred that would
have a material adverse effect on the future operation of any Asset.
2.4 Attached as Exhibit 2.4 are unaudited balance sheets and
comparative operating statements of Seller's business in the Market as
of July 31, 1996 (the "Financial Statements"). These Financial
Statements are in accordance with the books and records of Seller and
fairly and accurately present its financial position as of that date
in accordance with generally accepted accounting principles.
2.5 Since the date of the Financial Statements, except as disclosed
in Exhibit 2.5 attached hereto, to the best of Seller's knowledge
there have been no material adverse changes in the general affairs,
management or financial
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position or financial condition of Seller with respect to the Market.
2.6 The Exhibits attached to this Agreement are correct in all
material respects including specifically the following:
2.6.1 The information about contracts attached as Exhibit 1.3.3
and Exhibit 1.3.4 to this Agreement is true and correct as of the date
set forth in said Exhibit. Except as set forth in Exhibit 2.6.1, said
contracts (1) are in full force and effect (2) have not been breached
by Seller or to the best of Seller's knowledge, any of the parties
thereto; and (3) all payments required under said contracts have been
made except those not yet due and payable provided the current portion
of which is included as a Current Liabilities. Seller has no
"percentage rental" leases.
2.6.2 All sign leases to which Seller is a Lessee are in full
force and effect.
2.6.3 [Intentionally Deleted]
2.6.4 Exhibit 2.6.4 lists agreements, whether oral or written
requiring payments or performance by IOD after Closing other than
Lease payments and the following agreements:
(a) Each material contract, agreement or commitment for the sale
or lease of Seller's Assets, products or services, excluding
advertising contracts and contracts to provide advertising allowances
or promotional services which are listed in Exhibit 1.3.4.
(b) Each contract with any dealer, distributor, broker, agent or
sales representative.
(c) Employment contracts, including union contracts, executed by
any officer, director, employee or consultant of Seller.
2.7 There are no unfair labor practice charges pending, or to the
best of Seller's knowledge, threatened against Seller. Seller has not
engaged in any unfair labor practices, and there is no strike,
dispute, request for representation or work stoppage pending or
threatened against Seller by or with respect to any such employees.
2.8 The execution, delivery and performance of this Agreement by
Seller, including, without limitation, all conveyances, transfers,
assignments and deliveries
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contemplated herein, have been duly and effectively authorized and
approved by IOD's board of directors and shareholders and all other
persons, businesses, banks and governmental bodies or courts whose
approval is required. This Agreement and each and every instrument
executed and delivered hereunder by Seller shall constitute a valid
and binding obligation of Seller enforceable according to their terms.
2.9 The performance of this Agreement by Seller will not conflict
with or violate the provisions of any material agreement or instrument
binding upon Seller
2.10 Except as set forth in Exhibit 2.10, there is no suit, action,
arbitration or legal, administrative or other proceeding or
governmental investigation pending or, after due inquiry, to the best
of Seller's knowledge, threatened against or affecting the business,
Assets or financial conditions of Seller within the Market which would
have any material adverse effect on Seller's performance of this
Agreement and the transactions contemplated herein. Seller is not in
default with respect to any order, writ, injunction or decree of any
federal, state, local or foreign court, department, agency or
instrumentality.
2.11 Except as set forth on Exhibit 2.11, at Closing Seller will
convey good and merchantable title to all Assets and Seller's title to
all property included in the Assets required to be disclosed in the
Exhibits to this Agreement is not encumbered in any manner other than
for liens for taxes not yet due.
2.12 All Assets are useable in the ordinary course of business in
accordance with industry standards except those listed in Exhibit
2.12. Seller has no knowledge of any defects in the condition of any
of the said Assets, ordinary wear and tear excepted.
2.13 Seller represents and warrants to Buyer that as of the date of
this Agreement the following environmental representations and
warranties are true:
2.13.1 Seller has not caused or permitted its operations on
any real estate owned or leased by Seller to generate,
manufacture, refine, transport, treat, store, handle,
dispose, transfer, produce or process hazardous substances
or other dangerous or toxic substances or solid wastes,
except in compliance with all applicable federal, state and
local laws or regulations, and has not
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caused or to the best of Seller's knowledge permitted and
has no knowledge of the release of any hazardous substances
that have gone onto or offsite of any real estate owned or
leased by Seller (other than the disposal of paints, pastes
and similar chemicals through approved channels) and Seller
has no knowledge that any person or entity has in the past
utilized any real estate owned or leased by Seller in a
manner which has created any hazardous substance on or off
any real estate owned or leased by Seller. There are no
pending and, to the best of Seller's knowledge, no
threatened claims, suits, administrative proceedings, or
other actions by a Court or governmental entity with regard
to hazardous substances on any real estate owned or leased
by Seller except as set forth in Exhibit 2.13.1.
2.13.2 Seller agrees to indemnify and hold harmless Buyer, its
successors, and assigns against and in respect of any and
all damages, claims, losses, liabilities and expenses,
including, without limitation, reasonable legal, accounting,
consulting, engineering and other expenses, which may be
imposed upon or incurred by Buyer, its successors or
assigns, or asserted against the Buyer, their successors or
assigns by any other party or parties (including, without
limitation, a governmental entity), arising out of or in
connection with any environmental condition, resulting from
activity of Seller prior to Closing. The indemnification
obligations of Seller in this Section 2.13.2 shall survive
and extend to the fifth anniversary of Closing subject to
the limits stated in Section 10.5.
2.14 As of the date of this Agreement, Seller knows of no individual,
partnership, corporation or other entity in the Market who makes it a
practice to destroy billboards as part of a campaign or concerted
effort to damage billboard companies.
2.15 Except current liabilities incurred or paid in the ordinary
course of business and obligations under contracts entered into or
performed in the ordinary course of business Seller has not since the
date of the Financial Statements attached as Exhibit 2.4:
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2.15.1 incurred or become subject to any obligations or
liabilities (absolute or contingent) which have a material
adverse effect on the Assets;
2.15.2 mortgaged, pledged or subjected to any lien, charge or
encumbrance any of its assets covered by this Agreement
(other than liens for taxes not yet due;
2.15.3 entered into any transaction other than in the ordinary
course of business in any way affecting the Assets, except
for this Agreement and the transactions contemplated
hereunder;
2.15.4 increased, without the knowledge of Buyer, the general
rate of compensation payable to any of its employees or made
or accrued for any new employee benefit plans for employees.
A list of employees who work on a full time basis and all
compensation and bonus arrangements for these employees is
set forth in Exhibit 2.15.4;
2.15.5 made, accrued or become liable in any way for any
bonus, profit sharing, pension, incentive compensation or
other similar payments to any employee; or
2.15.6 suffered any other event or condition of any character
which has materially adversely affected Seller's business.
2.16 The accounts receivable of Seller reflected in the Financial
Statements attached hereto as Exhibit 2.4 and the accounts receivable
of Seller resulting from its business operations through the Closing
Date have been or, to the best of Seller's knowledge, will be
collected in the ordinary course of business, considering the offset
for the reserve for doubtful accounts on the same basis as used by
Seller in the past. Seller shall continue through the Closing Date
its normal and customary collection efforts with regard to such
accounts receivable and shall not make any operational changes in
anticipation of this transaction. Said accounts receivable arose out
of bona fide transactions in the ordinary course of business and are
not subject to any right of offset or counterclaim except for any
barter or lease trade out arrangements disclosed in Section 2.21.
2.17 Except as set forth in Exhibit 2.17, Seller does not sponsor or
participate in any (i) life, health, accident
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or disability or any other "employee welfare benefit plan" as defined
in Section 3(l) of ERISA, or (ii) any "employee pension benefit plan"
as defined in Section 3(2) of ERISA. Exhibit 2.17 also discloses the
Seller's vacation, sick leave and holiday policies.
2.18 Pursuant to the terms of this Agreement, is delivering to Buyer
all Assets used in the Market by Seller to operate its business except
Seller's Automobile.
2.19 Seller has paid all federal and municipal taxes, including real
and personal property, sales and use taxes it is required to pay.
2.20 Seller has not sublet any property except as disclosed in
Exhibit 2.20.
2.21 Seller has not engaged in any "bartering" or "lease trade outs"
of accounts receivable or advertising space except as set forth in
Exhibit 2.21.
2.22 The supplies owned by Seller being purchased by Buyer, which are
current assets, are useable by Buyer, both as to quality and quantity,
in the ordinary course of business in accordance with industry
standards.
2.23 [Intentionally Deleted]
2.24 [Intentionally Deleted]
2.25 Seller has all permits and licenses needed to operate the Assets
being purchased by Buyer and no one has challenged the validity of
those permits and licenses except as set forth in Exhibit 2.25.
2.26 No Major Advertiser of Seller has advised Seller that it will not
renew or it is going to breach or terminate its advertising contracts
when it is assigned to Buyer. The term "Major Advertiser" as used
herein shall mean any advertiser whose annual payments are Five
Thousand Dollars ($5,000.00) in the aggregate or more. No group of
advertisers whose annual payments exceed Forty Thousand Dollars
($40,000) have advised Seller they will not renew or are going to
breach or terminate their advertising contracts when they are assigned
to Buyer.
2.27 Seller has not received notice of any tax audits against Seller.
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2.28 Seller shall be responsible for providing any notice of layoff or
plant closing required in connection with the transaction contemplated
herein pursuant to the Federal Worker Adjustment and Retraining
Notification Act of 1988, any successor federal law, and any
applicable state or local plant closing notification statute, and
Seller shall bear any liability or obligation that may rise or accrue
as the result of improper or untimely notice or that may arise from
any person claiming wrongful termination or change of employment as a
result of any action or omissions of Seller with respect to the
transactions set forth in this Agreement.
2.29 All dues owed by Seller to any outdoor advertising association
have been paid.
2.30 There are no agreements or undertakings pursuant to which any
third party has or may have the right to acquire from Seller any of
the stock or (except in the ordinary course of business) Assets of
Seller.
2.31 To the best of Seller's knowledge, except as set forth on Exhibit
2.31, after Closing Buyer will have the exclusive right to use the
Seller's name and all other trade names used by Seller in the outdoor
advertising business in the outdoor advertising market area where
Seller currently transacts business.
2.32 To the best of Seller's knowledge, in the five years prior to
Closing, no employee of Seller, lessor, business invitee, or other
person has suffered personal injury or property damage as a result of
any action involving the business or Assets of Seller within the
Market such that a claim has been or may be raised against Seller
directly or indirectly or under the workman's compensation laws of any
state except as set forth in Exhibit 2.32.
2.33 Seller shall have delivered to Buyer under this Agreement sign
structures containing, in the aggregate, at least 155 advertising
faces.
2.34 Except as disclosed on Exhibit 2.34, following Closing, neither
Seller nor any affiliates, officers, directors or shareholders of IOD
nor any person related to or affiliated with Lambert will have any
direct, indirect or beneficial ownership of any real or personal
property which is in any way involved with or related to the operation
of the Assets and property of Seller used in the Market in Seller's
outdoor advertising business being purchased by Buyer.
3. Representations and Warranties of Buyer. Buyer represents and
warrants to Seller as follows:
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3.1 Buyer has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Illinois,
with full power and authority to own its properties and carry on its
business as now being conducted and to execute and deliver this Asset
Purchase Agreement and any other Agreements to be entered into by
Buyer in connection with this Asset Purchase Agreement.
3.2 The performance of this Agreement by Buyer will not conflict with
or violate the provisions of any material agreement or instrument
binding upon Buyer; and the execution, delivery and performance of
this Agreement shall have been duly and effectively authorized by
Buyer prior to Closing. This Agreement and each and every instrument
executed and delivered by Buyer shall constitute a valid and binding
obligation of Buyer.
3.3 There is no suit, action, arbitration or legal, administrative or
other proceeding or governmental investigation pending or, to the best
of Buyer's knowledge, threatened against or affecting the business,
assets or financial conditions of Buyer which would have any material
adverse effect on Buyer's performance of this Agreement and the
transactions contemplated. Buyer is not in default with respect to
any order, writ, injunction or decree of any federal, state, local or
foreign court, department, agency or instrumentality.
3.4 Buyer shall use its best efforts to perform and fulfill all
conditions and obligations on its part to be performed and fulfilled
under this Agreement, to the end that the transactions contemplated by
this Agreement shall be fully carried out.
4. Assumption of Obligations.
4.1 Buyer does not assume any obligations or liabilities of Seller of
any kind or nature, except as to those post-closing matters specified
below.
4.1.1 Post-closing liabilities under leases affecting the
Assets or within the Market; and which have not been paid,
performed or discharged by Seller.
4.1.2 Post-closing obligations to deliver advertising
services pursuant to advertising contracts purchased
pursuant to this Agreement in the Market.
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4.2 Anything to the contrary notwithstanding, it is expressly
understood that Buyer shall not assume any of the following
obligations or liabilities of Seller:
4.2.1 Any city, state or federal tax liabilities for any kind
of tax for any period prior to and including the Closing
Date. Real and personal property taxes shall be prorated as
of the Closing Date, based upon bills received, when
received.
4.2.2 Any income tax liability arising from the sale of
Assets to Buyer or conveyance of Assets to Buyer or any
liquidation and dissolution of Seller.
4.2.3 Any obligation, commitment or liability of or claim
against Seller which constitutes or arises from a breach by
Seller of any representation, warranty or covenant.
4.2.4 Any obligation, commitment or liability of or claim
against Seller which may arise from Seller's operation of
the Assets prior to the Closing Date.
4.2.5 Any obligation, commitment or liability of or claim
against Seller which may arise from the rendering of
professional, legal, accounting, appraisal, engineering or
other similar services to Seller in connection with the
transactions.
4.2.6 Any liability of Seller under profit-sharing or similar
employee benefit plans or any other employee benefit
collective bargaining agreement, employment agreement or
salary or bonus arrangement.
4.3 Seller herewith agrees that it shall pay promptly when due, or
contest, any and all liabilities of Seller arising in the Market not
assumed by Buyer at Closing or discharged by Seller prior to Closing,
if Seller's failure to pay would have a material adverse effect on
Buyer, provided that Seller may contest the assertion of any such
liability to the extent reasonably prudent and Buyer shall cooperate
fully in any such contest. If Seller elects to contest any such
liability and fails to succeed in such contest after any appeals, then
Seller shall promptly pay such liability. Seller shall give Buyer
written notice before Seller begins contesting any such liability
unless Seller does not have adequate time,
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in which event, Seller shall give Buyer said written notice within
five (5) business days after Seller begins contesting any such
liability.
In the event that Seller is contesting any liability not assumed
by Buyer under the terms of the Asset Agreement, Seller shall make it
clear to the third party that Seller and not Buyer is the entity
disputing the matter.
4.4 Installments of special assessments levied against real estate
included in the Assets shall be the obligation of Seller if due on or
before the Closing Date and the obligation of Buyer if due after the
Closing Date.
4.5 Prior to the Closing and for six months thereafter, Seller shall
cooperate with Buyer to obtain all consents, approvals, and
certificates and licenses and permits, and other documents required or
appropriate in connection with the performance by it of this Agreement
and the consummation of the transactions contemplated hereby or
otherwise required in order to prevent the breach of any
representation and warranty set forth herein; provided, however, that
no contact will be made by the Seller with any third party to obtain
any Consent except in accordance with arrangements previously agreed
to by Buyer.
4.6 Excluding workmen's compensation, Seller shall be responsible for
all claims associated with health, illness or injury insofar as they
relate to events or conditions existing on or before the Closing Date
and relating to employees or their dependents (or others) to the
extent that event or condition has been reported on or before the
Closing Date to Seller or to a medical professional or as to which
medical treatment has been obtained on or before the Closing Date;
provided, however, that Buyer's health plans will (to the extent they
would cover medical expenses for a condition arising after the Closing
Date) cover medical expenses for continuing employees incurred after
the Closing Date to the extent said medical expenses result from a
medical condition existing on or before the Closing Date that have not
been so reported or the subject of such treatment.
Seller shall be responsible for all workmen's compensation claims
associated with health, illness or injury insofar as they relate to
events occurring on or before the Closing Date.
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4.7 Seller shall offer continuation coverage under its applicable
group health plans to all employees of Seller and their covered
dependents who incur a "qualifying event" (within the meaning of
section 4980(B) of the Code and section 603 of ERISA) as a result of
or in connection with the transactions contemplated by this Agreement.
Such coverage shall comply with the continuation coverage requirements
(including any applicable notice provisions) of section 4980(B) of the
Code and Part 6 of Title I of ERISA and any applicable state law
continuation coverage requirements.
5. Conduct of Business Pending Closing. Seller represents, warrants and
agrees that from the date of this Agreement until the Closing as to the
Markets and Assets:
5.1 The business of Seller will be conducted in the usual and
ordinary course, the character of the business will not change, no
different business will be undertaken within the Market, and Seller
will, in accordance with its past practices, preserve for Buyer the
relationship with suppliers, customers and others having business
relations with Seller, including those employees of Seller which Buyer
intends to hire after Closing.
5.2 Except in the ordinary course of business, Seller will not enter
into any contract, agreement, commitment or understanding with respect
to employing any agents, wholesalers, dealers, brokers or consultants
in the development and sale of their services which requires an
expenditure of more than $5,000 without the prior written
authorization of Buyer.
5.3 As to the Market or Assets in the Market, Seller will not:
(i) mortgage, pledge or subject to any lien, charge or
encumbrance any of its Assets in the Market;
(ii) sell or transfer any of its Assets in the Market, except in
the ordinary course of business, or any permits, licenses, approvals,
or authorization or except in the ordinary course of business, cancel
any debts or claims;
(iii) knowingly enter into any transaction outside the ordinary
course of business.
(iv) make, accrue or become liable in any way for any bonus
(other than those which Seller shall pay in full), profit-sharing,
pension, incentive compensation or other similar payments to any
employee in the Market
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inconsistent with prior practices or other than as shown on a Schedule
or Exhibit to this Agreement;
(v) make or permit any amendment or early termination of any
contract, except in the ordinary course of business;
(vi) through negotiations or otherwise, make any commitment
affecting the Market or incur any liability affecting the Market to
labor organizations without the prior written approval of Buyer;
(vii) make any material alteration to the normal and customary
pricing in the Market or terms and conditions of sale extended to
Seller's customers; or
(vii) discharge or satisfy any lien or encumbrance affecting the
Market or pay any obligation or liability affecting the Market
(absolute or contingent), except as required or allowed hereunder.
5.4 Seller shall maintain books of account consistent with past
accounting practices as described in Section 2.4. Seller will not
materially alter its current insurance coverage without the prior
written consent of Buyer.
5.5 Prior to this Agreement, Seller has made available to Buyer and
its representatives certain information and records relating to the
business and affairs of Seller as requested by Buyer. During the
normal business hours throughout the period from this date to the
Closing Date, Seller will give to Buyer and its accountants, counsel,
appraisers and other representatives full access to all properties,
contracts, commitments, books and records or Seller pertaining to the
Market. Buyer will keep such information confidential and not
disclose or use such information except for purposes of this Agreement
until Closing.
5.6 Prior to Closing, Buyer shall not have the risk of loss with
respect to the Assets to be conveyed pursuant to this Agreement. In
the event, between the date of this Agreement and the Closing Date,
any parcel of improved real property or personal property being
purchased, or leased as a part of this transaction, including but not
limited to, the office furniture and equipment, fixtures, leasehold
improvements, equipment, vehicles or other personal property is
materially damaged or destroyed by fire or other casualty or in the
event that the sign structures to be purchased are materially damaged
or destroyed by fire or other casualty, and if as a result the Assets
are materially diminished in value,
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Buyer may elect to terminate this Agreement, and all obligations of
the parties shall cease and neither party shall have any further
rights against the other. Seller shall have the right within thirty
(30) days to remedy or repair such damage or destruction and (subject
to the terms and conditions of this Agreement) thereupon require Buyer
to close. Seller shall immediately notify the Buyer in writing of the
occurrence of any fire or other casualty. Buyer shall notify Seller
in writing within two days of Buyer's receipt of Seller's notice
whether Buyer elects to consummate this transaction.
6. Conditions to Obligations of Buyer to Consummate the Transaction. The
obligations of Buyer to be performed at the Closing shall be subject to the
satisfaction or the waiver in writing by Buyer on or prior to the Closing
Date of the following conditions:
6.1 Buyer shall have received an opinion from counsel for Seller in
the form attached as Exhibit 6.1 which shall be reasonably
satisfactory to Buyer, dated the Closing Date, to the effect that;
6.1.1 IOD is a corporation duly organized, existing and in
good standing under the laws of the State of Pennsylvania
and has the corporate power to carry on its business as now
being conducted in the Market, and is not required to
qualify to do business in any state where the nature of its
business or assets require qualification.
6.1.2 Such counsel does not know of any pending or threatened
lawsuits against Seller other than those described in
Exhibit 2.10 or elsewhere in this Agreement.
6.1.3 The execution, delivery and performance of this
Agreement by Seller has been duly authorized and approved by
its Board of Directors and this Agreement and each
instrument executed and delivered herewith by Seller has
been duly executed by and constitute valid and binding
obligations of Seller on the Closing Date enforceable
according to their terms except to the extent enforceability
is limited by applicable bankruptcy and insolvency laws and
by general principles of equity. Counsel may take exception
to the enforceability of the noncompetition and
nonsolicitation provisions of the instruments and other
generally accepted exceptions.
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6.1.4 This Agreement and each instrument have been duly
executed and delivered by Seller.
6.1.5 [Intentionally Deleted]
6.1.6 [Intentionally Deleted]
6.1.7 When the Bill of Sale or other conveyance instruments
shall have been delivered to Buyer by Seller, such delivery
will transfer to Buyer good title to the Assets, and the
Assets to the best of counsel's knowledge will be free and
clear of all liens, encumbrances, claims, charges and
assessments whatsoever, other than any incurred by Buyer.
6.2 Buyer shall not have discovered and given notice to Seller prior
to closing of any material error, misstatement or omission in the
representations and warranties made by Seller which alone or in the
aggregate are materially adverse to Seller or to Buyer if the
transaction is completed, unless Seller has covered the same to
Buyer's reasonable satisfaction. The representations and warranties
and Exhibits or Schedules of Seller contained in this Agreement shall
be true on and as of the Closing Date with the same effect as though
such representations and warranties have been made on and as of such
date, except for any variations resulting from actions contemplated or
permitted by this Agreement, which variations shall not be materially
adverse, and each and all of the covenants to be performed by Seller
on or before the Closing Date pursuant to the terms shall have been
duly performed in all material respects. Seller shall deliver to
Buyer a certificate to that effect, dated the Closing Date, certifying
to all the foregoing, and executed by an authorized officer of Seller.
6.3 All contracts, leases and options, permits and rights employed by
Seller in the conduct of its business in the Market, to the extent
assignable by Seller, shall be assigned to Buyer at Closing, and
Seller will use reasonable business efforts to obtain and provide to
Buyer at Closing any third parties' consents required for such
assignments.
6.4 If required by law, Seller shall have
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complied with all requirements imposed by such agencies of the U. S.
Government as may be necessary for the valid and legal consummation of
the transactions contemplated by this Agreement.
6.5 No court or governmental agency shall have issued an order,
binding on Buyer, enjoining the closing of the transactions
contemplated herein, and no proceeding shall be pending or threatened
that could result in such order.
6.6 [Intentionally Deleted]
6.7 Seller shall have delivered a certificate that there has been no
material adverse change in the exhibits prepared for this Agreement
between the date of the exhibit and the Closing Date.
6.8 There shall be no existing or threatened suit, action,
arbitration or legal, administrative or other proceeding or
governmental investigation pending or, after due inquiry, to the best
of Seller's knowledge, threatened against or affecting the business,
assets or financial conditions of Seller within the Market which would
have any material adverse effect on Seller's performance of this
Agreement and the transactions contemplated, including that listed in
Exhibit 2.10 or elsewhere in this Agreement.
6.9 Seller shall deliver a certified copy of the Board of Directors
resolution approving this transaction and the execution of this
Agreement.
6.10 Seller shall deliver an Incumbency Certificate to Buyer as to
Seller.
6.11 Seller shall deliver to Buyer copies of all books, records and
documents relating to the Assets at the Closing. Seller shall retain
its minute books and Corporate records.
6.12 Seller shall have terminated or reassigned all of Seller's
employees in the Market.
7. Conditions to Obligations of Seller to Consummate the Transaction.
The obligations of Seller to be performed at the Closing shall be subject
to the satisfaction or the waiver in writing by Seller on or prior to the
Closing Date of the following conditions:
7.1 Seller shall have received an opinion of Buyer's counsel in the
form attached as Exhibit 7.1 and which shall be reasonably
satisfactory to Seller, dated the
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Closing Date, to the effect that:
7.1.1 Buyer is a corporation duly organized, existing and in
good standing under the laws of the State of Illinois and
has the corporate power to carry on its business as now
being conducted.
7.1.2 The execution, delivery and performance of this
Agreement by Buyer has been duly authorized and approved;
and this Agreement and each instrument executed and
delivered by Buyer have been duly executed by and constitute
valid and binding obligations of Buyer enforceable according
to their terms subject, however, to any state or federal
laws for debtor relief or general principles of equitable
relief.
7.1.3 All actions and proceedings required by law or this
Agreement to be taken by Buyer at or prior to the Closing in
connection with this Agreement and the transactions provided
for have been duly and validly taken or waived by Seller.
7.2 Seller shall not have discovered any material error, misstatement
or omission in the representations and warranties made by Buyer which
alone or in the aggregate to Buyer or Seller if this transaction is
completed unless Buyer has covered the same to Seller's reasonable
satisfaction. The representations and warranties of Buyer contained
in this Agreement shall be true on and as of the Closing Date with the
same effect as though such representations and warranties had been
made on and as of such date, except for any variations therein
resulting from actions permitted by this Agreement, which variations
shall not be materially adverse to Buyer and each and all the
covenants to be performed by Buyer on or before the Closing Date shall
have been duly performed in all material respects. Buyer shall
deliver to Seller a certificate to that effect, dated the Closing
Date, and executed by an authorized officer of Buyer.
7.3 If required by law, Buyer shall have complied with all
requirements imposed by such agencies of the U. S. Government as may
be necessary for the valid and legal consummation of the transactions
contemplated hereby.
7.4 No court of competent jurisdiction or governmental agency shall
have issued an order, binding on Seller, enjoining the closing of the
transactions contemplated herein, and no proceeding shall be pending
or threatened
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that could result in such order.
7.5 There shall be no existing or threatened suit, action,
arbitration or legal, administrative or other proceeding or
governmental investigation pending or, after due inquiry, to the best
of Buyer's knowledge, threatened against or affecting the business,
assets or financial conditions of Buyer within the Market which would
have any material adverse effect on Buyer's performance of this
Agreement and the transactions contemplated, including that listed in
Exhibit 2.10 or elsewhere in this Agreement.
7.6 Buyer shall deliver an Incumbency Certificate to Seller as to
Buyer.
8. Closing.
8.1 The transactions required under this Agreement to be consummated
at the Closing shall take place at such date ("Closing Date"), and
time as Seller and Buyer may agree, as close as possible to the
execution of this agreement, but in no event later than
September 30, 1996.
8.2 In addition to, and without limiting any other provision of this
Agreement, Seller agrees to do, perform and deliver at the date of
Closing the following:
8.2.1 The opinion of counsel of Seller as specified in
Section 6.1;
8.2.2 Execution by Seller of the requisite instruments of
conveyance, including, but not limited to, a Bill of Sale
and assignments;
8.2.3 Appropriate instruments of transfer to Buyer all
parcels of real estate or leaseholds covered by this
Agreement.
8.2.4 Evidence satisfactory to Buyer showing compliance with
provisions of any applicable requirement of the U.S.
Government or any state or local government.
8.2.5 Such other instruments as counsel for Buyer may
reasonably request.
8.2.6 A certificate that there has been no material adverse
change in the Exhibits prepared for this Agreement, between
the date of the Exhibit and the Closing Date.
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8.3 In addition to, and without limiting any other provisions of this
Agreement, Buyer agrees to do, perform and deliver at the Closing the
following:
8.3.1 The opinion of Buyer's counsel as specified in
Section 7.01;
8.3.2 The amount specified in Section 1.4 in the form of an
interbank transfer of immediately available funds;
8.3.3 Deposit of the amount specified in Section 1.4 in
escrow pursuant to the Escrow Agreement.
8.3.4 Evidence satisfactory to Seller showing compliance with
provisions of any applicable requirement of the U.S.
Government or any state or local government.
8.3.5 Such other instruments as counsel for Seller may
reasonably request.
9. Post-Closing Covenants.
9.1 Buyer and Seller agree to retain and permit each other access to
relevant pre-closing accounting records and corporate books of Seller
regarding the Assets for a period of six (6) years following the
Closing Date for any proper purpose. "Proper purpose" means the
preparation and review of any federal, state or local tax filing or
governmental report, filing, or application and defending or enforcing
rights against third parties or defending or enforcing rights under
this Agreement.
9.2 Seller and Buyer agree to cooperate in the preparation of any
governmental reports and to furnish reasonably requested information
needed for the preparation of governmental reports.
9.3 Consents. To the extent that the assignment of any contract,
license, lease or other agreement to be assigned to Buyer herein shall
require the consent of any person other than Seller, this Agreement
shall not constitute an agreement to assign the same if an attempted
assignment would constitute a breach thereof. Of any such consent is
not obtained before the Closing Date, Seller agrees to cooperate with
Buyer thereafter in any reasonable arrangement (such as
subcontracting, sublicensing or subleasing) designed to provide for
Buyer
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the benefits under the applicable contract, license, lease or other
agreement, as the case may be including without limitation,
enforcement, at the cost to and for the benefit of Buyer, of any all
rights of Seller against the other parties thereto arising out of the
breach or cancellation thereof by such other parties or otherwise.
9.4 Waiver of Bulk Transfer Laws. The Buyer and Seller each hereby
agrees to waive compliance by the other with the provisions of the
bulk transfer law of any jurisdiction.
10. Indemnity.
10.1 Seller agrees to indemnify Buyer against all claims, losses,
expenses, obligations, damages and liabilities (including, without
limitation, costs and expenses of litigation and reasonable attorneys'
fees) occurring or arising from the following: (1) any breach of any
representation or warranty or failure to do and perform any covenant
or agreement of Seller contained in this Agreement; (2) any
obligation, debt or liability of Seller or any claim based upon any
other occurrence arising from the operation of the Assets anywhere, or
from the operation of Seller's entire business anywhere, prior to the
Closing, the obligation for which is not expressly assumed or agreed
to be assumed by Buyer; or (3) any claim of any finder or broker
engaged by Seller or owed compensation by Seller as a result of the
transactions contemplated in this Agreement.
10.2 Buyer hereby agrees to indemnify Seller against all claims,
losses, expenses, obligations, damages and liabilities (including,
without limitation, costs and expenses of litigation and reasonable
attorneys' fees) occurring or arising from the following: (1) any
breach of any representation or warranty or failure to do and perform
any covenant or agreement of Buyer contained in this Agreement; (2)
any obligation, debt or liability of Seller or any claim based upon
any other occurrence arising from the operation of the Assets
anywhere, or from the operation of Buyer's entire business anywhere,
after the Closing, the obligation for which is not expressly assumed
or agreed to be assumed by Seller; or (3) any claim of any finder or
broker engaged by Buyer or owed compensation by Buyer as a result of
this transaction.
10.3 Within a reasonable time after receipt of notification of a
claim, the indemnified party shall notify the indemnifying party of
any claim or demand which the indemnified party has determined has
given rise
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to a right of indemnification. Such notice shall specify the
agreement, representation or warranty with respect to which the claim
is made, the facts giving rise to the claim, the alleged basis for the
claim, and the amount (to the extent then determinable) of liability
for which indemnity is asserted. Failure to give the foregoing
notice shall not be deemed a waiver of any claim or a bar to the
assertion of such claim unless and to the extent an indemnifying party
is able to establish damage or prejudice arising from the delay, in
which case such failure shall be a waiver and bar only to the extent
of such damage or prejudice. In the event any action, suit or
proceeding is brought against the indemnified party with respect to
which it may make a claim for indemnification, the indemnifying party
shall assume the defense of such action, suit or proceeding and shall
hire attorneys and other professionals reasonably acceptable to the
indemnified party. The defense shall include all settlement
negotiations and arbitration, trial, appeal or other proceedings which
indemnifying party's counsel shall deem appropriate, all of which
shall be at the discretion of and conducted by the indemnifying party.
The indemnified party shall have the right to be represented by
advisory counsel and accountants, at its expense, and shall be kept
informed of such action, suit or proceeding at reasonable times at all
stages thereof, whether or not so represented. The parties agree to
make available to each other, their counsel and accountants all
information and documents reasonably available to them which relate to
such proceedings or litigation, and the parties further agree to
render to each other such assistance as they may reasonably require of
each other in order to ensure the proper and adequate defense of any
such action, suit or proceeding. Each party shall promptly notify the
other party of any audit or examination of its books and records
undertaken by federal or state tax authorities and the results of any
such audit or examination, if such audit or examination is reasonably
expected to impact the other party.
10.4 In the event that any party does not provide indemnification as
required by the terms of this Article 10, and an indemnified party
shall pay or suffer a loss due to an indemnified liability, the party
or parties failing to provide indemnification shall pay all expenses
suffered by the indemnified party including reasonable legal expenses
of compelling the indemnifying party or parties to provide
indemnification to so provide.
If any party brings a legal action to compel an indemnification
and loses, the losing party or parties shall pay all reasonable costs
of litigation and the
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legal expenses of the defendant in that action.
10.5 Limits on Indemnification. No claim for indemnification or
damages shall be made by Buyer hereunder unless the aggregate
cumulative amount of claims of Buyer (or any person or entity claiming
through Buyer) exceeds $7,500 and then only to the extent such claims
exceeds such amount. Notwithstanding anything in this Agreement
to the contrary, Seller shall not be liable to Buyer or any person
claiming through Buyer for an aggregate cumulative amount in excess of
$250,000.
10.6 Arbitration. Any controversy or claim arising out of or relating
to this Agreement, or the breach thereof shall be settled by final and
binding arbitration in accordance with the then prevailing rules of
the American Arbitration Association, and judgment upon the award
rendered may be entered in any court having jurisdiction thereof. The
arbitration proceedings shall be held in Des Moines, Iowa, before a
single arbitrator.
11. Finders. Except with respect to Johnsen, Fretty & Co., which shall be paid
solely by Seller, Seller and Buyer each represent and warrant to the other
that they have not dealt with any finder or broker, they have not had
communications with any individual acting in such capacity with regard to
these transactions, and they are not in any way obligated to compensate any
such person.
12. Miscellaneous.
12.1 This Agreement may be amended or modified by, and only by, a
written document executed by all of the parties.
12.2 The titles of the sections of this Agreement are for convenience
of reference only and are not to be considered in construing this
Agreement.
12.3 This Agreement and any documents specifically referred to
constitute the entire understanding between the parties with respect
to the subject matter, superseding all negotiations, prior discussions
and preliminary agreements. This Agreement may be executed in any
number of counterparts.
12.4 The representations and warranties by the parties shall survive
the Closing for a period of two (2) years, all covenants and
agreements shall also survive the
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Closing for a period of two (2) years unless they expire by their
terms on or before Closing. Except as set forth in Section 2.13, no
claim for indemnification shall be allowed after such two year period.
12.5 It is expressly understood and agreed that Buyer and Seller or
their respective officers or agents have not made any warranty or
agreement, express or implied, except as are expressly provided, as to
the tax consequences of this transaction or the tax consequences of
any transaction pursuant to or arising out of this Agreement.
12.6 Other than to a subsidiary or affiliate of Buyer, this Agreement
may not be assigned without the prior written consent of the other
party. This Agreement will be binding upon and inure to the benefit
of the parties, their successors or permitted assigns, and the parties
agree for themselves, their successors or permitted assigns, to
execute any instrument and to perform any acts which may be necessary
or proper to carry out the purposes of this Agreement.
12.7 The Exhibits to this agreement shall be as of the date of this
Agreement unless otherwise stated, but Seller shall provide Buyer with
the certification provided for in Section 6.7.
12.8 All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given if
delivered in person or by electronic facsimile with receipt
acknowledged and copies sent by mail as provided below to the
respective persons named below or if mailed by Express, certified or
registered mail, postage prepaid, return receipt requested:
If to Seller:
Robert H. Lambert
Iowa Outdoor Displays, Inc.
P.O.Box 66
105 W. Montgomery
Creston, IA 50801
(Phone: 515-782-4176)
(Fax: 515-782-4177)
With a copy to:
David A. Swerdloff, Esq.
Day, Berry & Howard
One Canterbury Green
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Stamford, CT 06901
(Phone: 203-977-7301)
(Fax: 203-977-7334)
If to Buyer:
Brian T. Clingen
Paul G. Simon
Universal Outdoor, Inc.
321 North Clark Street, Suite 1010
Chicago, Illinois 60610
12.9 After the execution of this Agreement, Buyer may issue such press
releases and prepare and file documents containing such information
regarding this Agreement and the transactions contemplated as Buyer
deems appropriate.
12.10 This Agreement may be executed in one or more counterparts, each
of which need not contain the signatures of all parties, and all of
such counterparts taken together shall constitute one Agreement.
Signatures on facsimile copies of this Agreement are acceptable.
IN WITNESS WHEREOF, all of the parties hereto have executed and
delivered this Agreement as of the day and year first above written.
BUYER:
UNIVERSAL OUTDOOR, INC.
By:
----------------------------------
Its:
----------------------------------
SELLER:
MOUNTAIN MEDIA INC., D/B/A
IOWA OUTDOOR DISPLAYS
By:
----------------------------------
Its
----------------------------------
--------------------------------------
ROBERT H. LAMBERT
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Exhibit 2.8
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into this 11th day of September, 1996,
by and among SRM INVESTMENTS, INC., d/b/a The Chase Company, a Texas corporation
("Chase"), Frank E. Rolfe ("Rolfe") and Richard M. Skorburg ("Skorburg") (Chase,
Rolfe and Skorburg are collectively referred to as "Seller") and UNIVERSAL
OUTDOOR, INC., an Illinois corporation ("Buyer").
W I T N E S S E T H :
In consideration of the respective representations, warranties and
covenants contained in this Agreement and other good and valuable consideration,
the sufficiency and receipt of which is hereby acknowledged, Buyer and Seller
agree as follows:
1. TRANSFER OF ASSETS.
1.1 Buyer agrees that at the Closing it shall acquire the assets
of Seller described in Section 1.3 of this Agreement, including those
assets listed on Exhibits 1.3.1 through 1.3.11A attached to this
Agreement ("Assets"), all of which Assets are used in the outdoor
advertising business in the market described in Exhibit 1.1 ("the
Market"). Seller agrees to transfer, assign, convey and deliver to
Buyer all of the Assets, in exchange solely for the consideration
specified under the provisions of Section 1.4 herein ("Purchase
Price"), the assumption of certain obligations of Seller as specified,
and the other undertakings of Buyer pursuant to this Agreement.
1.2 The consideration payable by Buyer, as specified in Section
1.4, includes any applicable sales taxes or other taxes imposed upon
the transfer of the Assets to Buyer.
1.3 The Assets shall consist of the following:
1.3.1 All interest in and to the real property described on
Exhibit 1.3.1, including all leasehold interests of Seller
as lessee in and to such real property, and all easements,
licenses, and prepaid ground rents associated with such real
property (collectively "Leases").
1.3.2 All sign structures, whether owned or leased, and
leasehold interests in sign structures, including all
fixtures, lights, electrical hook ups, catwalks and other
appurtenant equipment, which are described in Exhibit 1.3.2
(collectively "Signs").
1.3.3 All rights and entitlement of Seller in and to
advertising contracts which are listed in Exhibit 1.3.3.
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1.3.4 All other contract rights and entitlements related to
the Assets, whether oral or written, including those set
forth in Exhibit 1.3.4.
1.3.5 All rights and obligations of Seller in and to the
unbuilt sign locations listed in Exhibit 1.3.5. For
purposes of this subsection "unbuilt sign locations" shall
mean all leasehold or other property interests, all state or
local permits, and any other complete or partial right or
expectancy to construct a sign.
1.3.6 To the extent they are assignable, all governmental
permits, licenses, approvals or authorizations related to
the Assets ("Permits"). Seller shall cooperate with Buyer
in the assignment and transfer to Buyer of all such
governmental permits, licenses, approvals or authorizations,
including state and local sign permits. All such permits,
licenses, approvals or authorizations are listed in Exhibit
1.3.6. Buyer acknowledges that Seller's Texas Department of
Transportation sign operator's license is personal and non-
transferable and will not be assigned to Buyer pursuant to
this Agreement.
1.3.7 All deposits from customers held by Seller arising from
transactions relating to the Assets. There are no such
deposits known to Seller.
1.3.8 All telephone numbers and listings used by Seller in
the Market. Seller will not change said telephone numbers.
A list of all telephone numbers and listings is attached as
Exhibit 1.3.8.
1.3.9 All claims or rights to payment associated with or
arising with respect to any litigation as to which Seller is
a plaintiff or defendant (except for Seller's rights as to
collection judgments as set forth in Section 1.3.11), and/or
any condemnation proceedings relating to any Assets pending
as of the Closing Date. There are no such proceedings known
to Seller. Seller will cooperate with Buyer in providing
Buyer with information about said litigation.
1.3.10 All computerized or non-computerized artwork used with
respect to Seller's outdoor advertising business in the
Market.
1.3.11 All accounts receivable and prepaid expenses of Chase
at Closing, including but not limited to those listed on
Exhibit 1.3.11A, except for collection judgments and the
Heywood Company promissory note set forth on Exhibit
1.3.11B.
1.3.12 All rights of Seller as sublessee of Seller's sign shop
in Kennedale, Texas, all rights of Seller as lessee of the
leased shop equipment located therein, all of Seller's
right, title, and interest in the shop equipment, inventory,
supplies, and all other personal property located therein
which is owned by Seller, and (subject to Buyer's assumption
of the promissory notes described in
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Exhibit 4.1.4) all of Seller's right, title, and interest in
the Toyota T-100 truck, Ford Ranger truck, and trailer used
in Seller's shop operations.
1.3.13 All books, records, and documents relating to the
Assets, but excluding Seller's general accounting and tax
records and other documents not specifically relating to the
Assets.
1.4 Buyer shall pay to Chase a Purchase Price for the Assets
equal to the sum of the following:
(a) One Hundred Thousand Dollars ($100,000) as a non-
refundable earnest money deposit ("the Earnest Money"); and
(b) Five Million Six Hundred Fifty Thousand Dollars
($5,650,000) in cash or cash equivalent funds or by wire
transfer at closing pursuant to Chase's instructions shown
on Exhibit 1.4(b).
(c) Fifty Thousand Dollars ($50,000) payable into
escrow pursuant to the terms of the Escrow Agreement
attached as Exhibit 1.4(c).
1.4.1 The parties acknowledge that the anticipated payment
status of such periodic receipts and expenditures as sign
lease ground rents (including percentage rentals) and other
lease payments, advertising revenues, advertising
commissions, property taxes, utility charges, and paint
costs has been taken into account in determining the
Purchase Price, and that therefore there will be no
proration of said items or any other periodic receipts and
expenditures associated with the Assets.
1.5 The Purchase Price shall be payable as follows:
1.5.1 The Earnest Money will be paid by Buyer to Chase by
wire transfer upon execution of this Agreement. The Earnest
Money will be refundable to Buyer solely in the event that
the transactions contemplated by this Agreement fail to
close by reason of Seller's default.
1.5.2 The portion of the Purchase Price payable under Section
1.4(b) will be paid by Buyer to the order of Chase on the
Closing Date, without reduction or credit for the Earnest
Money.
1.5.3 The portion of the Purchase Price payable under Section
1.4(c) will be paid by Buyer to the escrow agent by wire
transfer at Closing.
1.6 The parties agree that the allocated Asset values attached
as Exhibit 1.6 fairly and accurately represent the respective values
of the Asset categories of Seller purchased
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by Buyer pursuant to this Agreement. Buyer and Seller shall timely
(and in no event later than three months after the Closing Date)
complete a Form 8594, Asset Acquisition Statement of Allocation,
consistent with the allocations set forth on Exhibit 1.6, and shall
file a copy of such form with their respective federal income tax
returns for the period which includes the Closing Date. Buyer and
Seller further agree not to take any position inconsistent with such
allocation for any tax purpose.
1.7 At the Closing, Seller shall execute the Non-Competition,
Non-Solicitation and Non-Disclosure Agreement substantially in the
form set forth in Exhibit 1.7.
If Seller violates this Section 1.7 and the Non-Competition,
Non-Solicitation and Non-Disclosure Agreement referenced herein, and
Buyer obtains a final judgment or arbitration award or a settlement is
reached with Seller for damages as a result of this violation, Buyer
may offset the amount of this judgment, arbitration award or
settlement against any amounts owed by Buyer to the party or parties
committing such violation. "Final" shall mean any judgment for which
no appeal has been filed despite the expiration of the time allowed
therefor under applicable law, or as to which all available appeals
have been exhausted. Provided, however, Buyer's claim shall not be
limited to the amount of any offset available.
1.8 Buyer has the non-exclusive right to use the name Chase and
all other trade names used by Seller in its outdoor advertising
business in the Market for one year from the Closing Date. Buyer
shall have the right for one year from the Closing Date to endorse the
name Chase or Chase Company to all checks, which pursuant to the terms
of this Agreement, are the property of Buyer.
2. REPRESENTATIONS AND WARRANTIES OF CHASE. Chase represents and warrants to
Buyer as an inducement to Buyer to purchase the Assets pursuant to the
terms of this Agreement as follows:
2.1 Chase is a Texas corporation, duly organized, validly
existing in good standing under the laws of that state, and has the
corporate power to own its property and carry on its business as now
being conducted, and to execute and deliver the Asset Purchase
Agreement and any other agreements to be entered into by Chase in
connection with the Asset Purchase Agreement.
2.2 To the best of Seller's knowledge, no violations of
applicable laws or regulations, including, but not limited to, zoning
regulations and building permits or other permits related to sign
structures have occurred that would have a material adverse effect on
the future operation of any Asset, except as disclosed in Exhibit 2.2.
Buyer and Seller acknowledge that some or all of the Signs constitute
legal nonconforming uses under the laws and ordinances of the
respective jurisdictions in which they are located.
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2.3 Attached as Exhibit 2.3 are unaudited balance sheets and
comparative operating statements of Seller's outdoor advertising
business in the Market as of June 30, 1996 (the "Financial
Statements"). These Financial Statements are in accordance with the
books and records of Seller and fairly and accurately present its
financial position with respect to its outdoor advertising business in
the Market as of that date.
2.4 Since the date of the Financial Statements, except as
disclosed in Exhibit 2.4, there have been no material adverse changes
in the general affairs, management or financial position or financial
condition of Seller with respect to the outdoor advertising business
in the Market.
2.5 The Exhibits attached to this Agreement are correct in all
respects including specifically the following;
2.5.1 The information about contracts attached as Exhibit
1.3.3 and Exhibit 1.3.4 to this Agreement is true and
correct as of the dates set forth and those contracts (1)
are, to the best of Seller's knowledge, enforceable
according to their terms; and (2) have not been breached by
Seller or, to the best of Seller's knowledge, any of the
other parties thereto except as disclosed in Exhibit 1.3.3.
2.5.2 To the best of Seller's knowledge, all sign leases
to which Seller is a Lessee of property on which one or more
Signs have been erected are enforceable according to their
terms.
2.5.3 Exhibit 2.5.3 lists the following agreements,
whether oral or written:
(a) Each contract, agreement or commitment for the
sale or lease of Assets, excluding advertising contracts listed in
Exhibit 1.3.3, contracts to provide advertising allowances or
promotional services which are listed in Exhibit 1.3.4, subleases
listed in Exhibit 2.17, and agreements listed in Exhibit 2.26.
(b) Each contract with any dealer, distributor,
broker, agent or sales representative related to the Assets.
(c) Employment contracts, including union contracts,
executed by any officer, director, employee or consultant of Seller in
connection with Seller's outdoor advertising business in the Market
(other than Skorburg and Rolfe).
2.6 There are no unfair labor practice charges pending, or to
the best of Seller's knowledge, threatened against Seller in
connection with its outdoor advertising business in the Market.
Seller has not engaged in any unfair labor practices in connection
with its outdoor advertising business in the Market, and there is no
strike, dispute, request for representation or work stoppage pending
or threatened against Seller by or with respect to any employees of
Seller in its outdoor advertising business
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in the Market.
2.7 The execution, delivery and performance of this Agreement by
Seller, including, without limitation, all conveyances, transfers,
assignments and deliveries contemplated, have been duly and
effectively authorized and approved by Chase's board of directors and
shareholders and all other persons, businesses, banks and governmental
bodies or courts whose approval is required. This Agreement and each
and every instrument executed and delivered by Seller shall constitute
a valid and binding obligation of Seller enforceable against Seller
according to its terms.
2.8 The performance of this Agreement by Seller shall not
conflict with or violate the provisions of any agreement or instrument
binding upon Seller.
2.9 There is no suit, action, arbitration or legal,
administrative or other proceeding or governmental investigation
pending or, after due inquiry, to the best of Seller's knowledge,
threatened against or affecting the Assets or which would have any
adverse effect on Seller's performance of this Agreement and the
transactions contemplated. Seller is not in default with respect to
any order, writ, injunction or decree of any federal, state, local or
foreign court, department, agency or instrumentality.
2.10 Except as set forth on Exhibits 2.10, 2.17, and 2.26,
Seller's title to all property included in the Assets disclosed in the
Exhibits to this Agreement has not been encumbered by Seller in any
manner, except for encumbrances which will be extinguished at or
before Closing.
2.11 To the best of Seller's knowledge, all Assets are useable in
the ordinary course of business in accordance with industry standards.
Except as set forth in Exhibit 2.11, Seller has no knowledge of any
defects in the condition of any of the said Assets which would
materially impair Buyer's ability to use said Assets in the outdoor
advertising business in the Market. The provisions of this Section
are subject to the provisions of Section 4.5 regarding Consents.
2.12 Chase represents and warrants to Buyer that as of the date
of this Agreement the following environmental representations and
warranties are true to the best of Seller's knowledge:
2.12.1 Seller has not caused or permitted its operations on
any real estate owned or leased by Seller in connection with
the Assets to generate, manufacture, refine, transport,
treat, store, handle, dispose, transfer, produce or process
hazardous substances or other dangerous or toxic substances,
or solid wastes except in compliance with all applicable
federal, state and local laws or regulations, and has not
caused or permitted and has no knowledge of the release of
any hazardous substances that have gone onto or offsite of
any real estate owned or leased by Seller in connection with
the Assets, and Seller has
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no knowledge that any person or entity has in the past
utilized any real estate owned or leased by Seller in
connection with the Assets in a manner which has created any
hazardous substance on or off any real estate owned or
leased by Seller. There are no pending and no threatened
claim, suit, administrative proceeding, or other action by a
Court or governmental entity with regard to hazardous
substances on any real estate owned or leased by Seller in
connection with the Assets.
2.12.2 Chase agrees to indemnify and hold harmless Buyer, its
successors, and assigns against and in respect of any and
all damages, claims, losses, liabilities and expenses,
including, without limitation, reasonable legal, accounting,
consulting, engineering and other expenses, which may be
imposed upon or incurred by Buyer, its successors or
assigns, or asserted against the Buyer, their successors or
assigns by any other party or parties (including, without
limitation, a governmental entity), arising out of or in
connection with any environmental condition, resulting from
activity of Seller prior to Closing.
2.13 Except current liabilities incurred or paid in the ordinary
course of business and obligations under contracts entered into or
performed in the ordinary course of business so as to preserve and
expand their ongoing business or as otherwise incurred or performed in
the ordinary course of business, Seller has not since the date of the
Financial Statements attached as Exhibit 2.3;
2.13.1 incurred or become subject to any obligations or
liabilities (absolute or contingent) which have a material
adverse effect on the Assets;
2.13.2 mortgaged, pledged or subjected to any lien, charge or
encumbrance any of the Assets;
2.13.3 entered into any transaction other than in the ordinary
course of business in any way affecting the Assets, except
for this Agreement and the transactions contemplated
hereunder;
2.13.4 except as disclosed in Exhibit 2.13.4, increased,
without the knowledge of Buyer, the general rate of
compensation payable to any of its employees in Seller's
outdoor advertising business in the Market or made or
accrued for any new employee benefit plans for such
employees. A list of such employees (except Skorburg and
Rolfe) who work on a full time basis and all compensation
and bonus arrangements for these employees is set forth in
Exhibit 2.13.4;
2.13.5 except as disclosed in Exhibit 2.13.4, made, accrued or
become liable in any way for any bonus, profit sharing,
pension, incentive compensation or other similar payments to
any employee in Seller's outdoor advertising business in the
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Market;
2.13.6 suffered any other event or condition of any character
which has materially adversely affected the Assets.
2.14 Seller shall continue through the Closing Date its normal
and customary collection efforts with regard to its accounts
receivable and shall not make any operational changes in anticipation
of this transaction. The accounts receivable reflected in the
Financial Statements attached as Exhibit 2.3 arose out of bona fide
transactions in the ordinary course of business and, to the best of
Seller's knowledge, are not subject to any right of offset or
counterclaim except for any barter or lease trade out arrangements
disclosed in Exhibit 2.18.
2.15 Except as set forth in Exhibit 2.15, Seller does not sponsor
or participate in any (i) life, health, accident or disability or any
other "employee welfare benefit plan" as defined in Section 3(1) of
ERISA, with respect to Seller's outdoor advertising business in the
Market, or (ii) any "employee pension benefit plan" as defined in
Section 3(2) of ERISA, with respect to Seller's outdoor advertising
business in the Market. Exhibit 2.15 also discloses the Seller's
vacation, sick leave and holiday policies with respect to its
employees engaged in outdoor advertising business in the Market.
2.16 Seller has paid or will pay all federal, state, and local
taxes, including real and personal property, sales and use and other
taxes it is required to pay with respect to its outdoor advertising
business in the Market, except for current year property taxes
proration of which is waived pursuant to Section 1.4.1.
2.17 Except as set forth in Exhibit 2.17, Seller has not sublet
any Assets.
2.18 Seller has not engaged in any "bartering" or "lease trade
outs" of accounts receivable or advertising space with respect to the
Assets except as described on Exhibit 2.18.
2.19 Seller does not know of any governmental investigation of
Seller, or Chase's shareholders, officers or directors, in connection
with Seller's outdoor advertising business in the Market.
2.20 The performance of this Agreement by Seller shall not
constitute a fraudulent conveyance under Federal or State law.
2.21 To the best of Seller's knowledge, Seller has all permits
and licenses needed to operate the Assets being purchased by Buyer
except as disclosed in Exhibit 2.2, and no one has challenged the
validity of those permits and licenses.
2.22 No Major Advertiser of Seller has advised Seller that it is
going to breach,
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terminate, or decline to renew its advertising contract by reason of
the assignment of such contract to Buyer. The term "Major Advertiser"
as used herein shall mean any advertiser whose annual payments are
Five Thousand Dollars ($5,000.00) in the aggregate or more. No group
of advertisers whose annual payments exceed Forty Thousand Dollars
($40,000) have advised Seller they are going to breach, terminate, or
decline to renew their advertising contracts by reason of the
assignment of such contracts to Buyer.
2.23 With respect to its outdoor advertising business in the
Market, Seller has filed all tax returns or other tax reports when
due. There are no tax audits threatened or pending against Seller
with respect to its outdoor advertising business in the Market.
2.24 Chase shall be responsible for providing any notice of
layoff or plant closing required in connection with the transaction
contemplated herein pursuant to the Federal Worker Adjustment and
Retraining Notification Act of 1988, any successor federal law, and
any applicable state or local plant closing notification statute, and
Chase shall bear any liability or obligation that may arise or accrue
as the result of improper or untimely notice or that may arise under
such laws from any person claiming wrongful termination or change of
employment as a result of the transaction set forth in this Agreement.
2.25 All dues owed by Seller to any outdoor advertising
association have been paid.
2.26 There are no agreements or undertakings pursuant to which
any third party has or may have the right to acquire from Seller any
Assets, except as described in Exhibit 2.26.
2.27 To the best of Seller's knowledge, in the five years prior
to Closing, no employee of Seller, lessor, business invitee, or other
person has suffered personal injury or property damage as a result of
any action involving the Assets such that a claim has been or may be
raised against Seller directly or indirectly or under the workman's
compensation laws of any state except as set forth in Exhibit 2.27.
2.28 Seller shall deliver to Buyer under this Agreement sign
structures containing, in the aggregate, at least 255 advertising
faces.
2.29 Following Closing, neither Seller nor any affiliates of
Seller will have any direct, indirect or beneficial ownership of any
of the Assets being purchased by Buyer.
3. Representations and Warranties of Buyer. Buyer represents and
warrants to Seller as follows:
3.1 Buyer has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of
Illinois, with full power and authority to
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own its properties and carry on its business as now being conducted,
and to execute and deliver this Agreement and any other agreements to
be entered into by Buyer in connection with this Agreement.
3.2 The performance of this Agreement by Buyer will not conflict
with or violate the provisions of any agreement or instrument binding
upon Buyer; and the execution, delivery and performance of this
Agreement shall have been duly and effectively authorized and approved
by Buyer and all other persons, businesses, banks, and governmental
bodies whose approval is required, prior to closing. This Agreement
and each and every instrument executed and delivered by Buyer shall
constitute a valid and binding obligation of Buyer enforceable
according to its terms.
3.3 There is no suit, action, arbitration or legal,
administrative or other proceeding or governmental investigation
pending or, after due inquiry, to the best of Buyer's knowledge,
threatened against or affecting the business, assets or financial
conditions of Buyer within the Market or which would have any material
adverse effect on Buyer's performance of this Agreement and the
transactions contemplated. Buyer is not in default with respect to
any order, writ, injunction or decree of any federal, state, local or
foreign court, department, agency or instrumentality.
3.4 Buyer shall use its reasonable business efforts to perform
and fulfill all conditions and obligations on its part to be performed
and fulfilled under this Agreement, to the end that the transactions
contemplated by this Agreement shall be fully carried out.
3.5 The performance of this Agreement by Buyer shall not
constitute a fraudulent conveyance under Federal or State law.
4. ASSUMPTION OF OBLIGATIONS.
4.1 Buyer does not assume any obligations or liabilities of
Seller of any kind or nature, except as to those matters specified
below.
4.1.1 Post-closing liabilities under leases affecting the
Assets, and which have not been paid, performed or
discharged by Seller.
4.1.2 Post-closing obligation to deliver advertising services
pursuant to advertising contracts purchased pursuant to this
Agreement.
4.1.3 Post-closing obligations to pay advertising commissions
with respect to advertising revenues received by Buyer after
the Closing Date. Such obligations are listed in Exhibits
2.5.3 and 4.1.3.
4.1.4 Post-closing obligations under the promissory notes
described in
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Exhibit 4.1.4.
4.1.5 Those trade accounts payable in the ordinary course of
business of Seller listed on Exhibit 4.1.5.
4.2 Anything to the contrary notwithstanding, it is expressly
understood that Buyer shall not assume any of the following
obligations or liabilities of Seller:
4.2.1 Any city, state or federal tax liabilities for any kind
of tax for any period prior to and including the Closing
Date, except current year property taxes proration of which
has been waived pursuant to Section 1.4.1.
4.2.2 Any income tax liability arising from the sale of
Assets to Buyer or conveyance of Assets to Buyer or any
liquidation and dissolution of Chase.
4.2.3 Any obligation, commitment or liability of or claim
against Seller which constitutes or arises from a breach by
Seller at or prior to the Closing of any representation,
warranty or covenant.
4.2.4 Any obligation, commitment or liability of or claim
against Seller which may arise from Seller's operation of
the Assets prior to the Closing Date, except for liabilities
assumed by Buyer pursuant to Sections 4.1.1 through 4.1.5.
4.2.5 Any obligation, commitment or liability of or claim
against Seller which may arise from the rendering of
professional, legal, accounting, appraisal, engineering or
other similar services to Seller in connection with this
Agreement or the transactions contemplated hereunder.
4.2.6 Any liability of Seller under profit-sharing or similar
employee benefit plans or any other employee benefit
collective bargaining agreement, employment agreement or
salary or bonus arrangement.
4.3 Chase, Skorburg, and Rolfe hereby severally agree that they
shall pay promptly when due, or contest, any and all of their
liabilities arising with respect to Seller's outdoor advertising
business in the Market not assumed by Buyer at Closing or discharged
by Seller prior to Closing, provided that Chase, Skorburg, and Rolfe
may contest the assertion of any such liability to the extent
reasonably prudent and Buyer shall cooperate fully in any such
contest. If Chase, Skorburg, or Rolfe elects to contest any such
liability and fails to succeed in such contest, then the contesting
party shall promptly pay such liability. The contesting party shall
give Buyer written notice before the contesting party begins
contesting any such liability unless the contesting party does not
have adequate time, in which event, the contesting party shall give
Buyer said written notice within five (5) business days after the
contesting party begins contesting any such liability. If Chase,
Skorburg, or Rolfe elects to contest or fails without contest
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to pay any such liability, it or he shall indemnify and hold Buyer
harmless from and against any costs of such contest or failure
(including all reasonable costs and attorneys' fees). If Chase,
Skorburg, or Rolfe fails to succeed in such contest, then it or he
shall promptly pay such liability.
In the event that Chase, Skorburg, or Rolfe is contesting
any liability arising from Seller's outdoor advertising business in
the Market and not assumed by Buyer under the terms of this Agreement,
Seller shall clearly state to the third party that Chase, Skorburg, or
Rolfe and not Buyer is the entity disputing the matter, unless Buyer
is in actuality also disputing the matter.
4.4 Installments of special assessments levied against real
estate included in the Assets shall be the obligation of Chase if due
on or before the Closing Date and the obligation of Buyer if due after
the Closing Date.
4.5 The Seller shall cooperate with Buyer to the extent
reasonable to obtain all consents, approvals, and certificates and
licenses and permits, and other documents required or appropriate in
connection with the performance by it of this Agreement and the
consummation of the transactions contemplated or otherwise required in
order to prevent the breach of any representation and warranty set
forth ("Consents"); provided, however, that no contact will be made by
the Seller with any third party to obtain any Consent except in
accordance with arrangements previously agreed to by Buyer. The
provisions of this Section shall apply to consents of the respective
lessors of the leases described in Sections 1.3.1 and 1.3.12 and
Exhibit 1.3.1 to assignment of said leases to Buyer, but Seller does
not warrant that such consents can be obtained and the obtaining of
such consents is not a condition precedent to Closing.
4.6 Excluding workmen's compensation, Chase shall be responsible
for all claims associated with health, illness or injury insofar as
they relate to events or conditions existing on or before the Closing
Date and relating to employees or their dependents (or others) to the
extent that event or condition has been reported on or before the
Closing Date to Seller or to a medical professional or as to which
medical treatment has been obtained on or before the Closing Date;
provided, however, that Buyer's health plans will (to the extent they
would cover medical expenses for a condition arising after the Closing
Date) cover medical expenses for continuing employees incurred after
the Closing Date to the extent said medical expenses result from a
medical condition existing on or before the Closing Date that have not
been so reported or the subject of such treatment.
Chase, through its workers' compensation carrier, shall be
responsible for all workmen's compensation claims associated with
health, illness or injury insofar as they relate to events occurring
on or before the Closing Date.
5. CONDUCT OF BUSINESS PENDING CLOSING. Chase represents, warrants and
agrees that
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from the date of this Agreement until the Closing as to the Assets:
5.1 The outdoor advertising business of Seller with respect to
the Assets will be conducted in the usual and ordinary course, the
character of such business will not change in a materially adverse
manner, no different business will be undertaken with respect to the
Assets, and Seller will, in accordance with its past practices,
exercise reasonable efforts to preserve for Buyer the relationship
with suppliers, customers and others having business relations with
Seller with respect to the Assets, including employees of Seller
engaged in such business.
5.2 Except in the ordinary course of business, Seller will not,
in connection with the Assets, enter into any contract, agreement,
commitment or understanding with respect to employing any agents,
wholesalers, dealers, brokers or consultants in the development and
sale of their services which requires an expenditure of more than
$5,000 without the prior written authorization of Buyer.
5.3 As to the Assets, Seller will not:
(i) mortgage, pledge or subject to any lien, charge or
encumbrance any of the Assets;
(ii) sell or transfer any of the Assets, or any permits,
licenses, approvals, or authorizations with respect to the Assets or
cancel any debts or claims relating to Seller's outdoor advertising
business in the Market;
(iii) knowingly enter into any transaction affecting the Market
which would have an adverse effect on the Assets;
(iv) make, accrue or become liable in any way for any bonus
(other than those which Seller shall pay in full), profit-sharing,
pension, incentive compensation or other similar payments to any
employee in Seller's outdoor advertising business in the Market
inconsistent with prior practices or other than as shown on an Exhibit
to this Agreement;
(v) make or permit any amendment or termination of any contract
in connection with the Assets, except for termination of contracts by
parties other than Seller as authorized by the terms of such
contracts;
(vi) through negotiations or otherwise, make any commitment
affecting the Market to labor organizations or incur any liability
affecting the Market to labor organizations without the prior written
approval of Buyer;
(vii) make any material alteration to the normal and customary
pricing or terms and conditions of sale extended to Seller's customers
with respect to the Assets; or
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(vii) discharge or satisfy any lien or encumbrance affecting the
Assets or pay any obligation or liability affecting the Assets
(absolute or contingent), except in the ordinary course of business or
as required or allowed under this Agreement.
5.4 Seller shall maintain books of account with respect to the
Assets consistent with past accounting practices as described in
Section 2.3. Seller will not materially alter its current insurance
coverage with respect to the Assets without the prior written consent
of Buyer.
5.5 Prior to this Agreement, Seller has made available to Buyer
and its representatives certain information and records relating to
the business and affairs of Seller as requested by Buyer. During the
normal business hours throughout the purchase from this date to the
Closing Date, Seller will give to Buyer and its accountants, counsel,
appraisers and other representatives full access to all properties,
contracts, commitments, books and records or Seller pertaining to the
Assets. Prior to the Closing Date, and thereafter if the transactions
contemplated by this Agreement fail to close for any reason, Buyer
will maintain in confidence all information acquired through such
access regarding the outdoor advertising business of Seller in the
Market.
5.6 Prior to Closing, Buyer shall not have the risk of loss with
respect to the Assets to be conveyed pursuant to this Agreement. In
the event, between the date of this Agreement and the Closing Date,
any parcel of improved real property or personal property being
purchased as a part of this transaction, including but not limited to,
the furniture and equipment, fixtures, leasehold improvements,
equipment, vehicles or other personal property is materially damaged
or destroyed by fire or other casualty or in the event that the sign
structures to be purchased are materially damaged or destroyed by fire
or other casualty, Buyer may elect to terminate this Agreement, and
all obligations of the parties shall cease and neither party shall
have any further rights against the other. Chase shall immediately
notify the Buyer in writing of the occurrence of any fire or other
casualty. Buyer shall notify Chase in writing of Buyer's receipt of
Chase's notice, indicating whether Buyer elects to consummate this
transaction.
6. CONDITIONS TO OBLIGATIONS OF BUYER TO CONSUMMATE THE TRANSACTION. The
obligations of Buyer to be performed at the Closing shall be subject to the
satisfaction or the waiver in writing by Buyer on or prior to the Closing
Date of the following conditions:
6.1 Buyer and Buyer's lenders, if required, shall have received
an opinion from counsel for Chase in substantially the form attached
as Exhibit 6.1 which shall be reasonably satisfactory to Buyer, dated
the Closing Date, to the effect that:
6.1.1 Chase is a corporation duly organized, existing and in
good standing under the laws of the State of Texas and has
the corporate power to carry on
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its business as now being conducted in the Market, and is
not required to qualify to do business in any state other
than where qualified.
6.1.2 Such counsel does not know of any pending or threatened
lawsuits against Seller with respect to the Assets. Counsel
giving this opinion for Chase shall review their files in
such manner as they consider necessary before giving this
opinion.
6.1.3 The execution, delivery and performance of this
Agreement by Chase has been duly authorized and approved by
its Board of Directors.
6.1.4 This Agreement and each instrument executed and
delivered by Seller have been duly executed by and
constitute valid and binding obligations of Seller
enforceable against Seller according to their terms,
subject, however, to any state or federal laws for debtor
relief or general principles of equitable relief. No
opinion will be given regarding the enforceability of the
Non-Competition, Non-Solicitation and Non-Disclosure
Agreement (Exhibit 1.7).
6.1.5 All actions and proceedings required by law to be taken
by Seller at or prior to the closing in connection with this
Agreement and the transactions provided for have been duly
and validly taken, or waived by Buyer.
6.1.6 Except as disclosed in Exhibits 2.10, 2.17, and 2.26,
the Assets to the best of counsel's knowledge are free and
clear of all liens, encumbrances, claims, charges and
assessments incurred by Seller, other than any which will be
extinguished at or before Closing and any incurred by Buyer.
6.2 Buyer shall not have discovered and given notice to Seller
prior to Closing of any material error, misstatement or omission in
the representations and warranties made by Chase which alone or in the
aggregate are materially adverse to Seller or to Buyer if the
transaction is completed. The representations and warranties and
Exhibits contained in this Agreement shall be true on and as of the
Closing Date with the same effect as though such representations and
warranties have been made on and as of such date, except for any
variations resulting from actions contemplated or permitted by this
Agreement, which variations shall not be materially adverse, and each
and all of the covenants to be performed by Seller on or before the
Closing Date pursuant to the terms shall have been duly performed.
Chase shall deliver to Buyer a certificate to that effect, dated the
Closing Date, certifying to all the foregoing, and executed by an
authorized officer of Chase.
6.3 Subject to the provisions of Section 6.11, all contracts,
leases and options, permits and rights which constitute Assets, to the
extent assignable by Seller, shall be assigned to Buyer at Closing,
and Seller will use reasonable business efforts to obtain and provide
to Buyer at Closing any third parties' consents required for such
assignments in
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accordance with Section 4.5.
6.4 If required by law, Buyer and Seller shall have complied
with all requirements imposed by such agencies of the U.S. Government
as may be necessary for the valid and legal consummation of the
transactions contemplated by this Agreement.
6.5 No court or governmental agency shall have issued an order,
binding on Buyer, enjoining the closing of the transactions
contemplated herein.
6.6 There shall be no existing or threatened suit, action,
arbitration or legal, administrative or other proceeding or
governmental investigation pending or, after due inquiry, to the best
of Seller's or Buyer's knowledge, threatened against or affecting the
Assets or which would have any material adverse effect on Seller's
performance of this Agreement and the transactions contemplated.
6.7 Chase shall deliver a certified copy of the action of its
Board of Directors approving this transaction and the execution of
this Agreement.
6.8 Chase shall deliver an Incumbency Certificate to Buyer as to
Chase.
6.9 Seller shall deliver to Buyer all books, records and
documents relating to the Assets at the closing.
6.10 Chase shall have terminated from its employ all of Chase's
employees in its outdoor advertising business in the Market, except
Skorburg and Rolfe.
6.11 Buyer shall have received and approved a Phase 1
environmental report for the real property described in Section
1.3.12. In the event that Buyer has not yet received this report as
of Closing, Buyer and Seller shall execute a sublease of said property
from Seller to Buyer, on substantially the same terms as Seller's
existing sublease for the property, to be effective from month to
month pending receipt of the report. Upon receipt thereafter of a
report satisfactory to Buyer, Buyer and Seller will execute
appropriate instruments to cancel the sublease and effect an
assignment to Buyer of Seller's existing sublease in accordance with
Section 1.3.12. Upon receipt of a report unsatisfactory to Buyer,
Buyer may elect to cancel the sublease granted pursuant to this
Section or to continue said sublease for the remainder of the term of
Seller's existing sublease, but in either event this Agreement will
remain in force and the validity of the other transactions
contemplated hereunder will not be affected.
7. CONDITIONS TO OBLIGATIONS OF SELLER TO CONSUMMATE THE TRANSACTION.
The obligations of Seller to be performed at the Closing shall be subject
to the satisfaction or the waiver in writing by Seller on or prior to the
Closing Date of the following conditions:
7.1 Seller shall have received an opinion of Buyer's counsel in
substantially the
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form attached as Exhibit 7.1 and which shall be reasonably
satisfactory to Seller, dated the Closing Date, to the effect that;
7.1.1 Buyer is a corporation duly organized, existing and in
good standing under the laws of the State of Illinois and
has the corporate power to carry on its business as now
being conducted.
7.1.2 The execution, delivery and performance of this
Agreement by Buyer has been duly authorized and approved by
Buyer; and this Agreement and each instrument executed and
delivered by Buyer have been duly executed by and constitute
valid and binding obligations of Buyer enforceable according
to their terms subject, however, to any state or federal
laws for debtor relief or general principles of equitable
relief.
7.1.3 All actions and proceedings required by law to be taken
by Buyer at or prior to the Closing in connection with this
Agreement and the transactions provided for have been duly
and validly taken or waived by Seller.
7.2 Seller shall not have discovered any material error,
misstatement or omission in the representations and warranties made by
Buyer which alone or in the aggregate are materially adverse to Buyer
or Seller if this transaction is completed. The representations and
warranties of Buyer contained in this Agreement shall be true on and
as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date,
except for any variations therein resulting from actions contemplated
or permitted by this Agreement, which variations shall not be
materially adverse to Buyer and each and all the covenants to be
performed by Buyer on or before the Closing Date shall have been duly
performed. Buyer shall deliver to Seller a certificate to that
effect, dated the Closing Date, and executed by an authorized officer
of Buyer.
7.3 If required by law, Buyer and Seller shall have complied
with all requirements imposed by such agencies of the U.S. Government
as may be necessary for the valid and legal consummation of the
transactions contemplated hereby.
7.4 No court of competent jurisdiction or governmental agency
shall have issued an order, binding on Seller, enjoining the closing
of the transactions contemplated herein.
8. CLOSING.
8.1 The transactions required under this Agreement to be
consummated at the Closing shall take place in Dallas, Texas, at such
date ("Closing Date"), and time as Seller and Buyer may agree, as
close as possible to the execution of this Agreement, but in no event
later than September 18, 1996, or the third business day after Buyer
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receives the Exhibits to this Agreement from Seller, whichever is
later.
8.2 In addition to, and without limiting any other provision of
this Agreement, Chase agrees to do, execute, perform and deliver at
the Closing the following:
8.2.1 The opinion of counsel of Chase as specified in Section
6.1.
8.2.2 The requisite instruments of conveyance, including, but
not limited to, a Bill of Sale and assignments.
8.2.3 Appropriate instruments of transfer to Buyer all
parcels of real estate or leaseholds covered by this
Agreement.
8.2.4 Evidence satisfactory to Buyer showing compliance with
provisions of any applicable requirement of the U.S.
Government or any entity of state or local government.
8.2.5 An Escrow Agreement in the form attached as Exhibit
1.4(c).
8.2.6 The certificate described in Section 6.2.
8.2.7 The certified copy described in Section 6.7.
8.2.8 The Incumbency Certificate described in Section 6.8.
8.2.9 The sublease described in Section 6.11, if appropriate.
8.2.10 Such other instruments as counsel for Buyer may
reasonably request.
8.3 In addition to, and without limiting any other provisions of
this Agreement, Buyer agrees to do, execute, perform and deliver at
the Closing the following:
8.3.1 The opinion of Buyer's counsel as specified in Section
7.1.
8.3.2 The amounts specified in Sections 1.4(b) and 1.4(c) in
the form of an interbank transfer of immediately available
funds.
8.3.3 Evidence satisfactory to Seller showing compliance with
provisions of any applicable requirement of the U.S.
Government or any entity of state or local government.
8.3.4 The sublease described in Section 6.11, if appropriate.
8.3.5 The certificate described in Section 7.2.
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8.3.6 Such other instruments as counsel for Seller may
reasonably request.
9. POST-CLOSING COVENANTS.
9.1 Buyer and Seller agree to retain and permit each other
access to relevant pre-closing accounting records and corporate
books of Seller regarding the Assets for a period of six (6)
years following the Closing Date for any proper purpose. "Proper
purpose" means the preparation and review of any federal, state
or local tax filing or governmental report, filing, or
application or the enforcing of rights against third parties or
the enforcing of rights under this Agreement.
9.2 Seller and Buyer agree to cooperate in the preparation
of any governmental reports and to furnish reasonably requested
information needed for the preparation of governmental reports.
9.3 Buyer agrees to interview all persons listed in Exhibit
2.13.4 for possible employment with Buyer on terms and conditions
of employment comparable to those set forth in Exhibits 2.13.4
and 2.15, for a period of at least ninety days after the Closing
Date, subject to Buyer's right to terminate said employees for
cause. In the event that Buyer does not so employ any such
person(s), Buyer will pay Seller within ten days after the
Closing Date an amount equal to ninety days' base compensation of
such person(s).
10. INDEMNITY.
10.1 Chase agrees to indemnify Buyer against all claims,
losses, expenses, obligations, damages and liabilities
(including, without limitation, costs and expenses of litigation
and attorneys' fees), except for items as to which proration has
been waived pursuant to Section 1.4.1, occurring or arising from
the following: (1) any breach of any representation or warranty
or failure to do and perform any covenant or agreement of Seller
contained in this Agreement; (2) any obligation, debt or
liability of Seller or any claim based upon any other occurrence
arising from the operation of the Assets anywhere, or from the
operation of Seller's entire business anywhere, prior to the
Closing, the obligation for which is not expressly assumed or
agreed to be assumed by Buyer; or (3) any claim of any finder or
broker claiming to have been engaged by Seller or owed
compensation by Seller as a result of the transactions
contemplated in this Agreement.
10.2 Buyer agrees to indemnify Seller against all claims,
losses, expenses, obligations, damages and liabilities
(including, without limitation, costs and expenses of litigation
and attorneys' fees), except for items as to which
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proration has been waived pursuant to Section 1.4.1, occurring or
arising from the following: (1) any breach of any representation
or warranty or failure to do and perform any covenant or
agreement of Buyer contained in this Agreement; (2) any
obligation, debt or liability of Buyer or any claim based upon
any other occurrence arising from the operation of the Assets
anywhere, or from the operation of Buyer's entire business
anywhere, after the Closing, the obligation for which is not
expressly assumed or agreed to be assumed by Seller; or (3) any
claim of any finder or broker claiming to have been engaged by
Buyer or owed compensation by Buyer as a result of this
transaction.
10.3 Within a reasonable time after receipt of notification
of a claim, the indemnified party shall notify the indemnifying
party of any claim or demand which the indemnified party has
determined has given rise to a right of indemnification. Such
notice shall specify the agreement, representation or warranty
with respect to which the claim is made, the facts giving rise to
the claim, the alleged basis for the claim, and the amount (to
the extent then determinable) of liability for which indemnity is
asserted. Failure to give the foregoing notice shall not be
deemed a waiver of any claim or a bar to the assertion of such
claim unless and to the extent an indemnifying party is able to
establish damage or prejudice arising from the delay, in which
case such failure shall be a waiver and bar only to the extent of
such damage or prejudice. In the event any action, suit or
proceeding is brought against the indemnified party with respect
to which it may make a claim for indemnification, the
indemnifying party shall assume the defense of such action, suit
or proceeding and shall hire attorneys and other professionals
reasonably acceptable to the indemnified party. The defense
shall include all settlement negotiations and arbitration, trial,
appeal or other proceedings which indemnifying party's counsel
shall. deem appropriate, all of which shall be at the discretion
of and conducted by the indemnifying party. The indemnified
party shall have the right to be represented by advisory counsel
and accountants, at its expense, and shall be kept informed of
such action, suit or proceeding at reasonable times at all stages
thereof, whether or not so represented. The parties agree to
make available to each other, their counsel and accountants all
information and documents reasonably available to them which
relate to such proceedings or litigation, and the parties further
agree to render to each other such assistance as they may
reasonably require of each other in order to ensure the proper
and adequate defense of any such action, suit or proceeding.
Each party shall promptly notify the other party of any audit or
examination of its books and records undertaken by federal or
state tax authorities and the results of any such audit or
examination, if such audit or examination is reasonably expected
to impact the other party.
10.4 In the event that any party does not provide
indemnification as required by the terms of this Article 10, and
an indemnified party shall pay or suffer a loss
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due to an indemnified liability, the party or parties failing to
provide indemnification shall pay all expenses suffered by the
indemnified party including legal expenses of compelling the
indemnifying party or parties to provide indemnification to so
provide.
If any party brings a legal action to compel an
indemnification and loses, the losing party or parties shall pay
all reasonable costs of litigation and the legal expenses of the
defendant in that action.
Provided further, if any indemnified party shall pay or
suffer a loss of assets due to an indemnified liability, then
interest on any such amount shall accrue and be paid by the
indemnifying party or parties to the indemnified party or parties
from time to time, on demand, at the prime rate of interest (or
such other reference or base rate, as applicable) of the LaSalle
National Bank of Chicago, plus 2%, per annum, computed from the
date of such payment by the indemnified party to and including
the date upon which such indemnified party is reimbursed for such
payment.
10.5 The indemnity agreements contained in this Section 10 and in
other provisions of this Agreement shall not apply to the extent any
otherwise indemnifiable loss is covered by valid and collectible
insurance.
11. FINDERS. Seller and Buyer represent and warrant that they have not
dealt with any finder or broker, they have not had communications with any
individual acting in such capacity with regard to these transactions, and
they are not in any way obligated to compensate any such person.
12. MISCELLANEOUS.
12.1 This Agreement may be amended or modified by, and only by, a
written document executed by all of the parties.
12.2 The titles of the sections of this Agreement are for convenience
of reference only and are not to be considered in construing this
Agreement.
12.3 This Agreement and any documents specifically referred to
constitute the entire understanding between the parties with respect
to the subject matter, superseding all negotiations, prior discussions
and preliminary agreements. This Agreement may be executed in any
number of counterparts.
12.4 The representations and warranties by the parties shall survive
the Closing for a period of two years. All covenants and agreements
shall also survive the Closing unless they expire by their terms on or
before Closing.
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12.5 It is expressly understood and agreed that Buyer and Seller or
their respective officers or agents have not made any warranty or
agreement, express or implied, except as are expressly provided, as to
the tax consequences of this transaction or the tax consequences of
any transaction pursuant to or arising out of this Agreement.
12.6 Other than to a subsidiary or affiliate of Buyer, this Agreement
may not be assigned without the prior written consent of the other
party. This Agreement will be binding upon and inure to the benefit of
the parties, their successors or permitted assigns, and the parties
agree for themselves, their successors or permitted assigns, to
execute any instrument and to perform any acts which may be necessary
or proper to carry out the purposes of this Agreement. Any assignment
of this Agreement to a subsidiary or affiliate of Buyer shall not
relieve Buyer of its obligations under this Agreement.
12.7 The Exhibits to this Agreement shall be as of the Closing Date
unless otherwise stated, but Seller shall provide Buyer with the
certification provided for in Section 6.2.
12.8 This Agreement shall be construed in accordance with the laws of
the State of Texas. Any suit to enforce or construe this Agreement
shall be filed in an appropriate state or federal court in Dallas
County, Texas.
12.9 The parties acknowledge that one or more of the principals of
Seller is a licensed real estate broker in the State of Texas.
12.10 As used in this Agreement, the terms "affiliate of" or
"affiliated with," when used with respect to an entity, refer to
relationship with the entity by blood or marriage within the third
civil degree of relationship, or a business, partnership, or firm in
which the entity is an officer, director, shareholder, employee, or
consultant or which is more than 10% owned or controlled by the entity
(or which owns or controls the entity).
12.11 All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given if
delivered in person or by electronic facsimile with receipt
acknowledged and copies sent by mail as provided below to the
respective persons named below or if mailed by certified or registered
mail, postage prepaid, return receipt requested:
If to Seller:
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Frank E. Rolfe
Richard M. Skorburg
SRM Investments, Inc.
8214 Westchester, Suite 705
Dallas, Texas 75225
(Phone: 214-750-8636)
(Fax: 214-750-8671)
With a copy to:
P. Michael Jung, Esq.
Strasburger & Price, L.L.P.
901 Main Street
Suite 4300
Dallas, Texas 75202
(Phone: 214-651-4724)
(Fax: 214-651-4330)
If to Buyer:
Brian T. Clingen
Paul G. Simon
Universal Outdoor, Inc.
321 North Clark Street, Suite 1010
Chicago, Illinois 60610
(Phone: 312-644-8673)
(Fax: 312-644-8071)
Any party may change the address to which notification is to be
given by notice to all other parties given in the manner specified in
this Section.
12.12 The parties acknowledge that this Agreement has been executed
prior to preparation of some or all of the Exhibits to this Agreement,
which are to be prepared by Seller and furnished to Buyer for Buyer's
review. The obligation of Buyer to close and pay the remainder of the
Purchase Price specified in Sections 1.4(b) and 1.4(c) is subject to
Buyer's acceptance of the Exhibits, which will not be unreasonably
withheld.
IN WITNESS WHEREOF, all of the parties hereto have executed and delivered
this Agreement as of the day and year first above written.
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BUYER:
UNIVERSAL OUTDOOR, INC.
By:
------------------------------
Its:
------------------------------
SELLER:
SRM INVESTMENTS, INC., D/B/A THE CHASE COMPANY
By:
------------------------------
Its:
------------------------------
-----------------------------------
Frank E. Rolfe
-----------------------------------
Richard M. Skorburg
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INDEX TO EXHIBITS
-----------------
1.1 Market
1.3.1 List of Real Property and Leases
1.3.2 List of Sign Structures
1.3.3 List of Advertising Contracts
1.3.4 List of Contract Rights
1.3.5 List of Unbuilt Sign Structures
1.3.6 List of Permits
1.3.8 List of Telephone Numbers
1.3.11 Retained Accounts Receivable
1.3.11A List of Accounts Receivable
1.3.11B Retained Accounts Receivable
1.4(b) Seller's Wire Instructions
1.4(c) Escrow Agreement
1.6 Asset Allocation
1.7 Noncompetition, Nonsolicitation and Nondisclosure Agreement
2.2 Exceptions to Permit Warranty
2.3 June 30, 1996 Chase Financial Statements
2.4 Adverse Changes
2.5.3 Oral or Written Contracts
<PAGE>
2.10 Encumbrances
2.11 Repair Schedule
2.13.4 List of Employees
2.15 Employee Benefit Plans
2.17 Subleases
2.18 Description of Barter Transactions
2.26 Third-Party Rights to Acquire Assets
2.27 Claims Filed Against Seller
4.1.3 Non-Agency Advertising Commissions
4.1.4 Assumed Promissory Notes
4.1.5 Assumed Accounts Payable
6.1 Form of Seller's Legal Opinion
7.1 Form of Buyer's Legal Opinion
<PAGE>
NONCOMPETITION, NONSOLICITATION
AND NONDISCLOSURE AGREEMENT
THIS AGREEMENT, made and entered into as of this _____ day of __________,
1996 by and among SRM Investments, Inc., d/b/a The Chase Company, a Texas
corporation ("Chase"), Frank Rolfe ("Rolfe") and Richard Skorburg ("Skorburg")
(Chase, Rolfe and Skorburg are collectively referred to as "Seller") and
UNIVERSAL OUTDOOR, INC., an Illinois corporation, ("Buyer").
W I T N E S S E T H
In consideration of the purchase by Buyer of certain Assets from Seller and
the benefits of such purchase inuring to Seller pursuant to the Asset Purchase
Agreement, and in reliance upon the undertaking of Seller to enter into this
Noncompetition, Nonsolicitation and Nondisclosure Agreement, Seller and Buyer
agree as follows:
1. DEFINITIONS AND INTERPRETATION.
1.1 DEFINITIONS. In this Noncompetition, Nonsolicitation and
Nondisclosure Agreement ("Agreement") the words and expressions defined
below shall have the meanings assigned to them (unless the context
otherwise requires):
(a) "DEFINED TERMS": Unless otherwise defined, the terms used
in this Agreement shall have the same meanings as those used in the
Asset Purchase Agreement.
(b) "AFFILIATE": means any person related to Skorburg or Rolfe
by blood or marriage within the third civil degree of relationship or
a business, partnership or firm in which Seller is an officer,
director, shareholder, employee or consultant or which is more than
10% owned or controlled or directed by Seller (or which owns or
controls Seller).
PRONOUNS. Unless the context otherwise requires, words importing
the singular only shall include the plural and vice versa, words importing
the masculine only shall include the feminine gender or neuter and words
importing natural persons shall also include corporations, unincorporated
associations and partnerships.
EXHIBITS. Any and all Exhibits attached or delivered pursuant to
this Agreement or the Asset Purchase Agreement, shall be deemed
incorporated by this reference and shall be construed and have the same
force and effect as if expressly set out in the body of this Agreement.
2. NONCOMPETITION AND OTHER RESTRICTIVE COVENANTS.
<PAGE>
For and in consideration of the purchase of certain Assets of Seller, and
other good and valuable consideration, the receipt and sufficiency of which is
acknowledged and expressed, Seller agrees that:
(a) With regard to the rights to operate outdoor advertising
displays at the locations being purchased by Buyer in the Asset
Purchase Agreement, the parties agree that setting a definite term to
protect the legitimate expectations of Buyer is difficult because of
the long-term nature of the Leases and Permits being purchased and the
ongoing uncertainty of the duration of any Lease renewal or
extensions. Therefore, it is the express intention and agreement of
the parties that the duration of the Seller's agreement not to compete
for Leases or Permits or renewals of Leases or Permits or otherwise
interfere with Buyer's rights to operate the signs at the locations
where the signs are now located should extend as long as is necessary
to protect the value to Buyer of the Assets purchased. The parties
specifically agree that the term of twenty (20) years from the date of
execution is a reasonable restriction on Seller's competition for
Leases and Permits because it allows two (2) standard ten (10) year
extensions of those Leases which are currently in need of renewal.
(b) During the ten (10) year period commencing with the Closing
Date, Seller and any Affiliate will afford Buyer a right of first
refusal with respect to any sale by Seller of any outdoor advertising
Lease, Sign, or Permit within the Market.
(c) Seller shall not solicit any employee, independent
contractor or other person currently providing services to Seller to
terminate or refuse such services to Buyer within 5 years after the
Closing Date unless such employee, independent contractor or other
person has been terminated or is no longer doing business with Buyer.
(d) Except to the extent Seller is required by any Court order
to disclose said information or are otherwise required by law to
disclose said information, Seller agrees to keep secret and to
maintain the secrecy of all information pertaining to the Assets and
further agrees that Seller shall not disclose such information to any
third party for any purpose, without the express written permission of
Buyer.
3. REMEDIES.
Seller expressly further acknowledges and agrees that the period of
restriction and the territory provided in this Agreement are necessary to
protect Buyer and its successors and assigns in the use and enjoyment of the
Assets purchased by Buyer. Seller agrees that damages cannot adequately
compensate Buyer in the event of a violation of any of the above restrictive
covenants, and that injunctive relief shall be essential for the protection of
Buyer, its successors and assigns. Accordingly, Seller agrees and consents
that, in the event of a violation or breach of any of said restrictive
covenants,
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<PAGE>
Buyer shall be entitled to obtain injunctive relief against Seller but upon due
notice, in addition to such other relief as may be available at law or in
equity. Obtainment of such injunction by Buyer shall not be considered an
election of remedies or a waiver of any right to assert any other remedies
available at law or in equity. To the extent any provision hereof is deemed
unenforceable by virtue of its scope in terms of territory, business activities
or length of time, but may be made enforceable by limitations thereon, Seller
agrees that such reductions or limitations may be made so that the same shall be
enforceable to the fullest extent permissible under the laws and public policies
applied in such jurisdiction in which enforcement is sought.
In the event Buyer obtains a final judgment or arbitration award against
Seller or a settlement is reached between the parties to this Agreement, as a
result of Seller's breach of the provisions of this Agreement, in addition to
any other remedies provided herein, Buyer may, in addition to such judgment,
award or settlement obtain its reasonable costs of enforcement of this
Agreement, including all legal expenses. Final judgment means a judgment for
which no appeal has been filed despite the expiration of the time allowed
therefor under applicable law, or as to which all available appeals have been
exhausted.
4. PROCEDURE FOR NOTICES.
Any notice or demand which may be given under this Agreement shall be in
writing and shall be served by personal delivery or by Federal Express or
similar agency or by sending the same by first class prepaid registered or
certified mail, return receipt requested, addressed to the party to be served at
the address shown in the Asset Purchase Agreement or such other address as any
party hereto may from time to time notify the other for this purpose. Any
notice sent by first class prepaid registered or certified mail shall be deemed
to have been served on the third business day next following the date an which
it was properly posted. In proving service of any notice which is mailed it
shall be sufficient to prove that the envelope containing the same was properly
addressed and was delivered or sent by first class prepaid registered or
certified mail as aforesaid.
IN WITNESS WHEREOF, each of the parties hereto or their duly authorized
representatives have executed this Noncompetition, Nonsolicitation and
Nondisclosure Agreement, all as of the day and year first above written.
UNIVERSAL OUTDOOR, INC.,
An Illinois Corporation
By:
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Its:
------------------------
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SRM INVESTMENTS, INC., D/B/A THE CHASE COMPANY,
A Texas Corporation
By:
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Its:
------------------------
- ------------------------------
Frank E. Rolfe
- ------------------------------
Richard M. Skorburg
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<PAGE>
EXHIBIT 3.1
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.
<PAGE>
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.
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.
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<PAGE>
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
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
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<PAGE>
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 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.
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<PAGE>
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 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.
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<PAGE>
Exhibit 3.2
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
<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
(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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<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
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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DOCUMENT NUMBER: EX3-2.WPD
10-2-96/:33p
<PAGE>
EXHIBIT 5.1
October 9, 1996
Universal Outdoor Holdings, Inc.
321 North Clark Street
Chicago, Illinois 60610
Re: 6,612,500 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.
333-12457 (together with any registration statement filed pursuant to Rule
462(b) of the Securities Act, 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 6,612,500 shares of Common
Stock $0.01 par value (the "Shares"), of the Company. Up to 5,862,500 of the
Shares are being offered by the Company (the "Company Shares") and up to
750,000 of the Shares are being offered by the Selling Stockholders (the
"Seller Shares"). This opinion also relates to any registration statement
prepared in connection with the offering of the Company Shares that is to be
effective upon filing pursuant to Rule 462(b) under the Securities Act, and
the term "Company Shares" as used herein includes any additional shares of
the Common Stock registered pursuant to such subsequently filed registration
statement.
As set forth in the Registration Statement, the Company intends to cause
all required actions of directors and stockholders to accomplish the offering of
the Shares to be taken (the "Corporate Actions").
Based on the foregoing, we are of the opinion that:
1. The Company is duly incorporated and validly existing in Delaware.
2. Assuming that 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.
<PAGE>
Universal Outdoor Holdings, Inc.
October 9, 1996
Page 2
We do not find it necessary for the purposes of this opinion to cover, and
accordingly we express no opinion as to, the application of the securities or
blue sky laws of the various states to the sale of the 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,
/s/ Winston & Strawn
<PAGE>
Exhibit 9.2
UNIVERSAL OUTDOOR HOLDINGS, INC.
VOTING TRUST AGREEMENT
THIS VOTING TRUST AGREEMENT is made July 26, 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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by the Trustee in the name of "Daniel L. Simon as Voting Trustee under Voting
Trust Agreement dated July 26, 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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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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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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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 July 26, 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 July 26, 2006,
or at any time within two years prior to the time of expiration hereof as
extended, one or more holders of voting
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<PAGE>
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:
- ----------------
123,530
-------------------------------------
Paul G. Simon
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<PAGE>
NO. 1 123,530 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 July 26, 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 one hundred twenty-three thousand five hundred thirty
(123,530) 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.
<PAGE>
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 July
26, 1996, among the Company 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.
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<PAGE>
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.
The Voting Trust Agreement shall continue in full force and effect until
July 26, 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.
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<PAGE>
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.
IN WITNESS WHEREOF, the Trustee has signed this certificate on July 26,
1996.
----------------------------------------
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>
Exhibit 10.1
- --------------------------------------------------------------------------------
FORM OF
AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
among
UNIVERSAL OUTDOOR, INC.,
VARIOUS LENDING INSTITUTIONS,
LA SALLE NATIONAL BANK,
AS CO-AGENT
and
BANKERS TRUST COMPANY,
AS AGENT
---------------------------------------
$12,500,000
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
SECTION 1. Amount and Terms of Credit . . . . . . . . . . . . . . . . . . . 1
1.01 Commitment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Minimum Borrowing Amounts, etc. . . . . . . . . . . . . . . . . . 3
1.03 Notice of Borrowing . . . . . . . . . . . . . . . . . . . . . . . 3
1.04 Disbursement of Funds . . . . . . . . . . . . . . . . . . . . . . 4
1.05 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.06 Conversions . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.07 Pro Rata Borrowings . . . . . . . . . . . . . . . . . . . . . . . 6
1.08 Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.09 Interest Periods. . . . . . . . . . . . . . . . . . . . . . . . . 7
1.10 Increased Costs, Illegality, etc. . . . . . . . . . . . . . . . . 8
1.11 Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.12 Change of Lending Office. . . . . . . . . . . . . . . . . . . . . 10
1.13 Replacement of Banks. . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2. Letters of Credit. . . . . . . . . . . . . . . . . . . . . . . . 12
2.01 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . 12
2.02 Minimum Stated Amount . . . . . . . . . . . . . . . . . . . . . . 12
2.03 Letter of Credit Requests; Notices of Issuance. . . . . . . . . . 13
2.04 Agreement to Repay Letter of Credit Drawings. . . . . . . . . . . 13
2.05 Letter of Credit Participations . . . . . . . . . . . . . . . . . 14
2.06 Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3. Fees; Commitments. . . . . . . . . . . . . . . . . . . . . . . . 17
3.01 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.02 Voluntary Reduction of Commitments. . . . . . . . . . . . . . . . 18
3.03 Mandatory Adjustments of Commitments, etc.. . . . . . . . . . . . 18
SECTION 4. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.01 Voluntary Prepayments . . . . . . . . . . . . . . . . . . . . . . 18
4.02 Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . 19
4.03 Method and Place of Payment . . . . . . . . . . . . . . . . . . . 20
4.04 Net Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
<PAGE>
SECTION 5. Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.01 Restatement Effective Date. . . . . . . . . . . . . . . . . . . . 22
5.02 Credit Events . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 6. Representations, Warranties and Agreements . . . . . . . . . . . 26
6.01 Corporate Status. . . . . . . . . . . . . . . . . . . . . . . . . 26
6.02 Corporate Power and Authority . . . . . . . . . . . . . . . . . . 26
6.03 No Violation. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.04 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.05 Use of Proceeds; Margin Regulations . . . . . . . . . . . . . . . 27
6.06 Governmental Approvals. . . . . . . . . . . . . . . . . . . . . . 27
6.07 Investment Company Act. . . . . . . . . . . . . . . . . . . . . . 28
6.08 Public Utility Holding Company Act. . . . . . . . . . . . . . . . 28
6.09 True and Complete Disclosure. . . . . . . . . . . . . . . . . . . 28
6.10 Financial Condition; Financial Statements . . . . . . . . . . . . 28
6.11 Security Interests. . . . . . . . . . . . . . . . . . . . . . . . 29
6.12 Representations and Warranties in Transaction Documents . . . . . 30
6.13 Consummation of Transaction . . . . . . . . . . . . . . . . . . . 30
6.14 Tax Returns and Payments. . . . . . . . . . . . . . . . . . . . . 30
6.15 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . 30
6.16 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.17 Patents, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.18 Pollution and Other Regulations . . . . . . . . . . . . . . . . . 32
6.19 Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.20 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.21 Existing Indebtedness . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 7. Affirmative Covenants. . . . . . . . . . . . . . . . . . . . . . 33
7.01 Information Covenants . . . . . . . . . . . . . . . . . . . . . . 34
7.02 Books, Records and Inspections. . . . . . . . . . . . . . . . . . 36
7.03 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.04 Payment of Taxes. . . . . . . . . . . . . . . . . . . . . . . . . 37
7.05 Consolidated Corporate Franchises . . . . . . . . . . . . . . . . 37
7.06 Compliance with Statutes, etc.. . . . . . . . . . . . . . . . . . 37
7.07 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.08 Good Repair . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.09 End of Fiscal Years; Fiscal Quarters. . . . . . . . . . . . . . . 39
7.10 Additional Security; Further Assurances . . . . . . . . . . . . . 39
7.11 Corporate Separateness. . . . . . . . . . . . . . . . . . . . . . 40
7.12 Compliance with Environmental Laws. . . . . . . . . . . . . . . . 41
SECTION 8. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . 41
8.01 Changes in Business . . . . . . . . . . . . . . . . . . . . . . . 41
(ii)
<PAGE>
8.02 Consolidation, Merger, Sale or Purchase of Assets, etc. . . . . . 42
8.03 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.04 Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . 45
8.05 Capital Expenditures. . . . . . . . . . . . . . . . . . . . . . . 46
8.06 Investments and Loans . . . . . . . . . . . . . . . . . . . . . . 47
8.07 Subsidiaries; etc.. . . . . . . . . . . . . . . . . . . . . . . . 47
8.08 Prepayments of Indebtedness, etc. . . . . . . . . . . . . . . . . 47
8.09 Dividends, etc. . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.10 Transactions with Affiliates. . . . . . . . . . . . . . . . . . . 49
8.11 Fixed Charge Coverage Ratio . . . . . . . . . . . . . . . . . . . 50
8.12 Minimum Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . 50
8.13 Borrower Leverage Ratio . . . . . . . . . . . . . . . . . . . . . 50
SECTION 9. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . 51
9.01 Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
9.02 Representations, etc. . . . . . . . . . . . . . . . . . . . . . . 52
9.03 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
9.04 Default Under Other Agreements. . . . . . . . . . . . . . . . . . 52
9.05 Bankruptcy, etc.. . . . . . . . . . . . . . . . . . . . . . . . . 52
9.06 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.07 Credit Documents. . . . . . . . . . . . . . . . . . . . . . . . . 53
9.08 Holdings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.09 Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
9.10 AF Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 10. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 11. The Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
11.01 Appointment. . . . . . . . . . . . . . . . . . . . . . . . . . . 81
11.02 Nature of Duties . . . . . . . . . . . . . . . . . . . . . . . . 81
11.03 Lack of Reliance on the Agent. . . . . . . . . . . . . . . . . . 81
11.04 Certain Rights of the Agent. . . . . . . . . . . . . . . . . . . 82
11.05 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
11.06 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . 82
11.07 The Agent in Its Individual Capacity . . . . . . . . . . . . . . 82
11.08 Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
11.09 Resignation by the Agent . . . . . . . . . . . . . . . . . . . . 83
SECTION 12. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . 84
12.01 Payment of Expenses, etc.. . . . . . . . . . . . . . . . . . . . 84
12.02 Right of Setoff. . . . . . . . . . . . . . . . . . . . . . . . . 84
(iii)
<PAGE>
12.03 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
12.04 Benefit of Agreement . . . . . . . . . . . . . . . . . . . . . . 85
12.05 No Waiver; Remedies Cumulative . . . . . . . . . . . . . . . . . 87
12.06 Payments Pro Rata. . . . . . . . . . . . . . . . . . . . . . . . 87
12.07 Calculations; Computations . . . . . . . . . . . . . . . . . . . 88
12.08 Governing Law; Submission to Jurisdiction; Venue; Waiver of
Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
12.09 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 89
12.10 Execution. . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
12.11 Headings Descriptive . . . . . . . . . . . . . . . . . . . . . . 89
12.12 Amendment or Waiver. . . . . . . . . . . . . . . . . . . . . . . 90
12.13 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
12.14 Domicile of Loans. . . . . . . . . . . . . . . . . . . . . . . . 90
12.15 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . 90
12.16 Special Amendments . . . . . . . . . . . . . . . . . . . . . . . 91
ANNEX I -- Commitments
ANNEX II -- Bank Addresses
ANNEX III -- Government Approvals
ANNEX IV -- Subsidiaries
ANNEX V -- Properties
ANNEX VI -- Existing Indebtedness
ANNEX VII -- Insurance Policies
ANNEX VIII -- Existing Liens
ANNEX IX -- Management Fees
EXHIBIT A-1 -- Form of Notice of Borrowing
EXHIBIT A-2 -- Form of Letter of Credit Request
EXHIBIT B-1 -- Form of Revolving Note
EXHIBIT B-2 -- Form of Swingline Note
EXHIBIT C -- Form of Assignment Agreement
(iv)
<PAGE>
AMENDMENT AND RESTATEMENT dated as of October __, 1996 to REVOLVING
CREDIT AGREEMENT dated as March 29, 1996, among UNIVERSAL OUTDOOR, INC., an
Illinois corporation, the lending institutions listed from time to time on Annex
I hereto (each a "Bank" and, collectively, the "Banks"), LA SALLE NATIONAL BANK,
as Co-Agent and BANKERS TRUST COMPANY, as agent (the "Agent"). Unless otherwise
defined herein, all capitalized terms used herein and defined in Section 10 are
used herein as so defined.
W I T N E S S E T H :
WHEREAS, the Borrower and certain financial institutions are parties
to a Revolving Credit Agreement, dated as of March 29, 1996 (as the same has
been amended, modified or supplemented prior to the date hereof, the "Original
Credit Agreement"); and
WHEREAS, the parties hereto wish to amend and restate the Original
Credit Agreement as herein provided;
NOW, THEREFORE, the parties hereto agree that the Original Credit
Agreement shall be and hereby is amended and restated in its entirety as
follows, provided that if the Restatement Effective Date has not occurred on or
prior to November 30, 1996 this amendment and restatement shall be void and of
no further effect, with the Original Credit Agreement to remain in effect;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. AMOUNT AND TERMS OF CREDIT.
1.01 COMMITMENT. (a) Subject to and upon the terms and conditions
herein set forth, each Bank severally agrees to make a loan or loans (each a
"Revolving Loan" and, collectively, the "Revolving Loans"), which Revolving
Loans (i) shall be made at any time and from time to time on and after the
Restatement Effective Date and prior to the Expiry Date, (ii) except as
hereinafter provided, may, at the option of the Borrower, be incurred and
maintained as, and/or converted into, Base Rate Loans or Eurodollar Loans,
provided that (x) all Revolving Loans made as part of the same Borrowing shall,
unless otherwise specifically provided herein, consist of Loans of the same Type
and (y) Revolving Loans maintained as Eurodollar Loans may not be incurred prior
to the Syndication Date, (iii) may be repaid and be reborrowed in accordance
with the provisions hereof and (iv) shall not exceed for any Bank at any time
outstanding that aggregate
<PAGE>
principal amount which, when combined with the
aggregate outstanding principal amount of all other Revolving Loans of such Bank
and with such Bank's Adjusted Percentage of the sum of (x) the Letter of Credit
Outstandings (exclusive of Unpaid Drawings which are repaid with the proceeds
of, and simultaneously with the incurrence of, the respective incurrence of
Revolving Loans) at such time and (y) the outstanding principal amount of
Swingline Loans (exclusive of Swingline Loans which are repaid with the proceeds
of, and simultaneously with the incurrence of, the respective incurrence of
Revolving Loans) at such time, equals (1) if such Bank is a Non-Defaulting Bank,
the Adjusted Revolving Commitment of such Bank at such time and (2) if such Bank
is a Defaulting Bank, the Revolving Commitment of such Bank at such time.
(b) Subject to and upon the terms and conditions herein set forth,
BTCo in its individual capacity agrees to make at any time and from time to time
on or after the Initial Borrowing Date and prior to the Swingline Expiry Date, a
loan or loans to the Borrower (each a "Swingline Loan," and, collectively, the
"Swingline Loans"), which Swingline Loans (i) shall be made and maintained as
Base Rate Loans, (ii) may be repaid and reborrowed in accordance with the
provisions hereof, (iii) shall not exceed in aggregate principal amount at any
time outstanding, when combined with the aggregate principal amount of all
Revolving Loans made by Non-Defaulting Banks then outstanding and the Letter of
Credit Outstandings (exclusive of Unpaid Drawings which are repaid with the
proceeds of, and simultaneously with the incurrence of, the respective
incurrence of Swingline Loans) at such time, an amount equal to the Adjusted
Total Revolving Commitment then in effect and (iv) shall not exceed in aggregate
principal amount at any time outstanding the Maximum Swingline Amount. BTCo
will not make a Swingline Loan after it has received written notice from the
Required Banks that one or more of the applicable conditions to Credit Events
specified in Section 5.02 are not then satisfied.
(c) On any Business Day, BTCo may, in its sole discretion, give
notice to the Banks that its outstanding Swingline Loans shall be funded with a
Borrowing of Revolving Loans (PROVIDED that each such notice shall be deemed to
have been automatically given upon the occurrence of an Event of Default under
Section 9.05 or upon the exercise of any of the remedies provided in the last
paragraph of Section 9), in which case a Borrowing of Revolving Loans
constituting Base Rate Loans (each such Borrowing, a "Mandatory Borrowing")
shall be made on the immediately succeeding Business Day by all Banks PRO RATA
based on each Bank's Adjusted Percentage, and the proceeds thereof shall be
applied directly to repay BTCo for such outstanding Swingline Loans. Each Bank
hereby irrevocably agrees to make Base Rate Loans upon one Business Day's notice
pursuant to each Mandatory Borrowing in the amount and in the manner specified
in the preceding sentence and on the date specified in writing by BTCo
notwithstanding (i) that the amount of the Mandatory Borrowing may not comply
with the Minimum Borrowing Amount otherwise required hereunder, (ii) whether any
conditions specified in Section 5 are then satisfied, (iii) whether a Default or
an Event of Default has occurred and is contin-
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uing, (iv) the date of such Mandatory Borrowing and (v) any reduction in the
Total Revolving Commitment or the Adjusted Total Revolving Commitment after
any such Swingline Loans were made. In the event that any Mandatory
Borrowing cannot for any reason be made on the date otherwise required above
(including, without limitation, as a result of the commencement of a
proceeding under the Bankruptcy Code in respect of the Borrower), each Bank
(other than BTCo) hereby agrees that it shall forthwith purchase from BTCo
(without recourse or warranty) such assignment of the outstanding Swingline
Loans as shall be necessary to cause the Banks to share in such Swingline
Loans ratably based upon their respective Adjusted Percentages, provided that
all interest payable on the Swingline Loans shall be for the account of BTCo
until the date the respective assignment is purchased and, to the extent
attributable to the purchased assignment, shall be payable to the Bank
purchasing same from and after such date of purchase.
1.02 MINIMUM BORROWING AMOUNTS, ETC. The aggregate principal amount
of each Borrowing shall not be less than the Minimum Borrowing Amount. More
than one Borrowing may be incurred on any day, provided that at no time shall
there be outstanding more than seven Borrowings of Eurodollar Loans hereunder
and under the AF Credit Agreement.
1.03 NOTICE OF BORROWING. (a) Whenever the Borrower desires to
incur Revolving Loans, it shall give the Agent at its Notice Office, prior to
11:00 A.M. (New York time), at least three Business Days' prior written notice
(or telephonic notice promptly confirmed in writing) of each Borrowing of
Eurodollar Loans and at least one Business Day's prior written notice (or
telephonic notice promptly confirmed in writing) of each Borrowing of Base Rate
Loans to be made hereunder. Each such notice (each a "Notice of Borrowing")
shall be in the form of Exhibit A-1 and shall be irrevocable and shall specify
(i) the aggregate principal amount of the Revolving Loans to be made pursuant to
such Borrowing, (ii) the date of Borrowing (which shall be a Business Day) and
(iii) whether the respective Borrowing shall consist of Base Rate Loans or (to
the extent permitted) Eurodollar Loans and, if Eurodollar Loans, the Interest
Period to be initially applicable thereto. The Agent shall promptly give each
Bank written notice (or telephonic notice promptly confirmed in writing) of each
proposed Borrowing, of such Bank's proportionate share thereof and of the other
matters covered by the Notice of Borrowing.
(b) (i) Whenever the Borrower desires to make a Borrowing of
Swingline Loans hereunder, it shall give BTCo, prior to 11:00 A.M. (New York
time) on the day such Swingline Loan is to be made, written notice (or
telephonic notice promptly confirmed in writing) of each Swingline Loan to be
made hereunder. Each such notice shall be irrevocable and shall specify in each
case (x) the date of such Borrowing (which shall be a Business Day) and (y) the
aggregate principal amount of the Swingline Loan to be made pursuant to such
Borrowing.
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<PAGE>
(ii) Mandatory Borrowings shall be made upon the notice specified in
Section 1.01(c), with the Borrower irrevocably agreeing, by its incurrence of
any Swingline Loan, to the making of Mandatory Borrowings as set forth in such
Section.
(c) Without in any way limiting the obligation of the Borrower to
confirm in writing any telephonic notice permitted to be given hereunder, the
Agent, BTCo (in the case of Swingline Loans) and the Letter of Credit Issuer (in
the case of Letters of Credit), as the case may be, may prior to receipt of
written confirmation act without liability upon the basis of such telephonic
notice, believed by the Agent, BTCo or the Letter of Credit Issuer in good faith
to be from an Authorized Officer of the Borrower. In each such case, the
Borrower hereby waives the right to dispute the Agent's, BTCo's or the Letter of
Credit Issuer's record of the terms of such telephonic notice.
1.04 DISBURSEMENT OF FUNDS. (a) No later than 1:00 P.M. (New York
time) on the date specified in each Notice of Borrowing, each Bank will make
available its PRO RATA share of each Borrowing requested to be made on such date
in the manner provided below, provided that all Swingline Loans shall be made
available by BTCo no later than 2:00 P.M. on the date requested. All such
amounts shall be made available to the Agent in U.S. dollars and immediately
available funds at the Payment Office and the Agent promptly will make available
to the Borrower by depositing to its account at the Payment Office the aggregate
of the amounts so made available in the type of funds received. Unless the
Agent shall have been notified by any Bank prior to the date of Borrowing that
such Bank does not intend to make available to the Agent its portion of the
Borrowing or Borrowings to be made on such date, the Agent may assume that such
Bank has made such amount available to the Agent on such date of Borrowing, and
the Agent, in reliance upon such assumption, may (in its sole discretion and
without any obligation to do so) make available to the Borrower a corresponding
amount. If such corresponding amount is not in fact made available to the Agent
by such Bank and the Agent has made available same to the Borrower, the Agent
shall be entitled to recover such corresponding amount from such Bank. If such
Bank does not pay such corresponding amount forthwith upon the Agent's demand
therefor, the Agent shall promptly notify the Borrower, and the Borrower shall
immediately pay such corresponding amount to the Agent. The Agent shall also be
entitled to recover on demand from such Bank or the Borrower, as the case may
be, interest on such corresponding amount in respect of each day from the date
such corresponding amount was made available by the Agent to the Borrower to the
date such corresponding amount is recovered by the Agent, at a rate per annum
equal to (x) if paid by such Bank, the overnight Federal Funds Effective Rate or
(y) if paid by the Borrower, the then applicable rate of interest, calculated in
accordance with Section 1.08, for the respective Loans.
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<PAGE>
(b) Nothing herein shall be deemed to relieve any Bank from its
obligation to fulfill its commitments hereunder or to prejudice any rights which
the Borrower may have against any Bank as a result of any default by such Bank
hereunder.
1.05 NOTES. (a) The Borrower's obligation to pay the principal of,
and interest on, the Loans made to it by each Bank shall be evidenced (i) if
Revolving Loans, by a promissory note substantially in the form of Exhibit B-1
with blanks appropriately completed in conformity herewith (each a "Revolving
Note" and, collectively, the "Revolving Notes") and (ii) if Swingline Loans, by
a promissory note substantially in the form of Exhibit B-2 with blanks
appropriately completed in conformity herewith (the "Swingline Note").
(b) The Revolving Note issued to each Bank shall (i) be executed by
the Borrower, (ii) be payable to the order of such Bank and be dated the
Restatement Effective Date, (iii) be in a stated principal amount equal to the
Revolving Commitment of such Bank and be payable in the principal amount of the
Revolving Loans evidenced thereby, (iv) mature on the Expiry Date, (v) bear
interest as provided in the appropriate clause of Section 1.08 in respect of the
Base Rate Loans and Eurodollar Loans, as the case may be, evidenced thereby,
(vi) be subject to mandatory repayment as provided in Section 4.02 and (vii) be
entitled to the benefits of this Agreement and the other Credit Documents.
(c) The Swingline Note issued to BTCo shall (i) be executed by the
Borrower, (ii) be payable to the order of BTCo and be dated the Restatement
Effective Date, (iii) be in a stated principal amount equal to the Maximum
Swingline Amount and be payable in the principal amount of Swingline Loans
evidenced thereby, (iv) mature on the Swingline Expiry Date, (v) bear interest
as provided in Section 1.08 in respect of the Base Rate Loans evidenced thereby
and (vi) be entitled to the benefits of this Agreement and the other Credit
Documents.
(d) Each Bank will note on its internal records the amount of each
Loan made by it and each payment in respect thereof and will, prior to any
transfer of any of its Notes, endorse on the reverse side thereof the
outstanding principal amount of Loans evidenced thereby. Failure to make any
such notation shall not affect the Borrower's obligations in respect of such
Loans.
1.06 CONVERSIONS. The Borrower shall have the option to convert on
any Business Day occurring on and after the Syndication Date all or a portion at
least equal to the applicable Minimum Borrowing Amount of the outstanding
principal amount of the Revolving Loans (with Swingline Loans at all times to be
maintained as Base Rate Loans) into a Borrowing or Borrowings of another Type of
Loan, provided that (i) except as otherwise provided in Section 1.10(b),
Eurodollar Loans may be converted into Base Rate Loans only on the last day of
an Interest Period applicable thereto and no partial conversion
-5-
<PAGE>
of a Borrowing of Eurodollar Loans shall reduce the outstanding principal amount
of the Eurodollar Loans made pursuant to such Borrowing to less than the Minimum
Borrowing Amount applicable thereto, (ii) Base Rate Loans may not be converted
into Eurodollar Loans if any violation of Section 9.01 or any Event of Default
is then in existence to the extent that the Agent or the Required Banks have
determined that any such conversion at such time would be disadvantageous to the
Banks and (iii) Borrowings of Eurodollar Loans resulting from this Section 1.06
shall be limited in number as provided in Section 1.02. Each such conversion
shall be effected by the Borrower giving the Agent at its Notice Office, prior
to 11:00 A.M. (New York time), at least three Business Days' (or two Business
Days', in the case of a conversion into Base Rate Loans) prior written notice
(or telephonic notice promptly confirmed in writing) (each a "Notice of
Conversion") specifying the Loans to be so converted, the Type of Loans to be
converted into and, if to be converted into a Borrowing of Eurodollar Loans, the
Interest Period to be initially applicable thereto. The Agent shall give each
Bank prompt notice of any such proposed conversion affecting any of its Loans.
1.07 PRO RATA BORROWINGS. All Revolving Loans under this Agreement
shall be made by the Banks PRO RATA on the basis of their Adjusted Percentages.
It is understood that no Bank shall be responsible for any default by any other
Bank in its obligation to make Loans hereunder and that each Bank shall be
obligated to make the Loans provided to be made by it hereunder, regardless of
the failure of any other Bank to fulfill its commitments hereunder.
1.08 INTEREST. (a) The unpaid principal amount of each Base Rate
Loan shall bear interest from the date of the Borrowing thereof until maturity
(whether by acceleration or otherwise) at a rate per annum which shall at all
times be the Applicable Base Rate Margin plus the Base Rate in effect from time
to time.
(b) The unpaid principal amount of each Eurodollar Loan shall bear
interest from the date of the Borrowing thereof until maturity (whether by
acceleration or otherwise) at a rate per annum which shall at all times be the
Applicable Eurodollar Margin plus the relevant Eurodollar Rate.
(c) All overdue principal and, to the extent permitted by law,
overdue interest in respect of each Loan and any other overdue amount payable
hereunder shall bear interest at a rate per annum equal to the Base Rate in
effect from time to time plus the sum of (i) 2% and (ii) the Applicable Base
Rate Margin, provided that no Loan shall bear interest after maturity (whether
by acceleration or otherwise) at a rate per annum less than 2% plus the rate of
interest applicable thereto at maturity.
(d) Interest shall accrue from and including the date of any
Borrowing to but excluding the date of any repayment thereof and shall be
payable (i) in respect of each
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Base Rate Loan, quarterly in arrears on the last Business Day of each February,
May, August and November, (ii) in respect of each Eurodollar Loan, on the last
day of each Interest Period applicable thereto and, in the case of an Interest
Period of six months, on the date occurring three months after the first day of
such Interest Period and (iii) in respect of each Loan, on any prepayment or
conversion (other than the prepayment and conversion of Revolving Loans that are
Base Rate Loans) (on the amount prepaid or converted), at maturity (whether by
acceleration or otherwise) and, after such maturity, on demand.
(e) All computations of interest hereunder shall be made in
accordance with Section 12.07(b).
(f) The Agent, upon determining the interest rate for any Borrowing
of Eurodollar Loans for any Interest Period, shall promptly notify the Borrower
and the Banks thereof.
1.09 INTEREST PERIODS. (a) At the time the Borrower gives a Notice
of Borrowing or Notice of Conversion in respect of the making of, or conversion
into, a Borrowing of Eurodollar Loans (in the case of the initial Interest
Period applicable thereto) or prior to 10:00 A.M. (New York time) on the third
Business Day prior to the expiration of an Interest Period applicable to a
Borrowing of Eurodollar Loans, it shall have the right to elect by giving the
Agent written notice (or telephonic notice promptly confirmed in writing) of the
Interest Period applicable to such Borrowing, which Interest Period shall, at
the option of the Borrower, be a one, two, three or six month period.
Notwithstanding anything to the contrary contained above:
(i) the initial Interest Period for any Borrowing of Eurodollar Loans
shall commence on the date of such Borrowing (including the date of any
conversion from a Borrowing of Base Rate Loans) and each Interest Period
occurring thereafter in respect of such Borrowing shall commence on the day
on which the next preceding Interest Period expires;
(ii) if any Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period, such Interest Period shall end on the last Business Day of
such calendar month;
(iii) if any Interest Period would otherwise expire on a day which is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day, provided that if any Interest Period would
otherwise expire on a day which is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
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(iv) no Interest Period shall extend beyond the Expiry Date; and
(v) no Interest Period may be elected at any time when a violation of
Section 9.01 or an Event of Default is then in existence if the Agent or
the Required Banks have determined that such an election at such time would
be disadvantageous to the Banks.
(b) If upon the expiration of any Interest Period, the Borrower has
failed to (or may not) elect a new Interest Period to be applicable to the
respective Borrowing of Eurodollar Loans as provided above, the Borrower shall
be deemed to have elected to convert such Borrowing into a Borrowing of Base
Rate Loans effective as of the expiration date of such current Interest Period.
1.10 INCREASED COSTS, ILLEGALITY, ETC. (a) In the event that (x) in
the case of clause (i) below, the Agent or (y) in the case of clauses (ii) and
(iii) below, any Bank shall have determined (which determination shall, absent
manifest error, be final and conclusive and binding upon all parties hereto):
(i) on any date for determining the Eurodollar Rate for any Interest
Period that, by reason of any changes arising after the Restatement
Effective Date affecting the interbank Eurodollar market, adequate and fair
means do not exist for ascertaining the applicable interest rate on the
basis provided for in the definition of Eurodollar Rate; or
(ii) at any time, that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect to
any Eurodollar Loans (other than any increased cost or reduction in the
amount received or receivable resulting from the imposition of or a change
in the rate of taxes or similar charges) because of (x) any change since
the Restatement Effective Date in any applicable law, governmental rule,
regulation, guideline or order (or in the interpretation or administration
thereof and including the introduction of any new law or governmental rule,
regulation, guideline or order) (such as, for example, but not limited to,
a change in official reserve requirements, but, in all events, excluding
reserves required under Regulation D to the extent included in the
computation of the Eurodollar Rate) and/or (y) other circumstances
affecting such Bank, the interbank Eurodollar market or the position of
such Bank in such market; or
(iii) at any time, that the making or continuance of any Eurodollar Loan
has become unlawful by compliance by such Bank in good faith with any law,
governmental rule, regulation, guideline (or would conflict with any such
governmental rule, regulation, guideline or order not having the force of
law but with which such Bank customarily complies even though the failure
to comply therewith would not be
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<PAGE>
unlawful), or has become impracticable as a result of a contingency
occurring after the Restatement Effective Date which materially and
adversely affects the interbank Eurodollar market;
then, and in any such event, such Bank (or the Agent in the case of clause (i)
above) shall (x) on such date and (y) within ten Business Days of the date on
which such event no longer exists give notice (by telephone confirmed in
writing) to the Borrower and to the Agent of such determination (which notice
the Agent shall promptly transmit to each of the other Banks). Thereafter (x)
in the case of clause (i) above, Eurodollar Loans shall no longer be available
until such time as the Agent notifies the Borrower and the Banks that the
circumstances giving rise to such notice by the Agent no longer exist, and any
Notice of Borrowing or Notice of Conversion given by the Borrower with respect
to Eurodollar Loans which have not yet been incurred shall be deemed rescinded
by the Borrower, (y) in the case of clause (ii) above, the Borrower shall pay to
such Bank, upon written demand therefor, such additional amounts (in the form of
an increased rate of, or a different method of calculating, interest or
otherwise as such Bank in its sole discretion shall determine) as shall be
required to compensate such Bank for such increased costs or reductions in
amounts receivable hereunder (a written notice as to the additional amounts owed
to such Bank, showing the basis for the calculation thereof, submitted to the
Borrower by such Bank shall, absent manifest error, be final and conclusive and
binding upon all parties hereto) and (z) in the case of clause (iii) above, the
Borrower shall take one of the actions specified in Section 1.10(b) as promptly
as possible and, in any event, within the time period required by law.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the Borrower may (and
in the case of a Eurodollar Loan affected pursuant to Section 1.10(a)(iii) the
Borrower shall) either (i) if the affected Eurodollar Loan is then being made
pursuant to a Borrowing, cancel said Borrowing by giving the Agent telephonic
notice (confirmed promptly in writing) thereof on the same date that the
Borrower was notified by a Bank pursuant to Section 1.10(a)(ii) or (iii), or
(ii) if the affected Eurodollar Loan is then outstanding, upon at least three
Business Days' notice to the Agent, require the affected Bank to convert each
such Eurodollar Loan into a Base Rate Loan, provided that if more than one Bank
is affected at any time, then all affected Banks must be treated the same
pursuant to this Section 1.10(b).
(c) If any Bank shall have determined that after the Restatement
Effective Date, the adoption or effectiveness of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Bank with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
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reducing the rate of return on such Bank's capital or assets as a consequence of
its commitments or obligations hereunder to a level below that which such Bank
could have achieved but for such adoption, effectiveness, change or compliance
(taking into consideration such Bank's policies with respect to capital
adequacy), then from time to time, within 15 days after demand by such Bank
(with a copy to the Agent), the Borrower shall pay to such Bank such additional
amount or amounts as will compensate such Bank for such reduction. Each Bank,
upon determining in good faith that any additional amounts will be payable
pursuant to this Section 1.10(c), will give prompt written notice thereof to the
Borrower, which notice shall set forth the basis of the calculation of such
additional amounts, although the failure to give any such notice shall not
release or diminish any of the Borrower's obligations to pay additional amounts
pursuant to this Section 1.10(c) upon the subsequent receipt of such notice.
1.11 COMPENSATION. (a) The Borrower shall compensate each Bank,
upon its written request (which request shall set forth the basis for requesting
such compensation), for all reasonable losses, expenses and liabilities
(including, without limitation, any loss, expense or liability incurred by
reason of the liquidation or reemployment of deposits or other funds required by
such Bank to fund its Eurodollar Loans but excluding in any event the loss of
anticipated profits) which such Bank may sustain: (i) if for any reason (other
than a default by such Bank or the Agent) a Borrowing of Eurodollar Loans does
not occur on a date specified therefor in a Notice of Borrowing or Notice of
Conversion (whether or not withdrawn by the Borrower or deemed withdrawn
pursuant to Section 1.10(a)); (ii) if any prepayment, repayment or conversion of
any of its Eurodollar Loans occurs on a date which is not the last day of an
Interest Period applicable thereto; (iii) if any prepayment of any of its
Eurodollar Loans is not made on any date specified in a notice of prepayment
given by the Borrower; or (iv) as a consequence of (x) any other default by the
Borrower to repay its Eurodollar Loans when required by the terms of this
Agreement or (y) an election made pursuant to Section 1.10(b).
(b) Notwithstanding anything in this Agreement to the contrary, to
the extent any notice required by Section 1.10, 2.06 or 4.04 is given by any
Bank more than 180 days after such Bank obtained, or reasonably should have
obtained, knowledge of the occurrence of the event giving rise to the additional
costs of the type described in such Section, such Bank shall not be entitled to
compensation under Section 1.10, 2.06 or 4.04 for any amounts incurred or
accruing prior to the giving of such notice to the Borrower.
1.12 CHANGE OF LENDING OFFICE. Each Bank agrees that, upon the
occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or
(iii), 1.10(c), 2.06 or 4.04 with respect to such Bank, it will, if requested by
the Borrower, use reasonable efforts (subject to overall policy considerations
of such Bank) to designate another lending office for any Loans affected by such
event, provided that such designation is made on such terms that such Bank and
its lending office suffer no economic, legal or
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regulatory disadvantage, with the object of avoiding the consequence of the
event giving rise to the operation of any such Section. Nothing in this Section
1.12 shall affect or postpone any of the obligations of the Borrower or the
right of any Bank provided in Section 1.10, 2.06 or 4.04.
1.13 REPLACEMENT OF BANKS. (w) Upon any AF Bank being replaced under
Section 2.01 of the AF Credit Agreement, (x) upon the occurrence of any event
giving rise to the operation of Section 1.10(a)(ii) or (iii), Section 1.10(c),
Section 2.06 or Section 4.04 with respect to any Bank which results in such Bank
charging to the Borrower increased costs in excess of those being generally
charged by the other Banks, (y) if a Bank becomes a Defaulting Bank and/or (z)
in the case of a refusal by a Bank to consent to a proposed change, waiver,
discharge or termination with respect to this Agreement which has been approved
by the Required Banks or Super Majority Banks, as the case may be, as provided
in Section 12.12, the Borrower shall have the right, if no Default or Event of
Default then exists, to replace (and, in the case of clause (w) above, shall
replace) such Bank (the "Replaced Bank") with one or more other transferee or
transferees who shall be acceptable to the Agent and none of whom shall
constitute a Defaulting Bank at the time of such replacement (collectively, the
"Replacement Bank") reasonably acceptable to the Agent, provided that (i) any
Bank replaced pursuant to this Section 1.13 must also be replaced as an AF Bank
at the same time under Section 2.01 of the AF Credit Agreement by the same
Replacement Bank (and in the same pro rata amounts if more than one Replacement
Bank), (ii) any Bank that is replaced as an AF Bank pursuant to Section 2.01 of
the AF Credit Agreement must also be replaced at the same time as a Bank
hereunder by the same Replacement Bank (and in the same pro rata amounts if more
than one Replacement Bank), (iii) at the time of any replacement pursuant to
this Section 1.13, the Replacement Bank shall enter into one or more Assignment
Agreements pursuant to Section 12.04(b) (and with all fees payable pursuant to
said Section 12.04(b) to be paid by the Replacement Bank) pursuant to which the
Replacement Bank shall acquire all of the Revolving Commitment and outstanding
Revolving Loans of the Replaced Bank and, in connection therewith, shall pay to
the Replaced Bank in respect thereof an amount equal to the sum of (A) an amount
equal to the principal of, and all accrued interest on, all outstanding Loans of
the Replaced Bank and (B) an amount equal to all accrued, but theretofore
unpaid, Fees owing to the Replaced Bank pursuant to Section 3.01 and (iv) all
obligations of the Borrower owing to the Replaced Bank (other than those
specifically described in clause (i) above in respect of which the assignment
purchase price has been, or is concurrently being, paid) shall be paid in full
to such Replaced Bank concurrently with such replacement. Upon the execution of
the respective Assignment Agreements, the payment of amounts referred to in
clauses (iii) and (iv) above and, if so requested by the Replacement Bank,
delivery to the Replacement Bank of the appropriate Note executed by the
Borrower, the Replacement Bank shall become a Bank hereunder and the Replaced
Bank shall cease to constitute a Bank hereunder, except with respect to
indemnification provisions applicable to the Replaced Bank under this Agreement,
which shall survive as to such Replaced Bank.
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SECTION 2. LETTERS OF CREDIT.
2.01 LETTERS OF CREDIT. (a) Subject to and upon the terms and
conditions herein set forth, the Borrower may request that a Letter of Credit
Issuer at any time and from time to time on or after the Initial Borrowing Date
and prior to the Expiry Date to issue, for the account of the Borrower and in
support of such standby obligations of the Borrower that are acceptable to the
Agent (each such letter of credit a "Letter of Credit" and, collectively, the
"Letters of Credit"), and subject to and upon the terms and conditions herein
set forth the Letter of Credit Issuer agrees to issue from time to time,
irrevocable letters of credit denominated in U.S. dollars in such form as may be
approved by the Letter of Credit Issuer and the Agent. Each letter of credit
issued under the Original Credit Agreement by an institution that is a Bank
hereunder on the Restatement Effective Date and that remains outstanding on the
Restatement Effective Date (each an "Existing Letter of Credit") shall
constitute a "Letter of Credit" for all purposes of this Agreement and shall be
deemed issued, for purposes of Section 2.05(a), 3.01(b) and 3.01(c), on the
Restatement Effective Date.
(b) Notwithstanding the foregoing, (i) no Letter of Credit shall be
issued, the Stated Amount of which, when added to the Letter of Credit
Outstandings (exclusive of Unpaid Drawings which are repaid on the date of, and
prior to the issuance of, the respective Letter of Credit) at such time, would
exceed either (x) $5,000,000 or (y) when added to the aggregate principal amount
of all Revolving Loans made by Non-Defaulting Banks and Swingline Loans then
outstanding, the Adjusted Total Revolving Commitment at such time; and (ii) each
Letter of Credit shall have an expiry date occurring not later than one year
after such Letter of Credit's date of issuance (other than Existing Letters of
Credit) although any Letter of Credit may be extendable for successive periods
of up to 12 months, but not beyond the Business Day next preceding the Expiry
Date, on terms acceptable to the Letter of Credit Issuer and in no event shall
any Letter of Credit have an expiry date occurring later than the Business Day
next preceding the Expiry Date.
(c) Notwithstanding the foregoing, in the event a Bank Default
exists, the Letter of Credit Issuer shall not be required to issue any Letter of
Credit unless the Letter of Credit Issuer has entered into arrangements
satisfactory to it and the Borrower to eliminate the Letter of Credit Issuer's
risk with respect to the participation in Letters of Credit of the Defaulting
Bank or Banks, including by cash collateralizing such Defaulting Bank's or
Banks' Percentage of the Letter of Credit Outstandings.
2.02 MINIMUM STATED AMOUNT. The initial Stated Amount of each Letter
of Credit shall be not less than $25,000 or such lesser amount acceptable to the
Letter of Credit Issuer.
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2.03 LETTER OF CREDIT REQUESTS; NOTICES OF ISSUANCE. (a) Whenever
it desires that a Letter of Credit be issued after the Initial Borrowing Date,
the Borrower shall give the Agent and the Letter of Credit Issuer written notice
(including by way of telecopier) in the form of Exhibit A-2 thereof prior to
1:00 P.M. (New York time) at least three Business Days (or such shorter period
as may be acceptable to the Letter of Credit Issuer) prior to the proposed date
of issuance (which shall be a Business Day) (each a "Letter of Credit Request"),
which Letter of Credit Request shall include any other documents that the Letter
of Credit Issuer customarily requires in connection therewith.
(b) The Letter of Credit Issuer shall, promptly after each issuance
of a Letter of Credit by it, give the Agent, each Bank and the Borrower written
notice of the issuance of such Letter of Credit, accompanied by a copy to the
Agent of the Letter of Credit or Letters of Credit issued by it.
2.04 AGREEMENT TO REPAY LETTER OF CREDIT DRAWINGS. (a) The Borrower
hereby agrees to reimburse the Letter of Credit Issuer, by making payment to the
Agent at the Payment Office, for any payment or disbursement made by the Letter
of Credit Issuer under any Letter of Credit (each such amount so paid or
disbursed until reimbursed, an "Unpaid Drawing") immediately after, and in any
event on the date on which the Borrower is notified by the Letter of Credit
Issuer of such payment or disbursement with interest on the amount so paid or
disbursed by the Letter of Credit Issuer, to the extent not reimbursed prior to
1:00 P.M. (New York time) on the date of such payment or disbursement, from and
including the date paid or disbursed to but not including the date the Letter of
Credit Issuer is reimbursed therefor at a rate per annum which shall be the
Applicable Margin in excess of the Base Rate as in effect from time to time
(plus an additional 2% per annum if not reimbursed by the third Business Day
after the date of such notice of payment or disbursement), such interest also to
be payable on demand.
(b) The Borrower's obligation under this Section 2.04 to reimburse
the Letter of Credit Issuer with respect to Unpaid Drawings (including, in each
case, interest thereon) shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to payment
which the Borrower may have or have had against the Letter of Credit Issuer, the
Agent or any Bank, including, without limitation, any defense based upon the
failure of any drawing under a Letter of Credit to conform to the terms of the
Letter of Credit or any non-application or misapplication by the beneficiary of
the proceeds of such drawing; PROVIDED, HOWEVER, that the Borrower shall not be
obligated to reimburse the Letter of Credit Issuer for any wrongful payment made
by the Letter of Credit Issuer under a Letter of Credit as a result of acts or
omissions constituting willful misconduct or gross negligence on the part of the
Letter of Credit Issuer.
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2.05 LETTER OF CREDIT PARTICIPATIONS. (a) Immediately upon the
issuance by the Letter of Credit Issuer of any Letter of Credit, (and on the
Restatement Effective Date with respect to any Existing Letter of Credit), the
Letter of Credit Issuer shall be deemed to have sold and transferred to each
other Bank, and each such Bank (each a "Participant") shall be deemed
irrevocably and unconditionally to have purchased and received from such Letter
of Credit Issuer, without recourse or warranty, an undivided interest and
participation, to the extent of such Bank's Adjusted Percentage, in such Letter
of Credit, each substitute letter of credit, each drawing made thereunder and
the obligations of the Borrower under this Agreement with respect thereto
(although the Letter of Credit Fee shall be payable directly to the Agent for
the account of the Banks as provided in Section 3.01(b) and the Participants
shall have no right to receive any portion of any Facing Fees) and any security
therefor or guaranty pertaining thereto. Upon any change in the Revolving
Commitments or Adjusted Percentages of the Banks pursuant to Section 12.04(b) or
upon a Bank Default, it is hereby agreed that, with respect to all outstanding
Letters of Credit and Unpaid Drawings, there shall be an automatic adjustment to
the participations pursuant to this Section 2.05 to reflect the new Adjusted
Percentages of the assigning and assignee Bank or of all Banks, as the case may
be.
(b) In determining whether to pay under any Letter of Credit, the
Letter of Credit Issuer shall not have any obligation relative to the
Participants other than to determine that any documents required to be delivered
under such Letter of Credit have been delivered and that they substantially
comply on their face with the requirements of such Letter of Credit. Any action
taken or omitted to be taken by the Letter of Credit Issuer under or in
connection with any Letter of Credit if taken or omitted in the absence of gross
negligence or willful misconduct, shall not create for the Letter of Credit
Issuer any resulting liability.
(c) In the event that the Letter of Credit Issuer makes any payment
under any Letter of Credit and the Borrower shall not have reimbursed such
amount in full to the Letter of Credit Issuer pursuant to Section 2.04(a), the
Letter of Credit Issuer shall promptly notify the Agent, and the Agent shall
promptly notify each Participant of such failure, and each Participant shall
promptly and unconditionally pay to the Agent for the account of the Letter of
Credit Issuer, the amount of such Participant's Adjusted Percentage of such
payment in U.S. dollars and in same day funds; PROVIDED, HOWEVER, that no
Participant shall be obligated to pay to the Agent its Adjusted Percentage of
such unreimbursed amount for any wrongful payment made by the Letter of Credit
Issuer under a Letter of Credit as a result of acts or omissions constituting
willful misconduct or gross negligence on the part of the Letter of Credit
Issuer. If the Agent so notifies any Participant required to fund an Unpaid
Drawing under a Letter of Credit prior to 11:00 A.M. (New York time) on any
Business Day, such Participant shall make available to the Agent for the account
of the Letter of Credit Issuer such Participant's Adjusted Percentage of the
amount of such payment on such Business Day in same day funds. If and to the
extent such Participant
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shall not have so made its Adjusted Percentage of the amount of such Unpaid
Drawing available to the Agent for the account of the Letter of Credit Issuer,
such Participant agrees to pay to the Agent for the account of the Letter of
Credit Issuer, forthwith on demand such amount, together with interest thereon,
for each day from such date until the date such amount is paid to the Agent for
the account of the Letter of Credit Issuer at the overnight Federal Funds
Effective Rate. The failure of any Participant to make available to the Agent
for the account of the Letter of Credit Issuer its Adjusted Percentage of any
Unpaid Drawing under any Letter of Credit shall not relieve any other
Participant of its obligation hereunder to make available to the Agent for the
account of the Letter of Credit Issuer its Adjusted Percentage of any payment
under any Letter of Credit on the date required, as specified above, but no
Participant shall be responsible for the failure of any other
Participant to make available to the Agent for the account of the Letter of
Credit Issuer such other Participant's Adjusted Percentage of any such payment.
(d) Whenever the Letter of Credit Issuer receives a payment of a
reimbursement obligation as to which the Agent has received for the account of
the Letter of Credit Issuer any payments from the Participants pursuant to
clause (c) above, the Letter of Credit Issuer shall pay to the Agent and the
Agent shall promptly pay to each Participant which has paid its Adjusted
Percentage thereof, in U.S. dollars and in same day funds, an amount equal to
such Participant's Adjusted Percentage of the principal amount thereof and
interest thereon accruing at the overnight Federal Funds Effective Rate after
the purchase of the respective participations.
(e) The obligations of the Participants to make payments to the Agent
for the account of the Letter of Credit Issuer with respect to Letters of Credit
shall be irrevocable and not subject to counterclaim, set-off or other defense
or any other qualification or exception whatsoever (provided that no Participant
shall be required to make payments resulting from the Agent's gross negligence
or willful misconduct) and shall be made in accordance with the terms and
conditions of this Agreement under all circumstances, including, without
limitation, any of the following circumstances:
(i) any lack of validity or enforceability of this Agreement or any of
the other Credit Documents;
(ii) the existence of any claim, set-off, defense or other right which
the Borrower may have at any time against a beneficiary named in a Letter
of Credit, any transferee of any Letter of Credit (or any Person for whom
any such transferee may be acting), the Agent, the Letter of Credit Issuer,
any Bank or other Person, whether in connection with this Agreement, any
Letter of Credit, the transactions contemplated herein or any unrelated
transactions (including any underlying transaction between the Borrower and
the beneficiary named in any such Letter of Credit);
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(iii) any draft, certificate or other document presented under the
Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect;
(iv) the surrender or impairment of any security for the performance or
observance of any of the terms of any of the Credit Documents; or
(v) the occurrence of any Default or Event of Default.
(f) To the extent the Letter of Credit Issuer is not indemnified by
the Borrower, the Participants will reimburse and indemnify the Letter of Credit
Issuer, in proportion to their respective Adjusted Percentages, for and against
any and all liabilities, obligations, losses, damages, penalties, claims,
actions, judgments, costs, expenses or disbursements of whatsoever kind or
nature which may be imposed on, asserted against or incurred by the Letter of
Credit Issuer in performing its respective duties in any way relating to or
arising out of its issuance of Letters of Credit; PROVIDED that no Participants
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Letter of Credit Issuer's gross negligence or willful
misconduct.
2.06 INCREASED COSTS. If at any time after the Restatement Effective
Date, the adoption or effectiveness of any applicable law, rule or regulation,
or any change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by the Letter
of Credit Issuer or any Bank with any request or directive (whether or not
having the force of law) by any such authority, central bank or comparable
agency shall either (i) impose, modify or make applicable any reserve, deposit,
capital adequacy or similar requirement against Letters of Credit issued by the
Letter of Credit Issuer or such Bank's participation therein, or (ii) shall
impose on the Letter of Credit Issuer or any Bank any other conditions affecting
this Agreement, any Letter of Credit or such Bank's participation therein; and
the result of any of the foregoing is to increase the cost to the Letter of
Credit Issuer or such Bank of issuing, maintaining or participating in any
Letter of Credit, or to reduce the amount of any sum received or receivable by
the Letter of Credit Issuer or such Bank hereunder (other than any increased
cost or reduction in the amount received or receivable resulting from the
imposition of or a change in the rate of taxes or similar charges), then, upon
demand to the Borrower by the Letter of Credit Issuer or such Bank (a copy of
which notice shall be sent by the Letter of Credit Issuer or such Bank to the
Agent), the Borrower shall pay to the Letter of Credit Issuer or such Bank such
additional amount or amounts as will compensate the Letter of Credit Issuer or
such Bank for such increased cost or reduction. A certificate submitted to the
Borrower by the Letter of Credit Issuer or such Bank, as the case may be (a copy
of which certificate shall be sent by the Letter of Credit Issuer or such Bank
to the Agent),
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setting forth the basis for the determination of such additional
amount or amounts necessary to compensate the Letter of Credit Issuer or such
Bank as aforesaid shall be conclusive and binding on the Borrower absent
manifest error, although the failure to deliver any such certificate shall not
release or diminish any of the Borrower's obligations to pay additional amounts
pursuant to this Section 2.06 upon the subsequent receipt thereof.
SECTION 3. FEES; COMMITMENTS.
3.01 FEES. (a) The Borrower agrees to pay to the Agent a commitment
commission ("Commitment Commission") for the account of each Non-Defaulting Bank
for the period from and including the Restatement Effective Date to, but not
including, the Expiry Date, or, if earlier, the date upon which the Total
Revolving Commitment has been terminated, computed at a rate for each day equal
to 1/2 of 1% per annum on such Bank's Unutilized Revolving Commitment on such
day. Such Commitment Commission shall be due and payable in arrears on the last
Business Day of each February, May, August and November and on the Expiry Date,
or, if earlier, the date upon which the Total Revolving Commitment is
terminated.
(b) The Borrower agrees to pay to the Agent for the account of each
Non-Defaulting Bank pro rata on the basis of their respective Adjusted
Percentages, a fee in respect of each Letter of Credit (the "Letter of Credit
Fee") computed for each day at the rate equal to the Applicable Eurodollar
Margin then in effect on the Stated Amount of such Letter of Credit on such day.
Accrued Letter of Credit Fees shall be due and payable quarterly in arrears on
the last Business Day of each February, May, August and November of each year
and on the date upon which the Total Revolving Commitment is terminated.
(c) The Borrower agrees to pay to pay directly to the Letter of
Credit Issuer a fee in respect of each Letter of Credit (the "Facing Fee")
computed for each day at the rate of 1/4 of 1% per annum on the Stated Amount
of such Letter of Credit on such day provided that in no event shall the annual
Facing Fee be less than $500. Accrued Facing Fees shall be due and payable
quarterly in arrears on the last Business Day of each February, May, August and
November of each year and on the date upon which the Total Revolving Commitment
is terminated.
(d) The Borrower agrees to pay directly to the Letter of Credit
Issuer upon each issuance of, payment under, and/or amendment of, a Letter of
Credit such amount as shall at the time of such issuance, payment or amendment
be the administrative charge which the Letter of Credit Issuer is customarily
charging for issuances of, payments under or amendments of, letters of credit
issued by it.
(e) The Borrower shall pay to the Agent (x) on the Effective Date for
its own account and/or for distribution to the Banks such fees as heretofore
agreed by the
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Borrower and the Agent and (y) for its own account such other fees as agreed to
between the Borrower and the Agent, when and as due.
(f) All computations of Fees shall be made in accordance with Section
12.07(b).
3.02 VOLUNTARY REDUCTION OF COMMITMENTS. Upon at least three
Business Days' prior written notice (or telephonic notice confirmed in writing)
to the Agent at its Notice Office (which notice the Agent shall promptly
transmit to each of the Banks), the Borrower shall have the right, without
premium or penalty, to terminate or partially reduce the Unutilized Total
Revolving Commitment, provided that (x) any such termination shall apply to
proportionately and permanently reduce the Revolving Commitment of each Bank,
(y) no such reduction shall reduce any Non-Defaulting Bank's Revolving
Commitment to an amount that is less than the sum of (A) the outstanding
Revolving Loans of such Bank and (B) such Bank's Adjusted Percentage of
outstanding Swingline Loans and of Letter of Credit Outstandings and (z) any
partial reduction pursuant to this Section 3.02 shall be in the amount of at
least $1,000,000.
3.03 MANDATORY ADJUSTMENTS OF COMMITMENTS, ETC. The Total Revolving
Commitment shall terminate on the earlier of (x) the Expiry Date, (y) the
Acquisition Facility Termination Date and (z) the date on which any Change of
Control occurs.
SECTION 4. PAYMENTS.
4.01 VOLUNTARY PREPAYMENTS. The Borrower shall have the right to
prepay Loans in whole or in part, without premium or penalty, from time to time
on the following terms and conditions: (i) the Borrower shall give the Agent at
the Payment Office written notice (or telephonic notice promptly confirmed in
writing) of its intent to prepay the Loans, the amount of such prepayment and
(in the case of Eurodollar Loans) the specific Borrowing(s) pursuant to which
made, which notice shall be given by the Borrower at least one Business Day
prior to the date of such prepayment with respect to Base Rate Loans (other than
Swingline Loans, with respect to which notice may be given prior to 1:00 P.M. on
the date of prepayment) and two Business Days prior to the date of such
prepayment with respect to Eurodollar Loans, which notice shall promptly be
transmitted by the Agent to each of the Banks; (ii) each partial prepayment of
any Borrowing shall be in an aggregate principal amount of at least $500,000
and, if greater in an integral multiple of $100,000, provided that (x) Swingline
Loans may be prepaid in an aggregate amount of at least $250,000 and (y) no
partial prepayment of Eurodollar Loans made pursuant to a Borrowing shall reduce
the aggregate principal amount of the Eurodollar Loans outstanding pursuant to
such Borrowing to an amount less than the Minimum Borrowing Amount applicable
thereto; (iii) at the time of any prepayment of Eurodollar Loans pursuant to
this Section 4.01 on any date other than the last day of the Interest Period
applicable thereto, the
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Borrower shall pay the amounts required pursuant to Section 1.11; and (iv) each
prepayment in respect of any Loans made pursuant to a Borrowing shall be applied
PRO RATA among such Loans, provided, that at the Borrower's election in
connection with any prepayment of Revolving Loans pursuant to this Section 4.01,
such prepayment shall not be applied to any Revolving Loans of a Defaulting
Bank.
4.02 MANDATORY PREPAYMENTS.
(A) REQUIREMENTS:
(i) If on any date the sum of the aggregate outstanding principal
amount of Revolving Loans made by Non-Defaulting Banks, Swingline Loans and the
Letter of Credit Outstandings exceeds the Adjusted Total Revolving Commitment as
then in effect, the Borrower shall repay on such date the principal of Swingline
Loans, and if no Swingline Loans are or remain outstanding, Revolving Loans of
Non-Defaulting Banks, in an aggregate amount equal to such excess. If, after
giving effect to the repayment of all outstanding Swingline Loans and Revolving
Loans of Non-Defaulting Banks, the aggregate amount of Letter of Credit
Outstandings exceeds the Adjusted Total Revolving Commitment then in effect, the
Borrower shall pay to the Agent an amount in cash and/or Cash Equivalents equal
to such excess and the Agent shall hold such payment as security for the
obligations of the Borrower hereunder pursuant to a cash collateral agreement to
be entered into in form and substance satisfactory to the Agent (which shall
permit certain investments in Cash Equivalents satisfactory to the Agent, until
the proceeds are applied to the secured obligations).
(ii) If on any date the aggregate outstanding principal amount of the
Revolving Loans made by a Defaulting Bank exceeds the Revolving Commitment of
such Defaulting Bank, the Borrower shall repay principal of the Revolving Loans
of such Defaulting Bank in an amount equal to such excess.
(B) APPLICATION:
(a) With respect to each prepayment of Loans required by Section
4.02, the Borrower may designate the Types of Loans which are to be prepaid and
the specific Borrowing(s) pursuant to which made, provided that (i) Eurodollar
Loans may so be designated for prepayment pursuant to this Section 4.02 only on
the last day of an Interest Period applicable thereto unless all Eurodollar
Loans with Interest Periods ending on such date of required prepayment and all
Base Rate Loans have been paid in full; (ii) if any prepayment of Eurodollar
Loans made pursuant to a single Borrowing shall reduce the outstanding Loans
made pursuant to such Borrowing to an amount less than the Minimum Borrowing
Amount, such Borrowing shall be immediately converted into Base Rate Loans;
(iii) each prepayment of any Revolving Loans made by Non-Defaulting Banks
pursuant to a Bor-
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rowing shall be applied PRO RATA among such Revolving Loans; and (iv) each
prepayment of any Revolving Loans made by Defaulting Banks pursuant to a
Borrowing shall be applied PRO RATA among such Revolving Loans. In the absence
of a designation by the Borrower as described in the preceding sentence, the
Agent shall, subject to the above, make such designation in its sole discretion
with a view, but no obligation, to minimize breakage costs owing under Section
1.11.
4.03 METHOD AND PLACE OF PAYMENT. Except as otherwise specifically
provided herein, all payments under this Agreement shall be made to the Agent
for the ratable (based on its PRO RATA share) account of the Banks entitled
thereto, not later than 1:00 P.M. (New York time) on the date when due and shall
be made in immediately available funds and in lawful money of the United States
of America at the Payment Office, it being understood that written notice by the
Borrower to the Agent to make a payment from the funds in the Borrower's account
at the Payment Office shall constitute the making of such payment to the extent
of such funds held in such account. Any payments under this Agreement which are
made later than 1:00 P.M. (New York time) shall be deemed to have been made on
the next succeeding Business Day. Whenever any payment to be made hereunder
shall be stated to be due on a day which is not a Business Day, the due date
thereof shall be extended to the next succeeding Business Day and, with respect
to payments of principal, interest shall be payable during such extension at the
applicable rate in effect immediately prior to such extension.
4.04 NET PAYMENTS. (a) All payments made by the Borrower hereunder,
under any Note or any other Credit Document, will be made without setoff,
counterclaim or other defense. Except as provided for in Section 4.04(b), all
such payments will be made free and clear of, and without deduction or
withholding for, any present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by any
jurisdiction or by any political subdivision or taxing authority thereof or
therein (but excluding, except as provided in the second succeeding sentence,
any tax imposed on or measured by the net income (or any franchise tax) of a
Bank pursuant to the laws of the jurisdiction in which the principal office or
applicable lending office of such Bank is located or under the laws of any
political subdivision or taxing authority of any such jurisdiction in which the
principal office or applicable lending office of such Bank is located) and all
interest, penalties or similar liabilities with respect thereto (collectively,
"Taxes"). If any Taxes are so levied or imposed, the Borrower agrees to pay the
full amount of such Taxes and such additional amounts as may be necessary so
that every payment of all amounts due hereunder, under any Note or under any
other Credit Document, after withholding or deduction for or on account of any
Taxes, will not be less than the amount provided for herein or in such Note or
in such other Credit Document. If any amounts are payable in respect of Taxes
pursuant to the preceding sentence, then the Borrower shall also reimburse each
Bank, upon the written request of such Bank, for taxes imposed on or measured by
the net income of such Bank pursuant to the laws of the juris-
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diction in which the principal office or applicable lending office of such
Bank is located or of any political subdivision or taxing authority of any
such jurisdiction and for any withholding of income or similar taxes imposed
by the United States of America as such Bank shall determine are payable by,
or withheld from, such Bank in respect of Taxes paid to or on behalf of such
Bank pursuant to this or the preceding sentence. The Borrower will furnish
to the Agent within 45 days after the date the payment of any Taxes, or any
withholding or deduction on account thereof, is due pursuant to applicable
law certified copies of tax receipts evidencing such payment by the
Borrower. The Borrower will indemnify and hold harmless the Agent and each
Bank, and reimburse the Agent or such Bank upon its written request, for the
amount of any Taxes so levied or imposed and paid or withheld by such Bank.
(b) Each Bank which is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) for Federal income tax purposes
agrees (i) to provide to the Borrower on or prior to the Initial Borrowing Date
two original signed copies of Internal Revenue Service Form 4224 or Form 1001
certifying to such Bank's entitlement to a complete exemption from United States
withholding tax with respect to payments to be made under this Agreement, under
any Note and under any other Credit Document and (ii) that, (x) to the extent
legally entitled to do so, with respect to a Bank that is an assignee or
transferee of an interest under this Agreement pursuant to Section 12.04 hereof
(unless the respective Bank was already a Bank hereunder immediately prior to
such assignment or transfer), upon the date of such assignment or transfer to
such Bank, and (y) with respect to any Bank which is not a United States person
(as such term is defined in Section 7701(a)(30) of the Code) for U.S. Federal
income tax purposes (including, without limitation, any assignee or transferee),
from time to time, upon the reasonable request by the Borrower or the Agent
after the Restatement Effective Date, such Bank will provide to each of the
Borrower and the Agent two original signed copies of Internal Revenue Service
Form 4224 or Form 1001 (or any successor forms) certifying to such Bank's
entitlement to a complete exemption from, or reduction in, United States
withholding tax with respect to payments to be made under this Agreement, under
any Note and under any other Credit Document. Notwithstanding anything to the
contrary contained in Section 4.04(a), the Borrower shall be entitled, to the
extent it is required to do so by law, to deduct or withhold income or other
similar taxes imposed by the United States (or any political subdivision or
taxing authority thereof or therein) from interest, fees or other amounts
payable hereunder (without any obligation under Section 4.04(a) to pay the
respective Bank such taxes or any additional amounts with respect thereto) for
the account of any Bank which is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) for United States federal income tax
purposes and which has not provided to the Borrower such forms required to be
provided to the Borrower by a Bank pursuant to the first sentence of this
Section 4.04(b), provided that if the Borrower shall so deduct or withhold any
such taxes, it shall provide a statement to the Agent and such Bank, setting
forth the amount of such taxes so deducted or withheld, the applicable rate and
any other information or documenta-
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tion which such Bank may reasonably request for assisting such Bank in obtaining
any allowable credits or deductions for the taxes so deducted or withheld in the
jurisdiction or jurisdictions in which such Bank is subject to tax.
Notwithstanding anything to the contrary contained in the preceding sentence,
the Borrower agrees to indemnify each Bank in the manner set forth in Section
4.04(a) in respect of any amounts deducted or withheld by it as described in the
previous sentence as a result of any changes after the Restatement Effective
Date in any applicable law, treaty, governmental rule, regulation, guideline or
order, or in the interpretation thereof, relating to the deducting or
withholding of income or similar Taxes.
SECTION 5. CONDITIONS.
5.01 RESTATEMENT EFFECTIVE DATE. This Agreement shall become
effective on the date (the "Restatement Effective Date") on which all the
following conditions are first satisfied:
(A) EXECUTION OF AGREEMENT. (i) This Agreement shall have been
executed as provided in Section 12.10 and (ii) there shall have been delivered
to the Agent for the account of each Bank the appropriate Revolving Note and, in
the case of BTCo, Swingline Note, in each case, executed by the Borrower, and in
the amount, maturity and as otherwise provided herein.
(B) OFFICER'S CERTIFICATE. On the Restatement Effective Date, the
Agent shall have received a certificate dated such date signed by the President
or any Vice President of the Borrower stating that all of the applicable
conditions set forth in Sections 5.01(G) and (H) and 5.02 exist as of such date.
(C) OPINIONS OF COUNSEL. On the Restatement Effective Date, the
Agent shall have received opinions, addressed to the Agent, and each of the
Banks and dated the Restatement Effective Date, from (i) Winston & Strawn,
counsel to the Borrower, which opinion shall cover the matters contained in
Exhibit C-1 to the AF Credit Agreement, (ii) White & Case, special counsel to
the Agent, which opinion shall cover the matters contained in Exhibit C-2 to the
AF Credit Agreement and (iii) such local counsel, if any, satisfactory to the
Agent as the Agent may request, which opinions shall cover the perfection of the
security interests granted pursuant to the Security Documents and such other
matters incident to the transactions contemplated herein as the Agent may
reasonably request and shall be in form and substance satisfactory to the Agent.
(D) CORPORATE PROCEEDINGS. (a) On the Restatement Effective Date,
the Agent shall have received from the Borrower a certificate, dated the
Restatement Effective Date, signed by the President or any Vice-President of the
Borrower in the form of Exhibit D to the AF Credit Agreement with appropriate
insertions and deletions, together
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with copies of the certificate of formation, the by-laws, or other
organizational documents of the Borrower and the resolutions, or such other
administrative approval, of the Borrower referred to in such certificate and all
of the foregoing (including each such certificate of formation, certificate of
incorporation and by-laws) shall be satisfactory to the Agent.
(b) On the Restatement Effective Date, all corporate and legal
proceedings and all instruments and agreements in connection with the
transactions contemplated by this Agreement and the other Documents shall be
satisfactory in form and substance to the Agent, and the Agent shall have
received all information and copies of all certificates, documents and papers,
including good standing certificates and any other records of corporate
proceedings and governmental approvals, if any, which the Agent may have
requested in connection therewith, such documents and papers, where appropriate,
to be certified by proper corporate or governmental authorities.
(E) ADVERSE CHANGE, ETC. From August 21, 1996 to the Restatement
Effective Date, nothing shall have occurred (and neither the Banks nor the Agent
shall have become aware of any facts or conditions not previously known) which
the Agent or the Required Banks shall determine (a) has, or is reasonably likely
to have, a material adverse effect on the rights or remedies of the Banks or the
Agent, or on the ability of the Borrower to perform its obligations to them, or
(b) has, or is reasonably likely to have, a Material Adverse Effect.
(F) LITIGATION. On the Restatement Effective Date, there shall be no
actions, suits or proceedings pending or threatened (a) with respect to this
Agreement or any other Document or the transactions contemplated hereby or
thereby (including the Transaction) or (b) which the Agent or the Required Banks
shall determine has, or is reasonably likely to have (i) a Material Adverse
Effect or (ii) a material adverse effect on the rights or remedies of the Banks
hereunder or under any other Credit Document or on the ability of the Borrower
to perform its obligations to the Banks hereunder or under any other Credit
Document or upon the ability of the parties to consummate the Transaction.
(G) APPROVALS. On the Restatement Effective Date, all material
necessary governmental and third party approvals in connection with the
transactions contemplated by the Credit Documents and the other Transaction
Documents and otherwise referred to herein or therein shall have been obtained
and remain in effect, and all applicable waiting periods shall have expired
without any action being taken by any competent authority which restrains or
prevents such transactions or imposes, in the reasonable judgment of the
Required Banks or the Agent, materially adverse conditions upon the consummation
of such transactions. In addition, the Agent shall have received evidence
satisfactory to it that all permits, leases, licenses and consents material to
the operations of OAH and its Subsidiaries and of the Borrower and its
Subsidiaries shall remain in effect after giving effect to the Transaction
and/or shall have been obtained.
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(H) ACQUISITION. On or prior to the Restatement Effective Date,
there shall have been delivered to the Banks true and complete copies of the
Acquisition Documents and all terms of the Acquisition Agreement and of the
other Acquisition Documents shall be reasonably satisfactory to the Agent. Each
of the conditions precedent to the obligation of the Borrower to consummate the
Acquisition shall have been satisfied, or waived, all to the reasonable
satisfaction of the Agent and the Borrower shall have consummated the
Acquisition in accordance with the Acquisition Agreement and all applicable
laws, rules and regulations and all Indebtedness of OAH and its Subsidiaries
pursuant to their existing credit arrangement shall have been repaid in full.
(I) SECURITY DOCUMENTS. (a) On the Restatement Effective Date, the
Borrower shall have duly authorized, executed and delivered the Borrower Pledge
Agreement, and shall have delivered to the Collateral Agent, as pledgee
thereunder, all of the certificates representing the Pledged Securities referred
to therein, accompanied by executed and undated stock powers, and the Borrower's
Pledge Agreement shall be in full force and effect.
(b) On the Restatement Effective Date, the Borrower and shall have
duly authorized, executed and delivered the Security Agreement covering all of
the Borrower's present and future Security Agreement Collateral.
(c) On the Restatement Effective Date, each of the Designated UOH
Stockholders shall have each duly authorized, executed and delivered the UOH
Pledge Agreement (which shall terminate on the Guaranty Commencement Date and
the execution and delivery of the Holdings Guaranty and the Holdings Pledge
Agreement) and shall have delivered to the Collateral Agent, as pledgee
thereunder, all of the certificates representing the Pledged Securities referred
to therein, accompanied by executed and undated stock powers, and each of the
UOH Pledge Agreement shall be in full force and effect.
(d) On the Restatement Effective Date, the Agent shall have received
(x) such executed amendments (in form and substance reasonably satisfactory to
the Agent) to the Mortgages created pursuant to the Original Credit Agreement
(as so amended, if at all, each a "Mortgage" and collectively, the "Mortgages")
covering all the Mortgaged Properties as the Agent deems necessary or
appropriate to give effect to the transactions contemplated by this Agreement,
and arrangements reasonably satisfactory to the Collateral Agent shall be in
place to provide that counterparts of such amendments shall be recorded on the
Restatement Effective Date or within one Business Day thereafter in all places
where the original Mortgages were filed and (y) such endorsements, if any, to
the Mortgage Policies delivered under the Original Credit Agreement with respect
to the Mortgages as the Agent deems appropriate.
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(J) SOLVENCY. On the Restatement Effective Date, the Borrower shall
have delivered, or shall cause to be delivered to the Agent a solvency letter in
the form of Exhibit H to the AF Credit Agreement from the Chief Financial
Officer of the Borrower and acceptable in form and substance to the Agent.
(K) FEES. On the Restatement Effective Date, the Borrower shall have
paid to the Agent and the Banks all Fees and expenses agreed upon by such
parties to be paid on or prior to such date.
(L) ENVIRONMENTAL REPORTS. On or prior to the Restatement Effective
Date, the Agent shall have received environmental reports from Persons
reasonably satisfactory to the Agent covering the properties of OAH and its
Subsidiaries (other than properties that are solely sign locations), which
reports shall be reasonably satisfactory to the Agent.
(M) AF CREDIT AGREEMENT. On the Restatement Effective Date, the
Restatement Effective Date under and as defined in the AF Credit Agreement shall
have occurred (or would be required to occur in the absence of the condition
specified in Section 5.01(m) of the AF Credit Agreement) and the Acquisition
Facility Termination Date shall not have occurred.
(N) ADJUSTED EBITDA. On or prior to the Restatement Effective Date,
the Agent shall have received evidence satisfactory to it that Holdings and its
Subsidiaries plus OAH and its Subsidiaries shall have attained on a combined
basis an Adjusted EBITDA of at least $57 million for the 12 months ended August
31, 1996.
(O) ORIGINAL CREDIT AGREEMENT. On the Restatement Effective Date and
concurrently with any borrowing hereunder, on such date, the Borrower shall have
(i) repaid all Loans outstanding thereunder, (ii) terminated all letters of
credit issued thereunder (other than the Existing Letters of Credit) and (iii)
paid all accrued but unpaid interest, costs (including pursuant to Section 1.11
thereof) and fees under the Original Credit Agreement, whether or not otherwise
then due and payable.
5.02 CREDIT EVENTS. The obligations of the Banks to make each Loan
and of the Letter of Credit Issuers to issue each Letter of Credit is subject,
at the time thereof, to the satisfaction of the following conditions:
(A) NOTICE. The appropriate Notice of Borrowing, other borrowing
notice or Letter of Credit Request shall have been received by the Agent.
(B) NO DEFAULT; REPRESENTATIONS AND WARRANTIES. At the time of each
Credit Event and also after giving effect thereto, (i) there shall exist no
Default or Event of
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Default and (ii) all representations and warranties contained herein or in the
other Credit Documents in effect at such time shall be true and correct in all
material respects with the same effect as though such representations and
warranties had been made on and as of the date of such Credit Event, except to
the extent that such representations and warranties expressly relate to an
earlier date.
(C) TESTED BORROWINGS. At the time of incurring any Tested
Borrowing, each of the covenants set forth in Sections 8.11 through 8.15 shall
have been satisfied as of, and no Event of Default under Section 9.08(B) or (C)
shall exist as of, the Measurement Date relating to such Tested Borrowing
determined on a PRO FORMA basis as if such Tested Borrowing occurred on such
Measurement Date, and in the case of a Tested Borrowing financing a Permitted
Acquisition, such Permitted Acquisition was consummated on the first day of the
12-month period ending on such Measurement Date.
The acceptance of the benefits of each Credit Event shall constitute a
representation and warranty by the Borrower to the Agent and each of the Banks
that all of the applicable conditions specified above exist as of that time.
All of the certificates, legal opinions and other documents and papers referred
to in Section 5.01, unless otherwise specified, shall be delivered to the Agent
at its Notice Office for the account of each of the Banks and, except for the
Notes, in sufficient counterparts for each of the Banks and shall be
satisfactory in form and substance to the Agent.
SECTION 6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. In order to
induce the Banks to enter into this Agreement and to make the Loans, the
Borrower makes the following representations and warranties to, and agreements
with, the Banks, all of which shall survive the execution and delivery of this
Agreement and the making of the Loans (with all representations and warranties
made as of the Restatement Effective Date to be made giving effect to the
Transaction).
6.01 CORPORATE STATUS. Each of Holdings, the Borrower and its
Subsidiaries (i) is a duly organized and validly existing corporation in good
standing under the laws of the jurisdiction of its organization and has the
corporate power and authority to own its property and assets and to transact the
business in which it is engaged and presently proposes to engage and (ii) has
duly qualified and is authorized to do business and is in good standing in all
jurisdictions where it is required to be so qualified and where the failure to
be so qualified would have a Material Adverse Effect.
6.02 CORPORATE POWER AND AUTHORITY. Each Credit Party has the
corporate power and authority to execute, deliver and carry out the terms and
provisions of the Transaction Documents to which it is a party and has taken all
necessary corporate action to authorize the execution, delivery and performance
of the Transaction Documents to which it is a party. Each Credit Party has duly
executed and delivered each Transaction
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Document to which it is a party and each such Transaction Document constitutes
the legal, valid and binding obligation of such Credit Party enforceable in
accordance with its terms.
6.03 NO VIOLATION. Neither the execution, delivery and performance
by any Credit Party of the Transaction Documents to which it is a party nor
compliance with the terms and provisions thereof, nor the consummation of the
transactions contemplated therein (i) will contravene any applicable provision
of any law, statute, rule, regulation, order, writ, injunction or decree of any
court or governmental instrumentality, (ii) will conflict or be inconsistent
with or result in any breach of, any of the terms, covenants, conditions or
provisions of, or constitute a default under, or (other than pursuant to the
Security Documents) result in the creation or imposition of (or the obligation
to create or impose) any Lien upon any of the property or assets of any Credit
Party or any of its Subsidiaries pursuant to the terms of any indenture,
mortgage, deed of trust, agreement or other instrument to which Holdings, the
Borrower or any of its Subsidiaries is a party or by which it or any of its
property or assets are bound or to which it may be subject or (iii) will violate
any provision of the Charter or By-Laws of any Credit Party or any of its
Subsidiaries.
6.04 LITIGATION. There are no actions, suits or proceedings pending
or, to the Borrower's knowledge, threatened with respect to the Borrower or any
of its Subsidiaries (i) that are likely to have a Material Adverse Effect or
(ii) that could reasonably be expected to have a material adverse effect on the
rights or remedies of the Banks or on the ability of the Borrower to perform its
obligations to them hereunder and under the other Credit Documents.
6.05 USE OF PROCEEDS; MARGIN REGULATIONS. (a) The proceeds of all
Loans may be used (i) to refinance on the Restatement Effective Date any
outstandings under the Original Credit Agreement and (ii) for the general
corporate and working capital purposes of the Borrower and its Subsidiaries.
(b) Neither the making of any Loan hereunder, nor the use of the
proceeds thereof, will violate or be inconsistent with the provisions of
Regulation G, T, U or X of the Board of Governors of the Federal Reserve System
and no part of the proceeds of any Loan will be used to purchase or carry any
Margin Stock in violation of Regulation U or to extend credit for the purpose of
purchasing or carrying any Margin Stock.
6.06 GOVERNMENTAL APPROVALS. Except for filings and recordings in
connection with the Security Documents, [and those items listed on Annex III],
no order, consent, approval, license, authorization, or validation of, or
filing, recording or registration with, or exemption by, any foreign or domestic
governmental or public body or authority, or any subdivision thereof, that has
not been obtained or made is required to authorize or is required in connection
with (i) the execution, delivery and performance of
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any Transaction Document or (ii) the legality, validity, binding effect or
enforceability of any Credit Document.
6.07 INVESTMENT COMPANY ACT. None of Holdings, the Borrower nor any
of its Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
6.08 PUBLIC UTILITY HOLDING COMPANY ACT. None of Holdings, the
Borrower or any of its Subsidiaries is a "holding company," or a "subsidiary
company" of a "holding company," or an "affiliate" of a "holding company," or of
a "subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
6.09 TRUE AND COMPLETE DISCLOSURE. All factual information (taken as
a whole) heretofore or contemporaneously furnished by or on behalf of Holdings,
the Borrower or any of its Subsidiaries in writing to the Agent or any Bank for
purposes of or in connection with this Agreement or any transaction contemplated
herein is, and all other such factual information (taken as a whole) hereafter
furnished by or on behalf of any such Person in writing to any Bank will be,
true and accurate in all material respects on the date as of which such
information is dated or certified and not incomplete by omitting to state any
material fact necessary to make such information (taken as a whole) not
misleading at such time in light of the circumstances under which such
information was provided. The projections and PRO FORMA financial information
contained in such materials are based on good faith estimates and assumptions
believed by such Persons to be reasonable at the time made, it being recognized
by the Banks that such projections as to future events are not to be viewed as
facts and that actual results during the period or periods covered by any such
projections may differ from the projected results. There is no fact known to
the Borrower which would have a Material Adverse Effect, which has not been
disclosed herein or in such other documents, certificates and statements
furnished to the Banks for use in connection with the transactions contemplated
hereby.
6.10 FINANCIAL CONDITION; FINANCIAL STATEMENTS. (a) On and as of
the Restatement Effective Date, on a PRO FORMA basis after giving effect to the
Transaction and to all Indebtedness incurred, and to be incurred, and Liens
created, and to be created, in connection therewith, (x) the sum of the assets,
at a fair valuation, of the Borrower and its Subsidiaries, and of Holdings and
is Subsidiaries, taken as a whole will exceed their debts, (y) the Borrower and
its Subsidiaries, and Holdings and its Subsidiaries, taken as a whole will not
have incurred or intended to, or believe that they will, incur debts beyond
their ability to pay such debts as such debts mature and (z) the Borrower and
its Subsidiaries, and Holdings and its Subsidiaries, taken as a whole will not
have unreasonably small capital with which to conduct their business. For
purposes of this Section 6.10, "debt" means any
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liability on a claim, and "claim" means (i) right to payment whether or not such
a right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or
unsecured; or (ii) right to an equitable remedy for breach of performance if
such breach gives rise to a
payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured.
(b) (i) The consolidated balance sheet of Holdings and of the
Borrower at December 31, 1994 and December 31, 1995 and at June 30, 1996 and the
related consolidated statements of operations and cash flows of Holdings and of
the Borrower for the fiscal years or six months ended as of said dates, which,
in the case of the annual financial statements, have been examined by Price
Waterhouse LLP, independent certified public accountants, who delivered an
unqualified opinion in respect therewith, (ii) the Financial Statements (as
defined in the Acquisition Agreement) of OAH and its Subsidiaries and (iii) the
PRO FORMA consolidated balance sheet of the Borrower as of June 30, 1996, copies
of which have heretofore been furnished to each Bank, present fairly the
financial position of such entities at the dates of said statements and the
results for the period covered thereby (or, in the case of the PRO FORMA balance
sheet, presents a good faith estimate of the consolidated PRO FORMA financial
condition of the Borrower (after giving effect to the Transaction and the
related financing thereof) at the date thereof) in accordance with GAAP, except
to the extent provided in the notes to said financial statements. All such
financial statements (other than the aforesaid PRO FORMA balance sheets) have
been prepared in accordance with generally accepted accounting principles and
practices consistently applied except to the extent provided in the notes to
said financial statements. Except for the incurrence of Indebtedness to finance
the Acquisition, nothing has occurred since December 31, 1995 that has had or
could reasonably be expected to have a Material Adverse Effect.
(c) Except as reflected in the financial statements and the notes
thereto described in Section 6.10(b), there were as of the Effective Date no
liabilities or obligations with respect to Holdings, the Borrower or any of its
Subsidiaries of a nature (whether absolute, accrued, contingent or otherwise and
whether or not due) which, either individually or in aggregate, would be
material to the Borrower and its Subsidiaries, and to Holdings and its
Subsidiaries, taken as a whole, except as incurred in the ordinary course of
business consistent with past practices subsequent to December 31, 1995 and
except for the Indebtedness incurred pursuant to the AF Credit Agreement
(including prior to the amendment and restatement thereof) or to finance the
Acquisition.
6.11 SECURITY INTERESTS. On and after the Restatement Effective Date
(or the date of the execution and delivery thereof, in the case of all
Additional Security Documents), each of the Security Documents create, as
security for the Obligations purported to be secured thereby, a valid and
enforceable perfected security interest in and
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Lien on all of the Collateral subject thereto, superior to and prior to the
rights of all third Persons and subject to no other Liens (except (x) that
the Security Agreement Collateral may be subject to the security interests
evidenced by Permitted Liens relating thereto and (y) the Mortgaged
Properties may be subject to Permitted Encumbrances relating thereto), in
favor of the Collateral Agent for the benefit of the Banks. No filings or
recordings are required in order to perfect the security interests created
under any Security Document except for filings or recordings required in
connection with any such Security Document (other than the Pledge Agreements)
which shall have been made upon or prior to (or are the subject of
arrangements, satisfactory to the Agent, for filing on or promptly after the
date of) the execution and delivery thereof.
6.12 REPRESENTATIONS AND WARRANTIES IN TRANSACTION DOCUMENTS. All
representations and warranties set forth in the Transaction Documents were true
and correct in all material respects as of the time such representations and
warranties were made and shall be true and correct in all material respects as
of the Restatement Effective Date as if such representations and warranties were
made on and as of such date, unless stated to relate to a specific earlier date,
in which case such representations and warranties shall be true and correct in
all material respects as of such earlier date.
6.13 CONSUMMATION OF TRANSACTION. As of the Restatement Effective
Date, the Transaction shall have been consummated in accordance with the terms
and conditions of the Transaction Documents and all applicable laws. All
applicable waiting periods with respect thereto have or, prior to the time when
required, will have, expired without, in all such cases, any action being taken
by any competent authority which restrains, prevents, or imposes material
adverse conditions upon the consummation of the Transaction. As of the
Restatement Effective Date, there does not exist any judgment, order, or
injunction prohibiting the consummation of the Transaction, or the making of
Loans or the performance by the Borrower of its obligations under the Documents.
6.14 TAX RETURNS AND PAYMENTS. Each of Holdings, the Borrower and
its Subsidiaries has filed all federal income tax returns and all other material
tax returns, domestic and foreign, required to be filed by it and has paid all
material taxes and assessments payable by it which have become due, other than
those not yet delinquent and except for those contested in good faith.
Holdings, the Borrower and its Subsidiaries have paid, or have provided adequate
reserves (in the good faith judgment of the management of the Borrower) for the
payment of, all federal, state and foreign income taxes applicable for all prior
fiscal years and for the current fiscal year to the date hereof.
6.15 COMPLIANCE WITH ERISA. Each Plan is in substantial compliance
with ERISA and the Code; no Reportable Event has occurred with respect to a
Plan; no Plan is insolvent or in reorganization; no Plan has an Unfunded Current
Liability; no Plan has an accumulated or waived funding deficiency, has
permitted decreases in its funding standard
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account or has applied for an extension of any amortization period within the
meaning of Section 412 of the Code; neither the Borrower, nor any Subsidiary
nor any ERISA Affiliate has incurred any material liability to or on account
of a Plan pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064,
4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971, 4975 or 4980
of the Code or expects to incur any liability (including any indirect,
contingent or secondary liability) under any of the foregoing Sections with
respect to any Plan; no proceedings have been instituted to terminate or
appoint a trustee to administer any Plan; no condition exists which presents
a material risk to the Borrower or any Subsidiary or any ERISA Affiliate of
incurring a liability to or on account of a Plan pursuant to the foregoing
provisions of ERISA and the Code; using actuarial assumptions and computation
methods consistent with Part 1 of subtitle E of Title IV of ERISA, the
aggregate liabilities of the Borrower and its Subsidiaries and its ERISA
Affiliates to all Plans which are multiemployer plans (as defined in Section
4001(a)(3) of ERISA) in the event of a complete withdrawal therefrom, as of
the close of the most recent fiscal year of each such Plan ended prior to the
date of the most recent Credit Event, would not exceed $150,000; no lien
imposed under the Code or ERISA on the assets of the Borrower or any
Subsidiary or any ERISA Affiliate exists or is likely to arise on account of
any Plan; and Holdings, the Borrower and its Subsidiaries do not maintain or
contribute to any employee welfare benefit plan (as defined in Section 3(1)
of ERISA) which provides benefits to retired employees (other than as
required by Section 601 of ERISA) or any employee pension benefit plan (as
defined in Section 3(2) of ERISA), except to the extent that all events
described in the preceding clauses of this Section 6.15 and then in existence
would not, in the aggregate, have or be likely to have a Material Adverse
Effect. With respect to Plans that are multiemployer plans (within the
meaning of Section 4001(a)(3) of ERISA) the representations and warranties in
this Section 6.15 are made to the best knowledge of the Borrower.
6.16 SUBSIDIARIES. (a) Annex IV hereto lists each Subsidiary of the
Borrower existing on the Restatement Effective Date. The Borrower owns 100% of
the outstanding capital stock of each such Subsidiary. The Borrower will at all
times own directly 100% of the outstanding capital stock of all of said entities
except to the extent otherwise permitted pursuant to Section 8.02.
(b) There are no restrictions on the Borrower or any of its
Subsidiaries which prohibit or otherwise restrict the transfer of cash or other
assets from any Subsidiary of the Borrower to the Borrower, other than
prohibitions or restrictions existing under or by reason of (i) this Agreement,
the other Credit Documents, the AF Credit Agreement, the Senior Notes and the
Discount Notes, (ii) applicable law, (iii) customary non-assignment provisions
entered into in the ordinary course of business and consistent with past
practices, (iv) any restriction or encumbrance with respect to a Subsidiary of
the Borrower imposed pursuant to an agreement which has been entered into for
the sale or disposition of all or substantially all of the capital stock or
assets of such Subsidiary, so long as such sale or
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disposition is permitted under this Agreement, and (v) any documents or
instruments governing the terms of any Indebtedness or other obligations secured
by Liens permitted by Section 8.03, provided that such prohibitions or
restrictions apply only to the assets subject to such Liens.
6.17 PATENTS, ETC. The Borrower and each of its Subsidiaries have
obtained all material patents, trademarks, service marks, trade names,
copyrights, licenses and other rights, free from burdensome restrictions, that
are necessary for the operation of their businesses taken as a whole as
presently conducted and as proposed to be conducted.
6.18 POLLUTION AND OTHER REGULATIONS. (a) Each of Holdings, the
Borrower and its Subsidiaries is in compliance with all Environmental Laws
governing its business for which failure to comply is reasonably likely to have
a Material Adverse Effect, and neither Holdings, the Borrower nor any of its
Subsidiaries is liable for any material penalties, fines or forfeitures for
failure to comply with any of the foregoing in the manner set forth above. All
licenses, permits, registrations or approvals required for the business of the
Borrower and each of its Subsidiaries, as conducted as of the Restatement
Effective Date, under any Environmental Law have been secured and the Borrower
and each of its Subsidiaries is in substantial compliance therewith, except such
licenses, permits, registrations or approvals the failure to secure or to comply
therewith is not likely to have a Material Adverse Effect. Neither Holdings,
the Borrower nor any of its Subsidiaries is in noncompliance with, breach of or
default under any applicable writ, order, judgment, injunction, or decree to
which Holdings, the Borrower or such Subsidiary is a party or which would affect
the ability of the Borrower or such Subsidiary to operate any real property and
no event has occurred and is continuing which, with the passage of time or the
giving of notice or both, would constitute noncompliance, breach of or default
thereunder, except in each such case, such noncompliance, breaches or defaults
as are not likely to, in the aggregate, have a Material Adverse Effect. There
are as of the Restatement Effective Date no Environmental Claims pending or, to
the best knowledge of the Borrower, threatened, which (a) challenge the
validity, term or entitlement of the Borrower or any of its Subsidiaries for any
permit, license, order or registration required for the operation of any
facility under the Environmental Laws which the Borrower or any of its
Subsidiaries operates and (b) wherein an unfavorable decision, ruling or finding
would be reasonably likely to have a Material Adverse Effect. There are no
facts, circumstances, conditions or occurrences concerning Holdings, the
Borrower or any of its Subsidiaries, any of their operations or on any Real
Property or, to the knowledge of the Borrower, on any property adjacent to any
such Real Property that could reasonably be expected (i) to form the basis of an
Environmental Claim against the Borrower, any of its Subsidiaries or any Real
Property of the Borrower or any of its Subsidiaries, or (ii) to cause such Real
Property to be subject to any restrictions on the ownership, occupancy, use or
transferability of such Real Property under any Environmental Law, except in
each such
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case, such Environmental Claims or restrictions that individually or
in the aggregate are not reasonably likely to have a Material Adverse Effect.
(b) Hazardous Materials have not at any time been (i) generated,
used, treated or stored on, or transported to or from, any Real Property of the
Borrower or any of its Subsidiaries or (ii) released on any Real Property, in
each case where such occurrence or event individually or in the aggregate is
reasonably likely to have a Material Adverse Effect.
6.19 PROPERTIES. The Borrower and each of its Subsidiaries have good
and marketable title to all properties owned by them, including all property
reflected in the consolidated balance sheet of the Borrower and its
Subsidiaries, and the Financial Statements, referred to in Section 6.10(b), free
and clear of all Liens, other than (i) as referred to in the consolidated
balance sheet, or the Financial Statements, or, in either case, in the notes
thereto or (ii) otherwise permitted by Section 8.03. Annex V contains a true
and complete list of each Real Property owned or leased by the Borrower or any
of its Subsidiaries on the Restatement Effective Date (other than properties
that are purely sign locations) and the type of interest therein held by the
Borrower or the respective Subsidiary. Holdings owns no properties or assets
(other than the Tax Sharing Agreement) other than all of the capital stock of
the Borrower.
6.20 LABOR RELATIONS. Holdings, the Borrower and its Subsidiaries
are not engaged in any unfair labor practice that could reasonably be expected
to have a Material Adverse Effect. There is (i) no unfair labor practice
complaint pending against Holdings, the Borrower or any of its Subsidiaries or
threatened against any of them, before the National Labor Relations Board, and
no grievance or arbitration proceeding arising out of or under any collective
bargaining agreement is so pending against any of them or threatened against any
of them, (ii) no strike, labor dispute, slowdown or stoppage pending against
Holdings, the Borrower or any of its Subsidiaries or threatened against any of
them and (iii) no union representation question existing with respect to the
employees of Holdings, the Borrower or any of its Subsidiaries and no union
organizing activities are taking place, except with respect to any matter
specified in clause (i), (ii) or (iii) above, either individually or in the
aggregate, such as is not reasonably likely to have a Material Adverse Effect.
6.21 EXISTING INDEBTEDNESS. Annex VI sets forth a true and complete
list of all Indebtedness of Holdings, the Borrower and each of its Subsidiaries
as of the Effective Date that is in excess of $5,000 for any one issue and is to
remain outstanding after giving effect to the Transaction (all such
Indebtedness, of whatever size, but excluding Indebtedness hereunder and under
the AF Credit Agreement, the "Existing Indebtedness"), in each case showing the
aggregate principal amount thereof and the name of the respective borrower (or
issuer) and any other entity which directly or indirectly guaranteed such debt.
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SECTION 7. AFFIRMATIVE COVENANTS. The Borrower covenants and agrees
that on the Restatement Effective Date and thereafter for so long as this
Agreement is in effect and until the Commitments have terminated, no Notes or
Letters of Credit are outstanding and the Loans and Unpaid Drawings, together
with interest, Fees and all other Obligations incurred hereunder, are paid in
full:
7.01 INFORMATION COVENANTS. The Borrower will furnish to each Bank:
(a) ANNUAL FINANCIAL STATEMENTS. Within 90 days after the close of
each fiscal year of the Borrower, the consolidated balance sheet of the
Borrower and its Subsidiaries and of Holdings and its Subsidiaries, as at
the end of such fiscal year and the related consolidated statements of
income and retained earnings and of cash flows for such fiscal year, in
each case setting forth comparative consolidated figures for the preceding
fiscal year, and examined by independent certified public accountants of
recognized national standing whose opinion shall not be qualified as to the
scope of audit and as to the status of Holdings, the Borrower or any of its
Subsidiaries as a going concern, together with a certificate of such
accounting firm stating that in the course of its regular audit of the
business of Holdings and of the Borrower, which audit was conducted in
accordance with generally accepted auditing standards, such accounting firm
has obtained no knowledge of any Default or Event of Default which has
occurred and is continuing or, if in the opinion of such accounting firm
such a Default or Event of Default has occurred and is continuing, a
statement as to the nature thereof.
(b) QUARTERLY FINANCIAL STATEMENTS. As soon as available and in any
event within 45 days after the close of each of the first three quarterly
accounting periods in each fiscal year, the consolidated balance sheet of
the Borrower and its Subsidiaries and of Holdings and its Subsidiaries, as
at the end of such quarterly period and the related consolidated statements
of income and retained earnings and of cash flows for such quarterly period
and for the elapsed portion of the fiscal year ended with the last day of
such quarterly period, and in each case setting forth comparative
consolidated figures for the related periods in the prior fiscal year, all
of which shall be certified by the chief financial officer or controller of
the Borrower or Holdings, as appropriate, subject to changes resulting from
audit and normal year-end audit adjustments.
(c) MONTHLY REPORTS. As soon as practicable, and in any event within
30 days, after the end of each monthly accounting period of each fiscal
year the consolidated balance sheet of the Borrower and its Subsidiaries
and of Holdings and its Subsidiaries, as at the end of such period, and the
related consolidated statements of income and retained earnings for such
period, setting forth comparative figures for the corresponding period of
the previous year, all of which shall be certified by
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the chief financial officer or controller of the Borrower or Holdings, as
appropriate, subject to changes resulting from audit and normal year-end
audit adjustments.
(d) BUDGETS; ETC. Not more than 60 days after the commencement of
each fiscal year of the Borrower, a budget of the Borrower and its
Subsidiaries in reasonable detail for each of the twelve months of such
fiscal year. Together with each delivery of consolidated financial
statements pursuant to Sections 7.01(a), (b) and (c), a comparison of the
current year to date financial results against the budgets required to be
submitted pursuant to this clause (d) shall be presented.
(e) OFFICER'S CERTIFICATES. (i) At the time of the delivery of the
financial statements provided for in Sections 7.01(a), (b) and (c), a
certificate of the chief financial officer, controller or other Authorized
Officer of the Borrower to the effect that no Default or Event of Default
exists or, if any Default or Event of Default does exist, specifying the
nature and extent thereof, which certificate shall set forth the
calculations required to establish (I) the Modified Holdings Leverage Ratio
for the Relevant Determination Date occurring on the last day of such
fiscal year, quarter or month, (II) whether the Borrower and its
Subsidiaries were in compliance with the provisions of Sections 8.11, 8.12,
8.13, 8.14 and 8.15, as applicable, as at the end of such fiscal period and
(III) whether there was any Event of Default under Section 9.08(B) and/or
9.08(C) as at the end of such fiscal period.
(ii) At the time of any incurrence of Consolidated Debt of Holdings
and its Subsidiaries at a time when the Margin Reduction Discount is (or
based on the last officer's certificate delivered pursuant to clause (i)
above will be) greater than zero, a certificate of any of the persons
specified in clause (i) above setting forth the calculations establishing
the Modified Holdings Leverage Ratio after giving effect to the incurrence
of such Consolidated Debt.
(f) NOTICE OF DEFAULT OR LITIGATION. Promptly, and in any event
within three Business Days after the Borrower obtains knowledge thereof,
notice of (x) the occurrence of any event which constitutes a Default or
Event of Default which notice shall specify the nature thereof, the period
of existence thereof and what action the Borrower proposes to take with
respect thereto and (y) the commencement of or any significant development
in any litigation or governmental proceeding pending against Holdings, the
Borrower or any of its Subsidiaries which is likely to have a Material
Adverse Effect or is likely to have a material adverse effect on the
ability of the Borrower to perform its obligations hereunder or under any
other Credit Document.
(g) AUDITORS' REPORTS. Promptly upon receipt thereof, a copy of each
other final report or "management letter" submitted to Holdings or the
Borrower by its
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independent accountants in connection with any annual, interim or special
audit made by it of the books of Holdings and/or the Borrower.
(h) ENVIRONMENTAL MATTERS. Promptly upon, and in any event within 20
Business Days after an officer of Holdings, the Borrower or any Subsidiary
obtains knowledge thereof, notice of one or more of the following
environmental matters: (i) any pending or threatened (in writing) material
Environmental Claim against, or for which liability would attach to, the
Borrower or any of its Subsidiaries or any Real Property owned or operated
by the Borrower or any of its Subsidiaries; (ii) any condition or
occurrence on or arising from any Real Property owned or operated by the
Borrower or any of its Subsidiaries that (a) results in material
noncompliance by Holdings, the Borrower or any of its Subsidiaries with any
applicable material Environmental Law or (b) would reasonably be expected
to form the basis of a material Environmental Claim against, or for which
liability would attach to, the Borrower or any of its Subsidiaries or any
such Real Property; (iii) any condition or occurrence on any Real Property
owned or operated by the Borrower or any of its Subsidiaries that could
reasonably be expected to cause such Real Property to be subject to any
material restrictions on the ownership, occupancy, use or transferability
by the Borrower or any of its Subsidiaries of such Real Property under any
Environmental Law; and (iv) the taking of any material removal or remedial
action in response to the actual or alleged presence of any Hazardous
Material on any Real Property owned or operated by the Borrower or any of
its Subsidiaries as required by any Environmental Law or any governmental
or other administrative agency, and all such notices shall describe in
reasonable detail the nature of the claim, investigation, condition,
occurrence or removal or remedial action and the Borrower's or such
Subsidiary's response thereto.
(i) OTHER INFORMATION. Promptly upon transmission thereof, (i)
copies of any filings and registrations with, and reports to, the
Securities and Exchange Commission or any successor thereto (the "SEC") by
Holdings, the Borrower or any of its Subsidiaries and (ii) with reasonable
promptness, such other information or documents (financial or otherwise) as
the Agent on its own behalf or on behalf of the Required Banks may
reasonably request from time to time.
7.02 BOOKS, RECORDS AND INSPECTIONS. The Borrower will, and will
cause its Subsidiaries to, permit, upon reasonable notice to the chief financial
officer, controller or any other Authorized Officer of the Borrower officers and
designated representatives of the Agent or the Required Banks to visit and
inspect any of the properties or assets of the Borrower and any of its
Subsidiaries in whomsoever's possession, and to examine the books of account of
Holdings, the Borrower and any of its Subsidiaries and discuss the affairs,
finances and accounts of Holdings, the Borrower and of any of its Subsidiaries
with, and be advised as to the same by, its and their officers and independent
accountants, all at such
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reasonable times and intervals and to such reasonable extent as the Agent or the
Required Banks may desire.
7.03 INSURANCE. The Borrower will, and will cause each of its
Subsidiaries to, at all times maintain in full force and effect insurance in
such amounts, covering such risks and liabilities and with such deductibles or
self-insured retentions as are in accordance with normal industry practice,
provided that in no event will any such deductible or self-insured retention in
respect of liability claims or in respect of casualty damage, exceed, in each
such case, (i) $250,000 per occurrence or (ii) $1,000,000 in the aggregate per
fiscal year. At any time that insurance at the levels described in Annex VII is
not being maintained by the Borrower and its Subsidiaries, the Borrower will
notify the Banks in writing thereof and, if thereafter notified by the Agent to
do so, the Borrower will, and will cause its Subsidiaries to, obtain insurance
at such levels at least equal to those set forth in Annex VII to the extent then
generally available (but in any event within the deductible or self-insured
retention limitations set forth in the preceding sentence) or otherwise as are
acceptable to the Agent. The Borrower will, and will cause each of its
Subsidiaries to, furnish on the Restatement Effective Date and annually
thereafter to the Agent a summary of the insurance carried together with
certificates of insurance and other evidence of such insurance, if any, naming
the Collateral Agent as an additional insured and/or loss payee.
7.04 PAYMENT OF TAXES. The Borrower will pay and discharge, and will
cause each Subsidiary to pay and discharge, all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits, or
upon any properties belonging to it, prior to the date on which penalties attach
thereto, and all lawful claims which, if unpaid, might become a Lien or charge
upon any properties of Holdings, the Borrower or any of its Subsidiaries,
provided that neither Holdings, the Borrower nor any Subsidiary shall be
required to pay any such tax, assessment, charge, levy or claim which is being
contested in good faith and by proper proceedings if it has maintained adequate
reserves (in the good faith judgment of the management of the Borrower) with
respect thereto in accordance with GAAP.
7.05 CONSOLIDATED CORPORATE FRANCHISES. The Borrower will do, and
will cause each Subsidiary to do, or cause to be done, all things necessary to
preserve and keep in full force and effect its existence, material rights and
authority, provided that any transaction permitted by Section 8.02 will not
constitute a breach of this Section 7.05.
7.06 COMPLIANCE WITH STATUTES, ETC. The Borrower will, and will
cause each Subsidiary to, comply with all applicable statutes, regulations
and orders of, and all applicable restrictions imposed by, all governmental
bodies, domestic or foreign, in respect of the conduct of its business and
the ownership of its property other than those the non-compliance with which
would not have a Material Adverse Effect or would not have
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a material adverse effect on the ability of the Borrower to perform its
obligations under any Credit Document.
7.07 ERISA. As soon as possible and, in any event, within 10 days
after the Borrower or any of its Subsidiaries or ERISA Affiliates knows or has
reason to know of the occurrence of any of the following, the Borrower will
deliver to each of the Banks a certificate of the chief financial officer of the
Borrower setting forth details as to such occurrence and such action, if any,
which the Borrower, such Subsidiary or such ERISA Affiliate is required or
proposes to take, together with any notices required or proposed to be given to
or filed with or by the Borrower, the Subsidiary, the ERISA Affiliate, the PBGC,
a Plan participant (other than notices relating to an individual participant's
benefits) or the Plan administrator with respect thereto: that a Reportable
Event has occurred; that an accumulated funding deficiency has been incurred or
an application is reasonably likely to be or has been made to the Secretary of
the Treasury for a waiver or modification of the minimum funding standard
(including any required installment payments) or an extension of any
amortization period under Section 412 of the Code with respect to a Plan; that a
Plan which has an Unfunded Current Liability has been or may be terminated,
reorganized, partitioned or declared insolvent under Title IV of ERISA; that a
Plan has an Unfunded Current Liability and there is a failure to make a required
contribution, which gives rise to a lien under ERISA or the Code; that
proceedings are reasonably likely to be or have been instituted to terminate a
Plan which has an Unfunded Current Liability; that a proceeding has been
instituted pursuant to Section 515 of ERISA to collect a delinquent contribution
to a Plan; that the Borrower, any Subsidiary or any ERISA Affiliate will or may
incur any liability (including, any contingent or secondary liability) to or on
account of the termination of or withdrawal from a Plan under Section 4062,
4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or with respect to a Plan under
Section 401(a)(29), 4971, 4975 or 4980 of the Code or Section 409, 502(l) or
502(l) of ERISA or that the Borrower or any Subsidiary or Holdings may incur any
material liability pursuant to any employee welfare benefit plan (as defined in
Section 3(1) of ERISA) that provides benefits to retired employees or other
former employees (other than as required by Section 601 of ERISA) or any
employee pension benefit plan (as defined in Section 3(2) of ERISA). Upon
request of a Bank, the Borrower will deliver to such Bank a complete copy of the
annual report (Form 5500) of each Plan required to be filed with the Internal
Revenue Service. In addition to any certificates or notices delivered to the
Banks pursuant to the first sentence hereof, copies of any annual reports and
any other material notices received by Holdings, the Borrower or any Subsidiary
with respect to a Plan shall be delivered to the Banks no later than 10 days
after the later of the date such notice has been filed with the Internal Revenue
Service or the PBGC, given to Plan participants (other than notices relating to
an individual participant's benefits) or received by Holdings, the Borrower or
such Subsidiary.
7.08 GOOD REPAIR. The Borrower will, and will cause each of its
Subsidiaries to, ensure that its properties and equipment used or useful in its
business in
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whomsoever's possession they may be, are kept in good repair, working order and
condition, normal wear and tear excepted, and, subject to Section 8.05, that
from time to time there are made in such properties and equipment all needful
and proper repairs, renewals, replacements, extensions, additions, betterments
and improvements thereto, to the extent and in the manner useful or customary
for companies in similar businesses.
7.09 END OF FISCAL YEARS; FISCAL QUARTERS. The Borrower will, for
financial reporting purposes, cause (i) each of its, and each of its
Subsidiaries' fiscal years to end on December 31 of each year and (ii) each of
its, and each of its Subsidiaries' fiscal quarters to end on March 31, June 30,
September 30 and December 31 of each year.
7.10 ADDITIONAL SECURITY; FURTHER ASSURANCES. (a) No later than 30
days following the Guaranty Commencement Date, the Borrower shall deliver to the
Agent a duly authorized and executed counterpart or counterparts of: (i) a
guaranty agreement in form and substance reasonably satisfactory to the Agent
(as modified, supplemented or amended from time to time in accordance with the
terms thereof and hereof, the "Subsidiary Guaranty") executed by each Domestic
Subsidiary (except as otherwise agreed by the Agent) guaranteeing the
Obligations; (ii) a pledge agreement executed by each Subsidiary Guarantor in
form substantially the same as the Borrower Pledge Agreement and otherwise
reasonably satisfactory to the Agent (the "Additional Pledge Agreement"),
accompanied by the delivery thereunder of the certificates representing the
Pledged Securities referred to therein and executed and undated stock powers;
(iii) a security agreement executed by each Subsidiary Guarantor in a form
substantially the same as the Security Agreement and otherwise reasonably
satisfactory to the Agent (the "Additional Security Agreement") covering all of
such Subsidiary Guarantor's present and future Security Agreement Collateral,
together with the filings and reports referred to in Section 5.01(K)(b) (i)
through (iv) of the Original Credit Agreement relating thereto; and (iv) deeds
of trust, mortgages and similar documents in form and substance reasonably
satisfactory to the Agent (the "Additional Mortgages") covering all of the Real
Property owned by each of the Subsidiary Guarantors (except as otherwise agreed
by the Agent) (x) which Additional Mortgages shall constitute valid and
enforceable Liens superior to and prior to the rights of all third Persons and
subject to no other Liens except as permitted by Section 8.03 and (y) which
Additional Mortgages (or instruments related thereto) shall have been duly
recorded or filed in such manner and in such places as are required by law to
establish, perfect, preserve and protect the Liens in favor of the Collateral
Agent required to be granted thereunder and all taxes, fees and other charges
payable in connection therewith shall have been paid in full, with each such
Additional Mortgage to be accompanied by mortgage policies relating thereto
reasonably satisfactory to the Agent, it being understood that nothing in this
Section 7.10 shall prevent any Domestic Subsidiary from merging with the
Borrower to the extent permitted by Section 8.02.
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(b) The Borrower will, and after the Guaranty Commencement Date, will
cause the Subsidiary Guarantors to, grant to the Collateral Agent security
interests and mortgages (each a "New Mortgage") in such owned Real Property of
the Borrower and the Subsidiary Guarantors acquired (including as a result of
the merger of one or more Subsidiaries with the Borrower) after the Restatement
Effective Date (or in the case of such Subsidiary Guarantors, the date it became
a Subsidiary Guarantor) as may be requested from time to time by the Agent.
Such Mortgages shall be granted pursuant to documentation reasonably
satisfactory in form and substance to the Agent and shall constitute valid and
enforceable Liens superior to and prior to the rights of all third Persons and
subject to no other Liens except as are permitted by Section 8.03. The New
Mortgages or instruments related thereto shall have been duly recorded or filed
in such manner and in such places as are required by law to establish, perfect,
preserve and protect the Liens in favor of the Collateral Agent required to be
granted pursuant to the New Mortgages and all taxes, fees and other charges
payable in connection therewith shall have been paid in full.
(c) The Borrower will, and will cause its Subsidiaries to, at the
expense of the Borrower, make, execute, endorse, acknowledge, file and/or
deliver to the Collateral Agent from time to time such vouchers, invoices,
schedules, confirmatory assignments, conveyances, financing statements, transfer
endorsements, powers of attorney, certificates, real property surveys, reports
and other assurances or instruments and take such further steps relating to the
collateral covered by any of the Security Documents as the Collateral Agent may
reasonably require. Furthermore, the Borrower shall cause to be delivered to
the Collateral Agent such opinions of counsel, title insurance and other related
documents as may be requested by the Agent to assure themselves that this
Section 7.10 has been complied with.
(d) The Borrower agrees that each action required above by this
Section 7.10 shall be completed as soon as possible, but in no event later than
60 days after such action is requested to be taken by the Agent or the Required
Banks, provided that in no event shall the Borrower be required to take any
action, other than using its reasonable commercial efforts without any material
expenditure, to obtain consents from third parties with respect to its
compliance with this Section 7.10.
7.11 CORPORATE SEPARATENESS. The Borrower will take, and will cause
each of its Subsidiaries to take, all such action as is necessary to keep the
operations of the Borrower and its Subsidiaries separate and apart from those of
Holdings, including, without limitation, ensuring that all customary formalities
regarding corporate existence, including holding regular board of directors'
meetings and maintenance of corporate records, are followed. All financial
statements of the Borrower and its Subsidiaries provided to creditors will
clearly evidence the corporate separateness of the Borrower and its Subsidiaries
from Holdings. Finally, neither the Borrower nor any of its Subsidiaries will
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take any action, or conduct its affairs in a manner which is likely to result in
the corporate existence of Holdings on the one hand, and the Borrower and its
Subsidiaries on the other, being ignored, or in the assets and liabilities of
the Borrower or any of its Subsidiaries being substantively consolidated with
those of Holdings in a bankruptcy, reorganization or other insolvency
proceeding. No action expressly provided for in this Agreement, the other
Credit Documents, the AF Credit Agreement, the Senior Notes and/or the Discount
Notes will breach this covenant, and this covenant shall cease to be of any
force and effect once (x) the Discount Notes substantially have been paid in
full and (y) Holdings shall have delivered the Holdings Guaranty and the
Holdings Pledge Agreement.
7.12 COMPLIANCE WITH ENVIRONMENTAL LAWS. (i) The Borrower will
comply, and the Borrower will cause each of its Subsidiaries to comply, with all
Environmental Laws applicable to the ownership, lease or use of all Real
Property now or hereafter owned, leased or operated by the Borrower or any of
its Subsidiaries, will promptly pay or cause to be paid all costs and expenses
incurred in connection with such compliance, and will keep or cause to be kept
all such Real Property free and clear of any Liens imposed pursuant to such
Environmental Laws and (ii) neither the Borrower nor any of its Subsidiaries
will generate, use, treat, store, release or dispose of, or permit the
generation, use, treatment, storage, release or disposal of Hazardous Materials
on any Real Property now or hereafter owned, leased or operated by the Borrower
or any of its Subsidiaries, or transport or permit the transportation of
Hazardous Materials to or from any such Real Property, except to the extent that
the failure to comply with the requirements specified in clause (i) or (ii)
above, either individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect. If required to do so under any applicable
directive or order of any governmental agency, the Borrower agrees to undertake,
and cause each of its Subsidiaries to undertake, any clean up, removal, remedial
or other action necessary to remove and clean up any Hazardous Materials from
any Real Property owned, leased or operated by the Borrower or any of its
Subsidiaries in accordance with, in all material respects, the requirements of
all applicable Environmental Laws and in accordance with, in all material
respects, such orders and directives of all governmental authorities, except to
the extent that the Borrower or such Subsidiary is contesting such order or
directive in good faith and by appropriate proceedings and for which adequate
reserves have been established to the extent required by generally accepted
accounting principles.
SECTION 8. NEGATIVE COVENANTS. The Borrower hereby covenants and
agrees, as of the Effective Date and thereafter for so long as this Agreement is
in effect and until the Commitments have terminated, no Notes or Letters of
Credit are outstanding and the Loans and Unpaid Drawings, together with
interest, Fees and all other Obligations incurred hereunder, are paid in full,
that (it being agreed that no provision of Section 8.02, 8.03, 8.04, 8.06, 8.08,
8.09 or 8.10 shall at any time be defaulted by, or shall be interpreted to
prohibit, any action by the Borrower or any of its Subsidiaries to the extent
(x) such action was not prohibited by the LaSalle Loan Agreement and (y) a
restriction on
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any such action is prohibited by Section 3.12 of the Senior Note Indenture
and/or Section 3.13 of the Discount Note Indenture, in each case as in effect on
the Restatement Effective Date, to the extent the Senior Notes and the Discount
Notes, respectively, are then outstanding or have not been amended pursuant to a
Permitted Exit Amendment):
8.01 CHANGES IN BUSINESS. The Borrower will not, and will not permit
any of its Subsidiaries to, engage in any line of business other than the
business of outdoor advertising, including transit and bus shelter, stadium,
transport terminal and other similar out-of-home advertising services and any
administrative or similar activities reasonably related thereto.
8.02 CONSOLIDATION, MERGER, SALE OR PURCHASE OF ASSETS, ETC. The
Borrower will not, and will not permit any Subsidiary to, wind up, liquidate or
dissolve its affairs, or enter into any transaction of merger or consolidation,
sell or otherwise dispose of all or any part of its property or assets (other
than inventory or obsolete equipment or excess equipment no longer needed in the
conduct of the business in the ordinary course of business) or purchase, lease
or otherwise acquire all or any part of the property or assets of any Person
(other than purchases or other acquisitions of inventory, leases, materials and
equipment in the ordinary course of business) or agree to do any of the
foregoing at any future time, except that the following shall be permitted:
(a) any Subsidiary of the Borrower (other than, prior to the Guaranty
Commencement Date, Naegele or Peterson) may be merged or consolidated with
or into, or be liquidated into, the Borrower (so long as the Borrower is
the surviving corporation) or any other Subsidiary (so long as Naegele or
Peterson, as the case may be, is the surviving corporation if it is such
other Subsidiary), or all or any part of its business, properties and
assets may be conveyed, leased, sold or transferred to the Borrower or any
other Subsidiary;
(b) capital expenditures to the extent within the limitations set
forth in Section 8.05 hereof;
(c) the investments, acquisitions and transfers or dispositions of
properties permitted pursuant to Section 8.06;
(d) each of the Borrower and its Subsidiaries may lease (as lessee)
real or personal property in the ordinary course of business (so long as
such lease does not create a Capitalized Lease Obligation not otherwise
permitted by Section 8.04(d));
(e) licenses or sublicenses by the Borrower and its Subsidiary of
software, customer lists, trademarks and other intellectual property in the
ordinary course of
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business, provided, that such licenses or sublicenses shall not interfere
with the business of the Borrower or any Subsidiary;
(f) other sales or dispositions of assets (I) for cash in an amount
equal to the fair market value thereof as determined by the Borrower and/or
(II) in exchange for other assets permitted to be held under Section 8.01
provided that, in each case, (i) the assets so sold or disposed of,
together with all other assets, previously sold or disposed of pursuant to
this clause (f) after or during the Calculation Period applicable to such
sale or disposition, shall not have generated Adjusted EBITDA of the
Borrower during such Calculation Period (taken as one accounting period)
equal to 15% or more of the aggregate Adjusted EBITDA of the Borrower
during such Calculation Period (taken as one accounting period) and (ii)
the assets so sold or disposed of, together with all other assets
previously sold or disposed of pursuant to this clause (f) after the
Restatement Effective Date, shall not have generated Adjusted EBITDA of the
Borrower during the period (taken as one accounting period) commencing on
the Restatement Effective Date and ending on the last day of the last month
for which financial statements of the Borrower are reasonably available
equal to 25% or more of the aggregate Adjusted EBITDA of the Borrower
during such period (taken as one accounting period), and, provided further,
that (x) the sale or disposition of the capital stock of any Subsidiary of
the Borrower shall be prohibited unless it is for all of the outstanding
capital stock of such Subsidiary owned by the Borrower and (y) neither
Naegele nor Peterson may not be sold or disposed of pursuant to this clause
(f);
(g) other sales or dispositions of assets in each case to the extent
the Required Banks have consented in writing thereto and subject to such
conditions as may be set forth in such consent;
(h) any Subsidiary other than, prior to the Guaranty Commencement
Date, Naegele and Peterson may be liquidated into the Borrower; and
(i) Permitted Acquisitions provided that after giving effect thereto
and the related borrowings to finance same there would be no default under
Sections 8.11 through 8.15 or 9.08(B) or (C) determined on a pro forma
basis as if such Permitted Acquisition and the related borrowings were
consummated on the first day of the 12-month period ending on the
Measurement Date last to occur.
8.03 LIENS. The Borrower will not, and will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets of any kind (real or personal, tangible or
intangible) of the Borrower or any such Subsidiary whether now owned or
hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase
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such property or assets (including sales of accounts receivable or notes with
recourse to the Borrower or any of its Subsidiaries) or assign any right to
receive income, or file or permit the filing of any financing statement under
the UCC or any other similar notice of Lien under any similar recording or
notice statute, except:
(a) Liens for taxes not yet due or Liens for taxes being contested in
good faith and by appropriate proceedings for which adequate reserves (in
the good faith judgment of the management of the Borrower) have been
established;
(b) Liens in respect of property or assets of the Borrower or any of
its Subsidiaries imposed by law which were incurred in the ordinary course
of business, such as carriers', warehousemen's and mechanics' Liens,
statutory landlord's Liens, and other similar Liens arising in the ordinary
course of business, and (x) which do not in the aggregate materially
detract from the value of such property or assets or materially impair the
use thereof in the operation of the business of the Borrower or any
Subsidiary or (y) which are being contested in good faith by appropriate
proceedings, which proceedings have the effect of preventing the forfeiture
or sale of the property or asset subject to such Lien;
(c) Liens created by or pursuant to this Agreement or the other
Credit Documents;
(d) (x) Liens on assets of the Borrower and each Subsidiary existing
on the Restatement Effective Date and listed on Part A of Annex VIII
hereto, without giving effect to any subsequent extensions or renewals
thereof, (y) Liens on assets of Peterson existing on the Restatement
Effective Date and added to Part B of Annex VIII by the Borrower and the
Agent within 30 days after the Restatement Effective Date so long as such
Liens are deemed immaterial by the Agent and (z) immaterial Liens on assets
of the Borrower and each Subsidiary existing on the Restatement Effective
Date at the locations listed on Part B of Annex VIII;
(e) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under Section 9.09
provided, that no cash or property is deposited or delivered to secure any
respective judgment or award (or any appeal bond in respect thereof, except
as permitted by the following clause (f));
(f) Liens (other than any Lien imposed by ERISA) incurred or deposits
made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security, or
to secure the performance of tenders, statutory obligations, surety and
appeal bonds, bids, leases, government contracts, performance and
return-of-money bonds and other similar obligations incurred in the
ordinary course of business (exclusive of obligations in
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respect of the payment for borrowed money) provided, that the aggregate
amount of deposits at any time pursuant to this clause (f) shall not
exceed $500,000;
(g) Leases or subleases granted to others not interfering in any
material respect with the business of the Borrower or any of its
Subsidiaries;
(h) Easements, rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the ordinary conduct of the
business of the Borrower or any of its Subsidiaries;
(i) Liens arising from UCC financing statements regarding leases
permitted by this Agreement;
(j) Purchase money Liens securing payables arising from the purchase
by the Borrower of any equipment or goods in the normal course of business,
provided that such payables shall not constitute Indebtedness;
(k) Any interest or title of a lessor or any Lien on the interest or
title of a lessor under any lease permitted by this Agreement;
(l) Liens arising pursuant to purchase money mortgages relating to,
or security interests securing Indebtedness representing the purchase price
of, assets acquired by the Borrower, Naegele and/or Peterson or any
Subsidiary Guarantor after the Restatement Effective Date, provided that
any such Liens attach only to the assets so acquired and that all
Indebtedness secured by Liens created pursuant to this clause (l) shall not
exceed $5,000,000 at any time outstanding;
(m) Liens created pursuant to Capital Leases permitted pursuant to
Section 8.04(d);
(n) Liens on assets of Subsidiaries of the Borrower in favor of the
Borrower;
(o) Liens securing Indebtedness permitted by Section 8.04(i) provided
that such Liens attach only to the assets (or to the assets of the Person
whose stock is being) acquired; and
(p) Liens on assets of the Borrower securing Indebtedness not in
excess of $1,000,000 at any time outstanding.
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8.04 INDEBTEDNESS. The Borrower will not, and will not permit any of
its Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement, the other
Credit Documents and the AF Credit Agreement;
(b) Indebtedness owing by (i) any Subsidiary to the Borrower or
another Subsidiary and (ii) the Borrower to any Subsidiary;
(c) Indebtedness of the Borrower evidenced by the Senior Notes, in an
aggregate principal amount not to exceed $65,000,000;
(d) Capitalized Lease Obligations of the Borrower, Naegele or
Peterson, provided that the aggregate Capitalized Lease Obligations under
all Capital Leases entered into after the Restatement Effective Date shall
not exceed $10,000,000;
(e) Existing Indebtedness, without giving effect to any subsequent
extension, renewal or refinancing thereof;
(f) Permitted Subordinated Debt and the Additional Subordinated Debt;
(g) to the extent same has been assumed by the Borrower, the
Indebtedness evidenced by the promissory note originally executed by
Holdings in favor of William H. Smith (the "Smith Note");
(h) Indebtedness incurred pursuant to purchase money mortgages
permitted by Section 8.03(l);
(i) Indebtedness of a Person, or secured by assets, acquired after
the Restatement Effective Date pursuant to a Permitted Acquisition provided
that such Indebtedness (x) existed at the time of such Permitted
Acquisition and was not created in connection therewith or in anticipation
thereof, (y) is not guaranteed in any respect by the Borrower or any of its
Subsidiaries, except to the extent such Person merges into, or such assets
are directly acquired by, the Borrower or such Subsidiary and (z) shall not
exceed in the aggregate for all Indebtedness permitted by this clause (i)
$5,000,000 at any time outstanding, without giving effect to any subsequent
extension, renewal or refinancing thereof; and
(j) additional Indebtedness of the Borrower not to exceed an
aggregate outstanding principal amount of $5,000,000 at any time.
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8.05 CAPITAL EXPENDITURES. (a) The Borrower will not, and will not
permit any of its Subsidiaries to, incur Consolidated Capital Expenditures,
provided that the Borrower, Naegele, Peterson and any Subsidiary Guarantor may
make Consolidated Capital Expenditures (x) during the period from the
Restatement Effective Date through December 31, 1996 (taken as one accounting
period) in an aggregate amount not in excess of $3,000,000, (y) during the
fiscal year of the Borrower ended December 31, 1997, $12,000,000 and (z) during
each successive fiscal year of the Borrower, in an aggregate amount not in
excess of 105% of the maximum amount for the immediately prior 12-month period.
(b) In the event that the maximum amount which is permitted to be
expended in respect of Consolidated Capital Expenditures during any fiscal year
pursuant to Section 8.05(a) (without giving effect to this clause (b)) is not
fully expended during such fiscal year, the maximum amount which may be expended
during the immediately succeeding fiscal year pursuant to Section 8.05(a) shall
be increased by such unutilized amount provided that such increase shall not
exceed $5,000,000 in any fiscal year.
(c) In addition to the foregoing, the Borrower, Naegele, Peterson and
any Subsidiary Guarantor may make Consolidated Capital Expenditures in amounts
in excess of those permitted under Sections 8.05(a) and (b) provided that the
amount of such additional Consolidated Capital Expenditures shall not exceed the
sum of (x) the Available ECF Amount and (y) the Available Equity Amount, in each
case as determined at the time of, but immediately prior to, the making thereof.
8.06 INVESTMENTS AND LOANS. The Borrower will not make or permit to
exist any Investments or Loans in or to any other Person or acquire or establish
any Subsidiary, except for Permitted Investments or as permitted by the next
sentence. Notwithstanding anything contained in this Section 8.06 to the
contrary, Borrower may acquire 100% of the Capital Stock of (x) Quantum
Structure & Design, Inc. and (y)] any [other] Person if [, in the case of clause
(y), the following conditions are satisfied: (i) an Event of Default has not
occurred and is continuing under this Agreement and will not occur as a result
of, in connection with or after giving effect to such acquisition; (ii) the
Person being acquired engages exclusively in the business permitted to be
engaged in by Borrower and its Subsidiaries pursuant to Section 8.01; (iii)
title to all of the assets acquired in such acquisition is transferred by
operation of law, assignment, sale or otherwise, to Borrower within 60 days of
the consummation of such acquisition provided that such transfer shall not be
required after the Guaranty Commencement Date if the assets are held by a
Subsidiary Guarantor; and (iv) such acquired assets are expressly made subject
to the Liens created by the Security Documents.
8.07 SUBSIDIARIES; ETC. The Borrower will not (x) sell, assign or
otherwise encumber or dispose of, and will not permit any of its Subsidiaries
directly or indirectly to
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issue, sell, assign, pledge or otherwise encumber or dispose of, any shares of a
Subsidiary's capital stock or other securities (or warrants, rights or options
to acquire shares or other equity securities) of such Subsidiary, except to the
Borrower (to the extent otherwise permitted hereunder) and except for
dispositions permitted by Section 8.02, (y) after the Restatement Effective
Date, create or permit to be created any new Subsidiary except to the extent
created in compliance with the second sentence of Section 8.06 and (z) violate
or breach the provisions of Section 3.11(a) of the Senior Note Indenture as in
effect on the Restatement Effective Date (to the extent such Section is then in
effect).
8.08 PREPAYMENTS OF INDEBTEDNESS, ETC. The Borrower will not, and
will not permit any of its Subsidiaries to:
(a) make (or give any notice in respect thereof) any voluntary or
optional payment or prepayment or redemption or acquisition for value of
(including, without limitation, by way of depositing with the trustee with
respect thereto money or securities before due for the purpose of paying
when due) or exchange of the Senior Notes, Subordinated Debt (once
issued)[, the Smith Note] or any other Existing Indebtedness provided that
(I) the Borrower may Purchase Senior Notes (w) in an aggregate amount, at
any time, equal to the Holdback Proceeds at such time, (x) in an amount at
the time of any such Purchase equal to the Available ECF Amount at the time
of, but immediately prior to, such Purchase provided that at such time
(i.e., immediately prior to such Purchase) the Holdings Leverage Ratio is
less than 5.00 to 1.00, (y) in an amount at the time of any such Purchase
equal to the Available Equity Amount at the time of, but immediately prior
to, such Purchase and (z) as otherwise consented to by the Required Banks
and (II) the Borrower may pay Dividends to Holdings to permit it to
purchase Discount Notes as provided for in Section 8.09(a);
(b) amend or modify, or permit the amendment or modification of, any
provisions of (x) any Senior Note Documents (except for Permitted Exit
Amendments), (y) any Subordinated Debt Documents and (z) the AF Credit
Agreement; and/or
(c) amend, modify or change in any manner adverse to the interests of
the Banks the Certificate of Incorporation (including, without limitation,
by the filing of any certificate of designation) or By-Laws of the
Borrower, Naegele or Peterson or any agreement entered into by the
Borrower, with respect to its capital stock, or the Acquisition Documents
or enter into any new agreement in any manner adverse to the interests of
the Banks with respect to the capital stock of the Borrower, Naegele or
Peterson.
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8.09 DIVIDENDS, ETC. (a) The Borrower will not redeem, retire,
purchase or otherwise acquire, directly or indirectly, any Capital Stock of
Borrower or other evidence of ownership interest, or declare or pay dividends
upon any Capital Stock of Borrower or make any distribution of Borrower's
property or assets (any of the foregoing, a "Dividend"), provided that this
Section 8.09 will not prohibit, so long as no Event of Default shall have
occurred and is continuing or would occur as a consequence thereof, (i) the
repurchase, redemption or other acquisition or retirement for value of any
shares of Capital Stock of the Borrower from the estate of Daniel L. Simon
solely out of the proceeds of any policy of insurance maintained to provide
funds for such purpose, (ii) to the extent the Indebtedness evidenced by the
Smith Note has not been assumed by the Borrower, the payment of dividends to
Holdings in an annual amount not to exceed $120,000 to fund payments of interest
on the Smith Note, (iii) the payment of cash Dividends to Holdings to the extent
the proceeds are promptly used to pay administrative costs arising in the
ordinary course of business, (iv) the payment of cash Dividends to Holdings to
be promptly utilized by Holdings to Purchase its Common Stock (or options or
warrants to purchase such Common Stock) from officers, employees and directors
(or their estates) upon the death, permanent disability, retirement or
termination of employment of any such Person or otherwise in accordance with any
stock option plan or any employee stock ownership plan or warrant plan and (v)
the payment of cash Dividends to Holdings to the extent that the proceeds are
used on the date of receipt to Purchase Discount Notes provided that any such
Dividend will not exceed the Modified Available Amount at the time of, but
immediately prior to, the making of such Dividend.
(b) The Borrower will not, and will not permit any of its
Subsidiaries to, create or otherwise cause or suffer to exist any encumbrance or
restriction which prohibits or otherwise restricts (A) the ability of any
Subsidiary to (a) pay dividends or make other distributions or pay any
Indebtedness owed to the Borrower or any Subsidiary, (b) make loans or advances
to the Borrower or any Subsidiary, (c) transfer any of its properties or assets
to the Borrower or any Subsidiary or (B) the ability of the Borrower or any
other Subsidiary of the Borrower to create, incur, assume or suffer to exist any
Lien upon its property or assets to secure the Obligations, other than
prohibitions or restrictions existing under or by reason of: (i) this
Agreement, the other Credit Documents, the AF Credit Agreement, the Senior Note
Documents, the Discount Note Indenture and the Subordinated Debt Documents (once
executed); (ii) applicable law; (iii) customary non-assignment provisions
entered into in the ordinary course of business and consistent with past
practices; (iv) any restriction or encumbrance with respect to a Subsidiary of
the Borrower imposed pursuant to an agreement which has been entered into for
the sale or disposition of all or substantially all of the capital stock or
assets of such Subsidiary, so long as such sale or disposition is permitted
under this Agreement; and (v) Liens permitted under Section 8.03 and any
documents or instruments governing the terms of any Indebtedness or other
obligations secured by any such Liens, provided that such prohibitions or
restrictions apply only to the assets subject to such Liens.
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8.10 TRANSACTIONS WITH AFFILIATES. The Borrower will not, and will
not permit any Subsidiary to, sell, lease, license, transfer, exchange, or
otherwise dispose of any of its properties, assets or services to, or purchase,
lease, or license the use of any property, assets or services from, or transfer
funds to, or enter into any contract, agreement, understanding, loan, advance or
guarantee with, to or for the benefit of, any Affiliate (each of the foregoing,
an "Affiliate Transaction," whether constituting one transaction or a series of
related transactions), unless (a) such Affiliate Transaction is on terms that
are no less favorable to the Borrower or the relevant Subsidiary than those that
would have been obtained in a comparable transaction by the Borrower or such
Subsidiary with an unrelated person and (b) Borrower delivers to the Agent (i)
with respect to any Affiliate Transaction involving aggregate payments in excess
of $250,000, an officers' certificate setting forth a resolution of the Board of
Directors of the Borrower approved by a majority of the members of the Board of
Directors (and a majority of the disinterested members of the Board of
Directors, if any) certifying that such Affiliate Transaction complies with
clause(a) above and (ii) with respect to any Affiliate Transaction involving
aggregate payments in excess of $3.0 million, an opinion as to the fairness,
from a financial point of view, of such Affiliate Transaction to the Borrower or
such Subsidiary issued by an independent investment banking firm of national
standing with total assets in excess of $1.0 billion. The foregoing limitation
does not limit, and shall not apply to, (i) the payment of reasonable annual
compensation to directors or executive officers of the Borrower or any
Subsidiary thereof, (ii) transactions described in Annex IX hereto, provided
that the fees described in Annex IX shall accrue and not be paid at any time
that a Default or an Event of Default specified in Section 9.01 shall occur and
be continuing or (iii) payments by the Borrower to Holdings under the Tax
Sharing Agreement.
8.11 FIXED CHARGE COVERAGE RATIO. The Borrower will not permit the
ratio of (i) Adjusted EBITDA of the Borrower to (ii) Consolidated Fixed Charges
of the Borrower for any 12 month period (taken as one accounting period) ending
on a Measurement Date (or if less the period from the Initial Borrowing Date to
such Measurement Date) to be less than 1.00 to 1.
8.12 MINIMUM ADJUSTED EBITDA. The Borrower will not permit Adjusted
EBITDA of the Borrower for any 12 month period (taken as one accounting period)
ending on a Measurement Date occurring in a period set forth below to be less
than the amount set forth opposite such period [plus (B) the Aggregate Acquired
EBITDA as of such Measurement Date]:
Period Amount
------ -------
Restatement Effective Date through
December 30, 1997 $57,000,000
December 31, 1997 through
December 30, 1998 $58,400,000
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December 31, 1998 through
December 30, 1999 $60,750,000
December 31, 1999 through
December 30, 2000 $65,750,000
December 31, 2000
and thereafter $70,500,000
8.13 BORROWER LEVERAGE RATIO. The Borrower will not permit the
Borrower Leverage Ratio as of any Measurement Date occurring in a period set
forth below to be more than the ratio set forth opposite such period:
Period Ration
------ ------
Period Ratio Restatement Effective Date through
December 30, 1997 6.00 to 1.0
December 31, 1997 and
thereafter 5.00 to 1.0
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8.14 SENIOR LEVERAGE RATIO. On and after the Guaranty Commencement
Date, the Borrower will not permit the Senior Leverage Ratio as of any
Measurement Date occurring in a period set forth below to be more than the ratio
set forth opposite such period:
PERIOD RATIO
------ -----
Restatement Effective Date through
December 30, 1997 5.50 to 1.0
December 31, 1997 through
December 30, 1998 5.00 to 1.0
December 31, 1998 and
thereafter 4.50 to 1.0
8.15 INTEREST RATIO. On and after the Guaranty Commencement Date,
the Borrower will not permit the ratio of (i) Adjusted EBITDA of the Borrower to
(ii) Consolidated Interest Expense of the Borrower for any twelve month period
(taken as one accounting period) ending on a Measurement Date occurring in a
period set forth below to be less than the ratio set forth opposite such period:
PERIOD RATIO
------ -----
Restatement Effective Date through
December 30, 1997 1.50 to 1.0
December 31, 1997 through
December 30, 1998 1.75 to 1.0
December 31, 1998 through
December 30, 1999 1.85 to 1.0
December 31, 1999 through
December 30, 2001 2.00 to 1.0
December 31, 2001 and
thereafter 2.50 to 1.0
SECTION 9. EVENTS OF DEFAULT. Upon the occurrence of any of the
following specified events (each an "Event of Default"):
9.01 PAYMENTS. The Borrower shall (i) default in the payment when
due of any principal of the Loans or (ii) default, and such default shall
continue for five or more days, in the payment when due of any interest on the
Loans or any Fees or any other amounts owing hereunder or under any other Credit
Document; or
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9.02 REPRESENTATIONS, ETC. Any representation, warranty or statement
made by the Borrower herein or in any other Credit Document or in any statement
or certificate delivered or required to be delivered pursuant hereto or thereto
shall prove to be untrue in any material respect on the date as of which made or
deemed made; or
9.03 COVENANTS. The Borrower shall (a) default in the due
performance or observance by it of any term, covenant or agreement contained in
Sections 7.10, 7.11 or 8, or (b) default in the due performance or observance by
it of any term, covenant or agreement (other than those referred to in Section
9.01, 9.02 or clause (a) of this Section 9.03) contained in this Agreement and
such default shall continue unremedied for a period of at least 30 days after
notice to the defaulting party by the Agent or the Required Banks; or
9.04 DEFAULT UNDER OTHER AGREEMENTS. (a) Holdings, the Borrower or
any of its Subsidiaries shall (i) default in any payment with respect to any
Indebtedness (other than the Obligations) beyond the period of grace, if any,
applicable thereto or (ii) default in the observance or performance of any
agreement or condition relating to any such Indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or holders of such
Indebtedness (or a trustee or agent on behalf of such holder or holders) to
cause any such Indebtedness to become due prior to its stated maturity; or (b)
any such Indebtedness of Holdings, the Borrower or any of its Subsidiaries shall
be declared to be due and payable, or required to be prepaid other than by a
regularly scheduled required prepayment, prior to the stated maturity thereof,
provided that it shall not constitute an Event of Default pursuant to this
Section 9.04 unless the principal amount of any one issue of such Indebtedness
exceeds $2,500,000 individually or in the aggregate at any one time; or
9.05 BANKRUPTCY, ETC. Holdings, the Borrower or any of its
Subsidiaries shall commence a voluntary case concerning itself under Title 11 of
the United States Code entitled "Bankruptcy," as now or hereafter in effect, or
any successor thereto (the "Bankruptcy Code"); or an involuntary case is
commenced against Holdings, the Borrower or any of its Subsidiaries and the
petition is not controverted within 10 days, or is not dismissed within 60 days,
after commencement of the case; or a custodian (as defined in the Bankruptcy
Code) is appointed for, or takes charge of, all or substantially all of the
property of Holdings, the Borrower or any of its Subsidiaries; or Holdings, the
Borrower or any of its Subsidiaries commences any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to Holdings, the Borrower or any of its
Subsidiaries; or there is commenced against Holdings, the Borrower or any of its
Subsidiaries any such proceeding which remains undismissed for a period of 60
days; or Holdings, the Borrower or any of its Subsidiaries is adjudicated
insolvent or
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bankrupt; or any order of relief or other order approving any such case or
proceeding is entered; Holdings, the Borrower or any of its Subsidiaries suffers
any appointment of any custodian or the like for it or any substantial part of
its property to continue undischarged or unstayed for a period of 60 days; or
Holdings, the Borrower or any of its Subsidiaries makes a general assignment for
the benefit of creditors; or any corporate action is taken by Holdings, the
Borrower or any of its Subsidiaries for the purpose of effecting any of the
foregoing; or
9.06 ERISA. (a) A single-employer plan (as defined in Section 4001
of ERISA) established by the Borrower, any of its Subsidiaries or any ERISA
Affiliate shall fail to maintain the minimum funding standard required by
Section 412 of the Code for any plan year or a waiver of such standard or
extension of any amortization period is sought or granted under Section 412 of
the Code or shall provide security to induce the issuance of such waiver or
extension, (b) any Plan is or shall have been or is likely to be terminated or
the subject of termination proceedings under ERISA or an event has occurred
entitling the PBGC to terminate a Plan under Section 4042(a) of ERISA, (c) any
Plan shall have an Unfunded Current Liability or (d) the Borrower or a
Subsidiary or any ERISA Affiliate has incurred or is likely to incur a material
liability to or on account of a termination of or a withdrawal from a Plan under
Section 515, 4062, 4063, 4064, 4201 or 4204 of ERISA; and there shall result
from any such event or events described in the preceding clauses of this Section
9.06 the imposition of a Lien upon the assets of Holdings, the Borrower or any
Subsidiary, the granting of a security interest, or a liability or a material
risk of incurring a liability to the PBGC or a Plan or a trustee appointed under
ERISA or a penalty under Section 4971 of the Code, in each case which would
have, in the opinion of the Required Banks a Material Adverse Effect; or
9.07 CREDIT DOCUMENTS. Any Credit Document or Guaranty (once
executed) shall cease to be in full force and effect (except as provided for
therein), or shall cease to give the Collateral Agent any Lien encumbering
assets with an aggregate fair market value in excess of $2,500,000 (and, if
encumbering assets with a fair market value of less than $2,500,000, for a
period greater than thirty or more days), or any material rights, powers and
privileges purported to be created thereby in favor of the Collateral Agent or
any Credit Party shall default in any material respect in the due performance or
observance of any term, covenant or agreement on its part to be performed or
observed pursuant to any such Security Document or Guaranty or shall disaffirm
or seek to disaffirm any Guaranty; or
9.08 HOLDINGS. (A) Holdings shall after the Restatement Effective
Date [(i) incur any Indebtedness,] (ii) grant or create any Lien on any of its
assets that secures Indebtedness, (iii) modify or amend the Discount Note
Indenture or Discount Notes (except, in each case, for Permitted Exit
Amendments) or (except with the proceeds of equity contributions from Existing
UOH Stockholders) prepay any of the Discount Notes, (iv)
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engage in any business or activity other than the ownership of all of the
capital stock of the Borrower and administrative activities directly related
thereto, (v) sell or dispose of any of, or otherwise cease to own all of, the
capital stock of the Borrower, (vi) change its fiscal quarters or fiscal year
from those applicable also to the Borrower, (vii) fail to maintain its own
payroll and separate books of account and bank accounts separate from those of
the Borrower and its Subsidiaries, (viii) fail to pay its liabilities, including
all administrative expenses, from its own separate assets, (ix) fail to
separately identify and segregated its assets from the assets of the Borrower
and its Subsidiaries, except in each case (a) as expressly required by any of
the Shareholders' Agreements, Management Agreements, Tax Sharing Agreements,
subscription agreements with members of management and the Discount Notes, all
as in effect on the Restatement Effective Date, (b) as expressly required by
law, (c) Holdings issuing Capital Stock in any initial or subsequent public
offering to the extent the proceeds thereof are used to repay the Loans as
required by Section 4.02(A)(d) hereof and (d) Holdings Purchasing Discount Notes
(w) in an aggregate amount, at any time, equal to the Holdback Proceeds at such
time, (x) in an amount at the time of any such Purchase equal to the Available
ECF Amount at the time of, but immediately prior to, such Purchase provided that
at such time (i.e., immediately prior to such Purchase) the Holdings Leverage
Ratio is less than 5.00 to 1.00 or (y) in an amount at the time of any such
Purchase equal to the Available Equity Amount at the time of, but immediately
prior to, such Purchase and/or (x) amend, modify or change in any way adverse to
the interests of the Banks, its Certificate of Incorporation (including, without
limitation, by the filing or modification of any certificate of designation) or
By-Laws or any agreement entered into by Holdings with respect to its capital
stock; and/or
(B) The Holdings Leverage Ratio as of any Measurement Date occurring
in a period set forth below is more than the ratio set forth opposite such
period:
Period Ratio
------ -----
Restatement Effective Date through
June 29, 1998 6.50 to 1.0
June 30, 1998 through
December 30, 1999 6.25 to 1.0
December 31, 1999 and
thereafter 6.00 to 1.0;
(C) At any time prior to the Guaranty Commencement Date, the ratio of
(i) Adjusted EBITDA of Holdings to (ii) Consolidated Cash Interest Expense of
Holdings for any 12 month period (taken as one accounting period) ending on a
Measurement Date
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occurring in a period set forth below is less than the ratio set forth opposite
such period:
Period Ratio
------ ------
Restatement Date through
December 30,1997 1.50 to 1.0
December 31, 1997 through
December 30, 19981. 75 to 1.0
December 31, 1998 through
Deccember 30, 1999 1.85 to 1.0
December 31, 1999 through
Dececember 30, 2001 2.00 to 1.0
December 31, 2001 and
thereafter 2.50 to 1.0;
(D) Holdings shall have failed, for more than 15 days following the
Guaranty Commencement Date, to authorize and execute a guaranty agreement (as
modified, amended or supplemented in accordance with the terms thereof or
hereof, the "Holdings Guaranty") in respect of the Obligations hereunder and a
pledge agreement (as modified, amended or supplemented in accordance with the
terms thereof or hereof, the "Holdings Pledge Agreement") pledging all the
capital stock of the Borrower, all in such form as is acceptable to the Agent
and/or to deliver same to the Agent and Collateral Agent, as the case may be,
together with, in pledge under, the Holdings Pledge Agreement, the certificates
representing all the shares of the capital stock of the Borrower, accompanied by
executed and undated stock powers and such opinions of counsel relating thereto
as reasonably requested by the Agent; or
9.09 JUDGMENTS. One or more judgments or decrees shall be entered
against Holdings, the Borrower or any of its Subsidiaries involving a liability
of $2,500,000 or more individually or in the aggregate for all such judgments
and decrees for Holdings, the Borrower and its Subsidiaries (not paid or to the
extent not covered by insurance) and any such judgments or decrees shall not
have been vacated, discharged or stayed or bonded pending appeal within 60 days
from the entry thereof; or
9.10 AF CREDIT AGREEMENT. An Event of Default under and as defined
in the AF Credit Agreement shall have occurred and be continuing;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Agent shall, upon the written request of the
Required Banks, by written notice to the Borrower, take any or all of the
following actions, without prejudice to the rights of the Agent or any Bank to
enforce its claims against the Borrower, except as otherwise specifically
provided for in this Agreement (provided that, if an Event of Default specified
in Section 9.05 shall occur with respect to the Borrower, the result which would
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occur upon the giving of written notice by the Agent as specified in clauses (i)
and (ii) below shall occur automatically without the giving of any such notice):
(i) declare the Total Commitment terminated, whereupon the Commitment of each
Bank shall forthwith terminate immediately and any Commitment Commission shall
forthwith become due and payable without any other notice of any kind; (ii)
declare the principal of and any accrued interest in respect of all Loans and
all obligations owing hereunder to be, whereupon the same shall become,
forthwith due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Borrower; and/or (iii)
enforce, as Collateral Agent (or direct the Collateral Agent to enforce), any or
all of the Liens and security interests created pursuant to the Security
Documents.
SECTION 10. DEFINITIONS. As used herein, the following terms shall
have the meanings herein specified unless the context otherwise requires.
Defined terms in this Agreement shall include in the singular number the plural
and in the plural the singular:
"Acquisition" shall mean the acquisition by the Borrower of 100% of
the outstanding capital stock of Peterson pursuant to the Acquisition Documents
provided that after giving effect to the merger contemplated by the Acquisition
Agreement and the additional mergers consummated on the Restatement Effective
Date, Peterson shall be a direct wholly-owned subsidiary of the Borrower.
"Acquisition Agreement" shall mean the Agreement and Plan of Merger,
dated August __, 1996, among the Borrower, Universal Acquisition Corp., OAH and
the stockholders listed therein as delivered to the Banks pursuant to Section
5.01(H), as the same may be amended or modified in accordance with the
provisions thereof and hereof.
"Acquisition Documents" shall mean the Acquisition Agreement and all
other documents entered into to effectuate the Acquisition.
"Acquisition Facility Termination Date" shall mean the first date
occurring on or after the AR Termination Date under and as defined in the AF
Credit Agreement on which all Acquisition Loans have been repaid in full.
"Acquisition Loans" shall mean and include the AR Loans and the A Term
Loans as defined in the AF Credit Agreement.
"Additional Mortgages", "Additional Pledge Agreement" and "Additional
Security Agreement" shall each have the meaning provided in Section 7.10.
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"Additional Security Documents" shall mean and include the Additional
Pledge Agreement, Additional Security Agreement, Additional Mortgages, New
Mortgages and the Holdings Pledge Agreement.
"Additional Subordinated Debt" shall mean subordinated debt issued by
the Borrower after it has issued $200,000,000 of Permitted Subordinated Debt,
provided that (i) the terms and conditions (other than pricing and maturities,
provided that no scheduled payment of principal shall be due and payable prior
to the Final Maturity Date) are (in the reasonable opinion of the Agent)
substantially the same as those contained in the Permitted Subordinated Debt or
are consented to by the Required Banks [and (ii) the Additional Subordinated
Debt shall not exceed $100 million.]
"Adjusted EBITDA" of any Person shall mean, for any period (x) the
Consolidated EBITDA of such Person for such period plus or minus (y) the
adjustments thereto provided for in Exhibit I to AF Credit Agreement.
"Adjusted Percentage" shall mean (x) at a time when no Bank Default
exists, for each Bank such Bank's Percentage and (y) at a time when a Bank
Default exists (i) for each Bank that is a Defaulting Bank, zero and (ii) for
each Bank that is a Non-Defaulting Bank, the percentage determined by dividing
such Bank's Revolving Commitment at such time by the Adjusted Total Revolving
Commitment at such time, it being understood that all references herein to
Revolving Commitments and the Adjusted Total Revolving Commitment at a time when
the Total Revolving Commitment or Adjusted Total Revolving Commitment, as the
case may be, has been terminated shall be references to the Revolving Loan
Commitments or Adjusted Total Revolving Commitment, as the case may be, in
effect immediately prior to such termination, PROVIDED that (A) no Bank's
Adjusted Percentage shall change upon the occurrence of a Bank Default from that
in effect immediately prior to such Bank Default if, after giving effect to such
Bank Default and any repayment of Revolving Loans and Swingline Loans at such
time pursuant to Section 4.02(A)(a) or otherwise, the sum of (i) the aggregate
outstanding principal amount of Revolving Loans of all Non-Defaulting Banks plus
(ii) the aggregate outstanding principal amount of Swingline Loans plus (iii)
the Letter of Credit Outstandings, exceeds the Adjusted Total Revolving Loan
Commitment; (B) the changes to the Adjusted Percentage that would have become
effective upon the occurrence of a Bank Default but that did not become
effective as a result of the preceding clause (A) shall become effective on the
first date after the occurrence of the relevant Bank Default on which the sum of
(i) the aggregate outstanding principal amount of the Revolving Loans of all
Non-Defaulting Banks plus (ii) the aggregate outstanding principal amount of the
Swingline Loans plus (iii) the Letter of Credit Outstandings is equal to or less
than the Adjusted Total Revolving Commitment; and (C) if (i) a Non-Defaulting
Bank's Adjusted Percentage is changed pursuant to the preceding clause (B) and
(ii) any repayment of such Bank's Revolving Loans, or of Unpaid Drawings or of
Swingline Loans, that were made during the period commencing after the date of
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the relevant Bank Default and ending on the date of such change to its Adjusted
Percentage must be returned to the Borrower as a preferential or similar payment
in any bankruptcy or similar proceeding of the Borrower, then the change to such
Non-Defaulting Bank's Adjusted Percentage effected pursuant to said clause (B)
shall be reduced to that positive change, if any, as would have been made to its
Adjusted Percentage if (x) such repayments had not been made and (y) the maximum
change to its Adjusted Percentage would have resulted in the sum of the
outstanding principal of Revolving Loans made by such Bank plus such Bank's new
Adjusted Percentage of the outstanding principal amount of Swingline Loans and
of Letter of Credit Outstandings equalling such Bank's Revolving Commitment at
such time.
"Adjusted Revolving Commitment" for each Non-Defaulting Bank shall
mean at any time the product of such Bank's Adjusted Percentage and the Adjusted
Total Revolving Commitment.
"Adjusted Total Revolving Commitment" shall mean at any time the Total
Revolving Commitment less the aggregate Revolving Commitments of all Defaulting
Banks.
"AF Bank" shall mean at any time a financial institution that is then
an AR Bank under and as defined in the AF Credit Agreement.
"AF Credit Agreement" shall mean the Amendment and Restatement dated
as of the date hereof to the Acquisition Credit Agreement among the Borrower,
the Banks, LaSalle as Co-Agent and BTCo as Agent providing for the credits
specified therein, as in effect on the Restatement Effective Date hereunder and
as the same may be modified, amended or supplemented in accordance with the
terms thereof to the extent permitted hereunder.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all directors
and officers of such Person), controlled by, or under direct or indirect common
control with such Person. A Person shall be deemed to control a corporation if
such Person possesses, directly or indirectly, the power (i) to vote 10% or more
of the securities having ordinary voting power for the election of directors of
such corporation or (ii) to direct or cause the direction of the management and
policies of such corporation, whether through the ownership of voting
securities, by contract or otherwise.
"Agent" shall have the meaning provided in the first paragraph of this
Agreement and shall include any successor to the Agent appointed pursuant to
Section 11.09.
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["Aggregate Acquired EBITDA" shall mean, as at any Measurement Date,
an amount equal to the aggregate of 85% of the "12-month Consolidated EBITDA" of
each Person acquired by the Borrower and its Subsidiaries after the Restatement
Effective Date, with the "12-month Consolidated EBITDA" of each such Person to
be the Consolidated EBITDA of such Person for the 12 months last ended prior to
the acquisition of such Person.]
"Agreement" shall mean this Amendment and Restatement to Revolving
Credit Agreement, as the same may be from time to time further modified, amended
and/or supplemented.
"Applicable Base Rate Margin" shall mean 1.75% less the Margin
Reduction Amount, if any, provided that if the Guaranty Commencement Date has
not occurred prior to March 31, 1997 then the Applicable Base Rate Margin for
all Loans shall increase by .25% on March 31, 1997, which increase shall
continue in effect until such time, if any, as the Guaranty Commencement Date
occurs.
"Applicable Eurodollar Margin" shall mean 2.75% less the Margin
Reduction Discount, if any, provided that if the Guaranty Commencement Date has
not occurred prior to March 31, 1997, then the Applicable Eurodollar Margin for
all Loans shall increase by .25% on March 31, 1997, which increase shall
continue in effect until such time, if any, as the Guaranty Commencement Date
occurs.
"AR Loans" shall mean AR Loans under and as defined in the AF Credit
Agreement.
"Authorized Officer" shall mean any senior officer of the Borrower
designated as such in writing to the Agent by the Borrower in each case to the
extent acceptable to the Agent.
"Available ECF Amount" shall have the meaning provided in the AF
Credit Agreement.
"Available Equity Amount" shall have the meaning provided in the AF
Credit Agreement.
"Bank" shall have the meaning provided in the first paragraph of this
Agreement.
"Bank Default" shall mean (i) the refusal (which has not been
retracted) of a Bank to make available its portion of any incurrence of Loans or
to fund its portion of any unreimbursed payments under Section 2.05(c) or (ii) a
Bank having notified the Agent
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and/or the Borrower that it does not intend to comply with the obligations under
Section 1.01 or under Section 2.05(c), in the case of either (i) or (ii) as a
result of the appointment of a receiver or conservator with respect to such Bank
at the direction or request of any regulatory agency or authority.
"Bankruptcy Code" shall have the meaning provided in Section 9.05.
"Base Rate" at any time shall mean the higher, (i) the rate which is
1/2 of 1% in excess of the Federal Funds Effective Rate and (ii) the Prime
Lending Rate.
"Base Rate Loan" shall mean each Loan bearing interest at the rates
provided in Section 1.08(a).
"Borrower" shall mean Universal Outdoor, Inc.
"Borrower Leverage Ratio" shall mean, at any Measurement Date, the
ratio of (x) Consolidated Debt of the Borrower on such date to (y) Adjusted
EBITDA of the Borrower for the 12 month period (taken as one accounting period)
ending on such date.
"Borrower Pledge Agreement" shall mean an Amendment and Restatement to
Pledge Agreement in the form of Exhibit E to the AF Credit Agreement, as in
effect on the Effective Date and as the same may be modified, amended or
supplemented from time to time in accordance with the terms hereof and thereof.
"Borrowing" shall mean the incurrence of (i) Swingline Loans by the
Borrower from BTCo on a given date and (ii) one Type of Revolving Loan by the
Borrower from all of the Banks on a PRO RATA basis on a given date (or resulting
from conversions on a given date), having in the case of Eurodollar Loans the
same Interest Period; provided that Base Rate Loans incurred pursuant to Section
1.10(b) shall be considered part of any related Borrowing of Eurodollar Loans.
"BTCo" shall mean Bankers Trust Company.
"Business Day" shall mean (i) for all purposes other than as covered
by clause (ii) below, any day excluding Saturday, Sunday and any day which shall
be in the City of New York a legal holiday or a day on which banking
institutions are authorized by law or other governmental actions to close and
(ii) with respect to all notices and determinations in connection with, and
payments of principal and interest on, Eurodollar Loans, any day which is a
Business Day described in clause (i) and which is also a day for trading by and
between banks in U.S. dollar deposits in the interbank Eurodollar market.
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"Calculation Period" shall mean, with respect to any sale or
disposition of assets made pursuant to Section 8.02(f), the last 12 month period
for which financial statements of the Borrower are reasonably available.
"Capital Lease" as applied to any Person shall mean any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of such Person's
capital stock, whether or not voting, including but not limited to common stock,
preferred stock, convertible debentures, warrants, options or similar rights to
acquire such capital stock, and all agreements, instruments and documents
convertible, in whole or in part, into any one or more or all of the foregoing.
"Capitalized Lease Obligations" shall mean all obligations under
Capital Leases of the Borrower or any of its Subsidiaries in each case taken at
the amount thereof accounted for as liabilities in accordance with GAAP.
"Cash Equivalents" shall mean (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than six months from the date of acquisition, (ii) U.S. dollar denominated time
deposits, certificates of deposit and bankers' acceptances of (x) any Bank, (y)
any domestic commercial bank of recognized standing having capital and surplus
in excess of $500,000,000 or (z) any bank (or the parent company of such bank)
whose short-term commercial paper rating from Standard & Poor's Corporation
("S&P") is at least A-1 or the equivalent thereof or from Moody's Investors
Service, Inc. ("Moody's") is at least P-1 or the equivalent thereof (any such
bank, an "Approved Bank"), in each case with maturities of not more than six
months from the date of acquisition, (iii) repurchase obligations with a term of
not more than seven days for underlying securities of the types described in
clause (i) above entered into with any bank meeting the qualifications specified
in clause (ii) above, (iv) commercial paper issued by any Bank or Approved Bank
or by the parent company of any Bank or Approved Bank and commercial paper
issued by, or guaranteed by, any industrial or financial company with a
short-term commercial paper rating of at least A-1 or the equivalent thereof by
S&P or at least P-1 or the equivalent thereof by Moody's (any such company, an
"Approved Company"), or guaranteed by any industrial company with a long term
unsecured debt rating of at least A or A2, or the equivalent of each thereof,
from S&P or Moody's, as the case may be, and in each case maturing within six
months after the date of acquisition and
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(v) investments in money market funds substantially all of whose assets are
comprised of securities of the type described in clauses (i) through (iv) above.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601 ET
SEQ.
"Change of Control" shall mean (i) Holdings shall cease to own legally
and beneficially 100% of the outstanding capital stock of the Borrower, (ii)
Management Investors shall cease to be the "beneficial owner" (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act) of 75% or more (on a fully diluted
basis) of (x) the Common Stock beneficially owned by the Management Investors on
the Restatement Effective Date, less (y) the Common Stock (not exceeding 750,000
shares) sold by Management Investor pursuant to the Proposed Equity Offering,
(iii) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than one or more Permitted Holders, is or becomes the
beneficial owner (as defined in clause (ii) above, except that a person shall be
deemed to have "beneficial ownership" of all shares that any such person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of more than 30% of the total
voting and economic ownership interests of Holdings; PROVIDED, HOWEVER, that the
Permitted Holders "beneficially own" (as defined in clause (ii) above), directly
or indirectly, in the aggregate a lesser percentage of the total voting and
economic ownership interests of Holdings than such other person and do not have
the right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the Board of Directors of Holdings, (iv)
during any period of two consecutive years individuals who at the beginning of
such period constituted the Board of Directors of Holdings (together with any
new directors whose election by such Board of Directors or whose nomination for
election by the stockholders of Holdings was approved by either (i) the
Permitted Holders or (ii) a vote of a majority of the directors of Holdings then
still in office who were either directors at the beginning of such period or
whose election or nomination for election was previously so approved) cease for
any reason to constitute a majority of the Board of Directors of Holdings then
in office or (v) any "Change of Control" or similar term as defined in (I) prior
to the repayment in full of the Discount Notes or Senior Notes, respectively,
the Discount Note Indenture or the Senior Note Indenture except for any such
Change of Control arising from the Proposed Equity Issuance and/or (II) any
Permitted Subordinated Debt Documents.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time and the regulations promulgated and the rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the Effective
Date and any subsequent provisions of the Code, amendatory thereof, supplemental
thereto or substituted therefor.
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"Collateral" shall mean all of the Collateral as defined in each of
the Security Documents.
"Collateral Agent" shall mean the Agent acting as collateral agent for
the Banks.
"Commitment Commission" shall have the meaning provided in
Section 3.01(a).
"Common Stock" shall mean the common stock of Holdings.
"Consolidated Capital Expenditures" shall mean, for any period, the
aggregate of all expenditures (whether paid in cash or accrued as liabilities
and including in all events all amounts expended or capitalized under Capital
Leases but excluding any amount representing capitalized interest) by the
Borrower and its Subsidiaries during that period that, in conformity with GAAP,
are or are required to be included in the property, plant or equipment reflected
in the consolidated balance sheet of the Borrower and its Subsidiaries, provided
that Consolidated Capital Expenditures shall in any event exclude the purchase
price paid in connection with any Permitted Acquisition (whether or not
allocable to property, plant and equipment).
"Consolidated Cash Interest Expense" of any Person shall mean, for any
period, Consolidated Interest Expense of such Person, but excluding, however,
interest expense not payable in cash and amortization of discount and deferred
issuance and financing costs.
"Consolidated Current Assets" shall mean, as to any Person at any
time, the current assets (other than cash and Cash Equivalents) of such Person
and its Subsidiaries determined on a consolidated basis in accordance with GAAP.
"Consolidated Current Liabilities" shall mean, as to any Person at any
time, the current liabilities of such Person and its Subsidiaries determined on
a consolidated basis in accordance with GAAP, but excluding all short-term
Indebtedness for borrowed money and the current portion of any long-term
Indebtedness of such Person or its Subsidiaries, in each case to the extent
otherwise included therein.
"Consolidated Debt" of any Person shall mean, as at any date of
determination, the aggregate stated balance sheet amount of all Indebtedness of
such Person and its Subsidiaries on a consolidated basis as determined in
accordance with GAAP.
"Consolidated EBIT" of any Person shall mean, for any period, (A) the
sum of the amounts for such period for such Person of (i) Consolidated Net
Income, (ii)
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provisions for taxes based on income, (iii) Consolidated Interest Expense and
(iv) losses on sales of assets (excluding sales in the ordinary course of
business) and other extraordinary losses LESS (B) the amount for such period of
gains on sales of assets (excluding sales in the ordinary course of business)
and other extraordinary gains, all as determined on a consolidated basis for
such Person and its Subsidiaries in accordance with GAAP.
"Consolidated EBITDA" of any Person shall mean, for any period, the
sum of the amounts for such period for such Person of (i) Consolidated EBIT,
(ii) depreciation expense and (iii) amortization expense, all as determined on a
consolidated basis for such Person and its Subsidiaries in accordance with GAAP.
"Consolidated Fixed Charges" of any Person shall mean, for any period,
the sum, without duplication, for such Person of the amounts for such period of
(i) Consolidated Cash Interest Expense, (ii) Dividends paid to Holdings, (iii)
Consolidated Capital Expenditures (x) made other than pursuant to Section
8.05(c) and (y) paid in cash, (iv) taxes paid or payable in cash and (v)
scheduled payments on the Acquisition Loans and Existing Indebtedness, all as
determined on a consolidated basis for such Person and its Subsidiaries in
accordance with GAAP.
"Consolidated Interest Expense" of any Person shall mean, for any
period, total interest expense (including that attributable to Capital Leases in
accordance with GAAP) of such Person and its Subsidiaries on a consolidated
basis with respect to all outstanding Indebtedness of such Person and its
Subsidiaries, including, without limitation, all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers'
acceptance financing and net costs under Interest Rate Agreements.
"Consolidated Net Income" of any Person (a "Designated Person") shall
mean for any period, the net income (or loss) of such Designated Person and its
Subsidiaries on a consolidated basis for such period taken as a single
accounting period determined in conformity with GAAP, provided that there shall
be (A) deducted, in the case of the Borrower, any Dividends paid to Holdings and
(B) excluded (i) the income (or loss) of any Person (other than Subsidiaries of
the Designated Person) in which any other Person (other than the Designated
Person or any of its Subsidiaries) has a joint interest, except to the extent of
the amount of dividends or other distributions actually paid to the Designated
Person or any of its Subsidiaries by such Person during such period, (ii) the
income (or loss) of any Person accrued prior to the date it becomes a Subsidiary
of the Designated Person or is merged into or consolidated with the Designated
Person or any of its Subsidiaries or that Person's assets are acquired by the
Designated Person or any of its Subsidiaries, (iii) the income of any Subsidiary
of the Designated Person to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
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applicable to that Subsidiary, (iv) Transaction Expenses and (v) compensation
expense resulting from the issuance of capital stock, stock options or stock
appreciation rights issued to employees, including officers, of the Designated
Person or any Subsidiary, or the exercise of such options or rights, in each
case to the extent the obligation (if any) associated therewith is not expected
to be settled by the payment of cash by the Designated Person or any Affiliate
of the Designated Person and compensation expense resulting from the repurchase
of any such capital stock, options and rights.
"Consolidated Senior Debt" of any Person shall mean, as of any date of
determination, (x) the Consolidated Debt of such Person less (y) all Permitted
Subordinated Debt included in determining such Consolidated Debt.
"Contingent Obligations" shall mean as to any Person any obligation of
such Person guaranteeing or intending to guarantee any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(a) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (b) to advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (c) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation or (d) otherwise to assure or hold harmless the owner of
such primary obligation against loss in respect thereof, provided however, that
the term Contingent Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.
"Credit Documents" shall mean this Agreement, the Notes, the Security
Documents, any documents executed in connection therewith and (once executed)
the Guaranties.
"Credit Event" shall mean and include the making of a Loan or the
issuance of a Letter of Credit.
"Credit Party" shall mean the Borrower and, upon compliance with the
provisions of Section 7.10(a), each Guarantor.
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"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a Bank
Default is in effect.
"Designated UOH Stockholders" shall mean the Management Investors,
Kelso Investment Associates V, L.P. and Kelso Equity Partners V, L.P.
"Discount Note Indenture" shall mean the Indenture entered into by and
between Holdings and United States Trust Company of New York, as trustee
thereunder, with respect to the Discount Notes as in effect on the Effective
Date and as the same may be modified, amended or supplemented from time to time
in accordance with the terms hereof and thereof.
"Discount Notes" shall mean the 14% Series A and Series B Senior
Secured Discount Notes due 2004 issued by Holdings under the Discount Note
Indenture and as the same may be supplemented, amended or modified from time to
time in accordance with the terms hereof and thereof.
"Dividends" shall have the meaning provided in Section 8.09.
"Domestic Subsidiary" shall mean a Subsidiary of the Borrower that is
organized under the laws of the United States or any state thereof.
"Environmental Claims" means any and all administrative, regulatory or
judicial actions, suits, demand letters, claims, liens, notices of noncompliance
or violation, investigations (other than internal reports prepared by the
Borrower or any of its Subsidiaries solely in the ordinary course of such
Person's business and not in response to any third party action or request of
any kind) or proceedings relating to any Environmental Law or any permit issued,
or any written approval given, under any such Environmental Law (hereafter,
"Claims"), including, without limitation, (a) any and all Claims by governmental
or regulatory authorities for enforcement, cleanup, removal, response, remedial
or other actions or damages pursuant to any applicable Environmental Law, and
(b) any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting from
Hazardous Materials arising from alleged injury or threat of injury to health,
safety or the environment.
"Environmental Law" means any applicable Federal, state, foreign or
local statute, law, rule, regulation, ordinance, code, guide, policy and rule of
common law now or hereafter in effect and in each case as amended, and any
judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or
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judgment, relating to the environment, health, safety or Hazardous Materials,
including, without limitation, CERCLA; RCRA; the Federal Water Pollution Control
Act, as amended, 33 U.S.C. Section 1251 ET SEQ.; the Toxic Substances Control
Act, 15 U.S.C. Section 7401 ET SEQ.; the Clean Air Act, 42 U.S.C. Section 7401
ET SEQ.; the Safe Drinking Water Act, 42 U.S.C. Section 3808 ET SEQ.; the Oil
Pollution Act of 1990, 33 U.S.C. Section 2701 ET SEQ. and any applicable state
and local or foreign counterparts or equivalents.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder. Section references to ERISA are to ERISA, as in effect at
the Initial Borrowing Date and any subsequent provisions of ERISA, amendatory
thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9)
of ERISA) which together with Holdings, the Borrower or a Subsidiary would be
deemed to be a "single employer" within the meaning of Sections 414(b), (c), (m)
and (o) of the Code.
"Eurodollar Loans" shall mean each Loan bearing interest at the rates
provided in Section 1.08(b).
"Eurodollar Rate" shall mean with respect to each Interest Period for
a Eurodollar Loan, (i) the offered quotation to first-class banks in the
interbank Eurodollar market by the Agent for dollar deposits of amounts in same
day funds comparable to the outstanding principal amount of the Eurodollar Loan
of the Agent for which an interest rate is then being determined with maturities
comparable to the Interest Period to be applicable to such Eurodollar Loan,
determined as of 10:00 A.M. (New York time) on the date which is two Business
Days prior to the commencement of such Interest Period divided (and rounded
upward to the next whole multiple of 1/16 of 1%) by (ii) a percentage equal to
100% minus the then stated maximum rate of all reserve requirements (including
without limitation any marginal, emergency, supplemental, special or other
reserves) applicable to any member bank of the Federal Reserve System in respect
of Eurocurrency liabilities as defined in Regulation D (or any successor
category of liabilities under Regulation D).
"Event of Default" shall have the meaning provided in Section 9.
"Existing Indebtedness" shall have the meaning provided in Section
6.21.
"Existing Letter of Credit" shall have the meaning provided in
Section 2.01(a).
"Expiry Date" shall mean September 30, 2004.
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"Federal Funds Effective Rate" shall mean for any period, a
fluctuating interest rate equal for each day during such period to the weighted
average of the rates on overnight Federal Funds transactions with members of the
Federal Reserve System arranged by Federal Funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Agent from three Federal Funds brokers of
recognized standing selected by the Agent.
"Fees" shall mean all amounts payable pursuant to, or referred to in,
Section 3.01.
"Facing Fee" shall have the meaning provided in Section 3.01(c).
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect on the date of this Agreement; it being
understood and agreed that determinations in accordance with GAAP for purposes
of Section 8, including defined terms as used therein, are subject (to the
extent provided therein) to Section 12.07(a).
"Guarantor" shall mean and include each Subsidiary Guarantor and
Holdings upon their execution of a Guaranty.
"Guaranties" shall mean and include the Subsidiary Guaranty and the
Holdings Guaranty.
"Guaranty Commencement Date" shall mean the earlier of (x) the date on
which the Senior Notes and the Discount Notes are repaid in full and (y) the
date on which the covenants contained in the Senior Notes and the Discount Notes
are amended, modified or waived to the satisfaction of (and pursuant to a debt
tender offer and exit consent satisfactory to) the Agent so as to permit the
execution of the Guaranties and the Additional Security Documents.
"Hazardous Materials" means (a) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, transformers or other equipment that
contained, electric fluid containing levels of polychlorinated biphenyls, and
radon gas and (b) any chemicals, materials or substances defined as or included
in the definition of "hazardous substances," "hazardous waste," "hazardous
materials," "extremely hazardous waste," "restricted hazardous waste," "toxic
substances," "toxic pollutants," "contaminants," or "pollutants," or words of
similar import, under any Environmental Law.
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"Holdback Proceeds" shall have the meaning provided in the AF Credit
Agreement.
"Holdings" shall mean Universal Outdoor Holdings, Inc., a Delaware
corporation.
"Holdings Guaranty" shall have the meaning provided in Section
9.08(D).
"Holdings Leverage Ratio" shall mean, at any Measurement Date, the
ratio of (x) Consolidated Debt of Holdings on such date to (y) Adjusted EBITDA
of Holdings for the 12-month period (taken as one accounting period) ending on
such date.
"Holdings Pledge Agreement" shall have the meaning provided in Section
9.08(D).
"Indebtedness" of any Person shall mean without duplication (i) all
indebtedness of such Person for borrowed money, (ii) the deferred purchase price
of assets or services which in accordance with GAAP would be shown on the
liability side of the balance sheet of such Person, (iii) the face amount of all
letters of credit issued for the account of such Person and, without
duplication, all drafts drawn thereunder, (iv) all Indebtedness of a second
Person secured by any Lien on any property owned by such first Person, whether
or not such indebtedness has been assumed, (v) all Capitalized Lease Obligations
of such Person, (vi) all obligations of such Person to pay a specified purchase
price for goods or services whether or not delivered or accepted, I.E.,
take-or-pay and similar obligations, (vii) all net obligations of such Person
under Interest Rate Agreements and (viii) all Contingent Obligations of such
Person, (other than Contingent Obligations arising from the guaranty by such
Person of the obligations of the Borrower and/or its Subsidiaries to the extent
such guaranteed obligations do not constitute Indebtedness and are otherwise
permitted hereunder) provided that Indebtedness shall not include trade payables
and accrued expenses, in each case arising in the ordinary course of business.
"Initial Borrowing Date" shall mean the date upon which the initial
incurrence of Revolving Loans occurs.
"Interest Period" with respect to any Loan shall mean the interest
period applicable thereto, as determined pursuant to Section 1.09.
"Interest Rate Agreement" shall mean any interest rate swap agreement,
any interest rate cap agreement, any interest rate collar agreement or other
similar agreement or arrangement designed to protect the Borrower or any
Subsidiary against fluctuations in interest rates.
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"Investment" shall mean, with respect to any Person, all investments
by such Person in other Persons (including Affiliates and Subsidiaries) in the
forms of loans, guarantees, advances or capital contributions (excluding
commission, travel and similar advances to officers and employees made in the
ordinary course of business), purchases or other acquisitions for consideration
of Indebtedness, Capital Stock or other securities and all other items that are
or would be classified as investments on a balance sheet prepared in accordance
with GAAP.
"Kelso" shall mean Kelso & Company, L.P., a Delaware limited
partnership doing business as Kelso & Company, Inc.
"Kelso Designees" shall mean William A. Marquard, John F.
McGillicuddy, David M. Roderick, John Rutledge IRA, Michael Rapoport, Patricia
Hetter Kelso and George L. Shinn.
"LaSalle" shall mean LaSalle National Bank.
"LaSalle Loan Agreement" shall mean the Amended and Restated Loan and
Security Agreement dated March 22, 1995 between the Borrower and LaSalle
National Bank, as in effect on the Effective Date immediately prior to the
termination thereof.
"Leasehold" of any Person means all of the right, title and interest
of such Person as lessee or licensee in, to and under leases or licenses of
land, improvements and/or fixtures.
"Letter of Credit" shall have the meaning provided in Section 2.01(a).
"Letter of Credit Fee" shall have the meaning provided in Section
3.01(b).
"Letter of Credit Issuer" shall mean BTCo, LaSalle with respect to the
Existing Letter of Credit and/or any Bank which at the request of the Borrower
and with the consent of the Agent agrees, in such Bank's sole discretion, to
become a Letter of Credit Issuer for purposes of issuing Letters of Credit
pursuant to Section 2.
"Letter of Credit Outstandings" shall mean, at any time, the sum of,
without duplication, (i) the aggregate Stated Amount of all outstanding Letters
of Credit and (ii) the aggregate amount of all Unpaid Drawings in respect of all
Letters of Credit.
"Letter of Credit Request" shall have the meaning provided in Section
2.03(a).
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"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement or any
lease in the nature thereof).
"Loan" means and includes each Revolving Loan and each Swingline Loan.
"Management Agreements" shall have the meaning provided in the
Original Credit Agreement.
"Management Investors" shall mean Daniel Simon and Brian Clingen.
"Mandatory Borrowing" shall have the meaning provided in Section
1.01(c).
"Margin Reduction Discount" shall mean zero, provided that the Margin
Reduction Discount shall be increased to 1/4 of 1%, 1/2 of 1%, 1% or 1-1/2%, as
the case may be, as specified in clauses (i), (ii), (iii) or (iv) below, at any
time after the Restatement Effective Date, when, and for so long as, the ratio
set forth in such clause has been satisfied as at the Relevant Determination
Date:
(i) the Margin Reduction Discount shall be 1/4 of 1% in the event that
at the Relevant Determination Date the Modified Holdings Leverage
Ratio is equal to or greater than 5.0 to 1 but less than 6.0 to 1;
(ii) the Margin Reduction Discount shall be 3/4 of 1% in the event that
as at the Relevant Determination Date the Modified Holdings
Leverage Ratio is equal to or greater than 4.0 to 1 but less than
5.0 to 1;
(iii) the Margin Reduction Discount shall be 1 1/4% in the event that as
at the Relevant Determination Date the Modified Holdings Leverage
Ratio is equal to or greater than 3.0 to 1 but less than 4.0 to 1;
or
(iv) the Margin Reduction Discount shall be 1 3/4% in the event that as
the Relevant Determination Date the Modified Holdings Leverage
Ratio is less than 3.0 to 1.
The Modified Holdings Leverage Ratio shall be determined (x) for the last day of
a fiscal month, quarter or year, by delivery of an officer's certificate of the
Borrower to the Banks pursuant to Section 7.01(e)(i) and (y) for the date of the
incurrence of Consolidated Debt after delivery of the officer's certificate
referred to in clause (x), by delivery of an officer's certificate of the
Borrower to the Banks pursuant to Section 7.01(e)(ii), each of which
certificates shall set forth the calculation of the Modified Holdings Leverage
Ratio. The Margin Reduction Discount so determined shall apply, except as set
forth below, from five
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Business Days after the date on which such officer's certificate is delivered to
the Agent to the earlier of (x) the date on which the next certificate is
delivered to the Agent pursuant to Section 7.01(e)(i) or (ii) and (y) the 30th
day following the end of the fiscal month in which such first certificate was
delivered to the Agent pursuant to Section 7.01(e)(i). Notwithstanding anything
to the contrary contained above, the Margin Reduction Discount shall be zero (x)
if no officer's certificate has been delivered to the Banks pursuant to Section
7.01(e) (i) which sets forth the Modified Holdings Leverage Ratio for the
Relevant Determination Date or the financial statements upon which any such
calculations are based have not been delivered, until such a certificate and/or
financial statements are delivered and (y) at all times when there shall exist a
violation of Section 9.01 or an Event of Default. It is understood and agreed
that the Margin Reduction Discount as provided above shall in no event be
cumulative and only the Margin Reduction Discount applicable under either clause
(i), (ii), (iii) or (iv), if any, contained in this definition shall be
applicable.
"Margin Stock" shall have the meaning provided in Regulation U.
"Material Adverse Effect" shall mean a material adverse effect on the
business, property, assets, liabilities, operations, condition (financial or
otherwise) or prospects of (x) Holdings and its Subsidiaries taken as a whole,
(y) the Borrower and its Subsidiaries taken as a whole and/or (z) with respect
to any reference to such term in Section 5, OAH and its Subsidiaries taken as a
whole.
"Maximum Swingline Amount" shall mean $5,000,000.
"Measurement Date" shall mean (x) the last day of each fiscal quarter
of the Borrower and (y) the last day of the last month ended prior to the date
of a Tested Borrowing.
"Minimum Borrowing Amount" shall mean (i) for Revolving Loans
maintained as Base Rate Loans, $500,000, (ii) for Loans maintained as Eurodollar
Loans, $1,000,000 and (iii) for Swingline Loans, $250,000.
"Modified Available Amount" shall have the meaning provided in the AF
Credit Agreement.
"Modified Holdings Leverage Ratio" shall mean, with respect to any
Relevant Measurement Date, the Holdings Leverage Ratio determined as of such
date, modified by the inclusion in the computation thereof of any incremental
Consolidated Debt of Holdings incurred after such Relevant Measurement Date and
prior to the delivery of an officer's certificate pursuant to Section 7.01(e)(i)
in respect of the next Relevant Measurement Date.
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"Mortgage" shall have the meaning provided in Section 5.01(I)(d)(i).
"Mortgage Policies" shall have the meaning provided in the Original
Credit Agreement.
"Mortgaged Properties" shall mean the Real Properties subject to the
Mortgages.
"Naegele" shall mean Naegele Outdoor Advertising Company, a Delaware
corporation.
"New Mortgage" shall have the meaning provided in Section 7.10.
"Non-Defaulting Bank" shall mean each Bank other than a Defaulting
Bank.
"Note" shall mean and include each Revolving Note and each Swingline
Note.
"Notice of Borrowing" shall have the meaning provided in Section 1.03.
"Notice of Conversion" shall have the meaning provided in Section
1.06.
"Notice Office" shall mean the office of the Agent at 130 Liberty
Street, New York, New York or such other office as the Agent may designate to
the Borrower from time to time.
"OAH" shall mean Outdoor Advertising Holdings, Inc., a Delaware
corporation.
"Obligations" shall mean all amounts, direct or indirect, contingent
or absolute, of every type or description, and at any time existing, owing to
the Agent, the Collateral Agent or any Bank pursuant to the terms of this
Agreement or any other Credit Document.
"Original Credit Agreement" shall have the meaning referred to in the
first recital to this Agreement.
"Original Effective Date" shall mean the Effective Date as defined in
the Original Credit Agreement.
"Participant" shall have the meaning provided in Section 2.05(a).
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"Payment Office" shall mean the office of the Agent at 130 Liberty
Street, New York, New York or such other office as the Agent may designate to
the Borrower from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"Percentage" shall mean at any time for each Bank the percentage
obtained by dividing such Bank's Revolving Commitment by the Total Revolving
Commitment, PROVIDED that if the Total Revolving Commitment has been terminated,
the Percentage of each Bank shall be determined by dividing such Bank's
Revolving Commitment immediately prior to such termination by the Total
Revolving Commitment immediately prior to such termination.
"Permitted Acquisition" shall mean any acquisition (including through
a stock acquisition) of property or assets of a nature or type, or which will be
used in a business, permitted to be held or engaged in by Section 8.01 provided
that (x) the Holdings Leverage Ratio as of the last Measurement Date prior to
the consummation of such acquisition was less than 5.50 to 1.0 or (y) the
aggregate amount expended for all such acquisitions after the Restatement
Effective Date not effected in compliance with clause (x) above or clause (z)
below does not exceed $50,000,000 or (z) such acquisition has been consented to
in writing by the Super-Majority Banks.
"Permitted Encumbrances" shall mean, with respect to the Mortgaged
Property, such exceptions to title as are set forth in the title insurance
policy or title commitment delivered with respect thereto, all of which
exceptions must be reasonably acceptable to the Agent.
"Permitted Exit Amendments" shall mean the exit amendments referred to
in clause (y) of the definition of Guaranty Commencement Date.
"Permitted Holders" means Kelso and its Affiliates, the Kelso
Designees, the Management Investors, any employee stock ownership plan
established by the Borrower for the benefit of the employees of the Borrower or
any Subsidiary and their Permitted Transferees.
"Permitted Investments" shall mean (a) Cash and Cash Equivalents, (b)
Investments in Naegele and/or Peterson, (c) Investments in all other
Subsidiaries up to $1,000,000 in the aggregate, including Investments in a
Person that becomes a Subsidiary of the Borrower immediately after such
Investment, provided (i) an Event of Default has not occurred and is continuing
and will not occur as a result of, in connection with or after giving effect to
such Investment and (ii) such Person, at the time of such Investment or at
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the time such Person becomes a Subsidiary, engages exclusively in the business
permitted to be engaged in by Borrower and its Subsidiaries pursuant to Section
8.01, (c) loans and advances of money in the ordinary course of business and
consistent with past practice to officers and employees of Borrower or any of
its Subsidiaries, (d) investments in receivables owing to the borrower and/or
any Subsidiary, if created or acquired in the ordinary course of business and
payable or dischargeable in accordance with customary trade terms, and (e)
investments (including debt obligations) received in connection with the
bankruptcy or reorganization of suppliers and customers and in settlement of
delinquent obligations of, and other disputes with, customers and suppliers
owing in the ordinary course of business.
"Permitted Liens" shall mean Liens described in clauses (a), (b) and
(d) of Section 8.03.
"Permitted Subordinated Debt" shall mean up to $200 million of
subordinated debt of the Borrower as contemplated by the "red herring"
prospectus dated September 25, 1996 relating to subordinated debt of the
Borrower and issued on the terms and conditions described in such prospectus or
otherwise on terms and conditions reasonably satisfactory to the Required Banks.
"Permitted Subordinated Debt Documents" shall mean all indentures,
agreements, notes and other instruments governing or evidencing Permitted
Subordinated Debt, all of which shall be reasonably satisfactory to the Agent.
"Permitted Transferees" means (i) in the case of Kelso, (A) any
Affiliate thereof (other than any corporation or other Person (except for any
corporation or other Person engaged in a business similar, complementary or
related to the nature or type of the business of Holdings and its Subsidiaries)
controlled by, or any investment fund (other than Kelso Investment Associates V,
L.P. or any investment fund that is solely comprised of current and former
professionals of Kelso) managed by, Kelso), (B) any managing director, general
partner, limited partner, director, officer or employee of Kelso or any
Affiliate thereof (collectively, "Kelso Associates"), (C) the heirs, executors,
administrators, testamentary trustees, legatees or beneficiaries of any Kelso
Associate or Kelso Designee and (D) any trust, the beneficiaries of which, or a
corporation or partnership, the stockholders or partners of which, include only
a Kelso Associate or Kelso Designee, his spouse, parents, siblings, or direct
lineal descendants, and (ii) in the case of any Management Investors, (A) his
executor, administrator, testamentary trustee, legatee or beneficiaries, (B) his
spouse, parents, siblings, members of his or her immediate family (including
adopted children) and/or direct lineal descendants or (C) a trust, the
beneficiaries of which, or a corporation or partnership, the stockholders or
partners of which, include only the Management Investor, as the case may be, and
his spouse, parents, siblings,
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members of his or her immediate family (including adopted children) and/or
direct lineal descendants.
"Person" shall mean any individual, partnership, joint venture, firm,
corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.
"Peterson" shall mean Peterson Outdoor Advertising Corp., a Delaware
corporation, and shall include the surviving corporation of a merger between OAH
(as the survivor of the Merger referred to in the Acquisition Agreement) and
Peterson to be effected on or prior to the Restatement Effective Date.
"Plan" shall mean any multi-employer or single-employer plan as
defined in Section 4001 of ERISA, which is maintained or contributed to by (or
to which there is an obligation to contribute of) Holdings, the Borrower, a
Subsidiary or an ERISA Affiliate, and each such plan for the five year period
immediately following the latest date on which Holdings, the Borrower, a
Subsidiary, or an ERISA Affiliate maintained, contributed to or had an
obligation to contribute to such plan.
"Pledge Agreements" shall mean the Borrower Pledge Agreement and the
UOH Pledge Agreement and once executed the Additional Pledge Agreement and the
Holdings Pledge Agreement.
"Pledged Securities" shall mean all the Pledged Securities as defined
in the relevant Pledge Agreement.
"Prime Lending Rate" shall mean the rate which Bankers Trust Company
announces from time to time as its prime lending rate, the Prime Lending Rate to
change when and as such prime lending rate changes. The Prime Lending Rate is a
reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. Bankers Trust Company may make commercial
loans or other loans at rates of interest at, above or below the Prime Lending
Rate.
"Purchase" shall mean repay, redeem, purchase, repurchased or
otherwise acquire for value.
"RCRA" shall mean the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. Section 6901 ET SEQ.
"Real Property" of any Person shall mean all of the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
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"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing reserve requirements.
"Regulation U" shall mean Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing margin requirements.
"Relevant Determination Date" shall mean, at any time, (x) the last
day of the then most recently ended fiscal month, quarter or year of Holdings
with respect to which an officer's certificate has been, or is required to be,
delivered to the Banks pursuant to Section 7.01(e)(i) or (y) if the Margin
Reduction Discount is greater than zero, the last date subsequent to the date
specified in clause (x) on which any Consolidated Debt of Holdings and its
Subsidiaries has been incurred.
"Reportable Event" shall mean an event described in Section 4043(c) of
ERISA with respect to a Plan as to which the 30-day notice requirement has not
been waived by the PBGC.
"Required Banks" shall mean Non-Defaulting Banks whose Adjusted
Percentages exceed 50%.
"Restatement Effective Date" shall have the meaning provided in
Section 5.01.
"Revolving Commitment" shall mean, with respect to each Bank, the
amount set forth opposite such Bank's name in Annex I hereto directly below the
column entitled "Revolving Commitment," as the same may be reduced from time to
time pursuant to Section 3.02, 3.03 and/or 9 or (y) adjusted from time to time
as a result of assignments to or from such Bank pursuant to Section 12.04.
"Revolving Loan" shall have the meaning provided in Section 1.01(a).
"Revolving Note" has the meaning provided in Section 1.05(a).
"SEC" shall have the meaning provided in Section 7.01(h).
"SEC Regulation D" shall mean Regulation D as promulgated under the
Securities Act of 1933, as amended, as the same may be in effect from time to
time.
"Security Agreement" shall mean an Amendment and Restatement to
Security Agreement in the form of Exhibit F to the AF Credit Agreement, as in
effect
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on the Restatement Effective Date and as the same may be modified, amended or
supplemented from time to time in accordance with the terms hereof
and thereof.
"Security Agreement Collateral" shall mean all "Collateral" as defined
in the Security Agreement.
"Security Documents" shall mean each Pledge Agreement, the Security
Agreement, each Mortgage and, once executed, each Additional Security Document,
if any.
"Senior Leverage Ratio" shall mean, at any Measurement Date, the ratio
of (x) Consolidated Senior Debt of the Borrower on such date to (y) Adjusted
EBITDA of the Borrower for the 12-month period (taken as one accounting period)
ending on such date.
"Senior Note Documents" shall mean and include each of the documents,
instruments (including the Senior Notes) and other agreements entered into by
the Borrower (including, without limitation, the Senior Note Indenture) relating
to the issuance by the Borrower of the Senior Notes, as in effect on the
Restatement Effective Date and as the same may be supplemented, amended or
modified from time to time in accordance with the terms hereof and thereof.
"Senior Note Indenture" shall mean the Indenture entered into by and
between the Borrower and United States Trust Company of New York, as trustee
thereunder, with respect to the Senior Notes as in effect on the Restatement
Effective Date and as the same may be modified, amended or supplemented from
time to time in accordance with the terms hereof and thereof.
"Senior Notes" shall mean the 11% Senior Notes due 2003 issued by the
Borrower under the Senior Note Indenture, as in effect on the Restatement
Effective Date and as the same may be supplemented, amended or modified from
time to time in accordance with the terms thereof and hereof.
"Shareholders' Agreements" shall have the meaning provided in the
Original Credit Agreement.
"Smith Note" shall have the meaning provided in Section 8.04(g).
"Stated Amount" of each Letter of Credit shall mean the maximum
available to be drawn thereunder (regardless of whether any conditions for
drawing could then be met).
"Subordinated Debt" shall mean and include the Permitted Subordinated
Debt and the Additional Subordinated Debt, in each case once issued.
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"Subordinated Debt Documents" shall mean and include the Permitted
Subordinated Debt Documents and the execution versions of all indentures,
agreements, notes and instruments governing or evidencing Additional
Subordinated Debt.
"Subsidiary" of any Person shall mean and include (i) any corporation
more than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person directly or
indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity in which such Person directly or indirectly through
Subsidiaries, has more than a 50% equity interest at the time. Unless otherwise
expressly provided, all references herein to "Subsidiary" shall mean a
Subsidiary of the Borrower.
"Subsidiary Guarantor" shall mean each Subsidiary (x) that executes
and delivers a Subsidiary Guaranty pursuant to Section 7.10(a) and (y) each
Domestic Subsidiary created after the Section 7.10(a) actions are taken that
executes and delivers a counterpart of the Subsidiary Guaranty, provided that at
such time such Subsidiary also takes the other actions that it would have been
required to take under Section 7.10(a) if it were a Subsidiary on the Guaranty
Commencement Date.
"Subsidiary Guaranty" shall have the meaning provided in Section
7.10(a).
"Super-Majority Banks" shall mean the Non-Defaulting Banks which would
constitute the Required Banks if each reference to "50%" in the definition of
Required Banks were to read "66 2/3%."
"Swingline Expiry Date" shall mean the date which is five Business
Days prior to the Expiry Date.
"Swingline Loan" shall have the meaning provided in Section 1.01(b).
"Swingline Note" shall have the meaning provided in Section 1.05(a).
"Syndication Date" shall mean the earlier of (x) the date which is 90
days after the Restatement Effective Date and (y) the date upon which the Agent
determines in its sole discretion (and notifies the Borrower) that the primary
syndication (and the resulting addition of institutions as Banks pursuant to
Section 12.04) has been completed.
"Taxes" shall have the meaning provided in Section 4.04(a).
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"Tax Sharing Agreement" shall mean the Tax Sharing Agreement dated as
of November 18, 1993 between the Borrower and Holdings in the form delivered to
the Banks prior to the Restatement Effective Date and as the same may be
modified with the consent of the Required Banks.
"Tested Borrowing" shall mean any incurrence of Revolving Loans after
the Restatement Effective Date in which the aggregate amount of Revolving Loans
incurred, when added to the aggregate amount of AR Loans and Revolving Loans
incurred during the immediately preceding 30 day period (to the extent (x)
incurred after the Restatement Effective Date, (y) still outstanding and (z) not
included in establishing an earlier Tested Borrowing), equal or exceed
$1,000,000.
"Total Revolving Commitment" shall mean the sum of the Revolving
Commitments of each of the Banks.
"Transaction" shall mean and include (i) the Acquisition, (ii) the
entering into and borrowing under the AF Credit Agreement and (iii) the entering
into and borrowing under this Agreement.
"Transaction Documents" shall mean the Acquisition Documents, the UOH-
Kelso Agreements, the Credit Documents and the AF Credit Agreement.
"Transaction Expenses" shall mean all fees and expenses incurred in
connection with, and payable prior to or substantially concurrently with the
closing of, the Transaction and including all fees paid to any of the Banks and
the Agent hereunder, fees paid to Kelso or its Affiliates permitted hereunder;
attorney's fees, accountants' fees, placement agents' fees, discounts and
commissions and brokerage, and consultant fees. Transaction Expenses shall
include the amortization of any such fees and expenses that are capitalized and
not classified as an expense on the date incurred.
"Type" shall mean any type of Loan determined with respect to the
interest option applicable thereto, I.E., a Base Rate Loan or Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code.
"Unfunded Current Liability" of any Plan shall mean the amount, if
any, by which the actuarial present value of the accumulated plan benefits under
the Plan as of the close of its most recent plan year determined in accordance
with Statement of Financial Accounting Standards No. 35, based upon the
actuarial assumptions used by the Plan's actuary in the most recent annual
valuation of the Plan, exceeds the fair market value of the assets thereof,
determined in accordance with Section 412 of the Code.
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"Unpaid Drawings" shall have the meaning provided in Section 2.04(a).
"Unutilized Revolving Commitment" for any Bank at any time shall mean
the excess of (i) the Revolving Commitment of such Bank over (ii) the sum of (x)
the aggregate outstanding principal amount of Revolving Loans made by such Bank
plus (y) an amount equal to such Bank's Adjusted Percentage of the Letter of
Credit Outstandings at such time.
"Unutilized Total Revolving Commitment" shall mean, at any time, (i)
the Total Revolving Commitment at such time less (ii) the sum of the aggregate
principal amount of all Revolving Loans and Swingline Loans at such time plus
the Letter of Credit Outstandings at such time.
"UOH Pledge Agreement" shall mean a Pledge Agreement in the form of
Exhibit G to the AF Credit Agreement, as in effect on the Effective Date and as
the same may be modified, amended or supplemented from time to time in
accordance with the terms hereof and thereof.
"Working Capital" shall mean the excess of Consolidated Current Assets
over Consolidated Current Liabilities.
"Written" or "in writing" shall mean any form of written communication
or a communication by means of telex, facsimile transmission, telegraph or
cable.
SECTION 11. THE AGENT.
11.01 APPOINTMENT. The Banks hereby designate Bankers Trust Company
as Agent (for purposes of this Section 11, the term "Agent" shall include BTCo
in its capacity as Collateral Agent pursuant to the Security Documents) to act
as specified herein and in the other Credit Documents. Each Bank hereby
irrevocably authorizes, and each holder of any Note by the acceptance of such
Note shall be deemed irrevocably to authorize, the Agent to take such action on
its behalf under the provisions of this Agreement, the other Credit Documents
and any other instruments and agreements referred to herein or therein and to
exercise such powers and to perform such duties hereunder and thereunder as are
specifically delegated to or required of the Agent by the terms hereof and
thereof and such other powers as are reasonably incidental thereto. The Agent
may perform any of its duties hereunder by or through its respective officers,
directors, agents, employees or affiliates. The Co-Agent shall have no duties
or liabilities in acting in such capacity.
11.02 NATURE OF DUTIES. The Agent shall not have any duties or
responsibilities except those expressly set forth in this Agreement and the
Security
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Documents. Neither the Agent nor any of its respective officers,
directors, agents, employees or affiliates shall be liable for any action taken
or omitted by it or them hereunder or under any other Credit Document or in
connection herewith or therewith, unless caused by its or their gross negligence
or willful misconduct. The duties of the Agent shall be mechanical and
administrative in nature; the Agent shall not have by reason of this Agreement
or any other Credit Document a fiduciary relationship in respect of any Bank or
the holder of any Note; and nothing in this Agreement or any other Credit
Document, expressed or implied, is intended to or shall be so construed as to
impose upon the Agent any obligations in respect of this Agreement or any other
Credit Document except as expressly set forth herein or therein.
11.03 LACK OF RELIANCE ON THE AGENT. Independently and without
reliance upon the Agent, each Bank and the holder of each Note, to the extent it
deems appropriate, has made and shall continue to make (i) its own independent
investigation of the financial condition and affairs of Holdings, the Borrower
and its Subsidiaries in connection with the making and the continuance of the
Loans and the taking or not taking of any action in connection herewith and (ii)
its own appraisal of the creditworthiness of Holdings, the Borrower and its
Subsidiaries and, except as expressly provided in this Agreement, the Agent
shall not have any duty or responsibility, either initially or on a continuing
basis, to provide any Bank or the holder of any Note with any credit or other
information with respect thereto, whether coming into its possession before the
making of the Loans or at any time or times thereafter. The Agent shall not be
responsible to any Bank or the holder of any Note for any recitals, statements,
information, representations or warranties herein or in any document,
certificate or other writing delivered in connection herewith or for the
execution, effectiveness, genuineness, validity, enforceability, perfection,
collectibility, priority or sufficiency of this Agreement or any other Credit
Document or the financial condition of the Borrower and its Subsidiaries or be
required to make any inquiry concerning either the performance or observance of
any of the terms, provisions or conditions of this Agreement or any other Credit
Document, or the financial condition of Holdings, the Borrower and its
Subsidiaries or the existence or possible existence of any Default or Event of
Default.
11.04 CERTAIN RIGHTS OF THE AGENT. If the Agent shall request
instructions from the Required Banks (or, where applicable, the Super-Majority
Banks) with respect to any act or action (including failure to act) in
connection with this Agreement or any other Credit Document, the Agent shall be
entitled to refrain from such act or taking such action unless and until the
Agent shall have received instructions from the Required Banks (or, where
applicable, the Super-Majority Banks); and the Agent shall not incur liability
to any Person by reason of so refraining. Without limiting the foregoing,
neither any Bank nor the holder of any Note shall have any right of action
whatsoever against the Agent as a result of the Agent acting or refraining from
acting hereunder or under any other Credit
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Document in accordance with the instructions of the Required Banks (or, where
appropriate, the Super-Majority Banks).
11.05 RELIANCE. The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram,
radiogram, order or other document or telephone message signed, sent or made by
any Person that the Agent believed to be the proper Person, and, with respect to
all legal matters pertaining to this Agreement and any other Credit Document and
its duties hereunder and thereunder, upon advice of counsel selected by the
Agent.
11.06 INDEMNIFICATION. To the extent the Agent is not reimbursed and
indemnified by the Borrower, the Banks will reimburse and indemnify the Agent,
in proportion to their respective Loans and Commitments as used in determining
the Required Banks, for and against any and all liabilities, obligations,
losses, damages, penalties, claims, actions, judgments, costs, expenses or
disbursements of whatsoever kind or nature which may be imposed on, asserted
against or incurred by the Agent in performing its respective duties hereunder
or under any other Credit Document, in any way relating to or arising out of
this Agreement or any other Credit Document; provided that no Bank shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Agent's gross negligence or willful misconduct.
11.07 THE AGENT IN ITS INDIVIDUAL CAPACITY. With respect to its
obligation to make Loans under this Agreement, the Agent shall have the rights
and powers specified herein for a "Bank" and may exercise the same rights and
powers as though it were not performing the duties specified herein; and the
term "Banks," "Letter of Credit Issuer," "Required Banks," "Super-Majority
Banks," "holders of Notes" or any similar terms shall, unless the context
clearly otherwise indicates, include the Agent in its individual capacity. The
Agent may accept deposits from, lend money to, and generally engage in any kind
of banking, trust or other business with the Borrower or any Affiliate of the
Borrower as if it were not performing the duties specified herein, and may
accept fees and other consideration from the Borrower for services in connection
with this Agreement and otherwise without having to account for the same to the
Banks.
11.08 HOLDERS. The Agent may deem and treat the payee of any Note as
the owner thereof for all purposes hereof unless and until a written notice of
the assignment, transfer or endorsement thereof, as the case may be, shall have
been filed with the Agent. Any request, authority or consent of any Person who,
at the time of making such request or giving such authority or consent, is the
holder of any Note shall be conclusive and binding on any subsequent holder,
transferee, assignee or indorsee, as the case may be, of such Note or of any
Note or Notes issued in exchange therefor.
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11.09 RESIGNATION BY THE AGENT. (a) The Agent may resign from the
performance of all its functions and duties hereunder and/or under the other
Credit Documents at any time by giving 15 Business Days' prior written notice to
the Borrower and the Banks. Such resignation shall take effect upon the
appointment of a successor Agent pursuant to clauses (b) and (c) below or as
otherwise provided below.
(b) Upon any such notice of resignation, the Banks shall appoint a
successor Agent hereunder or thereunder who shall be the Co-Agent or such other
commercial bank or trust company as is reasonably acceptable to the Borrower.
(c) If a successor Agent shall not have been so appointed within such
15 Business Day period, the Agent, with the consent of the Borrower, shall then
appoint a successor Agent who shall serve as Agent hereunder or thereunder until
such time, if any, as the Banks appoint a successor Agent as provided above.
(d) If no successor Agent has been appointed pursuant to clause (b)
or (c) above by the 20th Business Day after the date such notice of resignation
was given by the Agent, the Agent's resignation shall become effective and the
Required Banks shall thereafter perform all the duties of the Agent hereunder
and/or under any other Credit Document until such time, if any, as the Banks
appoint a successor Agent as provided above.
SECTION 12. MISCELLANEOUS.
12.01 PAYMENT OF EXPENSES, ETC. The Borrower agrees to: (i) whether
or not the transactions herein contemplated are consummated, pay all reasonable
out-of-pocket costs and expenses of the Agent, the Co-Agent in connection with
the negotiation, preparation, execution and delivery of the Credit Documents and
the documents and instruments referred to therein and any amendment, waiver or
consent relating thereto (including, without limitation, the reasonable fees and
disbursements of their respective counsel) and of the Agent, the Co-Agent and
each of the Banks in connection with the enforcement of the Credit Documents and
the documents and instruments referred to therein (including, without
limitation, the reasonable fees and disbursements of counsel for the Agent, the
Co-Agent and for each of the Banks); (ii) pay and hold each of the Banks
harmless from and against any and all present and future stamp and other similar
taxes with respect to the foregoing matters and save each of the Banks harmless
from and against any and all liabilities with respect to or resulting from any
delay or omission (other than to the extent attributable to such Bank) to pay
such taxes; and (iii) indemnify each Bank (including in its capacity as the
Agent, Co-Agent or a Letter of Credit Issuer), its officers, directors,
employees, representatives and agents from and hold each of them harmless
against any and all losses, liabilities, claims, damages or expenses incurred by
any of them as a result of, or arising out of, or in any way related to, or by
reason of, (a) any investigation, litigation
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or other proceeding (whether or not any Bank is a party thereto) related to the
entering into and/or performance of any Transaction Document or the use of the
proceeds of any Loans hereunder or the Transaction or the consummation of any
transactions contemplated in any Credit Document, or (b) the actual or alleged
presence of Hazardous Materials in the air, surface water or groundwater or on
the surface or subsurface of any Real Property owned or at any time operated by
the Borrower or any of its Subsidiaries, the release, generation, storage,
transportation, handling or disposal of Hazardous Materials at any location,
whether or not owned or operated by the Borrower or any of its Subsidiaries, the
non-compliance of any Real Property with foreign, federal, state and local laws,
regulations, and ordinances (including applicable permits thereunder) applicable
to any Real Property, or any Environmental Claim asserted against the Borrower,
any of its Subsidiaries or any Real Property owned or at any time operated by
the Borrower or any of its Subsidiaries, including, in each case, without
limitation, the reasonable fees and disbursements of counsel incurred in
connection with any such investigation, litigation or other proceeding (but
excluding any such losses, liabilities, claims, damages or expenses to the
extent incurred by reason of the gross negligence or willful misconduct of the
Person to be indemnified).
12.02 RIGHT OF SETOFF. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, if an Event of Default then exists, each Bank is hereby authorized
at any time or from time to time, without presentment, demand, protest or other
notice of any kind to the Borrower or to any other Person, any such notice being
hereby expressly waived, to set off and to appropriate and apply any and all
deposits (general or special) and any other Indebtedness at any time held or
owing by such Bank (including without limitation by branches and agencies of
such Bank wherever located) to or for the credit or the account of the Borrower
against and on account of the Obligations and liabilities of the Borrower to
such Bank under this Agreement or under any of the other Credit Documents,
including, without limitation, all interests in Obligations purchased by such
Bank pursuant to Section 12.06(b), and all other claims of any nature or
description arising out of or connected with this Agreement or any other Credit
Document, irrespective of whether or not such Bank shall have made any demand
hereunder and although said Obligations, liabilities or claims, or any of them,
shall be contingent or unmatured.
12.03 NOTICES. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, telecopier or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered, if to the Borrower, at
the address specified opposite its signature below; if to any Bank, at its
address specified for such Bank on Annex II hereto; or, at such other address as
shall be designated by any party in a written notice to the other parties
hereto. All such notices and communications shall be mailed, telegraphed,
telexed, telecopied, or cabled or sent by overnight courier, and shall be
effective when received.
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12.04 BENEFIT OF AGREEMENT. (a) This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective successors
and assigns of the parties hereto, provided that the Borrower may not assign or
transfer any of its rights or obligations hereunder without the prior written
consent of the Banks. Each Bank may at any time grant participations in any of
its rights hereunder or under any of the Notes to another financial institution,
provided that in the case of any such participation, the participant shall not
have any rights under this Agreement or any of the other Credit Documents (the
participant's rights against such Bank in respect of such participation to be
those set forth in the agreement executed by such Bank in favor of the
participant relating thereto) and all amounts payable by the Borrower hereunder
shall be determined as if such Bank had not sold such participation, except that
the participant shall be entitled to the benefits of Sections 1.10 and 4.04 of
this Agreement to the extent that such Bank would be entitled to such benefits
if the participation had not been entered into or sold, and, provided further
that no Bank shall transfer, grant or assign any participation under which the
participant shall have rights to approve any amendment to or waiver of this
Agreement or any other Credit Document except to the extent such amendment or
waiver would (i) extend the final scheduled maturity of any Loan or Note in
which such participant is participating (it being understood that any waiver of
the application of any prepayment or the method of any application of any
prepayment to, the amortization of the Loans shall not constitute an extension
of the final maturity date), or reduce the rate or extend the time of payment of
interest or Fees thereon (except in connection with a waiver of the
applicability of any post-default increase in interest rates), or reduce the
principal amount thereof, or increase such participant's participating interest
in any Revolving Commitment over the amount thereof then in effect (it being
understood that a waiver of any Default or Event of Default or of a mandatory
reduction in the Total Revolving Commitment, or a mandatory prepayment, shall
not constitute a change in the terms of any Revolving Commitment), (ii) release
all or substantially all of the Collateral or (iii) consent to the assignment or
transfer by the Borrower of any of its rights and obligations under this
Agreement or any other Credit Document.
(b) Notwithstanding the foregoing, (x) any Bank may assign all or a
portion of its outstanding Revolving Loans and Revolving Commitment and its
rights and obligations hereunder to another Bank, and (y) with the consent of
the Agent and, to the extent such consent shall not be unreasonably withheld,
the Borrower, any Bank may assign all or a portion of its outstanding Revolving
Loans and Revolving Commitment and its rights and obligations hereunder to one
or more commercial banks or other financial institutions (including one or more
Banks). No assignment pursuant to the immediately preceding sentence shall to
the extent such assignment represents an assignment to an institution other than
one or more Banks hereunder, be in an aggregate amount less than $5,000,000
unless the entire Revolving Loans and Revolving Commitment of the assigning Bank
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are so assigned. If any Bank so sells or assigns all or a part of its rights
hereunder or under the Notes, any reference in this Agreement or the Notes to
such assigning Bank shall thereafter refer to such Bank and to the respective
assignee to the extent of their respective interests and the respective assignee
shall have, to the extent of such assignment (unless otherwise provided
therein), the same rights and benefits as it would if it were such assigning
Bank. Each assignment pursuant to this Section 12.04(b) shall be effected by
the assigning Bank and the assignee Bank executing an Assignment Agreement
substantially in the form of Exhibit C (appropriately completed). In the event
of any such assignment (x) to a commercial bank or other financial institution
not previously a Bank hereunder, either the assigning or the assignee Bank shall
pay to the Agent a nonrefundable assignment fee of $3,500 (PROVIDED, that in the
event of simultaneous assignments relating to this Agreement and the AF Credit
Agreement, the fees for such assignments shall total $3,500) and (y) to a Bank,
either the assigning or assignee Bank shall pay to Agent a nonrefundable
assignment fee of $2,000 (PROVIDED, that in the event of simultaneous
assignments relating to this Agreement and the AF Credit Agreement, the fees for
such assignments shall total $2,000), and at the time of any assignment pursuant
to this Section 12.04(b), (i) Annex I shall be deemed to be amended to reflect
the Revolving Commitment of the respective assignee (which shall result in a
direct reduction to the Revolving Commitment of the assigning Bank) and of the
other Banks, and (ii) the Borrower will issue new Notes to the respective
assignee and to the assigning Bank in conformity with the requirements of
Section 1.05. Each Bank and the Borrower agree to execute such documents
(including without limitation amendments to this Agreement and the other Credit
Documents) as shall be necessary to effect the foregoing. Nothing in this
clause (b) shall prevent or prohibit any Bank from pledging its Revolving Note
or Revolving Loans to a Federal Reserve Bank in support of borrowings made by
such Bank from such Federal Reserve Bank. Notwithstanding any of the foregoing
provisions of this Section 12.04, no assignment may be made hereunder unless a
concurrent assignment is made by the assigning Bank under the AF Credit
Agreement of a percentage of its Acquisition Loans, A Term Loans (as defined in
the AF Credit Agreement) and Commitments thereunder equal to the percentage of
its Revolving Loans and Revolving Commitment being assigned by it hereunder.
(c) Notwithstanding any other provisions of this Section 12.04, no
transfer or assignment of the interests or obligations of any Bank hereunder or
any grant of participation therein shall be permitted if such transfer,
assignment or grant would require the Borrower to file a registration statement
with the SEC or to qualify the Loans under the "Blue Sky" laws of any State.
(d) Each Bank initially party to this Agreement hereby represents,
and each Person that becomes a Bank pursuant to an assignment permitted by this
Section 12 will, upon its becoming party to this Agreement, represent that it is
a commercial lender, other financial institution or other "accredited" investor
(as defined in SEC Regulation D) which makes loans in the ordinary course of its
business and that it will make or acquire Loans for its own account in the
ordinary course of such business, provided that subject to the preceding clauses
(a) and (b), the disposition of any promissory notes or other evidences
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of or interests in Indebtedness held by such Bank shall at all times be within
its exclusive control.
12.05 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the
part of the Agent or any Bank in exercising any right, power or privilege
hereunder or under any other Credit Document and no course of dealing between
the Borrower and the Agent or any Bank shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder
or under any other Credit Document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder or
thereunder. The rights and remedies herein expressly provided are cumulative
and not exclusive of any rights or remedies which the Agent or any Bank would
otherwise have. No notice to or demand on the Borrower in any case shall
entitle the Borrower to any other or further notice or demand in similar or
other circumstances or constitute a waiver of the rights of the Agent or the
Banks to any other or further action in any circumstances without notice or
demand.
12.06 PAYMENTS PRO RATA. (a) The Agent agrees that promptly after
its receipt of each payment from or on behalf of the Borrower in respect of any
Obligations hereunder, it shall distribute such payment to the Banks (other than
any Bank that has expressly waived its right to receive its pro rata share
thereof) PRO RATA based upon their respective shares, if any, of the Obligations
with respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise) which is applicable to the payment of the principal of, or interest
on, the Loans or Fees, of a sum which with respect to the related sum or sums
received by other Banks is in a greater proportion than the total of such
Obligation then owed and due to such Bank bears to the total of such Obligation
then owed and due to all of the Banks immediately prior to such receipt, then
such Bank receiving such excess payment shall purchase for cash without recourse
or warranty from the other Banks an interest in the Obligations to such Banks in
such amount as shall result in a proportional participation by all of the Banks
in such amount, provided that if all or any portion of such excess amount is
thereafter recovered from such Bank, such purchase shall be rescinded and the
purchase price restored to the extent of such recovery, but without interest.
(c) Notwithstanding anything to the contrary contained herein, the
provisions of the preceding Sections 12.06(a) and (b) shall be subject to the
express provisions of this Agreement which require, or permit, differing
payments to be made to Non-Defaulting Banks as opposed to Defaulting Banks.
-89
<PAGE>
12.07 CALCULATIONS; COMPUTATIONS. (a) The financial statements to
be furnished to the Banks pursuant hereto shall be made and prepared in
accordance with GAAP consistently applied throughout the periods involved
(except as set forth in the notes thereto or as otherwise disclosed in writing
by the Borrower to the Banks), provided that (x) except as otherwise
specifically provided herein, all computations determining compliance with
Section 8, including definitions used therein, shall utilize accounting
principles and policies in effect at the time of the preparation of, and in
conformity with those used to prepare, the December 31, 1995 historical
financial statements of the Borrower delivered to the Banks pursuant to Section
6.10(b) and (y) that if at any time the computations determining compliance with
Section 8 utilize accounting principles different from those utilized in the
financial statements furnished to the Banks, such financial statements shall be
accompanied by reconciliation work-sheets.
(b) All computations of interest and Fees hereunder shall be made on
the actual number of days elapsed over a year of 360 days.
12.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF
JURY TRIAL. (a) This Agreement and the other Credit Documents and the rights
and obligations of the parties hereunder and thereunder shall be construed in
accordance with and be governed by the law of the state of New York. Any legal
action or proceeding with respect to this Agreement or any other Credit Document
may be brought in the courts of the State of New York or of the United States
for the Southern District of New York, and, by execution and delivery of this
Agreement, the Borrower hereby irrevocably accepts for itself and in respect of
its property, generally and unconditionally, the jurisdiction of the aforesaid
courts. The Borrower further irrevocably consents to the service of process out
of any of the aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
the Borrower located outside New York City and by hand delivery to the Borrower
located within New York City, at its address for notices pursuant to Section
12.03, such service to become effective 30 days after such mailing. The
Borrower hereby irrevocably designates appoints and empowers CT Corporation
System, with offices on the date hereof located at 1633 Broadway, New York, New
York 10019, as its agent for service of process in respect of any such action or
proceeding. Nothing herein shall affect the right of the Agent or any Bank to
serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the Borrower in any other jurisdiction.
(b) The Borrower hereby irrevocably waives any objection which it may
now or hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement or any other
Credit Document brought in the courts referred to in clause (a) above and hereby
further irrevocably waives and agrees not to plead or claim in any such court
that any such action or proceeding brought in any such court has been brought in
an inconvenient forum.
-90-
<PAGE>
(c) Each of the parties to this agreement hereby irrevocably waives
all right to a trial by jury in any action, proceeding or counterclaim arising
out of or relating to this agreement, the other Credit Documents or the
transactions contemplated hereby or thereby.
12.09 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Agent.
12.10 EXECUTION. This Agreement shall be deemed executed by all
parties when the Borrower and each of the Banks shall have signed a copy hereof
(whether the same or different copies) and shall have delivered the same to the
Agent at the Payment Office of the Agent or, in the case of the Banks, shall
have given to the Agent telephonic (confirmed in writing), written telex or
facsimile transmission notice (actually received) at such office that the same
has been signed and mailed to it.
12.11 HEADINGS DESCRIPTIVE. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
12 AMENDMENT OR WAIVER. Neither this Agreement nor any other
Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by the Borrower and the Required Banks, provided that no such
change, waiver, discharge or termination shall, without the consent of each Bank
(other than a Defaulting Bank) affected thereby, (i) extend the Expiry Date (it
being understood that any waiver of the application of any prepayment of or the
method of application of any prepayment to the amortization of, the Loans shall
not constitute any such extension), or reduce the rate or extend the time of
payment of interest (other than as a result of waiving the applicability of any
post-default increase in interest rates) or Fees thereon, or reduce the
principal amount thereof, or increase the Revolving Commitment of any Bank over
the amount thereof then in effect (it being understood that a waiver of any
Default or Event of Default or of a mandatory reduction in the Total Revolving
Commitment shall not constitute a change in the terms of any Revolving
Commitment of any Bank), (ii) release or permit the release of all or
substantially all of the Collateral except as expressly provided in the Credit
Documents, (iii) amend, modify or waive any provision of this Section 12.12,
(iv) reduce the percentage specified in, or otherwise modify, the definition of
Required Banks or (v) consent to the assignment or transfer by the Borrower of
any of its rights and obligations under this Agreement provided further that no
such change, waiver, discharge or termination shall without the consent of the
Super-Majority Banks change directly or indirectly the definition of Permitted
Acquisition or Super-Majority Banks. No provision of Section 11 may be
-91-
<PAGE>
amended without the consent of the Agent and to the extent any such amendment
would affect the Co-Agent solely in its capacity as such, the Co-Agent, no
provision of Section 2 may be amended without the consent of the Letter of
Credit Issuer affected thereby and no provision of Section 1.01(b) or (c) or any
other provision applicable to Swingline Loans may be amended without the consent
of BTCo.
12.13 SURVIVAL. All indemnities set forth herein including, without
limitation, in Section 1.10, 1.11, 2.06, 4.04, 11.06 or 12.01 shall survive the
execution and delivery of this Agreement and the making and repayment of the
Loans.
12.14 DOMICILE OF LOANS. Each Bank may transfer and carry its Loans
at, to or for the account of any branch office, subsidiary or affiliate of such
Bank, provided that the Borrower shall not be responsible for costs arising
under Section 1.10, 2.06 or 4.04 resulting from any such transfer (other than a
transfer pursuant to Section 1.12) to the extent not otherwise applicable to
such Bank prior to such transfer.
12.15 CONFIDENTIALITY. Subject to Section 12.04, the Banks shall
hold all non-public information obtained pursuant to the requirements of this
Agreement which has been identified as such by the Borrower in accordance with
its customary procedure for handling confidential information of this nature and
in accordance with safe and sound banking practices and in any event may make
disclosure reasonably required by any BONA FIDE transferee or participant in
connection with the contemplated transfer of any Loans or participation therein
(so long as such transferee or participant agrees to abide by the provisions of
this Section 12.15) or as required or requested by any governmental agency or
representative thereof or pursuant to legal process, provided that, unless
specifically prohibited by applicable law or court order, each Bank shall notify
the Borrower of any request by any governmental agency or representative thereof
(other than any such request in connection with an examination of the financial
condition of such Bank by such governmental agency) for disclosure of any such
non-public information prior to disclosure of such information, and provided
further that in no event shall any Bank be obligated or required to return any
materials furnished by the Borrower or any Subsidiary.
12.16 SPECIAL AMENDMENTS. The parties hereto agree that, upon the
occur-rence of the Guaranty Commencement Date and the execution and delivery of
the Holdings Guaranty and the Holdings Pledge Agreement, the AF Credit Agreement
will be modified with the consent of the Borrower, the Required Banks under and
as defined in the AF Credit Agreement and the Required Banks hereunder to (x)
incorporate therein the Total Revolving Commitment, (y) incorporate therein any
representation, covenant or event of default contained herein and not contained
therein and (z) otherwise make such changes as appropriate to reflect the
incorporation of the Total Revolving Commitment therein (e.g., to the definition
of Required Banks therein to reflect same) and to eliminate the restrictions
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<PAGE>
imposed on the Borrower and its Subsidiaries by the Senior Notes and/or Discount
Notes and upon such amendment this Agreement will terminate.
* * *
-93-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Agreement to be duly executed and delivered as of the date
first above written.
Address
321 N. Clark Street UNIVERSAL OUTDOOR, INC.
Suite 1010 as Borrower
Chicago, Illinois
Attention: Brian T. Clingen
Tel. No.: (312) 644-8673 By:
Fax No.: (312) 644-8071 ---------------------------------
Name:
Title:
<PAGE>
BANKERS TRUST COMPANY,
Individually and as Agent
By:
------------------------------------
Name:
Title:
-95-
<PAGE>
LA SALLE NATIONAL BANK,
Individually and as Co-Agent
By:
------------------------------------
Name:
Title:
-96-
<PAGE>
BANK OF AMERICA ILLINOIS
By:
------------------------------------
Name:
Title:
-97-
<PAGE>
FIRST NATIONAL BANK OF BOSTON
By:
------------------------------------
Name:
Title:
<PAGE>
UNION BANK
By:
--------------------------------
Name:
Title:
-2-
<PAGE>
ANNEX I
COMMITMENTS
Revolving
Bank Commitment
---- -----------
Bankers Trust Company
La Salle National Bank
------------
Total: $12,500,000
------------
------------
<PAGE>
ANNEX II
BANK ADDRESSES
Bankers Trust Company 130 Liberty Street
New York, New York 10006
Attention: Dana Klein
Tel. No.: 212-250-1724
Fax No.: 212-250-7218
La Salle National Bank 120 South LaSalle Street
Chicago, Illinois 60603
Attention: Jeffrey D. Steele
Tel. No.: (312) 904-2721
Fax No.: (312) 904-4364
<PAGE>
ANNEX III
GOVERNMENT APPROVALS
<PAGE>
ANNEX IV
SUBSIDIARIES
<PAGE>
ANNEX V
PROPERTIES
<PAGE>
ANNEX VI
EXISTING INDEBTEDNESS
<PAGE>
ANNEX VII
INSURANCE POLICIES
<PAGE>
ANNEX VIII
EXISTING LIENS
<PAGE>
ANNEX IX
MANAGEMENT FEES
<PAGE>
Exhibit 10.2
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORM OF
AMENDED AND RESTATED
ACQUISITION CREDIT AGREEMENT
among
UNIVERSAL OUTDOOR, INC.
VARIOUS LENDING INSTITUTIONS,
LA SALLE NATIONAL BANK,
AS CO-AGENT
and
BANKERS TRUST COMPANY,
AS AGENT
____________________________________
$287,500,000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. Amount and Terms of Credit . . . . . . . . . . . . . . . . . . . 1
1.01 Commitment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Minimum Borrowing Amounts, etc. . . . . . . . . . . . . . . . . . 2
1.03 Notice of Borrowing, etc. . . . . . . . . . . . . . . . . . . . . 3
1.04 Disbursement of Funds . . . . . . . . . . . . . . . . . . . . . . 3
1.05 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.06 Conversions . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.07 Pro Rata Borrowings . . . . . . . . . . . . . . . . . . . . . . . 5
1.08 Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.09 Interest Periods. . . . . . . . . . . . . . . . . . . . . . . . . 7
1.10 Increased Costs, Illegality, etc. . . . . . . . . . . . . . . . . 8
1.11 Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.12 Change of Lending Office. . . . . . . . . . . . . . . . . . . . . 10
SECTION 2. Replacement Banks. . . . . . . . . . . . . . . . . . . . . . . . 11
2.01 Replacement of Banks. . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3. Fees; Commitments. . . . . . . . . . . . . . . . . . . . . . . . 12
3.01 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.02 Voluntary Reduction of Commitments. . . . . . . . . . . . . . . . 12
3.03 Mandatory Adjustments of Commitments, etc.. . . . . . . . . . . . 12
SECTION 4. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.01 Voluntary Prepayments . . . . . . . . . . . . . . . . . . . . . . 13
4.02 Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . 14
4.03 Method and Place of Payment . . . . . . . . . . . . . . . . . . . 18
4.04 Net Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 5. Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . 20
5.01 Conditions Precedent to Restatement Effective Date. . . . . . . . 20
5.02 Conditions Precedent to All Credit Events . . . . . . . . . . . . 24
(i)
<PAGE>
Page
----
SECTION 6. Representations, Warranties and Agreements . . . . . . . . . . . 25
6.01 Corporate Status. . . . . . . . . . . . . . . . . . . . . . . . . 25
6.02 Corporate Power and Authority . . . . . . . . . . . . . . . . . . 25
6.03 No Violation. . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.04 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.05 Use of Proceeds; Margin Regulations . . . . . . . . . . . . . . . 26
6.06 Governmental Approvals. . . . . . . . . . . . . . . . . . . . . . 26
6.07 Investment Company Act. . . . . . . . . . . . . . . . . . . . . . 26
6.08 Public Utility Holding Company Act. . . . . . . . . . . . . . . . 26
6.09 True and Complete Disclosure. . . . . . . . . . . . . . . . . . . 26
6.10 Financial Condition; Financial Statements . . . . . . . . . . . . 27
6.11 Security Interests. . . . . . . . . . . . . . . . . . . . . . . . 28
6.12 Representations and Warranties in Transaction Documents . . . . . 28
6.13 Consummation of Transaction . . . . . . . . . . . . . . . . . . . 29
6.14 Tax Returns and Payments. . . . . . . . . . . . . . . . . . . . . 29
6.15 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . 29
6.16 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.17 Patents, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.18 Pollution and Other Regulations . . . . . . . . . . . . . . . . . 30
6.19 Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.20 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.21 Existing Indebtedness . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 7. Affirmative Covenants. . . . . . . . . . . . . . . . . . . . . . 32
7.01 Information Covenants . . . . . . . . . . . . . . . . . . . . . . 32
7.02 Books, Records and Inspections. . . . . . . . . . . . . . . . . . 35
7.03 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.04 Payment of Taxes. . . . . . . . . . . . . . . . . . . . . . . . . 35
7.05 Consolidated Corporate Franchises . . . . . . . . . . . . . . . . 36
7.06 Compliance with Statutes, etc.. . . . . . . . . . . . . . . . . . 36
7.07 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.08 Good Repair . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.09 End of Fiscal Years; Fiscal Quarters. . . . . . . . . . . . . . . 37
7.10 Additional Security; Further Assurances . . . . . . . . . . . . . 37
7.11 Corporate Separateness. . . . . . . . . . . . . . . . . . . . . . 39
7.12 Compliance with Environmental Laws. . . . . . . . . . . . . . . . 39
SECTION 8. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . 40
8.01 Changes in Business . . . . . . . . . . . . . . . . . . . . . . . 40
8.02 Consolidation, Merger, Sale or Purchase of Assets, etc. . . . . . 40
8.03 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(ii)
<PAGE>
Page
----
8.04 Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . 44
8.05 Capital Expenditures. . . . . . . . . . . . . . . . . . . . . . . 45
8.06 Investments and Loans . . . . . . . . . . . . . . . . . . . . . . 46
8.07 Subsidiaries; etc.. . . . . . . . . . . . . . . . . . . . . . . . 46
8.08 Prepayments of Indebtedness, etc. . . . . . . . . . . . . . . . . 46
8.09 Dividends, etc. . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.10 Transactions with Affiliates. . . . . . . . . . . . . . . . . . . 48
8.11 Fixed Charge Coverage Ratio . . . . . . . . . . . . . . . . . . . 49
8.12 Minimum Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . 49
8.13 Borrower Leverage Ratio . . . . . . . . . . . . . . . . . . . . . 49
8.14 Senior Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . 49
8.15 Interest Ratio. . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 9. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . 50
9.01 Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
9.02 Representations, etc. . . . . . . . . . . . . . . . . . . . . . . 50
9.03 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
9.04 Default Under Other Agreements. . . . . . . . . . . . . . . . . . 51
9.05 Bankruptcy, etc.. . . . . . . . . . . . . . . . . . . . . . . . . 51
9.06 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
9.07 Credit Documents. . . . . . . . . . . . . . . . . . . . . . . . . 52
9.08 Holdings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
9.09 Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
9.10 RF Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 10. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 11. The Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
11.01 Appointment. . . . . . . . . . . . . . . . . . . . . . . . . . . 82
11.02 Nature of Duties . . . . . . . . . . . . . . . . . . . . . . . . 83
11.03 Lack of Reliance on the Agent. . . . . . . . . . . . . . . . . . 83
11.04 Certain Rights of the Agent. . . . . . . . . . . . . . . . . . . 84
11.05 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
11.06 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . 84
11.07 The Agent in Its Individual Capacity . . . . . . . . . . . . . . 84
11.08 Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
11.09 Resignation by the Agent . . . . . . . . . . . . . . . . . . . . 85
SECTION 12. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . 85
12.01 Payment of Expenses, etc.. . . . . . . . . . . . . . . . . . . . 85
12.02 Right of Setoff. . . . . . . . . . . . . . . . . . . . . . . . . 86
(iii)
<PAGE>
Page
----
12.03 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
12.04 Benefit of Agreement . . . . . . . . . . . . . . . . . . . . . . 87
12.05 No Waiver; Remedies Cumulative . . . . . . . . . . . . . . . . . 89
12.06 Payments Pro Rata. . . . . . . . . . . . . . . . . . . . . . . . 89
12.07 Calculations; Computations . . . . . . . . . . . . . . . . . . . 90
12.08 Governing Law; Submission to Jurisdiction; Venue; Waiver of
Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
12.09 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 91
12.10 Execution. . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
12.11 Headings Descriptive . . . . . . . . . . . . . . . . . . . . . . 91
12.12 Amendment or Waiver. . . . . . . . . . . . . . . . . . . . . . . 91
12.13 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
12.14 Domicile of Loans. . . . . . . . . . . . . . . . . . . . . . . . 92
12.15 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . 92
12.16 Special Amendments . . . . . . . . . . . . . . . . . . . . . . . 93
ANNEX I -- Commitments
ANNEX II -- Bank Addresses
ANNEX III -- Government Approvals
ANNEX IV -- Subsidiaries
ANNEX V -- Properties
ANNEX VI -- Existing Indebtedness
ANNEX VII -- Insurance Policies
ANNEX VIII -- Existing Liens
ANNEX IX -- Management Fees
EXHIBIT A -- Form of Notice of Borrowing
EXHIBIT B-1 -- Form of B Term Note
EXHIBIT B-2 -- Form of AR Note
EXHIBIT B-3 -- Form of A Term Note
EXHIBIT C-1 -- Form of Opinion of Counsel for the Borrower
EXHIBIT C-2 -- Form of Opinion of White & Case
EXHIBIT D -- Form of Officers' Certificate
EXHIBIT E -- Form of Borrower Pledge Agreement
EXHIBIT F -- Form of Security Agreement
EXHIBIT G -- Form of UOH Pledge Agreement
EXHIBIT H -- Form of Solvency Opinion
EXHIBIT I -- Form of Consent Letter
[EXHIBIT J -- Adjusted EBITDA]
EXHIBIT K -- Form of Assignment Agreement
(iv)
<PAGE>
AMENDMENT AND RESTATEMENT dated as of October __, 1996, to ACQUISITION
CREDIT AGREEMENT dated as of March 29, 1996, among UNIVERSAL OUTDOOR, INC., an
Illinois corporation, the lending institutions listed from time to time on Annex
I hereto (each a "Bank" and, collectively, the "Banks"), LA SALLE NATIONAL BANK,
as Co-Agent and BANKERS TRUST COMPANY, as agent (the "Agent"). Unless otherwise
defined herein, all capitalized terms used herein and defined in Section 10 are
used herein as so defined.
W I T N E S S E T H :
WHEREAS, the Borrower and certain financial institutions are parties
to an Acquisition Credit Agreement, dated as of March 29, 1996 (as the same has
been amended, modified or supplemented prior to the date hereof, the "Original
Credit Agreement"); and
WHEREAS, the parties hereto wish to amend and restate the Original
Credit Agreement as herein provided;
NOW, THEREFORE, the parties hereto agree that the Original Credit
Agreement shall be and hereby is amended and restated in its entirety as
follows, provided that if the Restatement Effective Date has not occurred on or
prior to November 30, 1996 this amendment and restatement shall be void and of
no further effect, with the Original Credit Agreement to remain in effect;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. AMOUNT AND TERMS OF CREDIT.
1.01 COMMITMENT. (A) Subject to and upon the terms and conditions
herein set forth, each Bank severally agrees to make or continue loans (together
with the A Term Loan referred to below, each a "Loan" and, collectively, the
"Loans") to the Borrower, which Loans shall be drawn or continued, as the case
may be, to the extent such Bank has a commitment under such Facility, under the
Term Facility and the AR Facility, as set forth below:
(a) Loans under the Term Facility (each a "B Term Loan" and,
collectively, the "B Term Loans") (i) shall be made pursuant to a single
drawing on the Restatement Effective Date, (ii) shall be made and initially
maintained as a single Borrowing of Base Rate Loans (subject to the option
to convert such B Term Loans
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pursuant to Section 1.06) and (iii) shall not exceed in aggregate principal
amount for any Bank at the time of occurrence thereof the Term Commitment,
if any, of such Bank. Once repaid, B Term Loans may not be reborrowed.
(b) Loans under the AR Facility (each an "AR Loan" and, collectively,
the "AR Loans") (i) shall continue outstanding the AR Loans under and as
defined in the Original Credit Agreement that are outstanding on the
Restatement Effective Date and otherwise may be made at any time and from
time to time on and after the Restatement Effective Date and prior to the
AR Termination Date, (ii) except as hereinafter provided, may, at the
option of the Borrower, be continued, incurred and maintained as, and/or
converted into, Base Rate Loans or Eurodollar Loans, provided that (x) all
AR Loans made as part of the same Borrowing shall, unless otherwise
specifically provided herein, consist of Loans of the same Type and (y) AR
Loans maintained as Eurodollar Loans may not be continued or incurred prior
to the Syndication Date, (iii) may be repaid and, prior to the AR
Termination Date, be reborrowed in accordance with the provisions hereof
and (iv) shall not exceed for any Bank at any time outstanding that
aggregate principal amount which, when combined with the aggregate
outstanding principal amount of all other AR Loans of such Bank, equals the
AR Commitment, if any, of such Bank at such time.
(B) Notwithstanding the provisions of Section 1.01(A)(b), if on the
first anniversary of the Restatement Effective Date (i) the Borrower has not
issued at least $200 million principal amount of Permitted Subordinated Debt,
(ii) the Guaranty Commencement Date has not occurred and/or (iii) the B Term
Loans have not been repaid in full, then on said first anniversary $100 million
of the AR Loans outstanding on such date (or if less than $100 million of AR
Loans are then outstanding, the full amount of AR Loans then outstanding) shall
be automatically converted (the "Loan Conversion") into term loans (each an "A
Term Loan" and collectively the "A Term Loans"), with the Loan Conversion to
apply PRO RATA to the outstanding AR Loans. The AR Loans so converted will be
those outstanding pursuant to the same Borrowing or Borrowings, with the
Interest Period or Periods (if any) applicable to such Borrowing or Borrowings
to continue in effect after the Loan Conversion as originally scheduled. Once
repaid, A Term Loans may not be reborrowed. Promptly following the Loan
Conversion, should it occur, the Borrower will deliver to each Bank with A Term
Loans the A Term Note provided for in Section 1.05(d).
1.02 MINIMUM BORROWING AMOUNTS, ETC. The aggregate principal amount
of each Borrowing shall not be less than the Minimum Borrowing Amount. More
than one Borrowing may be incurred on any day, provided that at no time shall
there be outstanding more than seven Borrowings of Eurodollar Loans hereunder
and under the RF Credit Agreement.
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1.03 NOTICE OF BORROWING, ETC. (a) Whenever the Borrower desires to
continue or incur Loans hereunder, it shall give the Agent at its Notice Office,
prior to 11:00 A.M. (New York time), at least three Business Days' prior written
notice (or telephonic notice promptly confirmed in writing) of each Borrowing of
Eurodollar Loans and at least one Business Day's prior written notice (or
telephonic notice promptly confirmed in writing) of each Borrowing of Base Rate
Loans to be made hereunder. Each such notice (each a "Notice of Borrowing")
shall be in the form of Exhibit A and shall be irrevocable and shall specify (i)
the Facility pursuant to which each Borrowing is being made, (ii) the aggregate
principal amount of the Loans to be made pursuant to each Borrowing, (iii) the
date of Borrowing (which shall be a Business Day) and (iv) whether any
respective Borrowing shall consist of Base Rate Loans or (to the extent
permitted) Eurodollar Loans and, if Eurodollar Loans, the Interest Period to be
initially applicable thereto. The Agent shall promptly give each Bank written
notice (or telephonic notice promptly confirmed in writing) of each proposed
Borrowing, of such Bank's proportionate share thereof and of the other matters
covered by the Notice of Borrowing.
(b) Without in any way limiting the obligation of the Borrower to
confirm in writing any telephonic notice permitted to be given hereunder, the
Agent may prior to receipt of written confirmation act without liability upon
the basis of such telephonic notice, believed by the Agent in good faith to be
from an Authorized Officer of the Borrower. In each such case, the Borrower
hereby waives the right to dispute the Agent's record of the terms of such
telephonic notice.
1.04 DISBURSEMENT OF FUNDS. (a) No later than 1:00 P.M. (New York
time) on the date specified in a Notice of Borrowing, each Bank with a
Commitment under the respective Facility will make available its PRO RATA share
(as provided in Section 1.07) of each Borrowing requested to be made on such
date (other than in respect of any AR Loans being continued on such date) in the
manner provided below. All such amounts shall be made available to the Agent in
U.S. dollars and immediately available funds at the Payment Office and the Agent
promptly will make available to the Borrower by depositing to its account at the
Payment Office the aggregate of the amounts so made available in the type of
funds received. Unless the Agent shall have been notified by any Bank prior to
the date of Borrowing that such Bank does not intend to make available to the
Agent its portion of the Borrowing or Borrowings to be made on such date, the
Agent may assume that such Bank has made such amount available to the Agent on
such date of Borrowing, and the Agent, in reliance upon such assumption, may (in
its sole discretion and without any obligation to do so) make available to the
Borrower a corresponding amount. If such corresponding amount is not in fact
made available to the Agent by such Bank and the Agent has made available same
to the Borrower, the Agent shall be entitled to recover such corresponding
amount from such Bank. If such Bank does not pay such corresponding amount
forthwith upon the Agent's demand therefor, the Agent shall promptly notify the
Borrower, and the Borrower shall immediately pay such corresponding amount to
the Agent. The
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Agent shall also be entitled to recover on demand from such Bank
or the Borrower, as the case may be, interest on such corresponding amount in
respect of each day from the date such corresponding amount was made available
by the Agent to the Borrower to the date such corresponding amount is recovered
by the Agent, at a rate per annum equal to (x) if paid by such Bank, the
overnight Federal Funds Effective Rate or (y) if paid by the Borrower, the then
applicable rate of interest, calculated in accordance with Section 1.08, for the
respective Loans.
(b) Nothing herein shall be deemed to relieve any Bank from its
obligation to fulfill its commitments hereunder or to prejudice any rights which
the Borrower may have against any Bank as a result of any default by such Bank
hereunder.
1.05 NOTES. (a) The Borrower's obligation to pay the principal of,
and interest on, the Loans made to it by each Bank shall be evidenced (i) if B
Term Loans, by a promissory note substantially in the form of Exhibit B-1 with
blanks appropriately completed in conformity herewith (each a "B Term Note" and,
collectively, the "B Term Notes"), (ii) if AR Loans, by a promissory note
substantially in the form of Exhibit B-2 with blanks appropriately completed in
conformity herewith (each an "AR Note" and, collectively, the "AR Notes") and
(iii) if A Term Loans, by a promissory note substantially in the form of Exhibit
B-3 with blanks appropriately completed in conformity herewith (each an "A Term
Note" and collectively the "A Term Notes").
(b) The B Term Note issued to each Bank that makes a B Term Loan
shall (i) be executed by the Borrower, (ii) be payable to the order of such Bank
and be dated the Restatement Effective Date, (iii) be in a stated principal
amount equal to the B Term Loans made by such Bank on the Restatement Effective
Date (or subsequently purchased by such Bank) and be payable in the principal
amount of B Term Loans evidenced thereby, (iv) mature on the Final Maturity
Date, (v) bear interest as provided in the appropriate clause of Section 1.08 in
respect of the Base Rate Loans and Eurodollar Loans, as the case may be,
evidenced thereby, (vi) be subject to mandatory repayment as provided in
Section 4.02 and (vii) be entitled to the benefits of this Agreement and the
other Credit Documents.
(c) The AR Note issued to each Bank with an AR Commitment shall (i)
be executed by the Borrower, (ii) be payable to the order of such Bank and be
dated the Restatement Effective Date, (iii) be in a stated principal amount
equal to the AR Commitment of such Bank and be payable in the principal amount
of the AR Loans evidenced thereby, (iv) mature on the AR Maturity Date, (v) bear
interest as provided in the appropriate clause of Section 1.08 in respect of the
Base Rate Loans and Eurodollar Loans, as the case may be, evidenced thereby,
(vi) be subject to mandatory repayment as provided in Section 4.02 and (vii) be
entitled to the benefits of this Agreement and the other Credit Documents.
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(d) The A Term Note issued to each Bank that makes an A Term Loan as
provided in Section 1.01(B) shall (i) be executed by the Borrower, (ii) be
payable to the order of such Bank and be dated the date of the Loan Conversion,
(iii) be in a stated principal amount equal to the A Term Loans made by such
Bank pursuant to the Loan Conversion (or subsequently purchased by such Bank)
and be payable in the principal amount of the A Term Loans evidenced thereby,
(iv) mature on the AR Maturity Date, (v) bear interest as provided in the
appropriate clause of Section 1.08 in respect of the Base Rate Loans and
Eurodollar Loans, as the case may be, evidenced thereby, (vi) be subject to
mandatory repayment as provided in Section 4.02 and (vii) be entitled to the
benefits of this Agreement and the other Credit Documents.
(e) Each Bank will note on its internal records the amount of each
Loan made by it and each payment in respect thereof and will, prior to any
transfer of any of its Notes, endorse on the reverse side thereof the
outstanding principal amount of Loans evidenced thereby. Failure to make any
such notation shall not affect the Borrower's obligations in respect of such
Loans.
1.06 CONVERSIONS. The Borrower shall have the option to convert on
any Business Day occurring on and after the Syndication Date all or a portion at
least equal to the applicable Minimum Borrowing Amount of the outstanding
principal amount of the Loans owing pursuant to a single Facility into a
Borrowing or Borrowings pursuant to such Facility of another Type of Loan,
provided that (i) except as otherwise provided in Section 1.10(b), Eurodollar
Loans may be converted into Base Rate Loans only on the last day of an Interest
Period applicable thereto and no partial conversion of a Borrowing of Eurodollar
Loans shall reduce the outstanding principal amount of the Eurodollar Loans made
pursuant to such Borrowing to less than the Minimum Borrowing Amount applicable
thereto, (ii) Base Rate Loans may not be converted into Eurodollar Loans if any
violation of Section 9.01 or any Event of Default is then in existence to the
extent that the Agent or the Required Banks have determined that any such
conversion at such time would be disadvantageous to the Banks and (iii)
Borrowings of Eurodollar Loans resulting from this Section 1.06 shall be limited
in number as provided in Section 1.02. Each such conversion shall be effected
by the Borrower giving the Agent at its Notice Office, prior to 11:00 A.M. (New
York time), at least three Business Days' (or two Business Days', in the case of
a conversion into Base Rate Loans) prior written notice (or telephonic notice
promptly confirmed in writing) (each a "Notice of Conversion") specifying the
Loans to be so converted, the Type of Loans to be converted into and, if to be
converted into a Borrowing of Eurodollar Loans, the Interest Period to be
initially applicable thereto. The Agent shall give each Bank prompt notice of
any such proposed conversion affecting any of its Loans.
1.07 PRO RATA BORROWINGS. All B Term Loans and all AR Loans shall be
continued and/or made by the Banks PRO RATA on the basis of their Term
Commitments and AR Commitments, as the case may be, provided at any time that a
Bank with an AR
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Commitment is a Defaulting Bank, AR Loans will be incurred from
the Banks with AR Commitments that are Non-Defaulting Banks PRO RATA on the
basis of their AR Commitments. All A Term Loans shall be made by the Banks with
AR Loans outstanding at the time of a Loan Conversion PRO RATA on the basis of
such outstanding AR Loans. It is understood that no Bank shall be responsible
for any default by any other Bank in its obligation to make Loans hereunder and
that each Bank shall be obligated to make the Loans provided to be made by it
hereunder, regardless of the failure of any other Bank to fulfill its
commitments hereunder.
1.08 INTEREST. (a) The unpaid principal amount of each Base Rate
Loan shall bear interest from the date of the Borrowing thereof until maturity
(whether by acceleration or otherwise) at a rate per annum which shall at all
times be the Applicable Base Rate Margin plus the Base Rate in effect from time
to time.
(b) The unpaid principal amount of each Eurodollar Loan shall bear
interest from the date of the Borrowing thereof until maturity (whether by
acceleration or otherwise) at a rate per annum which shall at all times be the
Applicable Eurodollar Margin plus the relevant Eurodollar Rate.
(c) All overdue principal and, to the extent permitted by law,
overdue interest in respect of each Loan and any other overdue amount payable
hereunder shall bear interest at a rate per annum equal to the Base Rate in
effect from time to time plus the sum of (i) 2% and (ii) the Applicable Base
Rate Margin, provided that no Loan shall bear interest after maturity (whether
by acceleration or otherwise) at a rate per annum less than 2% plus the rate of
interest applicable thereto at maturity.
(d) Interest shall accrue from and including the date of any
Borrowing to but excluding the date of any repayment thereof and shall be
payable (i) in respect of each Base Rate Loan, quarterly in arrears on the last
Business Day of each February, May, August and November, (ii) in respect of each
Eurodollar Loan, on the last day of each Interest Period applicable thereto and,
in the case of an Interest Period of six months, on the date occurring three
months after the first day of such Interest Period and (iii) in respect of each
Loan, on any prepayment or conversion (other than the prepayment and conversion
of AR Loans that are Base Rate Loans) (on the amount prepaid or converted), at
maturity (whether by acceleration or otherwise) and, after such maturity, on
demand.
(e) All computations of interest hereunder shall be made in
accordance with Section 12.07(b).
(f) The Agent, upon determining the interest rate for any Borrowing
of Eurodollar Loans for any Interest Period, shall promptly notify the Borrower
and the Banks thereof.
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1.09 INTEREST PERIODS. (a) At the time the Borrower gives a Notice
of Borrowing or Notice of Conversion in respect of the making of, or conversion
into, a Borrowing of Eurodollar Loans (in the case of the initial Interest
Period applicable thereto) or prior to 10:00 A.M. (New York time) on the third
Business Day prior to the expiration of an Interest Period applicable to a
Borrowing of Eurodollar Loans, it shall have the right to elect by giving the
Agent written notice (or telephonic notice promptly confirmed in writing) of the
Interest Period applicable to such Borrowing, which Interest Period shall, at
the option of the Borrower, be a one, two, three or six month period.
Notwithstanding anything to the contrary contained above:
(i) the initial Interest Period for any Borrowing of Eurodollar Loans
shall commence on the date of such Borrowing (including the date of any
conversion from a Borrowing of Base Rate Loans) and each Interest Period
occurring thereafter in respect of such Borrowing shall commence on the day
on which the next preceding Interest Period expires;
(ii) if any Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period, such Interest Period shall end on the last Business Day of
such calendar month;
(iii) if any Interest Period would otherwise expire on a day which
is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day, provided that if any Interest Period would
otherwise expire on a day which is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iv) no Interest Period shall extend beyond (x) in the case of AR
Loans and A Term Loans, the AR Maturity Date and (y) in the case of B Term
Loans, the Final Maturity Date;
(v) no Interest Period with respect to any Borrowing of A Term Loans,
B Term Loans or AR Loans, respectively, may be elected that would extend
beyond any date upon which a Scheduled Repayment is required to be made in
respect of such Loans if, after giving effect to the selection of such
Interest Period, the aggregate principal amount of A Term Loans, B Term
Loans or AR Loans, as the case may be, maintained as Eurodollar Loans with
Interest Periods ending after such date would exceed the aggregate
principal amount of A Term Loans, B Term Loans or AR Loans, as the case may
be, permitted to be outstanding after such Scheduled Repayment; and
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(vi) no Interest Period may be elected at any time when a violation of
Section 9.01 or an Event of Default is then in existence if the Agent or
the Required Banks have determined that such an election at such time would
be disadvantageous to the Banks.
(b) If upon the expiration of any Interest Period, the Borrower has
failed to (or may not) elect a new Interest Period to be applicable to the
respective Borrowing of Eurodollar Loans as provided above, the Borrower shall
be deemed to have elected to convert such Borrowing into a Borrowing of Base
Rate Loans effective as of the expiration date of such current Interest Period.
1.10 INCREASED COSTS, ILLEGALITY, ETC. (a) In the event that (x) in
the case of clause (i) below, the Agent or (y) in the case of clauses (ii) and
(iii) below, any Bank shall have determined (which determination shall, absent
manifest error, be final and conclusive and binding upon all parties hereto):
(i) on any date for determining the Eurodollar Rate for any Interest
Period that, by reason of any changes arising after the Restatement
Effective Date affecting the interbank Eurodollar market, adequate and fair
means do not exist for ascertaining the applicable interest rate on the
basis provided for in the definition of Eurodollar Rate; or
(ii) at any time, that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect to
any Eurodollar Loans (other than any increased cost or reduction in the
amount received or receivable resulting from the imposition of or a change
in the rate of taxes or similar charges) because of (x) any change since
the Restatement Effective Date in any applicable law, governmental rule,
regulation, guideline or order (or in the interpretation or administration
thereof and including the introduction of any new law or governmental rule,
regulation, guideline or order) (such as, for example, but not limited to,
a change in official reserve requirements, but, in all events, excluding
reserves required under Regulation D to the extent included in the
computation of the Eurodollar Rate) and/or (y) other circumstances
affecting such Bank, the interbank Eurodollar market or the position of
such Bank in such market; or
(iii) at any time, that the making or continuance of any Eurodollar
Loan has become unlawful by compliance by such Bank in good faith with any
law, governmental rule, regulation, guideline (or would conflict with any
such governmental rule, regulation, guideline or order not having the force
of law but with which such Bank customarily complies even though the
failure to comply therewith would not be unlawful), or has become
impracticable as a result of a contingency occurring
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after the Restatement Effective Date which materially and adversely affects
the interbank Eurodollar market;
then, and in any such event, such Bank (or the Agent in the case of clause (i)
above) shall (x) on such date and (y) within ten Business Days of the date on
which such event no longer exists give notice (by telephone confirmed in
writing) to the Borrower and to the Agent of such determination (which notice
the Agent shall promptly transmit to each of the other Banks). Thereafter (x)
in the case of clause (i) above, Eurodollar Loans shall no longer be available
until such time as the Agent notifies the Borrower and the Banks that the
circumstances giving rise to such notice by the Agent no longer exist, and any
Notice of Borrowing or Notice of Conversion given by the Borrower with respect
to Eurodollar Loans which have not yet been incurred shall be deemed rescinded
by the Borrower, (y) in the case of clause (ii) above, the Borrower shall pay to
such Bank, upon written demand therefor, such additional amounts (in the form of
an increased rate of, or a different method of calculating, interest or
otherwise as such Bank in its sole discretion shall determine) as shall be
required to compensate such Bank for such increased costs or reductions in
amounts receivable hereunder (a written notice as to the additional amounts owed
to such Bank, showing the basis for the calculation thereof, submitted to the
Borrower by such Bank shall, absent manifest error, be final and conclusive and
binding upon all parties hereto) and (z) in the case of clause (iii) above, the
Borrower shall take one of the actions specified in Section 1.10(b) as promptly
as possible and, in any event, within the time period required by law.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the Borrower may (and
in the case of a Eurodollar Loan affected pursuant to Section 1.10(a)(iii) the
Borrower shall) either (i) if the affected Eurodollar Loan is then being made
pursuant to a Borrowing, cancel said Borrowing by giving the Agent telephonic
notice (confirmed promptly in writing) thereof on the same date that the
Borrower was notified by a Bank pursuant to Section 1.10(a)(ii) or (iii), or
(ii) if the affected Eurodollar Loan is then outstanding, upon at least three
Business Days' notice to the Agent, require the affected Bank to convert each
such Eurodollar Loan into a Base Rate Loan, provided that if more than one Bank
is affected at any time, then all affected Banks must be treated the same
pursuant to this Section 1.10(b).
(c) If any Bank shall have determined that after the Restatement
Effective Date, the adoption or effectiveness of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Bank with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on such Bank's capital or assets as a consequence of
its
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commitments or obligations hereunder to a level below that which such Bank
could have achieved but for such adoption, effectiveness, change or compliance
(taking into consideration such Bank's policies with respect to capital
adequacy), then from time to time, within 15 days after demand by such Bank
(with a copy to the Agent), the Borrower shall pay to such Bank such additional
amount or amounts as will compensate such Bank for such reduction. Each Bank,
upon determining in good faith that any additional amounts will be payable
pursuant to this Section 1.10(c), will give prompt written notice thereof to the
Borrower, which notice shall set forth the basis of the calculation of such
additional amounts, although the failure to give any such notice shall not
release or diminish any of the Borrower's obligations to pay additional amounts
pursuant to this Section 1.10(c) upon the subsequent receipt of such notice.
1.11 COMPENSATION. (a) The Borrower shall compensate each Bank,
upon its written request (which request shall set forth the basis for requesting
such compensation), for all reasonable losses, expenses and liabilities
(including, without limitation, any loss, expense or liability incurred by
reason of the liquidation or reemployment of deposits or other funds required by
such Bank to fund its Eurodollar Loans but excluding in any event the loss of
anticipated profits) which such Bank may sustain: (i) if for any reason (other
than a default by such Bank or the Agent) a Borrowing of Eurodollar Loans does
not occur on a date specified therefor in a Notice of Borrowing or Notice of
Conversion (whether or not withdrawn by the Borrower or deemed withdrawn
pursuant to Section 1.10(a)); (ii) if any prepayment, repayment or conversion of
any of its Eurodollar Loans occurs on a date which is not the last day of an
Interest Period applicable thereto; (iii) if any prepayment of any of its
Eurodollar Loans is not made on any date specified in a notice of prepayment
given by the Borrower; or (iv) as a consequence of (x) any other default by the
Borrower to repay its Eurodollar Loans when required by the terms of this
Agreement or (y) an election made pursuant to Section 1.10(b).
(b) Notwithstanding anything in this Agreement to the contrary, to
the extent any notice required by Section 1.10 or 4.04 is given by any Bank more
than 180 days after such Bank obtained, or reasonably should have obtained,
knowledge of the occurrence of the event giving rise to the additional costs of
the type described in such Section, such Bank shall not be entitled to
compensation under Section 1.10 or 4.04 for any amounts incurred or accruing
prior to the giving of such notice to the Borrower.
1.12 CHANGE OF LENDING OFFICE. Each Bank agrees that, upon the
occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or
(iii), 1.10(c) or 4.04 with respect to such Bank, it will, if requested by the
Borrower, use reasonable efforts (subject to overall policy considerations of
such Bank) to designate another lending office for any Loans affected by such
event, provided that such designation is made on such terms that such Bank and
its lending office suffer no economic, legal or regulatory disadvantage, with
the object of avoiding the consequence of the event giving rise to the
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operation of any such Section. Nothing in this Section 1.12 shall affect or
postpone any of the obligations of the Borrower or the right of any Bank
provided in Section 1.10 or 4.04.
SECTION 2. REPLACEMENT BANKS.
2.01 REPLACEMENT OF BANKS. (w) Upon any RF Bank being replaced under
Section 1.13 of the RF Credit Agreement, (x) upon the occurrence of any event
giving rise to the operation of Section 1.10(a)(ii) or (iii), Section 1.10(c) or
Section 4.04 with respect to any Bank which results in such Bank charging to the
Borrower increased costs in excess of those being generally charged by the other
Banks, (y) if a Bank becomes a Defaulting Bank and/or (z) in the case of a
refusal by a Bank to consent to a proposed change, waiver, discharge or
termination with respect to this Agreement which has been approved by the
Required Banks or Super Majority Banks, as the case may be, as provided in
Section 12.12, the Borrower shall have the right, if no Default or Event of
Default then exists, to replace (and, in the case of clause (w) above, shall
replace) such Bank (the "Replaced Bank") with one or more other transferee or
transferees who shall be acceptable to the Agent and none of whom shall
constitute a Defaulting Bank at the time of such replacement (collectively, the
"Replacement Bank") reasonably acceptable to the Agent, provided that (i) any AR
Bank replaced pursuant to this Section 2.01 must also be replaced as an RF Bank
at the same time under Section 1.13 of the RF Credit Agreement by the same
Replacement Bank (and in the same pro rata amounts if more than one Replacement
Bank), (ii) any Bank that is replaced as an RF Bank pursuant to Section 1.13 of
the RF Credit Agreement must also be replaced at the same time as an AR Bank
hereunder by the same Replacement Bank (and in the same pro rata amounts if more
than one Replacement Bank), (iii) at the time of any replacement pursuant to
this Section 2.01, the Replacement Bank shall enter into one or more Assignment
Agreements pursuant to Section 12.04(b) (and with all fees payable pursuant to
said Section 12.04(b) to be paid by the Replacement Bank) pursuant to which the
Replacement Bank shall acquire all of the Commitments and outstanding Loans of
the Replaced Bank and, in connection therewith, shall pay to the Replaced Bank
in respect thereof an amount equal to the sum of (A) an amount equal to the
principal of, and all accrued interest on, all outstanding Loans of the Replaced
Bank and (B) an amount equal to all accrued, but theretofore unpaid, Fees owing
to the Replaced Bank pursuant to Section 3.01 and (iv) all obligations of the
Borrower owing to the Replaced Bank (other than those specifically described in
clause (iii) above in respect of which the assignment purchase price has been,
or is concurrently being, paid) shall be paid in full to such Replaced Bank
concurrently with such replacement. Upon the execution of the respective
Assignment Agreement, the payment of amounts referred to in clauses (iii) and
(iv) above and, if so requested by the Replacement Bank, delivery to the
Replacement Bank of the appropriate Note or Notes executed by the Borrower, the
Replacement Bank shall become a Bank hereunder and the Replaced Bank shall cease
to constitute a Bank
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hereunder, except with respect to indemnification
provisions applicable to the Replaced Bank under this Agreement, which shall
survive as to such Replaced Bank.
SECTION 3. FEES; COMMITMENTS.
3.01 FEES. (a) The Borrower agrees to pay to the Agent a commitment
commission ("Commitment Commission") for the account of each Non-Defaulting Bank
with an AR Commitment for the period from and including the Restatement
Effective Date to, but not including, the AR Termination Date, or, if earlier,
the date upon which the Total AR Commitment has been terminated, computed at a
rate for each day equal to 1/2 of 1% per annum on such Bank's unutilized AR
Commitment on such day. Such Commitment Commission shall be due and payable in
arrears on the last Business Day of each February, May, August and November and
on the AR Termination Date.
(b) The Borrower shall pay to the Agent (x) on the Restatement
Effective Date for its own account and/or for distribution to the Banks such
fees as heretofore agreed by the Borrower and the Agent and (y) for its own
account such other fees as agreed to between the Borrower and the Agent, when
and as due.
(c) All computations of Fees shall be made in accordance with Section
12.07(b).
3.02 VOLUNTARY REDUCTION OF COMMITMENTS. Upon at least three
Business Days' prior written notice (or telephonic notice confirmed in writing)
to the Agent at its Notice Office (which notice the Agent shall promptly
transmit to each of the Banks), the Borrower shall have the right, without
premium or penalty, to terminate or partially reduce the unutilized Total AR
Commitment, provided that (x) any such termination shall apply to
proportionately and permanently reduce the AR Commitment of each Bank, (y) no
such reduction shall reduce any Non-Defaulting Bank's AR Commitment to an amount
that is less than the outstanding AR Loans of such Bank and (z) any partial
reduction pursuant to this Section 3.02 shall be in the amount of at least
$1,000,000.
3.03 MANDATORY ADJUSTMENTS OF COMMITMENTS, ETC. (a) The Total Term
Commitment shall terminate on the Restatement Effective Date (after giving
effect to the making of the B Term Loans on such date).
(b) The Total AR Commitment shall terminate on the earliest of (x)
the AR Termination Date, (y) the Revolving Facility Termination Date and (z) the
date on which any Change of Control occurs.
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(c) The Total AR Commitment shall be reduced on the date, if any,
upon which the Loan Conversion occurs in an aggregate amount of $100 million.
(d) The Total AR Commitment shall be reduced at the time that any
required mandatory repayment of Term Loans and AR Loans would be made prior to
the AR Termination Date pursuant to Section 4.02(A)(c), (d), (e), (f) or (g) if
Term Loans and AR Loans were then outstanding in an amount, if any, by which the
amount of such required repayment (determined as if an unlimited amount of such
Loans were then outstanding) exceeds the aggregate amount of Term Loans and AR
Loans then outstanding.
(e) Each partial reduction of the Total AR Commitment pursuant to
this Section 3.03 shall apply (x) if made pursuant to clause (c) above, to each
Bank in an amount equal to the AR Loans of such Bank converted into A Term Loans
pursuant to the Loan Conversion and, if such reduction is in excess of such
converted AR Loans, then as provided in clause (y) below, and (y) to the extent
clause (x) is not applicable, proportionately to the AR Commitment, if any, of
each Bank.
SECTION 4. PAYMENTS.
4.01 VOLUNTARY PREPAYMENTS. The Borrower shall have the right to
prepay Loans in whole or in part, without premium or penalty, from time to time
on the following terms and conditions: (i) the Borrower shall give the Agent at
the Payment Office written notice (or telephonic notice promptly confirmed in
writing) of its intent to prepay the Loans, whether such Loans are A Term Loans,
B Term Loans or AR Loans, the amount of such prepayment and (in the case of
Eurodollar Loans) the specific Borrowing(s) pursuant to which made, which notice
shall be given by the Borrower at least one Business Day prior to the date of
such prepayment with respect to Base Rate Loans and two Business Days prior to
the date of such prepayment with respect to Eurodollar Loans, which notice shall
promptly be transmitted by the Agent to each of the Banks; (ii) each partial
prepayment of any Borrowing shall be in an aggregate principal amount of at
least $500,000 and, if greater in an integral multiple of $100,000, provided
that no partial prepayment of Eurodollar Loans made pursuant to a Borrowing
shall reduce the aggregate principal amount of the Eurodollar Loans outstanding
pursuant to such Borrowing to an amount less than the Minimum Borrowing Amount
applicable thereto; (iii) at the time of any prepayment of Eurodollar Loans
pursuant to this Section 4.01 on any date other than the last day of the
Interest Period applicable thereto, the Borrower shall pay the amounts required
pursuant to Section 1.11; (iv) each prepayment in respect of any Loans made
pursuant to a Borrowing shall be applied PRO RATA among such Loans, provided,
that at the Borrower's election in connection with any prepayment of AR Loans
pursuant to this Section 4.01 prior to the AR Termination Date, such prepayment
shall not be applied to any AR Loans of a Defaulting Bank; and (v) each
prepayment of A Term Loans, B Term Loans or, to the extent made after the AR
Termination Date, AR Loans pursuant to this Section
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4.01 shall reduce the remaining Scheduled Repayments of the A Term Loans,
B Term Loans or AR Loans, as the case may be, on a PRO RATA basis (based upon
the then remaining principal amount of each such Scheduled Repayment).
4.02 MANDATORY PREPAYMENTS.
(A) REQUIREMENTS:
(a) (i) If on any date prior to the AR Termination Date the aggregate
outstanding principal amount of AR Loans made by Non-Defaulting Banks exceeds
the Adjusted Total AR Commitment as then in effect, the Borrower shall repay on
such date the principal of AR Loans of Non-Defaulting Banks in an aggregate
amount equal to such excess.
(ii) If on any date prior to the AR Termination Date the aggregate
outstanding principal amount of the AR Loans made by a Defaulting Bank exceeds
the AR Commitment of such Defaulting Bank, the Borrower shall repay principal of
the AR Loans of such Defaulting Bank in an amount equal to such excess.
(b) (I) On each date set forth below, the Borrower shall be required
to repay the principal amount of B Term Loans set forth opposite such date (each
such repayment, together with each repayment of AR Loans required by clause
(b)(II) below and each repayment of A Term Loans required by clause (b)(III)
below, a "Scheduled Repayment"):
DATE AMOUNT
March 31, 1997 $187,500
June 30, 1997 $187,500
September 30, 1997 $187,500
December 31, 1997 $187,500
March 31, 1998 $187,500
June 30, 1998 $187,500
September 30, 1998 $187,500
December 31, 1998 $187,500
March 31, 1999 $187,500
June 30, 1999 $187,500
September 30, 1999 $187,500
December 31, 1999 $187,500
March 31, 2000 $187,500
June 30, 2000 $187,500
September 30, 2000 $187,500
December 31, 2000 $187,500
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DATE AMOUNT
March 30, 2001 $187,500
June 30, 2001 $187,500
September 30, 2001 $187,500
December 31, 2001 $187,500
March 31, 2002 $187,500
June 30, 2002 $187,500
September 30, 2002 $375,000
December 31, 2002 $7,625,000
March 31, 2003 $7,625,000
June 30, 2003 $7,625,000
September 30, 2003 $7,625,000
December 31, 2003 $10,000,000
March 31, 2004 $10,000,000
June 30, 2004 $10,000,000
Final Maturity Date $10,000,000
(II) On each date set forth below, the Borrower shall be required to
repay the AR Repayment Percentage of the principal amount of AR Loans set forth
opposite such date:
REPAYMENT DATE AMOUNT
December 31, 1999 $10,625,000
March 31, 2000 $10,625,000
June 30, 2000 $10,625,000
September 30, 2000 $10,625,000
December 31, 2000 $13,281,250
March 31, 2001 $13,281,250
June 30, 2001 $13,281,250
September 30, 2001 $13,281,250
December 31, 2001 $14,609,375
March 31, 2002 $14,609,375
June 30, 2003 $14,609,375
September 30, 2002 $14,609,375
December 31, 2002 $14,609,375
March 31, 2003 $14,609,375
June 30, 2003 $14,609,375
AR Maturity Date $14,609,375
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(III) On the last day of each calendar quarter, commencing on December
31, 1997 and ending on the AR Maturity Date, the Borrower shall be required to
repay the A Term Loans (if made) in an amount equal to the ATL Repayment
Percentage of $4,166,666 ($4,166,682 on the AR Maturity Date).
(c) On the Business Day following the date of receipt thereof by
Holdings, the Borrower and/or any of its Subsidiaries of the Cash Proceeds from
any Asset Sale, an amount equal to 100% of the Net Cash Proceeds from such Asset
Sale shall be applied as a mandatory repayment of FIRST, the principal of the
then outstanding Term Loans and SECOND, if no Term Loans remain outstanding and
the AR Termination Date has occurred, the principal of the then outstanding AR
Loans, provided that such Net Cash Proceeds from Permitted Asset Sales shall
not be required to be used to so repay Loans to the extent the Borrower elects,
as hereinafter provided, to cause such Net Cash Proceeds to be reinvested in
Reinvestment Assets (a "Reinvestment Election"). The Borrower may exercise its
Reinvestment Election (within the parameters specified in the preceding
sentence) with respect to an Asset Sale if (x) no Default or Event of Default
exists and (y) the Borrower delivers a Reinvestment Notice to the Agent on the
Business Day following the date of the consummation of the respective Asset
Sale, with such Reinvestment Election being effective with respect to the Net
Cash Proceeds of such Asset Sale equal to the Anticipated Reinvestment Amount
specified in such Reinvestment Notice.
(d) On the date of the receipt thereof by Holdings or the Borrower,
as the case may be, an amount equal to 75% of the cash proceeds (net of
underwriting discounts and commissions and other reasonable costs associated
therewith but excluding any Holdback Proceeds) (or, in the case of the Proposed
Equity Offering, 100% of such proceeds to the extent not Holdback Proceeds) of
any sale or issuance of equity by Holdings or the Borrower, respectively (other
than equity issued to management and other employees of Holdings, the Borrower
or its Subsidiaries, the exercise of any warrants outstanding on the Restatement
Effective Date and/or any amount of cash received by Holdings or the Borrower in
connection with any capital contributions made by any of the Designated UOH
Stockholders or, in the case of the Borrower, by Holdings) shall be applied as a
mandatory repayment of FIRST, the principal of the then outstanding Term Loans
and SECOND, if no Term Loans remain outstanding and the AR Termination Date has
occurred, the principal of the then outstanding AR Loans provided that such
proceeds received prior to the AR Termination Date shall not be so applied but
shall be applied as a mandatory repayment of FIRST, the principal of the then
outstanding A Term Loans and SECOND, if no A Term Loans remain outstanding, the
principal of the then outstanding AR Loans (with any such payment not to reduce
the Total AR Commitment) and (y) the first $5,000,000 of such proceeds in the
aggregate do not have to be so applied to repay Loans.
(e) (i) On the date of the receipt thereof by the Borrower, an amount
equal to 100% of the cash proceeds (net of underwriting discounts and
commissions and other
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reasonable costs associated therewith but excluding any
Holdback Proceeds) of any sale or issuance of Permitted Subordinated Debt shall
be applied as a mandatory repayment of FIRST, the principal of the then
outstanding Term Loans and SECOND, if no Term Loans remain outstanding, the
principal of the then outstanding AR Loans (with any such payment not to reduce
the Total AR Commitment).
(ii) On the date when the amount of the Holdback Proceeds is reduced
to zero, an amount equal to the Holdback Proceeds not theretofore applied to
Purchase Senior Notes and Discount Notes shall be applied as a mandatory
repayment of FIRST, the principal of the then outstanding Term Loans and SECOND,
if no Term Loans remain outstanding, the principal of the then outstanding AR
Loans (with any such payment not to reduce the Total AR Commitment).
(f) On each date which is 90 days after the last day of each fiscal
year of the Borrower (commencing with the fiscal year ending on December 31,
1999), 50% of Excess Cash Flow for the fiscal year then last ended shall be
applied as a mandatory repayment of FIRST, the principal of the then outstanding
Term Loans and SECOND, if no Term Loans remain outstanding and the AR
Termination Date has occurred, the principal of the then outstanding AR Loans.
(g) On the Reinvestment Prepayment Date with respect to a
Reinvestment Election, an amount equal to the Reinvestment Prepayment Amount, if
any, for such Reinvestment Election shall be applied as a repayment of FIRST,
the principal of the then outstanding Term Loans and SECOND, if no Term Loans
remain outstanding and the AR Termination Date has occurred, the principal of
the then outstanding AR Loans.
(h) On the date on which any Change of Control occurs, the
outstanding principal amount of all Loans shall become due and payable in full.
(i) On the Revolving Facility Termination Date, the outstanding
principal amount of all Loans shall become due and payable in full.
(B) APPLICATION:
(a) Each mandatory repayment of "Term Loans" required to be made
pursuant to Section 4.02(A) (other than pursuant to clause (b) thereof) shall be
applied to the outstanding A Term Loans and B Term Loans PRO RATA between same
on the basis of their respective aggregate outstanding principal amounts. Each
mandatory repayment of A Term Loans, B Term Loans and, to the extent made after
the AR Termination Date, AR Loans required to be made pursuant to Sections
4.02(A) (other than pursuant to clause (a) or (b) thereof) shall be applied to
reduce the Scheduled Repayments of A Term Loans, B Term Loans and AR Loans,
respectively, on a PRO RATA basis (based upon the then
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remaining outstanding principal amount of each such Scheduled Repayment of A
Term Loans, B Term Loans and AR Loans, respectively).
(b) With respect to each prepayment of Loans required by Section
4.02, the Borrower may designate the Types of Loans which are to be prepaid and
the specific Borrowing(s) under the affected Facility pursuant to which made,
provided that (i) Eurodollar Loans may so be designated for prepayment pursuant
to this Section 4.02 only on the last day of an Interest Period applicable
thereto unless all Eurodollar Loans made pursuant to such Facility with Interest
Periods ending on such date of required prepayment and all Base Rate Loans made
pursuant to such Facility have been paid in full; (ii) if any prepayment of
Eurodollar Loans made pursuant to a single Borrowing shall reduce the
outstanding Loans made pursuant to such Borrowing to an amount less than the
Minimum Borrowing Amount for such Borrowing, such Borrowing shall be immediately
converted into Base Rate Loans; (iii) each prepayment of any AR Loans made by
Non-Defaulting Banks pursuant to a Borrowing shall be applied PRO RATA among
such AR Loans; and (iv) each prepayment of any AR Loans made by Defaulting Banks
pursuant to a Borrowing shall be applied PRO RATA among such AR Loans. In the
absence of a designation by the Borrower as described in the preceding sentence,
the Agent shall, subject to the above, make such designation in its sole
discretion with a view, but no obligation, to minimize breakage costs owing
under Section 1.11.
4.03 METHOD AND PLACE OF PAYMENT. Except as otherwise specifically
provided herein, all payments under this Agreement shall be made to the Agent
for the ratable (based on its PRO RATA share) account of the Banks entitled
thereto, not later than 1:00 P.M. (New York time) on the date when due and shall
be made in immediately available funds and in lawful money of the United States
of America at the Payment Office, it being understood that written notice by the
Borrower to the Agent to make a payment from the funds in the Borrower's account
at the Payment Office shall constitute the making of such payment to the extent
of such funds held in such account. Any payments under this Agreement which are
made later than 1:00 P.M. (New York time) shall be deemed to have been made on
the next succeeding Business Day. Whenever any payment to be made hereunder
shall be stated to be due on a day which is not a Business Day, the due date
thereof shall be extended to the next succeeding Business Day and, with respect
to payments of principal, interest shall be payable during such extension at the
applicable rate in effect immediately prior to such extension.
4.04 NET PAYMENTS. (a) All payments made by the Borrower hereunder,
under any Note or any other Credit Document, will be made without setoff,
counterclaim or other defense. Except as provided for in Section 4.04(b), all
such payments will be made free and clear of, and without deduction or
withholding for, any present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by any
jurisdiction or by any political subdivision or taxing authority
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thereof or therein (but excluding, except as provided in the second
succeeding sentence, any tax imposed on or measured by the net income (or any
franchise tax) of a Bank pursuant to the laws of the jurisdiction in which
the principal office or applicable lending office of such Bank is located or
under the laws of any political subdivision or taxing authority of any such
jurisdiction in which the principal office or applicable lending office of
such Bank is located) and all interest, penalties or similar liabilities with
respect thereto (collectively, "Taxes"). If any Taxes are so levied or
imposed, the Borrower agrees to pay the full amount of such Taxes and such
additional amounts as may be necessary so that every payment of all amounts
due hereunder, under any Note or under any other Credit Document, after
withholding or deduction for or on account of any Taxes, will not be less
than the amount provided for herein or in such Note or in such other Credit
Document. If any amounts are payable in respect of Taxes pursuant to the
preceding sentence, then the Borrower shall also reimburse each Bank, upon
the written request of such Bank, for taxes imposed on or measured by the net
income of such Bank pursuant to the laws of the jurisdiction in which the
principal office or applicable lending office of such Bank is located or of
any political subdivision or taxing authority of any such jurisdiction and
for any withholding of income or similar taxes imposed by the United States
of America as such Bank shall determine are payable by, or withheld from,
such Bank in respect of Taxes paid to or on behalf of such Bank pursuant to
this or the preceding sentence. The Borrower will furnish to the Agent
within 45 days after the date the payment of any Taxes, or any withholding or
deduction on account thereof, is due pursuant to applicable law certified
copies of tax receipts evidencing such payment by the Borrower. The Borrower
will indemnify and hold harmless the Agent and each Bank, and reimburse the
Agent or such Bank upon its written request, for the amount of any Taxes so
levied or imposed and paid or withheld by such Bank.
(b) Each Bank which is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) for Federal income tax purposes
agrees (i) to provide to the Borrower on or prior to the Initial Borrowing Date
two original signed copies of Internal Revenue Service Form 4224 or Form 1001
certifying to such Bank's entitlement to a complete exemption from United States
withholding tax with respect to payments to be made under this Agreement, under
any Note and under any other Credit Document and (ii) that, (x) to the extent
legally entitled to do so, with respect to a Bank that is an assignee or
transferee of an interest under this Agreement pursuant to Section 12.04 hereof
(unless the respective Bank was already a Bank hereunder immediately prior to
such assignment or transfer), upon the date of such assignment or transfer to
such Bank, and (y) with respect to any Bank which is not a United States person
(as such term is defined in Section 7701(a)(30) of the Code) for U.S. Federal
income tax purposes (including, without limit-ation, any assignee or
transferee), from time to time, upon the reasonable request by the Borrower or
the Agent after the Restatement Effective Date, such Bank will provide to each
of the Borrower and the Agent two original signed copies of Internal Revenue
Service Form 4224 or Form 1001 (or any successor forms) certifying to such
Bank's entitlement to a
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complete exemption from, or reduction in, United States withholding tax with
respect to payments to be made under this Agreement, under any Note and under
any other Credit Document. Notwithstanding anything to the contrary
contained in Section 4.04(a), the Borrower shall be entitled, to the extent
it is required to do so by law, to deduct or withhold income or other similar
taxes imposed by the United States (or any political subdivision or taxing
authority thereof or therein) from interest, fees or other amounts payable
hereunder (without any obligation under Section 4.04(a) to pay the respective
Bank such taxes or any additional amounts with respect thereto) for the
account of any Bank which is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) for United States federal income
tax purposes and which has not provided to the Borrower such forms required
to be provided to the Borrower by a Bank pursuant to the first sentence of
this Section 4.04(b), provided that if the Borrower shall so deduct or
withhold any such taxes, it shall provide a statement to the Agent and such
Bank, setting forth the amount of such taxes so deducted or withheld, the
applicable rate and any other information or documentation which such Bank
may reasonably request for assisting such Bank in obtaining any allowable
credits or deductions for the taxes so deducted or withheld in the
jurisdiction or jurisdictions in which such Bank is subject to tax.
Notwithstanding anything to the contrary contained in the preceding sentence,
the Borrower agrees to indemnify each Bank in the manner set forth in Section
4.04(a) in respect of any amounts deducted or withheld by it as described in
the previous sentence as a result of any changes after the Restatement
Effective Date in any applicable law, treaty, governmental rule, regulation,
guideline or order, or in the interpretation thereof, relating to the
deducting or withholding of income or similar Taxes.
SECTION 5. CONDITIONS PRECEDENT.
5.01 CONDITIONS PRECEDENT TO RESTATEMENT EFFECTIVE DATE. This
Agreement shall become effective on the date (the "Restatement Effective Date")
on which all of the following conditions are first satisfied:
(a) EFFECTIVENESS; NOTES. On or prior to the Restatement Effective
Date, (i) this Agreement shall have been executed as provided in Section 12.10
and (ii) there shall have been delivered to the Agent for the account of each
Bank the appropriate Note or Notes executed by the Borrower, in each case, in
the amount, maturity and as otherwise provided herein.
(b) OFFICER'S CERTIFICATE. On the Restatement Effective Date, the
Agent shall have received a certificate dated such date signed by the President
or any Vice President of the Borrower stating that all of the applicable
conditions set forth in Sections 5.01(g) and (h) and 5.02 exist as of such date.
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(c) OPINIONS OF COUNSEL. On the Restatement Effective Date, the
Agent shall have received opinions, addressed to the Agent, and each of the
Banks and dated the Restatement Effective Date, from (i) Winston & Strawn,
counsel to the Borrower, which opinion shall cover the matters contained in
Exhibit C-1 hereto, (ii) White & Case, special counsel to the Agent, which
opinion shall cover the matters contained in Exhibit C-2 hereto and (iii) such
local counsel, if any, satisfactory to the Agent as the Agent may request, which
opinions shall cover the perfection of the security interests granted pursuant
to the Security Documents and such other matters incident to the transactions
contemplated herein as the Agent may reasonably request and shall be in form and
substance satisfactory to the Agent.
(d) CORPORATE PROCEEDINGS. (I) On the Restatement Effective Date,
the Agent shall have received from the Borrower a certificate, dated the
Restatement Effective Date, signed by the President or any Vice-President of the
Borrower in the form of Exhibit D with appropriate insertions and deletions,
together with copies of the certificate of formation, the by-laws, or other
organizational documents of the Borrower and the resolutions, or such other
administrative approval, of the Borrower referred to in such certificate and all
of the foregoing (including each such certificate of formation, certificate of
incorporation and by-laws) shall be satisfactory to the Agent.
(II) On the Restatement Effective Date, all corporate and legal
proceedings and all instruments and agreements in connection with the
transactions contemplated by this Agreement and the other Documents shall be
satisfactory in form and substance to the Agent, and the Agent shall have
received all information and copies of all certificates, documents and papers,
including good standing certificates and any other records of corporate
proceedings and governmental approvals, if any, which the Agent may have
requested in connection therewith, such documents and papers, where appropriate,
to be certified by proper corporate or governmental authorities.
(e) ADVERSE CHANGE, ETC. From August 21, 1996 to the Restatement
Effective Date, nothing shall have occurred (and neither the Banks nor the Agent
shall have become aware of any facts or conditions not previously known) which
the Agent or the Required Banks shall determine (a) has, or is reasonably likely
to have, a material adverse effect on the rights or remedies of the Banks or the
Agent, or on the ability of the Borrower to perform its obligations to them, or
(b) has, or is reasonably likely to have, a Material Adverse Effect.
(f) LITIGATION. On the Restatement Effective Date, there shall be no
actions, suits or proceedings pending or threatened (a) with respect to this
Agreement or any other Document or the transactions contemplated hereby or
thereby (including the Transaction) or (b) which the Agent or the Required Banks
shall determine has, or is reasonably likely to have (i) a Material Adverse
Effect or (ii) a material adverse effect on the rights or
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remedies of the Banks hereunder or under any other Credit Document or on the
ability of the Borrower to perform its obligations to the Banks hereunder or
under any other Credit Document or upon the ability of the parties to
consummate the Transaction.
(g) APPROVALS. On the Restatement Effective Date, all material
necessary governmental and third party approvals in connection with the
transactions contemplated by the Credit Documents and the other Transaction
Documents and otherwise referred to herein or therein shall have been obtained
and remain in effect, and all applicable waiting periods shall have expired
without any action being taken by any competent authority which restrains or
prevents such transactions or imposes, in the reasonable judgment of the
Required Banks or the Agent, materially adverse conditions upon the consummation
of such transactions. In addition, the Agent shall have received evidence
satisfactory to it that all permits, leases, licenses and consents material to
the operations of OAH and its Subsidiaries and of the Borrower and its
Subsidiaries shall remain in effect after giving effect to the Transaction
and/or shall have been obtained.
(h) ACQUISITION. On or prior to the Restatement Effective Date,
there shall have been delivered to the Banks true and complete copies of the
Acquisition Documents and all terms of the Acquisition Agreement and of the
other Acquisition Documents shall be reasonably satisfactory to the Agent. Each
of the conditions precedent to the obligation of the Borrower to consummate the
Acquisition shall have been satisfied, or waived, all to the reasonable
satisfaction of the Agent and, concurrently with the making of AR Loans
hereunder on the Restatement Effective Date, the Borrower shall have consummated
the Acquisition in accordance with the Acquisition Agreement and all applicable
laws, rules and regulations and all Indebtedness of OAH and its Subsidiaries
pursuant to their existing credit arrangements shall have been repaid in full.
(i) SECURITY DOCUMENTS. (I) On the Restatement Effective Date, the
Borrower shall have duly authorized, executed and delivered an amended and
restated Pledge Agreement in the form of Exhibit E (as modified, amended or
supplemented from time to time in accordance with the terms thereof and hereof,
the "Borrower Pledge Agreement"), and shall have delivered to the Collateral
Agent, as pledgee thereunder, all of the certificates representing the Pledged
Securities referred to therein, accompanied by executed and undated stock
powers, and the Borrower's Pledge Agreement shall be in full force and effect.
(II) On the Restatement Effective Date, the Borrower shall have duly
authorized, executed and delivered an amended and restated Security Agreement
substantially in the form of Exhibit F (as modified, supplemented or amended
from time to time in accordance with the terms thereof and hereof, the "Security
Agreement") covering all of the Borrower's present and future Security Agreement
Collateral.
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(III) On the Restatement Effective Date, each of the Designated UOH
Stockholders shall have each duly authorized, executed and delivered a Pledge
Agreement in the form of Exhibit G (as modified, amended or supplemented from
time to time in accordance with the terms thereof and hereof, the "UOH Pledge
Agreement") (which agreement shall terminate by its terms upon the occurrence of
the Guaranty Commencement Date and the execution and delivery of the Holdings
Guaranty and the Holdings Pledge Agreement) and shall have delivered to the
Collateral Agent, as pledgee thereunder, all of the certificates representing
the Pledged Securities referred to therein, accompanied by executed and undated
stock powers, and each of the UOH Pledge Agreement shall be in full force and
effect.
(IV) On the Restatement Effective Date, the Agent shall have
received (x) such executed amendments (in form and substance reasonably
satisfactory to the Agent) to the Mortgages created pursuant to the Original
Credit Agreement (as so amended, if at all, each a "Mortgage" and collectively
the "Mortgages") covering all the Mortgaged Properties as the Agent deems
necessary or appropriate to give effect to the transactions contemplated by this
Agreement and arrangements reasonably satisfactory to the Collateral Agent shall
be in place to provide that counterparts of such amendments shall be recorded on
the Restatement Effective Date or within one Business Day thereafter in all
places where the original Mortgages were filed and (y) such endorsements, if
any, to the Mortgage Policies delivered under the Original Credit Agreement with
respect to the Mortgages as the Agent deems appropriate.
(j) SOLVENCY. On the Restatement Effective Date, the Borrower shall
have delivered, or shall cause to be delivered to the Agent a solvency letter in
the form of Exhibit H hereto from the Chief Financial Officer of the Borrower
and acceptable in form and substance to the Agent.
(k) FEES. On the Restatement Effective Date, the Borrower shall have
paid to the Agent and the Banks all Fees and expenses agreed upon by such
parties to be paid on or prior to such date.
(l) ENVIRONMENTAL REPORTS. On or prior to the Restatement Effective
Date, the Agent shall have received environmental reports from Persons
reasonably satisfactory to the Agent covering the properties of OAH and its
Subsidiaries (other than properties that are solely sign locations), which
reports shall be reasonably satisfactory to the Agent.
(m) RF CREDIT AGREEMENT. On the Restatement Effective Date, the
Restatement Effective Date under and as defined in the RF Credit Agreement shall
have occurred (or would be required to occur in the absence of the condition
specified in Section 5.01(m) of the RF Credit Agreement) and the Revolving
Facility Termination Date shall not have occurred.
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(n) ADJUSTED EBITDA. On or prior to the Restatement Effective Date,
the Agent shall have received evidence satisfactory to it that Holdings and its
Subsidiaries plus OAH and its Subsidiaries shall have attained on a combined
basis an Adjusted EBITDA of at least $57 million for the 12 months ended on
August 31, 1996.
(o) ORIGINAL CREDIT AGREEMENT. On the Restatement Effective Date and
concurrently with the initial borrowing hereunder, the Borrower shall have paid
all accrued but unpaid interest, costs (including pursuant to Section 1.11
thereof) and fees under the Original Credit Agreement, whether or not otherwise
then due and payable.
5.02 CONDITIONS PRECEDENT TO ALL CREDIT EVENTS. The obligation of
the Banks to make each Loan is subject, at the time thereof, to the satisfaction
of the following conditions:
(a) NOTICE OF BORROWING. The Agent shall have received a Notice of
Borrowing meeting the requirements of Section 1.02.
(b) NO DEFAULT; REPRESENTATIONS AND WARRANTIES. At the time of each
Credit Event and also after giving effect thereto, (i) there shall exist no
Default or Event of Default and (ii) all representations and warranties
contained herein or in the other Credit Documents shall be true and correct in
all material respects with the same effect as though such representations and
warranties had been made on and as of the date of such Credit Event, except to
the extent that such representations and warranties expressly relate to an
earlier date.
(c) TESTED BORROWINGS. At the time of incurring any Tested
Borrowing, each of the covenants set forth in Sections 8.11 through 8.15 shall
have been satisfied as of, and no Event of Default under Section 9.08(B) or (C)
shall exist as of, the Measurement Date relating to such Tested Borrowing
determined on a PRO FORMA basis as if such Tested Borrowing occurred on such
Measurement Date and, in the case of a Tested Borrowing financing a Permitted
Acquisition, such Permitted Acquisition was consummated on the first day of the
12-month period ending on such Measurement Date.
The acceptance of the benefits of each Credit Event shall constitute a
representation and warranty by the Borrower to the Agent and each of the Banks
that all of the applicable conditions specified above exist as of that time.
All of the certificates, legal opinions and other documents and papers referred
to in Section 5.01, unless otherwise specified, shall be delivered to the Agent
at its Notice Office for the account of each of the Banks and, except for the
Notes, in sufficient counterparts for each of the Banks and shall be
satisfactory in form and substance to the Agent.
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SECTION 6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. In order to
induce the Banks to enter into this Agreement and to make the Loans, the
Borrower makes the following representations and warranties to, and agreements
with, the Banks, all of which shall survive the execution and delivery of this
Agreement and the making of the Loans (with all representations and warranties
made as of the Restatement Effective Date to be made giving effect to the
Transaction).
6.01 CORPORATE STATUS. Each of Holdings, the Borrower and its
Subsidiaries (i) is a duly organized and validly existing corporation in good
standing under the laws of the jurisdiction of its organization and has the
corporate power and authority to own its property and assets and to transact the
business in which it is engaged and presently proposes to engage and (ii) has
duly qualified and is authorized to do business and is in good standing in all
jurisdictions where it is required to be so qualified and where the failure to
be so qualified would have a Material Adverse Effect.
6.02 CORPORATE POWER AND AUTHORITY. Each Credit Party has the
corporate power and authority to execute, deliver and carry out the terms and
provisions of the Transaction Documents to which it is a party and has taken all
necessary corporate action to authorize the execution, delivery and performance
of the Transaction Documents to which it is a party. Each Credit Party has duly
executed and delivered each Transaction Document to which it is a party and each
such Transaction Document constitutes the legal, valid and binding obligation of
such Credit Party enforceable in accordance with its terms.
6.03 NO VIOLATION. Neither the execution, delivery and performance
by any Credit Party of the Transaction Documents to which it is a party nor
compliance with the terms and provisions thereof, nor the consummation of the
transactions contemplated therein (i) will contravene any applicable provision
of any law, statute, rule, regulation, order, writ, injunction or decree of any
court or governmental instrumentality, (ii) will conflict or be inconsistent
with or result in any breach of, any of the terms, covenants, conditions or
provisions of, or constitute a default under, or (other than pursuant to the
Security Documents) result in the creation or imposition of (or the obligation
to create or impose) any Lien upon any of the property or assets of any Credit
Party or any of its Subsidiaries pursuant to the terms of any indenture,
mortgage, deed of trust, agreement or other instrument to which Holdings, the
Borrower or any of its Subsidiaries is a party or by which it or any of its
property or assets are bound or to which it may be subject or (iii) will violate
any provision of the Charter or By-Laws of any Credit Party or any of its
Subsidiaries.
6.04 LITIGATION. There are no actions, suits or proceedings pending
or, to the Borrower's knowledge, threatened with respect to the Borrower or any
of its Subsidiaries (i) that are likely to have a Material Adverse Effect or
(ii) that could reasonably be expected to have a material adverse effect on the
rights or remedies of the
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Banks or on the ability of the Borrower to perform its obligations to them
hereunder and under the other Credit Documents.
6.05 USE OF PROCEEDS; MARGIN REGULATIONS. (a) The proceeds of (x)
the B Term Loans shall be used to finance the Acquisition, including related
fees and expenses and (y) all AR Loans initially incurred on or after the
Restatement Effective Date may be used (i) on the Restatement Effective Date to
pay certain fees and expenses relating to the Acquisition and (ii) to finance
Permitted Acquisitions (including the Acquisition).
(b) Neither the making or continuance of any Loan hereunder, nor the
use of the proceeds thereof, will violate or be inconsistent with the provisions
of Regulation G, T, U or X of the Board of Governors of the Federal Reserve
System and no part of the proceeds of any Loan will be used to purchase or carry
any Margin Stock in violation of Regulation U or to extend credit for the
purpose of purchasing or carrying any Margin Stock.
6.06 GOVERNMENTAL APPROVALS. Except for filings and recordings in
connection with the Security Documents, and those items listed on Annex III, no
order, consent, approval, license, authorization, or validation of, or filing,
recording or registration with, or exemption by, any foreign or domestic
governmental or public body or authority, or any subdivision thereof, that has
not been obtained or made is required to authorize or is required in connection
with (i) the execution, delivery and performance of any Transaction Document or
(ii) the legality, validity, binding effect or enforceability of any Credit
Document.
6.07 INVESTMENT COMPANY ACT. None of Holdings, the Borrower nor any
of its Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
6.08 PUBLIC UTILITY HOLDING COMPANY ACT. None of Holdings, the
Borrower or any of its Subsidiaries is a "holding company," or a "subsidiary
company" of a "holding company," or an "affiliate" of a "holding company," or of
a "subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
6.09 TRUE AND COMPLETE DISCLOSURE. All factual information (taken as
a whole) heretofore or contemporaneously furnished by or on behalf of Holdings,
the Borrower or any of its Subsidiaries in writing to the Agent or any Bank for
purposes of or in connection with this Agreement or any transaction contemplated
herein is, and all other such factual information (taken as a whole) hereafter
furnished by or on behalf of any such Person in writing to any Bank will be,
true and accurate in all material respects on the date
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as of which such information is dated or certified and not incomplete by
omitting to state any material fact necessary to make such information (taken
as a whole) not misleading at such time in light of the circumstances under
which such information was provided. The projections and PRO FORMA financial
information contained in such materials are based on good faith estimates and
assumptions believed by such Persons to be reasonable at the time made, it
being recognized by the Banks that such projections as to future events are
not to be viewed as facts and that actual results during the period or
periods covered by any such projections may differ from the projected
results. There is no fact known to the Borrower which would have a Material
Adverse Effect, which has not been disclosed herein or in such other
documents, certificates and statements furnished to the Banks for use in
connection with the transactions contemplated hereby.
6.10 FINANCIAL CONDITION; FINANCIAL STATEMENTS. (a) On and as of
the Restatement Effective Date, on a PRO FORMA basis after giving effect to the
Transaction and to all Indebtedness incurred, and to be incurred, and Liens
created, and to be created, in connection therewith, (x) the sum of the assets,
at a fair valuation, of the Borrower and its Subsidiaries, and of Holdings and
is Subsidiaries, taken as a whole will exceed their debts, (y) the Borrower and
its Subsidiaries, and Holdings and its Subsidiaries, taken as a whole will not
have incurred or intended to, or believe that they will, incur debts beyond
their ability to pay such debts as such debts mature and (z) the Borrower and
its Subsidiaries, and Holdings and its Subsidiaries, taken as a whole will not
have unreasonably small capital with which to conduct their business. For
purposes of this Section 6.10, "debt" means any liability on a claim, and
"claim" means (i) right to payment whether or not such a right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured; or (ii) right to
an equitable remedy for breach of performance if such breach gives rise to a
payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured.
(b) (i) The consolidated balance sheet of Holdings and of the
Borrower at December 31, 1994 and December 31, 1995 and at June 30, 1996 and the
related consolidated statements of operations and cash flows of Holdings and of
the Borrower for the fiscal years or six months ended as of said dates, which,
in the case of the annual financial statements, have been examined by Price
Waterhouse LLP, independent certified public accountants, who delivered an
unqualified opinion in respect therewith, (ii) the Financial Statements (as
defined in the Acquisition Agreement) of OAH and its Subsidiaries and (iii) the
PRO FORMA consolidated balance sheet of the Borrower as of June 30, 1996, copies
of which have heretofore been furnished to each Bank, present fairly the
financial position of such entities at the dates of said statements and the
results for the period covered thereby (or, in the case of the PRO FORMA balance
sheet, presents a good faith estimate of the consolidated PRO FORMA financial
condition of the Borrower (after giving effect to the Transaction and the
related financing thereof) at the date thereof) in accordance with
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GAAP, except to the extent provided in the notes to said financial
statements. All such financial statements (other than the aforesaid PRO
FORMA balance sheets) have been prepared in accordance with generally
accepted accounting principles and practices consistently applied except to
the extent provided in the notes to said financial statements. Except for
the incurrence of Indebtedness to finance the Acquisition, nothing has
occurred since December 31, 1995 that has had or could reasonably be expected
to have a Material Adverse Effect.
(c) Except as reflected in the financial statements and the notes
thereto described in Section 6.10(b), there were as of the Initial Borrowing
Date no liabilities or obligations with respect to Holdings, the Borrower or any
of its Subsidiaries of a nature (whether absolute, accrued, contingent or
otherwise and whether or not due) which, either individually or in aggregate,
would be material to the Borrower and its Subsidiaries, and to Holdings and its
Subsidiaries, taken as a whole, except as incurred in the ordinary course of
business consistent with past practices subsequent to December 31, 1995 and
except for the Indebtedness incurred pursuant to the Original Credit Agreement
or to finance the Acquisition.
6.11 SECURITY INTERESTS. On and after the Restatement Effective Date
(or the date of the execution and delivery thereof, in the case of all
Additional Security Documents), each of the Security Documents create, as
security for the Obligations purported to be secured thereby, a valid and
enforceable perfected security interest in and Lien on all of the Collateral
subject thereto, superior to and prior to the rights of all third Persons and
subject to no other Liens (except (x) that the Security Agreement Collateral may
be subject to the security interests evidenced by Permitted Liens relating
thereto and (y) the Mortgaged Properties may be subject to Permitted
Encumbrances relating thereto), in favor of the Collateral Agent for the benefit
of the Banks. No filings or recordings are required in order to perfect the
security interests created under any Security Document except for filings or
recordings required in connection with any such Security Document (other than
the Pledge Agreements) which shall have been made upon or prior to (or are the
subject of arrangements, satisfactory to the Agent, for filing on or promptly
after the date of) the execution and delivery thereof.
6.12 REPRESENTATIONS AND WARRANTIES IN TRANSACTION DOCUMENTS. All
representations and warranties set forth in the Transaction Documents were true
and correct in all material respects as of the time such representations and
warranties were made and shall be true and correct in all material respects as
of the Restatement Effective Date as if such representations and warranties were
made on and as of such date, unless stated to relate to a specific earlier date,
in which case such representations and warranties shall be true and correct in
all material respects as of such earlier date.
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6.13 CONSUMMATION OF TRANSACTION. As of the Restatement Effective
Date, the Transaction shall have been consummated in accordance with the terms
and conditions of the Transaction Documents and all applicable laws. All
applicable waiting periods with respect thereto have or, prior to the time when
required, will have, expired without, in all such cases, any action being taken
by any competent authority which restrains, prevents, or imposes material
adverse conditions upon the consummation of the Transaction. As of the
Restatement Effective Date, there does not exist any judgment, order, or
injunction prohibiting the consummation of the Transaction, or the making of
Loans or the performance by the Borrower of its obligations under the Documents.
6.14 TAX RETURNS AND PAYMENTS. Each of Holdings, the Borrower and
its Subsidiaries has filed all federal income tax returns and all other material
tax returns, domestic and foreign, required to be filed by it and has paid all
material taxes and assessments payable by it which have become due, other than
those not yet delinquent and except for those contested in good faith.
Holdings, the Borrower and its Subsidiaries have paid, or have provided adequate
reserves (in the good faith judgment of the management of the Borrower) for the
payment of, all federal, state and foreign income taxes applicable for all prior
fiscal years and for the current fiscal year to the date hereof.
6.15 COMPLIANCE WITH ERISA. Each Plan is in substantial compliance
with ERISA and the Code; no Reportable Event has occurred with respect to a
Plan; no Plan is insolvent or in reorganization; no Plan has an Unfunded Current
Liability; no Plan has an accumulated or waived funding deficiency, has
permitted decreases in its funding standard account or has applied for an
extension of any amortization period within the meaning of Section 412 of the
Code; neither the Borrower, nor any Subsidiary nor any ERISA Affiliate has
incurred any material liability to or on account of a Plan pursuant to Section
409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or
Section 401(a)(29), 4971, 4975 or 4980 of the Code or expects to incur any
liability (including any indirect, contingent or secondary liability) under any
of the foregoing Sections with respect to any Plan; no proceedings have been
instituted to terminate or appoint a trustee to administer any Plan; no
condition exists which presents a material risk to the Borrower or any
Subsidiary or any ERISA Affiliate of incurring a liability to or on account of a
Plan pursuant to the foregoing provisions of ERISA and the Code; using actuarial
assumptions and computation methods consistent with Part 1 of subtitle E of
Title IV of ERISA, the aggregate liabilities of the Borrower and its
Subsidiaries and its ERISA Affiliates to all Plans which are multiemployer plans
(as defined in Section 4001(a)(3) of ERISA) in the event of a complete
withdrawal therefrom, as of the close of the most recent fiscal year of each
such Plan ended prior to the date of the most recent Credit Event, would not
exceed $150,000; no lien imposed under the Code or ERISA on the assets of the
Borrower or any Subsidiary or any ERISA Affiliate exists or is likely to arise
on account of any Plan; and Holdings, the Borrower and its Subsidiaries do not
maintain or contribute to any employee welfare benefit plan (as defined in
Section 3(1) of ERISA) which provides benefits to
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retired employees (other than as required by Section 601 of ERISA) or any
employee pension benefit plan (as defined in Section 3(2) of ERISA), except
to the extent that all events described in the preceding clauses of this
Section 6.15 and then in existence would not, in the aggregate, have or be
likely to have a Material Adverse Effect. With respect to Plans that are
multiemployer plans (within the meaning of Section 4001(a)(3) of ERISA) the
representations and warranties in this Section 6.15 are made to the best
knowledge of the Borrower.
6.16 SUBSIDIARIES. (a) Annex IV hereto lists each Subsidiary of the
Borrower existing on the Restatement Effective Date. The Borrower owns 100% of
the outstanding capital stock of each such Subsidiary. The Borrower will at all
times own directly 100% of the outstanding capital stock of all of said entities
except to the extent otherwise permitted pursuant to Section 8.02.
(b) There are no restrictions on the Borrower or any of its
Subsidiaries which prohibit or otherwise restrict the transfer of cash or other
assets from any Subsidiary of the Borrower to the Borrower, other than
prohibitions or restrictions existing under or by reason of (i) this Agreement,
the other Credit Documents, the RF Credit Agreement, the Senior Notes and the
Discount Notes, (ii) applicable law, (iii) customary non-assignment provisions
entered into in the ordinary course of business and consistent with past
practices, (iv) any restriction or encumbrance with respect to a Subsidiary of
the Borrower imposed pursuant to an agreement which has been entered into for
the sale or disposition of all or substantially all of the capital stock or
assets of such Subsidiary, so long as such sale or disposition is permitted
under this Agreement, and (v) any documents or instruments governing the terms
of any Indebtedness or other obligations secured by Liens permitted by Section
8.03, provided that such prohibitions or restrictions apply only to the assets
subject to such Liens.
6.17 PATENTS, ETC. The Borrower and each of its Subsidiaries have
obtained all material patents, trademarks, service marks, trade names,
copyrights, licenses and other rights, free from burdensome restrictions, that
are necessary for the operation of their businesses taken as a whole as
presently conducted and as proposed to be conducted.
6.18 POLLUTION AND OTHER REGULATIONS. (a) Each of Holdings, the
Borrower and its Subsidiaries is in compliance with all Environmental Laws
governing its business for which failure to comply is reasonably likely to have
a Material Adverse Effect, and neither Holdings, the Borrower nor any of its
Subsidiaries is liable for any material penalties, fines or forfeitures for
failure to comply with any of the foregoing in the manner set forth above. All
licenses, permits, registrations or approvals required for the business of the
Borrower and each of its Subsidiaries, as conducted as of the Restatement
Effective Date, under any Environmental Law have been secured and the Borrower
and each of its Subsidiaries is in substantial compliance therewith, except such
licenses, permits, registrations
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or approvals the failure to secure or to comply therewith is not likely to
have a Material Adverse Effect. Neither Holdings, the Borrower nor any of
its Subsidiaries is in noncompliance with, breach of or default under any
applicable writ, order, judgment, injunction, or decree to which Holdings,
the Borrower or such Subsidiary is a party or which would affect the ability
of the Borrower or such Subsidiary to operate any real property and no event
has occurred and is continuing which, with the passage of time or the giving
of notice or both, would constitute noncompliance, breach of or default
thereunder, except in each such case, such noncompliance, breaches or
defaults as are not likely to, in the aggregate, have a Material Adverse
Effect. There are as of the Restatement Effective Date no Environmental
Claims pending or, to the best knowledge of the Borrower, threatened, which
(a) challenge the validity, term or entitlement of the Borrower or any of its
Subsidiaries for any permit, license, order or registration required for the
operation of any facility under the Environmental Laws which the Borrower or
any of its Subsidiaries operates and (b) wherein an unfavorable decision,
ruling or finding would be reasonably likely to have a Material Adverse
Effect. There are no facts, circumstances, conditions or occurrences
concerning Holdings, the Borrower or any of its Subsidiaries, any of their
operations or on any Real Property or, to the knowledge of the Borrower, on
any property adjacent to any such Real Property that could reasonably be
expected (i) to form the basis of an Environmental Claim against the
Borrower, any of its Subsidiaries or any Real Property of the Borrower or any
of its Subsidiaries, or (ii) to cause such Real Property to be subject to any
restrictions on the ownership, occupancy, use or transferability of such Real
Property under any Environmental Law, except in each such case, such
Environmental Claims or restrictions that individually or in the aggregate
are not reasonably likely to have a Material Adverse Effect.
(b) Hazardous Materials have not at any time been (i) generated,
used, treated or stored on, or transported to or from, any Real Property of the
Borrower or any of its Subsidiaries or (ii) released on any Real Property, in
each case where such occurrence or event individually or in the aggregate is
reasonably likely to have a Material Adverse Effect.
6.19 PROPERTIES. The Borrower and each of its Subsidiaries have good
and marketable title to all properties owned by them, including all property
reflected in the consolidated balance sheet of the Borrower and its
Subsidiaries, and the Financial Statements, referred to in Section 6.10(b), free
and clear of all Liens, other than (i) as referred to in the consolidated
balance sheet, or the Financial Statements, or, in either case, in the notes
thereto or (ii) otherwise permitted by Section 8.03. Annex V contains a true
and complete list of each Real Property owned or leased by the Borrower or any
of its Subsidiaries on the Restatement Effective Date (other than properties
that are solely sign locations) and the type of interest therein held by the
Borrower or the respective Subsidiary. Holdings owns no properties or assets
(other than the Tax Sharing Agreement) other than all of the capital stock of
the Borrower.
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6.20 LABOR RELATIONS. Holdings, the Borrower and its Subsidiaries
are not engaged in any unfair labor practice that could reasonably be expected
to have a Material Adverse Effect. There is (i) no unfair labor practice
complaint pending against Holdings, the Borrower or any of its Subsidiaries or
threatened against any of them, before the National Labor Relations Board, and
no grievance or arbitration proceeding arising out of or under any collective
bargaining agreement is so pending against any of them or threatened against any
of them, (ii) no strike, labor dispute, slowdown or stoppage pending against
Holdings, the Borrower or any of its Subsidiaries or threatened against any of
them and (iii) no union representation question existing with respect to the
employees of Holdings, the Borrower or any of its Subsidiaries and no union
organizing activities are taking place, except with respect to any matter
specified in clause (i), (ii) or (iii) above, either individually or in the
aggregate, such as is not reasonably likely to have a Material Adverse Effect.
6.21 EXISTING INDEBTEDNESS. Annex VI sets forth a true and complete
list of all Indebtedness of Holdings, the Borrower and each of its Subsidiaries
as of the Restatement Effective Date that is in excess of $5,000 for any one
issue and is to remain outstanding after giving effect to the Transaction (all
such Indebtedness, of whatever size, but excluding Indebtedness hereunder and
under the RF Credit Agreement, the "Existing Indebtedness"), in each case
showing the aggregate principal amount thereof and the name of the respective
borrower (or issuer) and any other entity which directly or indirectly
guaranteed such debt.
SECTION 7. AFFIRMATIVE COVENANTS. The Borrower covenants and agrees
that on the Restatement Effective Date and thereafter for so long as this
Agreement is in effect and until the Commitments have terminated, no Notes are
outstanding and the Loans, together with interest, Fees and all other
Obligations incurred hereunder, are paid in full:
7.01 INFORMATION COVENANTS. The Borrower will furnish to each Bank:
(a) ANNUAL FINANCIAL STATEMENTS. Within 90 days after the close of
each fiscal year of the Borrower, the consolidated balance sheet of the Borrower
and its Subsidiaries and of Holdings and its Subsidiaries, as at the end of such
fiscal year and the related consolidated statements of income and retained
earnings and of cash flows for such fiscal year, in each case setting forth
comparative consolidated figures for the preceding fiscal year, and examined by
independent certified public accountants of recognized national standing whose
opinion shall not be qualified as to the scope of audit and as to the status of
Holdings, the Borrower or any of its Subsidiaries as a going concern, together
with a certificate of such accounting firm stating that in the course of its
regular audit of the business of Holdings and of the Borrower, which audit was
conducted in accordance with generally accepted auditing standards, such
accounting firm has obtained no knowledge of any Default or Event of Default
which has occurred and is continuing or, if in the opinion
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of such accounting firm such a Default or Event of Default has occurred and
is continuing, a statement as to the nature thereof.
(b) QUARTERLY FINANCIAL STATEMENTS. As soon as available and in any
event within 45 days after the close of each of the first three quarterly
accounting periods in each fiscal year, the consolidated balance sheet of the
Borrower and its Subsidiaries and of Holdings and its Subsidiaries, as at the
end of such quarterly period and the related consolidated statements of income
and retained earnings and of cash flows for such quarterly period and for the
elapsed portion of the fiscal year ended with the last day of such quarterly
period, and in each case setting forth comparative consolidated figures for the
related periods in the prior fiscal year, all of which shall be certified by the
chief financial officer or controller of the Borrower or Holdings, as
appropriate, subject to changes resulting from audit and normal year-end audit
adjustments.
(c) MONTHLY REPORTS. As soon as practicable, and in any event within
30 days, after the end of each monthly accounting period of each fiscal year the
consolidated balance sheet of the Borrower and its Subsidiaries and of Holdings
and its Subsidiaries, as at the end of such period, and the related consolidated
statements of income and retained earnings for such period, setting forth
comparative figures for the corresponding period of the previous year, all of
which shall be certified by the chief financial officer or controller of the
Borrower or Holdings, as appropriate, subject to changes resulting from audit
and normal year-end audit adjustments.
(d) BUDGETS; ETC. Not more than 60 days after the commencement of
each fiscal year of the Borrower, a budget of the Borrower and its Subsidiaries
in reasonable detail for each of the twelve months of such fiscal year.
Together with each delivery of consolidated financial statements pursuant to
Sections 7.01(a), (b) and (c), a comparison of the current year to date
financial results against the budgets required to be submitted pursuant to this
clause (d) shall be presented.
(e) OFFICER'S CERTIFICATES. (i) At the time of the delivery of the
financial statements provided for in Sections 7.01(a), (b) and (c), a
certificate of the chief financial officer, controller or other Authorized
Officer of the Borrower to the effect that no Default or Event of Default exists
or, if any Default or Event of Default does exist, specifying the nature and
extent thereof, which certificate, shall set forth the calculations required to
establish (I) the Modified Holdings Leverage Ratio for the Relevant
Determination Date occurring on the last day of such fiscal year, quarter or
month, (II) whether the Borrower and its Subsidiaries were in compliance with
the provisions of Sections 8.11, 8.12, 8.13, 8.14 and 8.15, as applicable, as at
the end of such fiscal period or year, as the case may be and (III) whether
there was any Event of Default under Section 9.08(B) and/or 9.08(C) as at the
end of such fiscal period.
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(ii) At the time of any incurrence of Consolidated Debt of Holdings
and its Subsidiaries at a time when the Margin Reduction Discount is (or based
on the last officer's certificate delivered pursuant to clause (i) above will
be) greater than zero, a certificate of any of the persons specified in clause
(i) above setting forth the calculations establishing the Modified Holdings
Leverage Ratio after giving effect to the incurrence of such Consolidated Debt.
(f) NOTICE OF DEFAULT OR LITIGATION. Promptly, and in any event
within three Business Days after the Borrower obtains knowledge thereof, notice
of (x) the occurrence of any event which constitutes a Default or Event of
Default which notice shall specify the nature thereof, the period of existence
thereof and what action the Borrower proposes to take with respect thereto and
(y) the commencement of or any significant development in any litigation or
governmental proceeding pending against Holdings, the Borrower or any of its
Subsidiaries which is likely to have a Material Adverse Effect or is likely to
have a material adverse effect on the ability of the Borrower to perform its
obligations hereunder or under any other Credit Document.
(g) AUDITORS' REPORTS. Promptly upon receipt thereof, a copy of each
other final report or "management letter" submitted to Holdings or the Borrower
by its independent accountants in connection with any annual, interim or special
audit made by it of the books of Holdings and/or the Borrower.
(h) ENVIRONMENTAL MATTERS. Promptly upon, and in any event within 20
Business Days after an officer of Holdings, the Borrower or any Subsidiary
obtains knowledge thereof, notice of one or more of the following environmental
matters: (i) any pending or threatened (in writing) material Environmental
Claim against, or for which liability would attach to, the Borrower or any of
its Subsidiaries or any Real Property owned or operated by the Borrower or any
of its Subsidiaries; (ii) any condition or occurrence on or arising from any
Real Property owned or operated by the Borrower or any of its Subsidiaries that
(a) results in material noncompliance by Holdings, the Borrower or any of its
Subsidiaries with any applicable material Environmental Law or (b) would
reasonably be expected to form the basis of a material Environmental Claim
against, or for which liability would attach to, the Borrower or any of its
Subsidiaries or any such Real Property; (iii) any condition or occurrence on any
Real Property owned or operated by the Borrower or any of its Subsidiaries that
could reasonably be expected to cause such Real Property to be subject to any
material restrictions on the ownership, occupancy, use or transferability by the
Borrower or any of its Subsidiaries of such Real Property under any
Environmental Law; and (iv) the taking of any material removal or remedial
action in response to the actual or alleged presence of any Hazardous Material
on any Real Property owned or operated by the Borrower or any of its
Subsidiaries as required by any Environmental Law or any governmental or other
administrative agency, and all such notices shall describe in reasonable detail
the nature of the claim, investigation, condition,
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occurrence or removal or remedial action and the Borrower's or such
Subsidiary's response thereto.
(i) OTHER INFORMATION. Promptly upon transmission thereof, (i)
copies of any filings and registrations with, and reports to, the Securities and
Exchange Commission or any successor thereto (the "SEC") by Holdings, the
Borrower or any of its Subsidiaries and (ii) with reasonable promptness, such
other information or documents (financial or otherwise) as the Agent on its own
behalf or on behalf of the Required Banks may reasonably request from time to
time.
7.02 BOOKS, RECORDS AND INSPECTIONS. The Borrower will, and will
cause its Subsidiaries to, permit, upon reasonable notice to the chief financial
officer, controller or any other Authorized Officer of the Borrower officers and
designated representatives of the Agent or the Required Banks to visit and
inspect any of the properties or assets of the Borrower and any of its
Subsidiaries in whomsoever's possession, and to examine the books of account of
Holdings, the Borrower and any of its Subsidiaries and discuss the affairs,
finances and accounts of Holdings, the Borrower and of any of its Subsidiaries
with, and be advised as to the same by, its and their officers and independent
accountants, all at such reasonable times and intervals and to such reasonable
extent as the Agent or the Required Banks may desire.
7.03 INSURANCE. The Borrower will, and will cause each of its
Subsidiaries to, at all times maintain in full force and effect insurance in
such amounts, covering such risks and liabilities and with such deductibles or
self-insured retentions as are in accordance with normal industry practice,
provided that in no event will any such deductible or self-insured retention in
respect of liability claims or in respect of casualty damage, exceed, in each
such case, (i) $250,000 per occurrence or (ii) $1,000,000 in the aggregate per
fiscal year. At any time that insurance at the levels described in Annex VII is
not being maintained by the Borrower and its Subsidiaries, the Borrower will
notify the Banks in writing thereof and, if thereafter notified by the Agent to
do so, the Borrower will, and will cause its Subsidiaries to, obtain insurance
at such levels at least equal to those set forth in Annex VII to the extent then
generally available (but in any event within the deductible or self-insured
retention limitations set forth in the preceding sentence) or otherwise as are
acceptable to the Agent. The Borrower will, and will cause each of its
Subsidiaries to, furnish on the Restatement Effective Date and annually
thereafter to the Agent a summary of the insurance carried together with
certificates of insurance and other evidence of such insurance, if any, naming
the Collateral Agent as an additional insured and/or loss payee.
7.04 PAYMENT OF TAXES. The Borrower will pay and discharge, and will
cause each Subsidiary to pay and discharge, all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits, or
upon any properties belonging to it, prior to the date on which penalties attach
thereto, and all lawful claims
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which, if unpaid, might become a Lien or charge upon any properties of
Holdings, the Borrower or any of its Subsidiaries, provided that neither
Holdings, the Borrower nor any Subsidiary shall be required to pay any such
tax, assessment, charge, levy or claim which is being contested in good faith
and by proper proceedings if it has maintained adequate reserves (in the good
faith judgment of the management of the Borrower) with respect thereto in
accordance with GAAP.
7.05 CONSOLIDATED CORPORATE FRANCHISES. The Borrower will do, and
will cause each Subsidiary to do, or cause to be done, all things necessary to
preserve and keep in full force and effect its existence, material rights and
authority, provided that any transaction permitted by Section 8.02 will not
constitute a breach of this Section 7.05.
7.06 COMPLIANCE WITH STATUTES, ETC. The Borrower will, and will
cause each Subsidiary to, comply with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of its business and the ownership
of its property other than those the non-compliance with which would not have a
Material Adverse Effect or would not have a material adverse effect on the
ability of the Borrower to perform its obligations under any Credit Document.
7.07 ERISA. As soon as possible and, in any event, within 10 days
after the Borrower or any of its Subsidiaries or ERISA Affiliates knows or has
reason to know of the occurrence of any of the following, the Borrower will
deliver to each of the Banks a certificate of the chief financial officer of the
Borrower setting forth details as to such occurrence and such action, if any,
which the Borrower, such Subsidiary or such ERISA Affiliate is required or
proposes to take, together with any notices required or proposed to be given to
or filed with or by the Borrower, the Subsidiary, the ERISA Affiliate, the PBGC,
a Plan participant (other than notices relating to an individual participant's
benefits) or the Plan administrator with respect thereto: that a Reportable
Event has occurred; that an accumulated funding deficiency has been incurred or
an application is reasonably likely to be or has been made to the Secretary of
the Treasury for a waiver or modification of the minimum funding standard
(including any required installment payments) or an extension of any
amortization period under Section 412 of the Code with respect to a Plan; that a
Plan which has an Unfunded Current Liability has been or may be terminated,
reorganized, partitioned or declared insolvent under Title IV of ERISA; that a
Plan has an Unfunded Current Liability and there is a failure to make a required
contribution, which gives rise to a lien under ERISA or the Code; that
proceedings are reasonably likely to be or have been instituted to terminate a
Plan which has an Unfunded Current Liability; that a proceeding has been
instituted pursuant to Section 515 of ERISA to collect a delinquent contribution
to a Plan; that the Borrower, any Subsidiary or any ERISA Affiliate will or may
incur any liability (including, any contingent or secondary liability) to or on
account of the termination of or withdrawal from a Plan under Section 4062,
4063, 4064, 4069, 4201,
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4204 or 4212 of ERISA or with respect to a Plan under Section 401(a)(29),
4971, 4975 or 4980 of the Code or Section 409, 502(l) or 502(l) of ERISA or
that the Borrower or any Subsidiary or Holdings may incur any material
liability pursuant to any employee welfare benefit plan (as defined in
Section 3(1) of ERISA) that provides benefits to retired employees or other
former employees (other than as required by Section 601 of ERISA) or any
employee pension benefit plan (as defined in Section 3(2) of ERISA). Upon
request of a Bank, the Borrower will deliver to such Bank a complete copy of
the annual report (Form 5500) of each Plan required to be filed with the
Internal Revenue Service. In addition to any certificates or notices
delivered to the Banks pursuant to the first sentence hereof, copies of any
annual reports and any other material notices received by Holdings, the
Borrower or any Subsidiary with respect to a Plan shall be delivered to the
Banks no later than 10 days after the later of the date such notice has been
filed with the Internal Revenue Service or the PBGC, given to Plan
participants (other than notices relating to an individual participant's
benefits) or received by Holdings, the Borrower or such Subsidiary.
7.08 GOOD REPAIR. The Borrower will, and will cause each of its
Subsidiaries to, ensure that its properties and equipment used or useful in its
business in whomsoever's possession they may be, are kept in good repair,
working order and condition, normal wear and tear excepted, and, subject to
Section 8.05, that from time to time there are made in such properties and
equipment all needful and proper repairs, renewals, replacements, extensions,
additions, betterments and improvements thereto, to the extent and in the manner
useful or customary for companies in similar businesses.
7.09 END OF FISCAL YEARS; FISCAL QUARTERS. The Borrower will, for
financial reporting purposes, cause (i) each of its, and each of its
Subsidiaries' fiscal years to end on December 31 of each year and (ii) each of
its, and each of its Subsidiaries' fiscal quarters to end on March 31, June 30,
September 30 and December 31 of each year.
7.10 ADDITIONAL SECURITY; FURTHER ASSURANCES. (a) No later than 30
days following the Guaranty Commencement Date, the Borrower shall deliver to the
Agent a duly authorized and executed counterpart or counterparts of: (i) a
guaranty agreement in form and substance reasonably satisfactory to the Agent
(as modified, supplemented or amended from time to time in accordance with the
terms thereof and hereof, the "Subsidiary Guaranty") executed by each Domestic
Subsidiary (except as otherwise agreed by the Agent) guaranteeing the
Obligations; (ii) a pledge agreement executed by each Subsidiary Guarantor in
form substantially the same as the Borrower Pledge Agreement and otherwise
reasonably satisfactory to the Agent (the "Additional Pledge Agreement"),
accompanied by the delivery thereunder of the certificates representing the
Pledged Securities referred to therein and executed and undated stock powers;
(iii) a security agreement executed by each Subsidiary Guarantor in a form
substantially the same as the Security Agreement and otherwise reasonably
satisfactory to the Agent (the "Additional Security Agreement") covering all of
such Subsidiary Guarantor's present and future
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Security Agreement Collateral, together with the filings and reports referred
to in Section 5.12(b) (i) through (iv) of the Original Credit Agreement
relating thereto; and (iv) deeds of trust, mortgages and similar documents in
form and substance reasonably satisfactory to the Agent (the "Additional
Mortgages") covering all of the Real Property owned by each of the Subsidiary
Guarantors (except as otherwise agreed by the Agent) (x) which Additional
Mortgages shall constitute valid and enforceable Liens superior to and prior
to the rights of all third Persons and subject to no other Liens except as
permitted by Section 8.03 and (y) which Additional Mortgages (or instruments
related thereto) shall have been duly recorded or filed in such manner and in
such places as are required by law to establish, perfect, preserve and
protect the Liens in favor of the Collateral Agent required to be granted
thereunder and all taxes, fees and other charges payable in connection
therewith shall have been paid in full, with each such Additional Mortgage to
be accompanied by mortgage policies relating thereto reasonably satisfactory
to the Agent, it being understood that nothing in this Section 7.10 shall
prevent any Domestic Subsidiary from merging with the Borrower to the extent
permitted by Section 8.02.
(b) The Borrower will, and, after the Guaranty Commencement Date,
will cause the Subsidiary Guarantors to, grant to the Collateral Agent security
interests and mortgages (each a "New Mortgage") in such owned Real Property of
the Borrower and the Subsidiary Guarantors acquired (including as a result of
the merger of one or more Subsidiaries with the Borrower) after the Restatement
Effective Date (or in the case of such Subsidiary Guarantors, the date it became
a Subsidiary Guarantor) as may be requested from time to time by the Agent.
Such New Mortgages shall be granted pursuant to documentation reasonably
satisfactory in form and substance to the Agent and shall constitute valid and
enforceable Liens superior to and prior to the rights of all third Persons and
subject to no other Liens except as are permitted by Section 8.03. The New
Mortgages or instruments related thereto shall have been duly recorded or filed
in such manner and in such places as are required by law to establish, perfect,
preserve and protect the Liens in favor of the Collateral Agent required to be
granted pursuant to the New Mortgages and all taxes, fees and other charges
payable in connection therewith shall have been paid in full.
(c) The Borrower will, and will cause its Subsidiaries to, at the
expense of the Borrower, make, execute, endorse, acknowledge, file and/or
deliver to the Collateral Agent from time to time such vouchers, invoices,
schedules, confirmatory assignments, conveyances, financing statements, transfer
endorsements, powers of attorney, certificates, real property surveys, reports
and other assurances or instruments and take such further steps relating to the
collateral covered by any of the Security Documents as the Collateral Agent may
reasonably require. Furthermore, the Borrower shall cause to be delivered to
the Collateral Agent such opinions of counsel, title insurance and other related
documents as may be requested by the Agent to assure themselves that this
Section 7.10 has been complied with.
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(d) The Borrower agrees that each action required above by this
Section 7.10 shall be completed as soon as possible, but in no event later than
60 days after such action is requested to be taken by the Agent or the Required
Banks, provided that in no event shall the Borrower be required to take any
action, other than using its reasonable commercial efforts without any material
expenditure, to obtain consents from third parties with respect to its
compliance with this Section 7.10.
7.11 CORPORATE SEPARATENESS. The Borrower will take, and will cause
each of its Subsidiaries to take, all such action as is necessary to keep the
operations of the Borrower and its Subsidiaries separate and apart from those of
Holdings, including, without limitation, ensuring that all customary formalities
regarding corporate existence, including holding regular board of directors'
meetings and maintenance of corporate records, are followed. All financial
statements of the Borrower and its Subsidiaries provided to creditors will
clearly evidence the corporate separateness of the Borrower and its Subsidiaries
from Holdings. Finally, neither the Borrower nor any of its Subsidiaries will
take any action, or conduct its affairs in a manner which is likely to result in
the corporate existence of Holdings on the one hand, and the Borrower and its
Subsidiaries on the other, being ignored, or in the assets and liabilities of
the Borrower or any of its Subsidiaries being substantively consolidated with
those of Holdings in a bankruptcy, reorganization or other insolvency
proceeding. No action expressly provided for in this Agreement, the other
Credit Documents, the RF Credit Agreement, the Senior Notes and/or the Discount
Notes will breach this covenant, and this covenant shall cease to be of any
force and effect once (x) the Discount Notes substantially have been paid in
full and (y) Holdings shall have delivered the Holdings Guaranty and the
Holdings Pledge Agreement.
7.12 COMPLIANCE WITH ENVIRONMENTAL LAWS. (i) The Borrower will
comply, and the Borrower will cause each of its Subsidiaries to comply, with
all Environmental Laws applicable to the ownership, lease or use of all Real
Property now or hereafter owned, leased or operated by the Borrower or any of
its Subsidiaries, will promptly pay or cause to be paid all costs and
expenses incurred in connection with such compliance, and will keep or cause
to be kept all such Real Property free and clear of any Liens imposed
pursuant to such Environmental Laws and (ii) neither the Borrower nor any of
its Subsidiaries will generate, use, treat, store, release or dispose of, or
permit the generation, use, treatment, storage, release or disposal of
Hazardous Materials on any Real Property now or hereafter owned, leased or
operated by the Borrower or any of its Subsidiaries, or transport or permit
the transportation of Hazardous Materials to or from any such Real Property,
except to the extent that the failure to comply with the requirements
specified in clause (i) or (ii) above, either individually or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect. If required to do so under any applicable directive or order of any
governmental agency, the Borrower agrees to undertake, and cause each of its
Subsidiaries to undertake, any clean up, removal, remedial or other action
necessary to remove and clean up any Hazardous Materials from any Real
Property owned,
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leased or operated by the Borrower or any of its Subsidiaries in accordance
with, in all material respects, the requirements of all applicable
Environmental Laws and in accordance with, in all material respects, such
orders and directives of all governmental authorities, except to the extent
that the Borrower or such Subsidiary is contesting such order or directive in
good faith and by appropriate proceedings and for which adequate reserves
have been established to the extent required by generally accepted accounting
principles.
SECTION 8. NEGATIVE COVENANTS. The Borrower hereby covenants and
agrees, as of the Initial Borrowing Date and thereafter for so long as this
Agreement is in effect and until the Commitments have terminated, no Notes are
outstanding and the Loans, together with interest, Fees and all other
Obligations incurred hereunder, are paid in full, that (it being agreed that no
provision of Section 8.02, 8.03, 8.04, 8.06, 8.08, 8.09 or 8.10 shall at any
time be defaulted by, or shall be interpreted to prohibit, any action by the
Borrower or any of its Subsidiaries (other than Naegele or Peterson) to the
extent (x) such action was not prohibited by the LaSalle Loan Agreement and (y)
a restriction on any such action is prohibited by Section 3.12 of the Senior
Note Indenture and/or Section 3.13 of the Discount Note Indenture, in each case
as in effect on the Restatement Effective Date, to the extent the Senior Notes
and the Discount Notes, respectively, are then outstanding or have not been
amended pursuant to a Permitted Exit Amendment):
8.01 CHANGES IN BUSINESS. The Borrower will not, and will not permit
any of its Subsidiaries to, engage in any line of business other than the
business of outdoor advertising, including transit and bus shelter, stadium,
transport terminal and other similar out-of-home advertising services and any
administrative or similar activities reasonably related thereto.
8.02 CONSOLIDATION, MERGER, SALE OR PURCHASE OF ASSETS, ETC. The
Borrower will not, and will not permit any Subsidiary to, wind up, liquidate or
dissolve its affairs, or enter into any transaction of merger or consolidation,
sell or otherwise dispose of all or any part of its property or assets (other
than inventory or obsolete equipment or excess equipment no longer needed in the
conduct of the business in the ordinary course of business) or purchase, lease
or otherwise acquire all or any part of the property or assets of any Person
(other than purchases or other acquisitions of inventory, leases, materials and
equipment in the ordinary course of business) or agree to do any of the
foregoing at any future time, except that the following shall be permitted:
(a) any Subsidiary of the Borrower (other than, prior to the Guaranty
Commencement Date, Naegele and Peterson) may be merged or consolidated with
or into, or be liquidated into, the Borrower (so long as the Borrower is
the surviving corporation) or any other Subsidiary (so long as Naegele or
Peterson, as the case may be, is the surviving corporation if it is such
other Subsidiary), or all
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or any part of its business, properties and assets may be conveyed,
leased, sold or transferred to the Borrower or any other Subsidiary;
(b) capital expenditures to the extent within the limitations set
forth in Section 8.05 hereof;
(c) the investments, acquisitions and transfers or dispositions of
properties permitted pursuant to Section 8.06;
(d) each of the Borrower and its Subsidiaries may lease (as lessee)
real or personal property in the ordinary course of business (so long as
such lease does not create a Capitalized Lease Obligation not otherwise
permitted by Section 8.04(d));
(e) licenses or sublicenses by the Borrower and its Subsidiary of
software, customer lists, trademarks and other intellectual property in the
ordinary course of business, provided, that such licenses or sublicenses
shall not interfere with the business of the Borrower or any Subsidiary;
(f) other sales or dispositions of assets (I) for cash in an amount
equal to the fair market value thereof as determined by the Borrower and/or
(II) in exchange for other assets permitted to be held under Section 8.01
provided that, in each case, (i) the assets so sold or disposed of,
together with all other assets, previously sold or disposed of pursuant to
this clause (f) after or during the Calculation Period applicable to such
sale or disposition, shall not have generated Adjusted EBITDA of the
Borrower during such Calculation Period (taken as one accounting period)
equal to 15% or more of the aggregate Adjusted EBITDA of the Borrower
during such Calculation Period (taken as one accounting period), (ii) the
assets so sold or disposed of, together with all other assets previously
sold or disposed of pursuant to this clause (f) after the Restatement
Effective Date, shall not have generated Adjusted EBITDA of the Borrower
during the period (taken as one accounting period) commencing on the
Restatement Effective Date and ending on the last day of the last month for
which financial statements of the Borrower are reasonably available equal
to 25% or more of the aggregate Adjusted EBITDA of the Borrower during such
period (taken as one accounting period) and (iii) the Net Cash Proceeds, if
any, of any such sale are applied to repay the Loans to the extent required
by Section 4.02(A)(c), and, provided further, that (x) the sale or
disposition of the capital stock of any Subsidiary of the Borrower shall be
prohibited unless it is for all of the outstanding capital stock of such
Subsidiary owned by the Borrower and (y) neither Naegele nor Peterson may
be sold or disposed of pursuant to this clause (f);
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(g) other sales or dispositions of assets in each case to the extent
the Required Banks have consented in writing thereto and subject to such
conditions as may be set forth in such consent;
(h) any Subsidiary other than, prior to the Guaranty Commencement
Date, Naegele and Peterson may be liquidated into the Borrower; and
(i) Permitted Acquisitions provided that after giving effect thereto
and the related borrowings to finance same there would be no default under
Sections 8.11 through 8.15 or 9.08(B) or (C) determined on a pro forma
basis as if such Permitted Acquisition and the related borrowings were
consummated on the first day of the 12-month period ending on the
Measurement Date last to occur.
8.03 LIENS. The Borrower will not, and will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets of any kind (real or personal, tangible or
intangible) of the Borrower or any such Subsidiary whether now owned or
hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such property
or assets (including sales of accounts receivable or notes with recourse to the
Borrower or any of its Subsidiaries) or assign any right to receive income, or
file or permit the filing of any financing statement under the UCC or any other
similar notice of Lien under any similar recording or notice statute, except:
(a) Liens for taxes not yet due or Liens for taxes being contested in
good faith and by appropriate proceedings for which adequate reserves (in
the good faith judgment of the management of the Borrower) have been
established;
(b) Liens in respect of property or assets of the Borrower or any of
its Subsidiaries imposed by law which were incurred in the ordinary course
of business, such as carriers', warehousemen's and mechanics' Liens,
statutory landlord's Liens, and other similar Liens arising in the ordinary
course of business, and (x) which do not in the aggregate materially
detract from the value of such property or assets or materially impair the
use thereof in the operation of the business of the Borrower or any
Subsidiary or (y) which are being contested in good faith by appropriate
proceedings, which proceedings have the effect of preventing the forfeiture
or sale of the property or asset subject to such Lien;
(c) Liens created by or pursuant to this Agreement or the other
Credit Documents;
(d) (x) Liens on assets of the Borrower and each Subsidiary existing
on the Restatement Effective Date and listed on Part A of Annex VIII
hereto, without
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giving effect to any subsequent extensions or renewals thereof, (y)
Liens on assets of Peterson existing on the Restatement Effective Date
and added to Part B of Annex VIII by the Borrower and the Agent within
30 days after the Restatement Effective Date so long as such Liens are
deemed immaterial by the Agent and (z) immaterial Liens on assets of the
Borrower and each Subsidiary existing on the Restatement Effective Date
at the locations listed on Part B of Annex VIII;
(e) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under Section 9.09
provided, that no cash or property is deposited or delivered to secure any
respective judgment or award (or any appeal bond in respect thereof, except
as permitted by the following clause (f));
(f) Liens (other than any Lien imposed by ERISA) incurred or deposits
made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security, or
to secure the performance of tenders, statutory obligations, surety and
appeal bonds, bids, leases, government contracts, performance and
return-of-money bonds and other similar obligations incurred in the
ordinary course of business (exclusive of obligations in respect of the
payment for borrowed money) provided, that the aggregate amount of deposits
at any time pursuant to this clause (f) shall not exceed $500,000;
(g) Leases or subleases granted to others not interfering in any
material respect with the business of the Borrower or any of its
Subsidiaries;
(h) Easements, rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the ordinary conduct of the
business of the Borrower or any of its Subsidiaries;
(i) Liens arising from UCC financing statements regarding leases
permitted by this Agreement;
(j) Purchase money Liens securing payables arising from the purchase
by the Borrower of any equipment or goods in the normal course of business,
provided that such payables shall not constitute Indebtedness;
(k) Any interest or title of a lessor or any lien on the interest or
title of a lessor under any lease permitted by this Agreement;
(l) Liens arising pursuant to purchase money mortgages relating to,
or security interests securing Indebtedness representing the purchase price
of, assets acquired by the Borrower, Naegele and/or Peterson or any
Subsidiary Guarantor
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after the Restatement Effective Date, provided that any such Liens
attach only to the assets so acquired and that all Indebtedness secured
by Liens created pursuant to this clause (l) shall not exceed $5,000,000
at any time outstanding;
(m) Liens created pursuant to Capital Leases permitted pursuant to
Section 8.04(d);
(n) Liens on assets of Subsidiaries of the Borrower other than, prior
to the Guaranty Commencement Date, Naegele or Peterson in favor of the
Borrower;
(o) Liens securing Indebtedness permitted by Section 8.04(i) provided
that such Liens attach only to the assets (or to the assets of the Person
whose stock is being) acquired; and
(p) Liens on assets of the Borrower securing Indebtedness not in
excess of $1,000,000 at any time outstanding.
8.04 INDEBTEDNESS. The Borrower will not, and will not permit any of
its Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement, the other
Credit Documents and the RF Credit Agreement;
(b) Indebtedness owing by (i) any Subsidiary (other than, prior to
the Guaranty Commencement Date, Naegele or Peterson) to the Borrower or
another Subsidiary other than, prior to the Guaranty Commencement Date,
Naegele or Peterson, (ii) if prior to the Guaranty Commencement Date,
Naegele or Peterson to the Borrower to the extent not in excess of
$2,000,000 at any time outstanding and (iii) the Borrower to any Subsidiary
(provided that no such Indebtedness owing to Naegele or Peterson may be
incurred while an Event of Default exists);
(c) Indebtedness of the Borrower evidenced by the Senior Notes, in an
aggregate principal amount not to exceed $65,000,000;
(d) Capitalized Lease Obligations of the Borrower, Naegele or
Peterson, provided that the aggregate Capitalized Lease Obligations under
all Capital Leases entered into after the Restatement Effective Date shall
not exceed $10,000,000;
(e) Existing Indebtedness, without giving effect to any subsequent
extension, renewal or refinancing thereof;
(f) Permitted Subordinated Debt and the Additional Subordinated Debt;
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(g) to the extent same has been assumed by the Borrower, Indebtedness
evidenced by the promissory note originally executed by Holdings in favor
of William H. Smith (the "Smith Note");
(h) Indebtedness incurred pursuant to purchase money mortgages
permitted by Section 8.03(l);
(i) Indebtedness of a Person, or secured by assets, acquired after
the Restatement Effective Date pursuant to a Permitted Acquisition provided
that such Indebtedness (x) existed at the time of such Permitted
Acquisition and was not created in connection therewith or in anticipation
thereof, (y) is not guaranteed in any respect by the Borrower or any of its
Subsidiaries, except to the extent such Person merges into, or such assets
are directly acquired by, the Borrower or such Subsidiary and (z) shall not
exceed in the aggregate for all Indebtedness permitted by this clause (i)
$5,000,000 at any time outstanding, without giving effect to any subsequent
extension, renewal or refinancing thereof; and
(j) additional Indebtedness of the Borrower not to exceed an
aggregate outstanding principal amount of $5,000,000 at any time.
8.05 CAPITAL EXPENDITURES. (a) The Borrower will not, and will not
permit any of its Subsidiaries to, incur Consolidated Capital Expenditures,
provided that the Borrower, Naegele, Peterson and any Subsidiary Guarantor may
make Consolidated Capital Expenditures (x) during the period from the
Restatement Effective Date through December 31, 1996 (taken as one accounting
period) in an aggregate amount not in excess of $3,000,000, (y) during the
fiscal year of the Borrower ended December 31, 1997, $12,000,000 and (z) during
each successive fiscal year of the Borrower, in an aggregate amount not in
excess of 105% of the maximum amount for the prior 12-month period.
(b) In the event that the maximum amount which is permitted to be
expended in respect of Consolidated Capital Expenditures during any fiscal year
pursuant to Section 8.05(a) (without giving effect to this clause (b)) is not
fully expended during such fiscal year, the maximum amount which may be expended
during the immediately succeeding fiscal year pursuant to Section 8.05(a) shall
be increased by such unutilized amount provided that such increase shall not
exceed $5,000,000 in any fiscal year.
(c) In addition to the foregoing, the Borrower, Naegele, Peterson and
any Subsidiary Guarantor may make Consolidated Capital Expenditures in amounts
in excess of those permitted under Sections 8.05(a) and (b) provided that the
amount of such additional Consolidated Capital Expenditures shall not exceed the
sum of (x) the Available ECF Amount and (y) the Available Equity Amount in each
case as determined at the time of, but immediately prior to, the making thereof.
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8.06 INVESTMENTS AND LOANS. The Borrower will not make or permit to
exist any Investments or Loans in or to any other Person or acquire or establish
any Subsidiary, except for Permitted Investments or as permitted by the next
sentence. Notwithstanding anything contained in this Section 8.06 to the
contrary, Borrower may acquire 100% of the Capital Stock of (x) Quantum
Structure & Design, Inc. and (y)] any [other] Person if[, in the case of clause
(y), the following conditions are satisfied: (i) an Event of Default has not
occurred and is continuing under this Agreement and will not occur as a result
of, in connection with or after giving effect to such acquisition; (ii) the
Person being acquired engages exclusively in the business permitted to be
engaged in by Borrower and its Subsidiaries pursuant to Section 8.01; (iii)
title to all of the assets acquired in such acquisition is transferred by
operation of law, assignment, sale or otherwise, to Borrower within 60 days of
the consummation of such acquisition provided that such transfer shall not be
required after the Guaranty Commencement Date if the assets are held by a
Subsidiary Guarantor; and (iv) such acquired assets are expressly made subject
to the Liens created by the Security Documents.
8.07 SUBSIDIARIES; ETC. The Borrower will not (x) sell, assign or
otherwise encumber or dispose of, and will not permit any of its Subsidiaries
directly or indirectly to issue, sell, assign, pledge or otherwise encumber or
dispose of, any shares of a Subsidiary's capital stock or other securities (or
warrants, rights or options to acquire shares or other equity securities) of
such Subsidiary, except to the Borrower (to the extent otherwise permitted
hereunder) and except for dispositions permitted by Section 8.02, (y) after the
Restatement Effective Date, create or permit to be created any new Subsidiary
except to the extent created in compliance with the second sentence of Section
8.06 and (z) violate or breach the provisions of Section 3.11(a) of the Senior
Note Indenture as in effect on the Restatement Effective Date (to the extent
such Section is then in effect).
8.08 PREPAYMENTS OF INDEBTEDNESS, ETC. The Borrower will not, and
will not permit any of its Subsidiaries to:
(a) make (or give any notice in respect thereof) any voluntary or
optional payment or prepayment or redemption or acquisition for value of
(including, without limitation, by way of depositing with the trustee with
respect thereto money or securities before due for the purpose of paying
when due) or exchange of the Senior Notes, Subordinated Debt (once issued),
[the Smith Note] or any other Existing Indebtedness provided that (I) the
Borrower may Purchase Senior Notes (w) in an aggregate amount, at any time,
equal to the Holdback Proceeds at such time, (x) in an aggregate amount at
the time of any such Purchase equal to the Available ECF Amount at the time
of, but immediately prior to, such Purchase provided that at such time
(i.e., immediately prior to such Purchase) the Holding Leverage Ratio is
less than 5.00 to 1.0, (y) in an amount at the time of any such
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Purchase equal to the Available Equity Amount at the time of, but
immediately prior to, such Purchase and (z) as otherwise consented to by
the Required Banks and (II) the Borrower may pay Dividends to Holdings
to permit it to purchase Discount Notes as provided for in Section
8.09(a);
(b) amend or modify, or permit the amendment or modification of, any
provisions of (x) any Senior Note Documents (except for Permitted Exit
Amendments), (y) any Subordinated Debt Documents and (z) the RF Credit
Agreement; and/or
(c) amend, modify or change in any manner adverse to the interests of
the Banks the Certificate of Incorporation (including, without limitation,
by the filing of any certificate of designation) or By-Laws of the
Borrower, Naegele or Peterson or any agreement entered into by the
Borrower, with respect to its capital stock, or the Acquisition Documents
or enter into any new agreement in any manner adverse to the interests of
the Banks with respect to the capital stock of the Borrower, Naegele or
Peterson.
8.09 DIVIDENDS, ETC. (a) The Borrower will not redeem, retire,
purchase or otherwise acquire, directly or indirectly, any Capital Stock of
Borrower or other evidence of ownership interest, or declare or pay dividends
upon any Capital Stock of Borrower or make any distribution of Borrower's
property or assets (any of the foregoing, a "Dividend"), provided that this
Section 8.09 will not prohibit, so long as no Event of Default shall have
occurred and is continuing or would occur as a consequence thereof, (i) the
repurchase, redemption or other acquisition or retirement for value of any
shares of Capital Stock of the Borrower from the estate of Daniel L. Simon
solely out of the proceeds of any policy of insurance maintained to provide
funds for such purpose, (ii) to the extent the Indebtedness evidenced by such
Note has not been assumed by the Borrower, the payment of dividends to Holdings
in an annual amount not to exceed $120,000 to fund payments of interest on the
Smith Note, (iii) the payment of cash Dividends to Holdings to the extent the
proceeds are promptly used to pay administrative costs arising in the ordinary
course of business, (iv) the payment of cash Dividends to Holdings to be
promptly utilized by Holdings to purchase its Common Stock (or options or
warrants to purchase such Common Stock) from officers, employees and directors
(or their estates) upon the death, permanent disability, retirement or
termination of employment of any such Person or otherwise in accordance with any
stock option plan or any employee stock ownership plan or any warrant plan and
(v) the payment of cash Dividends to Holdings to the extent that the proceeds
are used on the date of receipt to Purchase Discount Notes provided that any
such Dividend will not exceed the Modified Available Amount at the time of, but
immediately prior to, the making of such Dividend.
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(b) The Borrower will not, and will not permit any of its
Subsidiaries to, create or otherwise cause or suffer to exist any encumbrance or
restriction which prohibits or otherwise restricts (A) the ability of any
Subsidiary to (a) pay dividends or make other distributions or pay any
Indebtedness owed to the Borrower or any Subsidiary, (b) make loans or advances
to the Borrower or any Subsidiary, (c) transfer any of its properties or assets
to the Borrower or any Subsidiary or (B) the ability of the Borrower or any
other Subsidiary of the Borrower to create, incur, assume or suffer to exist any
Lien upon its property or assets to secure the Obligations, other than
prohibitions or restrictions existing under or by reason of: (i) this
Agreement, the other Credit Documents, the RF Credit Agreement, the Senior Note
Documents, the Discount Note Indenture and the Subordinated Debt Documents (once
executed); (ii) applicable law; (iii) customary non-assignment provisions
entered into in the ordinary course of business and consistent with past
practices; (iv) any restriction or encumbrance with respect to a Subsidiary of
the Borrower imposed pursuant to an agreement which has been entered into for
the sale or disposition of all or substantially all of the capital stock or
assets of such Subsidiary, so long as such sale or disposition is permitted
under this Agreement; and (v) Liens permitted under Section 8.03 and any
documents or instruments governing the terms of any Indebtedness or other
obligations secured by any such Liens, provided that such prohibitions or
restrictions apply only to the assets subject to such Liens.
8.10 TRANSACTIONS WITH AFFILIATES. The Borrower will not, and will
not permit any Subsidiary to, sell, lease, license, transfer, exchange, or
otherwise dispose of any of its properties, assets or services to, or purchase,
lease, or license the use of any property, assets or services from, or transfer
funds to, or enter into any contract, agreement, understanding, loan, advance or
guarantee with, to or for the benefit of, any Affiliate (each of the foregoing,
an "Affiliate Transaction", whether constituting one transaction or a series of
related transactions), unless (a) such Affiliate Transaction is on terms that
are no less favorable to the Borrower or the relevant Subsidiary than those that
would have been obtained in a comparable transaction by the Borrower or such
Subsidiary with an unrelated person and (b) Borrower delivers to the Agent (i)
with respect to any Affiliate Transaction involving aggregate payments in excess
of $250,000, an officers' certificate setting forth a resolution of the Board of
Directors of the Borrower approved by a majority of the members of the Board of
Directors (and a majority of the disinterested members of the Board of
Directors, if any) certifying that such Affiliate Transaction complies with
clause(a) above and (ii) with respect to any Affiliate Transaction involving
aggregate payments in excess of $3.0 million, an opinion as to the fairness,
from a financial point of view, of such Affiliate Transaction to the Borrower or
such Subsidiary issued by an independent investment banking firm of national
standing with total assets in excess of $1.0 billion. The foregoing limitation
does not limit, and shall not apply to, (i) the payment of reasonable annual
compensation to directors or executive officers of the Borrower or any
Subsidiary thereof, (ii) transactions described in Annex IX hereto, provided
that the fees described in Annex IX shall accrue and not be paid at any time
that
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a Default or an Event of Default specified in Section 9.01 shall occur and
be continuing or (iii) payments by the Borrower to Holdings under the Tax
Sharing Agreement.
8.11 FIXED CHARGE COVERAGE RATIO. The Borrower will not permit the
ratio of (i) Adjusted EBITDA of the Borrower to (ii) Consolidated Fixed Charges
of the Borrower for any 12 month period (taken as one accounting period) ending
on a Measurement Date (or if less the period from the Initial Borrowing Date to
such Measurement Date) to be less than 1.00 to 1.
8.12 MINIMUM ADJUSTED EBITDA. The Borrower will not permit Adjusted
EBITDA of the Borrower for any 12 month period (taken as one accounting period)
ending on a Measurement Date occurring in a period set forth below to be less
than (A) the amount set forth opposite such period [plus (B) the Aggregate
Acquired EBITDA as of such Measurement Date]:
Period Amount
------ ------
Restatement Effective Date through
December 30, 1997 $57,000,000
December 31, 1997 through
December 30, 1998 $58,400,000
December 31, 1998 through
December 30, 1999 $60,750,000
December 31, 1999 through
December 30, 2000 $65,750,000
December 31, 2000 and
thereafter $70,500,000
8.13 BORROWER LEVERAGE RATIO. Prior to the Guaranty Commencement
Date, the Borrower will not permit the Borrower Leverage Ratio as of any
Measurement Date occurring in a period set forth below to be more than the ratio
set forth opposite such period:
Period Ratio
------ -----
Restatement Effective Date through
December 30, 1997 6.00 to 1.0
December 31, 1997
and thereafter 5.00 to 1.0
8.14 SENIOR LEVERAGE RATIO. On and after the Guaranty Commencement
Date, the Borrower will not permit the Senior Leverage Ratio as of any
Measurement Date
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occurring in a period set forth below to be more than the ratio set forth
opposite such period:
Period Ratio
------ -----
Restatement Effective Date through
December 30, 1997 5.50 to 1.0
December 31, 1997 through
December 30, 1998 5.00 to 1.0
December 31, 1998 and
thereafter 4.50 to 1.0
8.15 INTEREST RATIO. On and after the Guaranty Commencement Date,
the Borrower will not permit the ratio of (i) Adjusted EBITDA of the Borrower to
(ii) Consolidated Interest Expense of the Borrower for any twelve month period
(taken as one accounting period) ending on a Measurement Date occurring in a
period set forth below to be less than the ratio set forth opposite such period:
Period Ratio
------ -----
Restatement Effective Date through
December 30, 1997 1.50 to 1.0
December 31, 1997 through
December 30, 1998 1.75 to 1.0
December 31, 1998 through
December 30, 1999 1.85 to 1.0
December 31, 1999 through
December 30, 2001 2.00 to 1.0
December 31, 2001 and
thereafter 2.50 to 1.0
SECTION 9. EVENTS OF DEFAULT. Upon the occurrence of any of the
following specified events (each an "Event of Default"):
9.01 PAYMENTS. The Borrower shall (i) default in the payment when
due of any principal of the Loans or (ii) default, and such default shall
continue for five or more days, in the payment when due of any interest on the
Loans or any Fees or any other amounts owing hereunder or under any other Credit
Document; or
9.02 REPRESENTATIONS, ETC. Any representation, warranty or statement
made by the Borrower herein or in any other Credit Document or in any statement
or certificate
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delivered or required to be delivered pursuant hereto or thereto shall prove
to be untrue in any material respect on the date as of which made or deemed
made; or
9.03 COVENANTS. The Borrower shall (a) default in the due
performance or observance by it of any term, covenant or agreement contained in
Sections 7.10, 7.11 or 8, or (b) default in the due performance or observance by
it of any term, covenant or agreement (other than those referred to in Section
9.01, 9.02 or clause (a) of this Section 9.03) contained in this Agreement and
such default shall continue unremedied for a period of at least 30 days after
notice to the defaulting party by the Agent or the Required Banks; or
9.04 DEFAULT UNDER OTHER AGREEMENTS. (a) Holdings, the Borrower or
any of its Subsidiaries shall (i) default in any payment with respect to any
Indebtedness (other than the Obligations) beyond the period of grace, if any,
applicable thereto or (ii) default in the observance or performance of any
agreement or condition relating to any such Indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or holders of such
Indebtedness (or a trustee or agent on behalf of such holder or holders) to
cause any such Indebtedness to become due prior to its stated maturity; or (b)
any such Indebtedness of Holdings, the Borrower or any of its Subsidiaries shall
be declared to be due and payable, or required to be prepaid other than by a
regularly scheduled required prepayment, prior to the stated maturity thereof,
provided that it shall not constitute an Event of Default pursuant to this
Section 9.04 unless the principal amount of such Indebtedness exceeds $2,500,000
individually or in the aggregate at any one time; or
9.05 BANKRUPTCY, ETC. Holdings, the Borrower or any of its
Subsidiaries shall commence a voluntary case concerning itself under Title 11 of
the United States Code entitled "Bankruptcy," as now or hereafter in effect, or
any successor thereto (the "Bankruptcy Code"); or an involuntary case is
commenced against Holdings, the Borrower or any of its Subsidiaries and the
petition is not controverted within 10 days, or is not dismissed within 60 days,
after commencement of the case; or a custodian (as defined in the Bankruptcy
Code) is appointed for, or takes charge of, all or substantially all of the
property of Holdings, the Borrower or any of its Subsidiaries; or Holdings, the
Borrower or any of its Subsidiaries commences any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to Holdings, the Borrower or any of its
Subsidiaries; or there is commenced against Holdings, the Borrower or any of its
Subsidiaries any such proceeding which remains undismissed for a period of 60
days; or Holdings, the Borrower or any of its Subsidiaries is adjudicated
insolvent or bankrupt; or any order of relief or other order approving any such
case or proceeding is entered; Holdings, the Borrower or any of its Subsidiaries
suffers any appointment of any
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custodian or the like for it or any substantial part of its property to
continue undischarged or unstayed for a period of 60 days; or Holdings, the
Borrower or any of its Subsidiaries makes a general assignment for the
benefit of creditors; or any corporate action is taken by Holdings, the
Borrower or any of its Subsidiaries for the purpose of effecting any of the
foregoing; or
9.06 ERISA. (a) A single-employer plan (as defined in Section 4001
of ERISA) established by the Borrower, any of its Subsidiaries or any ERISA
Affiliate shall fail to maintain the minimum funding standard required by
Section 412 of the Code for any plan year or a waiver of such standard or
extension of any amortization period is sought or granted under Section 412 of
the Code or shall provide security to induce the issuance of such waiver or
extension, (b) any Plan is or shall have been or is likely to be terminated or
the subject of termination proceedings under ERISA or an event has occurred
entitling the PBGC to terminate a Plan under Section 4042(a) of ERISA, (c) any
Plan shall have an Unfunded Current Liability or (d) the Borrower or a
Subsidiary or any ERISA Affiliate has incurred or is likely to incur a material
liability to or on account of a termination of or a withdrawal from a Plan under
Section 515, 4062, 4063, 4064, 4201 or 4204 of ERISA; and there shall result
from any such event or events described in the preceding clauses of this Section
9.06 the imposition of a Lien upon the assets of Holdings, the Borrower or any
Subsidiary, the granting of a security interest, or a liability or a material
risk of incurring a liability to the PBGC or a Plan or a trustee appointed under
ERISA or a penalty under Section 4971 of the Code, in each case which would
have, in the opinion of the Required Banks a Material Adverse Effect; or
9.07 CREDIT DOCUMENTS. Any Security Document or Guaranty (once
executed) shall cease to be in full force and effect (except as provided for
therein), or any Security Document shall cease to give the Collateral Agent any
Lien encumbering assets with an aggregate fair market value in excess of
$2,500,000 (and, if encumbering assets with a fair market value of less than
$2,500,000, for a period greater than thirty or more days), or any material
rights, powers and privileges purported to be created thereby in favor of the
Collateral Agent or any Credit Party shall default in any material respect in
the due performance or observance of any term, covenant or agreement on its part
to be performed or observed pursuant to any such Security Document or Guaranty
or shall disaffirm or seek to disaffirm any Guaranty; or
9.08 HOLDINGS. (A) Holdings shall after the Restatement Effective
Date [(i) incur any Indebtedness,] (ii) grant or create any Lien on any of its
assets that secures Indebtedness, (iii) modify or amend the Discount Note
Indenture or Discount Notes (except, in each case, for Permitted Exit
Amendments) or (except with the proceeds of equity contributions from Designated
UOH Stockholders) prepay any of the Discount Notes, (iv) engage in any business
or activity other than the ownership of all of the capital stock of the Borrower
and administrative activities directly related thereto, (v) sell or dispose of
any of,
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or otherwise cease to own all of, the capital stock of the Borrower, (vi)
change its fiscal quarters or fiscal year from those applicable also to the
Borrower, (vii) fail to maintain its own payroll and books of account and
bank accounts separate from those of the Borrower and its Subsidiaries,
(viii) fail to pay its liabilities, including all administrative expenses,
from its own separate assets, (ix) fail to separately identify and segregated
its assets from the assets of the Borrower and its Subsidiaries, except in
each case (a) as expressly required by any of the Shareholders' Agreements,
Management Agreements, Tax Sharing Agreements, subscription agreements with
members of management and the Discount Notes, all as in effect on the
Restatement Effective Date, (b) as expressly required by law, (c) Holdings
issuing Capital Stock in any public offering to the extent the proceeds
thereof are used to repay the Loans as required by Section 4.02(A)(d) hereof
and (d) Holdings Purchasing Discount Notes (w) in an aggregate amount, at any
time, equal to the Holdback Proceeds at such time, (x) in an amount at the
time of any such Purchase equal to the Available ECF Amount at the time of,
but immediately prior to, such Purchase provided that at such time (i.e.,
immediately prior to such Purchase) the Holdings Leverage Ratio is less than
5.00 to 1.0 or (y) in an amount at the time of any such Purchase equal to the
Available Equity Amount at the time of, but immediately prior to, such
Purchase and/or (x) amend, modify or change in any way adverse to the
interests of the Banks, its Certificate of Incorporation (including, without
limitation, by the filing or modification of any certificate of designation)
or By-Laws or any agreement entered into by Holdings with respect to its
capital stock; and/or
(B) The Holdings Leverage Ratio as of any Measurement Date occurring
in a period set forth below is more than the ratio set forth opposite such
period:
Period Ratio
------ -----
Restatement Effective Date through
June 29, 1998 6.50 to 1.0
June 30, 1998 through
December 30, 1999 6.25 to 1.0
December 31, 1999 and
thereafter 6.00 to 1.0
(C) At any time prior to the Guaranty Commencement Date, the ratio of
(i) Adjusted EBITDA of Holdings to (ii) Consolidated Cash Interest Expense of
Holdings for any 12 month period (taken as one accounting period) ending on a
Measurement Date occurring in a period set forth below is less than the ratio
set forth opposite such period:
Period Ratio
------ -----
Restatement Date through
December 30, 1997 1.50 to 1.0
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December 31, 1997 through
December 30, 1998 1.75 to 1.0
December 31, 1998 through
December 30, 1999 1.85 to 1.0
December 31, 1999 through
December 30, 2001 2.00 to 1.0
December 31, 2001 and
thereafter 2.50 to 1.0
(D) Holdings shall have failed, for more than 15 days following the
Guaranty Commencement Date, to authorize and execute a guaranty agreement (as
modified, amended or supplemented in accordance with the terms thereof or
hereof, the "Holdings Guaranty") in respect of the Obligations hereunder and a
pledge agreement (as modified, amended or supplemented in accordance with the
terms thereof or hereof, the "Holdings Pledge Agreement") pledging all the
capital stock of the Borrower, all in such form as is acceptable to the Agent
and/or to deliver same to the Agent and Collateral Agent, as the case may be,
together with, in pledge under, the Holdings Pledge Agreement, the certificates
representing all the shares of the capital stock of the Borrower, accompanied by
executed and undated stock powers and such opinions of counsel relating thereto
as reasonably requested by the Agent; or
9.09 JUDGMENTS. One or more judgments or decrees shall be entered
against Holdings, the Borrower and/or any of its Subsidiaries involving a
liability of $2,500,000 or more or in the aggregate (not paid or to the extent
not covered by insurance) and any such judgments or decrees shall not have been
vacated, discharged or stayed or bonded pending appeal within 60 days from the
entry thereof; or
9.10 RF CREDIT AGREEMENT. An Event of Default under and as defined
in the RF Credit Agreement shall have occurred and be continuing;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Agent shall, upon the written request of the
Required Banks, by written notice to the Borrower, take any or all of the
following actions, without prejudice to the rights of the Agent or any Bank to
enforce its claims against the Borrower, except as otherwise specifically
provided for in this Agreement (provided that, if an Event of Default specified
in Section 9.05 shall occur with respect to the Borrower, the result which would
occur upon the giving of written notice by the Agent as specified in clauses (i)
and (ii) below shall occur automatically without the giving of any such notice):
(i) declare the Total Commitment terminated, whereupon the Commitment of each
Bank shall forthwith terminate immediately and any Commitment Commission shall
forthwith become due and payable without any other notice of any kind; (ii)
declare the principal of and any accrued interest in respect of all Loans and
all obligations owing hereunder to be, whereupon the
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same shall become, forthwith due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Borrower; and/or (iii) enforce, as Collateral Agent (or direct the Collateral
Agent to enforce), any or all of the Liens and security interests created
pursuant to the Security Documents.
SECTION 10. DEFINITIONS. As used herein, the following terms shall
have the meanings herein specified unless the context otherwise requires.
Defined terms in this Agreement shall include in the singular number the plural
and in the plural the singular:
"A Term Commitment" shall mean, with respect to each Bank with an AR
Commitment, such Bank's obligation to convert a portion of its AR Loans
outstanding on the date of the Loan Conversion into, and to thereafter maintain
such Loans as, A Term Loans as provided in Section 1.01(B).
"A Term Loan" shall have the meaning provided in Section 1.01(B).
"A Term Loan Facility" shall mean the Facility evidenced by the A Term
Loans.
"A Term Note" shall have the meaning provided in Section 1.05(a).
"Acquisition" shall mean the acquisition by the Borrower of 100% of
the outstanding capital stock of Peterson pursuant to the Acquisition Documents
provided that after giving effect to the merger contemplated by the Acquisition
Agreement and the additional mergers consummated on the Restatement Effective
Date, Peterson shall be a direct wholly-owned subsidiary of the Borrower.
"Acquisition Agreement" shall mean the Agreement and Plan of Merger,
dated August __, 1996, among the Borrower, Universal Acquisition Corp, OAH and
the stockholders listed therein as delivered to the Banks pursuant to Section
5.01(h), as the same may be amended or modified in accordance with the
provisions thereof and hereof.
"Acquisition Documents" shall mean the Acquisition Agreement and all
other documents entered into to effectuate the Acquisition.
"Additional Mortgages," "Additional Pledge Agreement" and "Additional
Security Agreement" shall each have the meaning provided in Section 7.10.
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"Additional Security Documents" shall mean and include the Additional
Pledge Agreement, Additional Security Agreement, Additional Mortgages, New
Mortgages and the Holdings Pledge Agreement.
"Additional Subordinated Debt" shall mean subordinated debt issued by
the Borrower after it has issued $200,000,000 of Permitted Subordinated Debt,
provided that (i) the terms and conditions (other than pricing and maturities,
provided that no scheduled payment of principal shall be due and payable prior
to the Final Maturity Date) are (in the reasonable opinion of the Agent)
substantially the same as those contained in the Permitted Subordinated Debt or
are consented to by the Required Banks [and (ii) the Additional Subordinated
Debt shall not exceed $100 million in the aggregate.]
"Adjusted Cash Flow" for any fiscal year shall mean Consolidated Net
Income of the Borrower for such fiscal year (after provision for taxes) plus the
amount of all net non-cash charges (including, without limitation, depreciation,
deferred tax expense, non-cash interest expense, amortization and other non-cash
charges) that were deducted in arriving at such Consolidated Net Income for such
fiscal year, minus the amount of all non-cash gains and gains from sales of
assets (other than sales of inventory and equipment in the normal course of
business) that were added in arriving at such Consolidated Net Income for such
fiscal year.
"Adjusted EBITDA" of any Person shall mean, for any period (x) the
Consolidated EBITDA of such Person for such period plus or minus (y) the
adjustments thereto provided for in Exhibit I.
"Adjusted Total AR Commitment" shall mean at any time the Total AR
Commitment less the aggregate AR Commitments of all Defaulting Banks.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including, but not limited to, all directors
and officers of such Person), controlled by, or under direct or indirect common
control with such Person. A Person shall be deemed to control a corporation if
such Person possesses, directly or indirectly, the power (i) to vote 10% or more
of the securities having ordinary voting power for the election of directors of
such corporation or (ii) to direct or cause the direction of the management and
policies of such corporation, whether through the ownership of voting
securities, by contract or otherwise.
"Agent" shall have the meaning provided in the first paragraph of this
Agreement and shall include any successor to the Agent appointed pursuant to
Section 11.09.
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["Aggregate Acquired EBITDA" shall mean, as at any Measurement Date,
an amount equal to the aggregate of 85% of the "12-month Consolidated EBITDA" of
each Person acquired by the Borrower and its Subsidiaries after the Restatement
Effective Date, with the "12-month Consolidated EBITDA" of each such Person to
be the Consolidated EBITDA of such Person for the 12 months last ended prior to
the acquisition of such Person.]
"Agreement" shall mean this Amendment and Restatement of the
Acquisition Credit Agreement, as the same may be from time to time further
modified, amended and/or supplemented.
"Anticipated Reinvestment Amount" shall mean, with respect to any
Reinvestment Election, the amount specified in the Reinvestment Notice delivered
by the Borrower in connection therewith as the amount of the Net Cash Proceeds
from the related Permitted Asset Sale that the Borrower intends to use to
purchase, construct or otherwise acquire Reinvestment Assets.
"Applicable Base Rate Margin" shall mean (x) for B Term Loans, 2% and
(y) for all other Loans, 1.75% less the Margin Reduction Discount, if any,
provided that if the Guaranty Commencement Date has not occurred prior to March
31, 1997 then the Applicable Base Rate Margin for all Loans shall increase by
.25% on March 31, 1997, which increase shall continue in effect until such time,
if any, as the Guaranty Commencement Date occurs.
"Applicable Eurodollar Margin" shall mean (x) for B Term Loans, 3% and
(y) for all other Loans, 2.75% less the Margin Reduction Discount, if any,
provided that if the Guaranty Commencement Date has not occurred prior to March
31, 1997, then the Applicable Eurodollar Margin for all Loans shall increase by
.25% on March 31, 1997, which increase shall continue in effect until such time,
if any, as the Guaranty Commencement Date occurs.
"AR Bank" shall mean a Bank hereunder to the extent it has an AR
Commitment and/or A Term Loans outstanding.
"AR Commitment" shall mean, with respect to each Bank, the amount set
forth opposite such Bank's name in Annex I hereto directly below the column
entitled "AR Commitment," as the same may be reduced from time to time pursuant
to Section 3.02, 3.03 and/or 9 or (y) adjusted from time to time as a result of
assignments to or from such Bank pursuant to Section 12.04.
"AR Facility" shall mean the Facility evidenced by the Total AR
Commitment.
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"AR Loan" shall have the meaning provided in Section 1.01(A)(b).
"AR Maturity Date" shall mean September 30, 2003.
"AR Note" shall have the meaning provided in Section 1.05(a).
"AR Repayment Percentage" shall mean the percentage obtained by
dividing (x) the aggregate principal amount of AR Loans outstanding on the AR
Termination Date by (y) $212,500,000.
"AR Termination Date" shall mean September 30, 1999 or if earlier the
date on which the Total AR Commitment is terminated.
"Asset Sale" shall mean and include (x) the sale, transfer or other
disposition by the Borrower or any Subsidiary to any Person other than the
Borrower or any Subsidiary of any asset of the Borrower or such Subsidiary
(other than sales, transfers or other dispositions in the ordinary course of
business of inventory and/or obsolete or excess equipment and other than sales
in which the Net Cash Proceeds are $50,000 or less) and/or (y) the receipt by
the Borrower or any Subsidiary of any insurance, condemnation or similar
proceeds in connection with a casualty or taking of any of its assets.
"ATL Repayment Percentage" shall mean the percentage obtained by
dividing (x) the aggregate principal amount of AR Loans converted into A Term
Loans pursuant to the Loan Conversion by (y) $100,000,000.
"Authorized Officer" shall mean any senior officer of the Borrower
designated as such in writing to the Agent by the Borrower in each case to the
extent acceptable to the Agent.
"Available ECF Amount" shall mean at any time, an amount equal to (A)
50% of Excess Cash Flow determined for the fiscal year of the Borrower
(commencing with the fiscal year ending on December 31, 1999) then last ended
less (B) the sum of (i) the aggregate Consolidated Capital Expenditures
theretofore made during the then current fiscal year pursuant to Section
8.05(c)(x) and (ii) the aggregate amount theretofore expended, as permitted by
Section 8.08(a)(x) or 9.08(A)(d)(x), as the case may be, during the then current
fiscal year to Purchase Senior Notes or Discount Notes, as the case may be.
"Available Equity Amount" shall mean at any time (A) an amount equal
to the aggregate net cash proceeds at such time from the sale or issuance of
equity by Holdings or the Borrower after the Restatement Effective Date (other
than the Proposed Equity Issuance) not required to be utilized to repay Loans
under Section 4.02(A)(d)
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(whether or not Loans are then outstanding) less (B) the sum of (x) the
aggregate amounts theretofore expended after the Restatement Effective Date
to Purchase Senior Notes and/or Discount Notes pursuant to Section 8.08(a)(y)
or 9.08(A)(d)(y), as the case may be, of this Agreement plus (y) the
aggregate of any amounts theretofore expended after the Restatement Effective
Date pursuant to Section 8.05(c)(y) of this Agreement to the extent in excess
of the Available ECF Amount at such time.
"B Term Loan" shall have the meaning provided in Section 1.01(A).
"B Term Note" shall have the meaning provided in Section 1.05(a).
"Bank" shall have the meaning provided in the first paragraph of this
Agreement.
"Bank Default" shall mean (i) the refusal (which has not been
retracted) of a Bank to make available its portion of any incurrence of AR Loans
or (ii) a Bank having notified the Agent and/or the Borrower that it does not
intend to comply with the obligations under Section 1.01, in the case of either
(i) or (ii) as a result of the appointment of a receiver or conservator with
respect to such Bank at the direction or request of any regulatory agency or
authority.
"Bankruptcy Code" shall have the meaning provided in Section 9.05.
"Base Rate" at any time shall mean the higher, (i) the rate which is
1/2 of 1% in excess of the Federal Funds Effective Rate and (ii) the Prime
Lending Rate.
"Base Rate Loan" shall mean each Loan bearing interest at the rates
provided in Section 1.08(a).
"Borrower" shall mean Universal Outdoor, Inc., an Illinois
corporation.
"Borrower Leverage Ratio" shall mean, at any Measurement Date, the
ratio of (x) Consolidated Debt of the Borrower on such date to (y) Adjusted
EBITDA of the Borrower for the 12 month period (taken as one accounting period)
ending on such date.
"Borrower Pledge Agreement" shall have the meaning provided in Section
5.01(i)(I).
"Borrowing" shall mean the incurrence or continuance of one Type of
Loan pursuant to a single Facility by the Borrower from all of the Banks having
Commitments with respect to such Facility on a PRO RATA basis on a given date
(or resulting from conversions on a given date), having in the case of
Eurodollar Loans the same Interest
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Period; provided that Base Rate Loans incurred pursuant to Section 1.10(b)
shall be considered part of any related Borrowing of Eurodollar Loans.
"BTCo" shall mean Bankers Trust Company.
"Business Day" shall mean (i) for all purposes other than as covered
by clause (ii) below, any day excluding Saturday, Sunday and any day which shall
be in the City of New York a legal holiday or a day on which banking
institutions are authorized by law or other governmental actions to close and
(ii) with respect to all notices and determinations in connection with, and
payments of principal and interest on, Eurodollar Loans, any day which is a
Business Day described in clause (i) and which is also a day for trading by and
between banks in U.S. dollar deposits in the interbank Eurodollar market.
"Calculation Period" shall mean, with respect to any sale or
disposition of assets made pursuant to Section 8.02(f), the last 12 month period
for which financial statements of the Borrower are reasonably available.
"Capital Lease" as applied to any Person shall mean any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of such Person's
capital stock, whether or not voting, including but not limited to common stock,
preferred stock, convertible debentures, warrants, options or similar rights to
acquire such capital stock, and all agreements, instruments and documents
convertible, in whole or in part, into any one or more or all of the foregoing.
"Capitalized Lease Obligations" shall mean all obligations under
Capital Leases of the Borrower or any of its Subsidiaries in each case taken at
the amount thereof accounted for as liabilities in accordance with GAAP.
"Cash Equivalents" shall mean (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than six months from the date of acquisition, (ii) U.S. dollar denominated time
deposits, certificates of deposit and bankers' acceptances of (x) any Bank, (y)
any domestic commercial bank of recognized standing having capital and surplus
in excess of $500,000,000 or (z) any bank (or the parent company of such bank)
whose short-term commercial paper rating from Standard & Poor's Corporation
("S&P") is at least A-1 or the equivalent thereof or from Moody's Investors
Service, Inc. ("Moody's") is at least P-1 or the equivalent thereof (any such
bank, an
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"Approved Bank"), in each case with maturities of not more than six
months from the date of acquisition, (iii) repurchase obligations with a term of
not more than seven days for underlying securities of the types described in
clause (i) above entered into with any bank meeting the qualifications specified
in clause (ii) above, (iv) commercial paper issued by any Bank or Approved Bank
or by the parent company of any Bank or Approved Bank and commercial paper
issued by, or guaranteed by, any industrial or financial company with a
short-term commercial paper rating of at least A-1 or the equivalent thereof by
S&P or at least P-1 or the equivalent thereof by Moody's (any such company, an
"Approved Company"), or guaranteed by any industrial company with a long term
unsecured debt rating of at least A or A2, or the equivalent of each thereof,
from S&P or Moody's, as the case may be, and in each case maturing within six
months after the date of acquisition and (v) investments in money market funds
substantially all of whose assets are comprised of securities of the type
described in clauses (i) through (iv) above.
"Cash Proceeds" shall mean, with respect to any Asset Sale, the
aggregate cash payments (including any cash received by way of deferred payment
pursuant to a note receivable issued in connection with such Asset Sale, other
than the portion of such deferred payment constituting interest, but only as and
when so received) and/or insurance or condemnation proceeds received by the
Borrower and/or any Subsidiary from such Asset Sale.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601 ET
SEQ.
"Change of Control" shall mean (i) Holdings shall cease to own legally
and beneficially 100% of the outstanding capital stock of the Borrower, (ii)
Management Investors shall cease to be the beneficial owner (as defined in Rules
13d-3 and 13d-5 under the Exchange Act) of 75% or more (on a fully diluted
basis) of (x) the Common Stock beneficially owned by the Management Investors on
the Restatement Effective Date less (y) the Common Stock (not exceeding 750,000
shares) sold by Management Investors pursuant to the Proposed Equity Offering,
(iii) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than one or more Permitted Holders, is or becomes the
beneficial owner (as defined in clause (ii) above, except that a person shall be
deemed to have "beneficial ownership" of all shares that any such person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of more than 30% of the total
voting and economic ownership interests of Holdings; PROVIDED, HOWEVER, that the
Permitted Holders "beneficially own" (as defined in clause (ii) above), directly
or indirectly, in the aggregate a lesser percentage of the total voting and
economic ownership interests of Holdings than such other person and do not have
the right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the Board of Directors of Holdings, (iv)
during any period of two consecutive years individuals who at the beginning of
such period constituted the Board of
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Directors of Holdings (together with any new directors whose election by such
Board of Directors or whose nomination for election by the stockholders of
Holdings was approved by either (i) the Permitted Holders or (ii) a vote of a
majority of the directors of Holdings then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of Holdings then in office or (v) any
"Change of Control" or similar term as defined in (I) prior to the repayment
in full of the Discount Notes or Senior Notes, respectively, the Discount
Note Indenture or the Senior Note Indenture except for any such Change of
Control arising from the Proposed Equity Issuance and/or (II) any Permitted
Subordinated Debt Documents.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time and the regulations promulgated and the rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the Effective
Date and any subsequent provisions of the Code, amendatory thereof, supplemental
thereto or substituted therefor.
"Collateral" shall mean all of the Collateral as defined in each of
the Security Documents.
"Collateral Agent" shall mean the Agent acting as collateral agent for
the Banks.
"Commitment" shall mean, with respect to each Bank, such Bank's Term
Commitment, AR Commitment and A Term Commitment, if any.
"Commitment Commission" shall have the meaning provided in
Section 3.01(a).
"Common Stock" shall mean the common stock of Holdings.
"Consolidated Capital Expenditures" shall mean, for any period, the
aggregate of all expenditures (whether paid in cash or accrued as liabilities
and including in all events all amounts expended or capitalized under Capital
Leases but excluding any amount representing capitalized interest) by the
Borrower and its Subsidiaries during that period that, in conformity with GAAP,
are or are required to be included in the property, plant or equipment reflected
in the consolidated balance sheet of the Borrower and its Subsidiaries, provided
that Consolidated Capital Expenditures shall in any event exclude the purchase
price paid in connection with any Permitted Acquisition (whether or not
allocable to property, plant and equipment).
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"Consolidated Cash Interest Expense" of any Person shall mean, for any
period, Consolidated Interest Expense of such Person, but excluding, however,
interest expense not payable in cash and amortization of discount and deferred
issuance and financing costs.
"Consolidated Current Assets" shall mean, as to any Person at any
time, the current assets (other than cash and Cash Equivalents) of such Person
and its Subsidiaries determined on a consolidated basis in accordance with GAAP.
"Consolidated Current Liabilities" shall mean, as to any Person at any
time, the current liabilities of such Person and its Subsidiaries determined on
a consolidated basis in accordance with GAAP, but excluding all short-term
Indebtedness for borrowed money and the current portion of any long-term
Indebtedness of such Person or its Subsidiaries, in each case to the extent
otherwise included therein.
"Consolidated Debt" of any Person shall mean, as at any date of
determination, the aggregate stated balance sheet amount of all Indebtedness of
such Person and its Subsidiaries on a consolidated basis as determined in
accordance with GAAP.
"Consolidated EBIT" of any Person shall mean, for any period, (A) the
sum of the amounts for such period for such Person of (i) Consolidated Net
Income, (ii) provisions for taxes based on income, (iii) Consolidated Interest
Expense and (iv) losses on sales of assets (excluding sales in the ordinary
course of business) and other extraordinary losses LESS (B) the amount for such
period of gains on sales of assets (excluding sales in the ordinary course of
business) and other extraordinary gains, all as determined on a consolidated
basis for such Person and its Subsidiaries in accordance with GAAP.
"Consolidated EBITDA" of any Person shall mean, for any period, the
sum of the amounts for such period for such Person of (i) Consolidated EBIT,
(ii) depreciation expense and (iii) amortization expense, all as determined on a
consolidated basis for such Person and its Subsidiaries in accordance with GAAP.
"Consolidated Fixed Charges" of any Person shall mean, for any period,
the sum, without duplication, for such Person of the amounts for such period of
(i) Consolidated Cash Interest Expense, (ii) Dividends paid to Holdings, (iii)
Consolidated Capital Expenditures (x) made other than pursuant to Section
8.05(c) and (y) paid in cash, (iv) taxes paid or payable in cash and (v)
scheduled payments on the Loans and Existing Indebtedness, all as determined on
a consolidated basis for such Person and its Subsidiaries in accordance with
GAAP.
"Consolidated Interest Expense" of any Person shall mean, for any
period, total interest expense (including that attributable to Capital Leases in
accordance with
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GAAP) of such Person and its Subsidiaries on a consolidated basis with
respect to all outstanding Indebtedness of such Person and its Subsidiaries,
including, without limitation, all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing and net costs under Interest Rate Agreements.
"Consolidated Net Income" of any Person (a "Designated Person") shall
mean for any period, the net income (or loss) of such Designated Person and its
Subsidiaries on a consolidated basis for such period taken as a single
accounting period determined in conformity with GAAP, provided that there shall
be (A) deducted, in the case of the Borrower, any Dividends paid to Holdings and
(B) excluded (i) the income (or loss) of any Person (other than Subsidiaries of
the Designated Person) in which any other Person (other than the Designated
Person or any of its Subsidiaries) has a joint interest, except to the extent of
the amount of dividends or other distributions actually paid to the Designated
Person or any of its Subsidiaries by such Person during such period, (ii) the
income (or loss) of any Person accrued prior to the date it becomes a Subsidiary
of the Designated Person or is merged into or consolidated with the Designated
Person or any of its Subsidiaries or that Person's assets are acquired by the
Designated Person or any of its Subsidiaries, (iii) the income of any Subsidiary
of the Designated Person to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary, (iv) Transaction Expenses and (v) compensation
expense resulting from the issuance of capital stock, stock options or stock
appreciation rights issued to employees, including officers, of the Designated
Person or any Subsidiary, or the exercise of such options or rights, in each
case to the extent the obligation (if any) associated therewith is not expected
to be settled by the payment of cash by the Designated Person or any Affiliate
of the Designated Person and compensation expense resulting from the repurchase
of any such capital stock, options and rights.
"Consolidated Senior Debt" of any Person shall mean, as of any date of
determination, (x) the Consolidated Debt of such Person less (y) all Permitted
Subordinated Debt included in determining such Consolidated Debt.
"Contingent Obligations" shall mean as to any Person any obligation of
such Person guaranteeing or intending to guarantee any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(a) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (b) to advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (c) to purchase property,
securities or services primarily
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for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation or
(d) otherwise to assure or hold harmless the owner of such primary obligation
against loss in respect thereof, provided however, that the term Contingent
Obligation shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.
"Credit Documents" shall mean this Agreement, the Notes, the Security
Documents, any documents executed in connection therewith and (once executed)
the Guaranties.
"Credit Event" shall mean the making or continuance of a Loan.
"Credit Party" shall mean the Borrower and, upon compliance with the
provisions of Section 7.10(a), each Guarantor.
"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a Bank
Default is in effect.
"Designated UOH Stockholders" shall mean the Management Investors,
Kelso Investment Associates V, L.P. and Kelso Equity Partners V, L.P.
"Discount Note Indenture" shall mean the Indenture entered into by and
between Holdings and United States Trust Company of New York, as trustee
thereunder, with respect to the Discount Notes as in effect on the Restatement
Effective Date and as the same may be modified, amended or supplemented from
time to time in accordance with the terms hereof and thereof.
"Discount Notes" shall mean the 14% Series A and Series B Senior
Secured Discount Notes due 2004 issued by Holdings under the Discount Note
Indenture and as the same may be supplemented, amended or modified from time to
time in accordance with the terms hereof and thereof.
"Dividends" shall have the meaning provided in Section 8.09.
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"Domestic Subsidiary" shall mean a Subsidiary of the Borrower that is
organized under the laws of the United States or any state thereof.
"Environmental Claims" means any and all administrative, regulatory or
judicial actions, suits, demand letters, claims, liens, notices of noncompliance
or violation, investigations (other than internal reports prepared by the
Borrower or any of its Subsidiaries solely in the ordinary course of such
Person's business and not in response to any third party action or request of
any kind) or proceedings relating to any Environmental Law or any permit issued,
or any written approval given, under any such Environmental Law (hereafter,
"Claims"), including, without limitation, (a) any and all Claims by governmental
or regulatory authorities for enforcement, cleanup, removal, response, remedial
or other actions or damages pursuant to any applicable Environmental Law, and
(b) any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting from
Hazardous Materials arising from alleged injury or threat of injury to health,
safety or the environment.
"Environmental Law" means any applicable Federal, state, foreign or
local statute, law, rule, regulation, ordinance, code, guide, policy and rule of
common law now or hereafter in effect and in each case as amended, and any
judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to the environment,
health, safety or Hazardous Materials, including, without limitation, CERCLA;
RCRA; the Federal Water Pollution Control Act, as amended, 33 U.S.C. Section
1251 ET SEQ.; the Toxic Substances Control Act, 15 U.S.C. Section 7401 ET SEQ.;
the Clean Air Act, 42 U.S.C. Section 7401 ET SEQ.; the Safe Drinking Water Act,
42 U.S.C. Section 3808 ET SEQ.; the Oil Pollution Act of 1990, 33 U.S.C. Section
2701 ET SEQ. and any applicable state and local or foreign counterparts or
equivalents.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder. Section references to ERISA are to ERISA, as in effect at
the Initial Borrowing Date and any subsequent provisions of ERISA, amendatory
thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9)
of ERISA) which together with Holdings, the Borrower or a Subsidiary would be
deemed to be a "single employer" within the meaning of Sections 414(b), (c), (m)
and (o) of the Code.
"Eurodollar Loans" shall mean each Loan bearing interest at the rates
provided in Section 1.08(b).
"Eurodollar Rate" shall mean with respect to each Interest Period for
a Eurodollar Loan, (i) the offered quotation to first-class banks in the
interbank Eurodollar
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market by the Agent for dollar deposits of amounts in same day funds
comparable to the outstanding principal amount of the Eurodollar Loan of the
Agent for which an interest rate is then being determined with maturities
comparable to the Interest Period to be applicable to such Eurodollar Loan,
determined as of 10:00 A.M. (New York time) on the date which is two
Business Days prior to the commencement of such Interest Period divided (and
rounded upward to the next whole multiple of 1/16 of 1%) by (ii) a percentage
equal to 100% minus the then stated maximum rate of all reserve requirements
(including without limitation any marginal, emergency, supplemental, special
or other reserves) applicable to any member bank of the Federal Reserve
System in respect of Eurocurrency liabilities as defined in Regulation D (or
any successor category of liabilities under Regulation D).
"Event of Default" shall have the meaning provided in Section 9.
"Excess Cash Flow" shall mean, for any fiscal year, the remainder of
(i) the sum of (x) Adjusted Cash Flow for such fiscal year and (y) the decrease,
if any, in Working Capital from the first day to the last day of such fiscal
year, plus (ii) to the extent not included in (i) above, any amounts received by
the Borrower and its Subsidiaries in settlement of, or in payment of any
judgments resulting from, actions, suits or proceedings with respect to the
Borrower and/or its Subsidiaries from the first day to the last day of such
fiscal year, plus (iii) to the extent not included in (i) above, any amounts
received by the Borrower and/or its Subsidiaries in connection with the
repayment or redemption of any long-term promissory notes and/or preferred stock
of other Persons held by them, minus (iv) the sum of (x) the amount of
Consolidated Capital Expenditures (except to the extent (x) financed through the
incurrence of Indebtedness other than Revolving Loans or (y) made pursuant to
Section 8.05(c)) made during such fiscal year and (y) the increase, if any, in
Working Capital from the first day to the last day of such fiscal year and (z)
any repayments or prepayments of the principal amount of (I) Existing
Indebtedness (other than Purchases of Senior Notes made as provided by Section
8.08(a)) or (II) Term Loans and, if after the AR Termination Date, AR Loans,
except prepayments of the principal amount of Loans made pursuant to Sections
4.02(A)(c), (d), (e), (f) or (g).
"Existing Indebtedness" shall have the meaning provided in Section
6.21.
"Existing Tenders" shall mean the Offers to Purchase and Consent
Solicitations of the Borrower and Holdings, respectively, in respect of the
Senior Notes and Discount Notes, respectively, that are outstanding on the
Restatement Effective Date as the same may be amended or extended.
"Facility" shall mean any of the credit facilities established under
this Agreement, I.E., the Term Facility, the AR Facility, or if the Loan
Conversion occurs, the A Term Facility.
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"Federal Funds Effective Rate" shall mean for any period, a
fluctuating interest rate equal for each day during such period to the weighted
average of the rates on overnight Federal Funds transactions with members of the
Federal Reserve System arranged by Federal Funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Agent from three Federal Funds brokers of
recognized standing selected by the Agent.
"Fees" shall mean all amounts payable pursuant to, or referred to in,
Section 3.01.
"Final Maturity Date" shall mean September 30, 2004.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect on the date of this Agreement; it being
understood and agreed that determinations in accordance with GAAP for purposes
of Section 8, including defined terms as used therein, are subject (to the
extent provided therein) to Section 12.07(a).
"Guarantor" shall mean and include each Subsidiary Guarantor and
Holdings upon their execution of a Guaranty.
"Guaranties" shall mean and include the Subsidiary Guaranty and the
Holdings Guaranty.
"Guaranty Commencement Date" shall mean the earlier of (x) the date on
which the Senior Notes and the Discount Notes are repaid in full and (y) the
date on which the covenants contained in the Senior Notes and the Discount Notes
are amended, modified or waived to the satisfaction of (and pursuant to a debt
tender offer and exit consent satisfactory to) the Agent so as to permit the
execution of the Guaranties and the Additional Security Documents.
"Hazardous Materials" means (a) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, transformers or other equipment that
contained, electric fluid containing levels of polychlorinated biphenyls, and
radon gas; and (b) any chemicals, materials or substances defined as or included
in the definition of "hazardous substances," "hazardous waste," "hazardous
materials," "extremely hazardous waste," "restricted hazardous waste," "toxic
substances," "toxic pollutants," "contaminants," or "pollutants," or words of
similar import, under any Environmental Law.
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"Holdback Proceeds" shall mean (A) if the Proposed Equity Issuance is
consummated prior to (or concurrently with) the issuance of Permitted
Subordinated Debt, (i) the net cash proceeds of the Proposed Equity Issuance in
an aggregate amount equal to the lesser of (x) the full amount of such net cash
proceeds and (y) the Maximum Purchase Amount at the time of the receipt of such
proceeds plus (ii) the portion, if any, of the net cash proceeds of any
Permitted Subordinated Debt issued prior to the Termination Date referred to
below equal to the excess of (x) the Maximum Purchase Amount at the time of the
consummation of the Proposed Equity Issuance over (y) the original amount of
Holdback Proceeds resulting from the Proposed Equity Issuance or (B) if the
Permitted Subordinated Debt is issued prior to earliest of (I) the date on which
the Proposed Equity Issuance is consummated, (II) the Business Day following the
termination of the Existing Tenders and (III) November 30, 1996, the portion of
the net cash proceeds of such issuance equal to the Maximum Purchase Amount on
the date of such issuance, provided that the Holdback Proceeds shall be reduced
(a) by all amounts expended after the Restatement Effective Date to Purchase
Senior Notes and Discount Notes and (b) to zero (I) in the case of the Holdback
Proceeds described in clause (A) above, on the date (the "Termination Date")
which is 50 days after the date of the consummation of the Proposed Equity
Issuance (or if earlier the date on which all Senior Notes and Discount Notes
have been repaid in full) or (II) in the case of the Holdback Proceeds described
in clause (B) above, on the date which is 20 days after the date of the issuance
of the Permitted Subordinated Debt, it being understood that all Holdback
Proceeds shall be immediately deposited in, and thereafter maintained in, an
Escrow Account maintained at the Payment Office and otherwise satisfactory to
the Agent, with the terms of the Escrow Account to provide, inter alia, that
Holdback Proceeds shall be released therefrom only (i) to fund the Purchase of
Senior Notes and Discount Notes and (ii) on the date the Holdback Proceeds are
reduced to zero as provided in clause (b) above, to repay Loans as provided for
in Section 4.02(A)(e)(ii).
"Holdings" shall mean Universal Outdoor Holdings, Inc., a Delaware
corporation.
"Holdings Guaranty" shall have the meaning provided in Section
9.08(D).
"Holdings Leverage Ratio" shall mean, at any Measurement Date, the
ratio of (x) Consolidated Debt of Holdings on such date to (y) Adjusted EBITDA
of Holdings for the 12-month period (taken as one accounting period) ending on
such date.
"Holdings Pledge Agreement" shall have the meaning provided in Section
9.08(D).
"Indebtedness" of any Person shall mean without duplication (i) all
indebtedness of such Person for borrowed money, (ii) the deferred purchase price
of assets or services which in accordance with GAAP would be shown on the
liability side of the
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balance sheet of such Person, (iii) the face amount of all letters of credit
issued for the account of such Person and, without duplication, all drafts
drawn thereunder, (iv) all Indebtedness of a second Person secured by any
Lien on any property owned by such first Person, whether or not such
indebtedness has been assumed, (v) all Capitalized Lease Obligations of such
Person, (vi) all obligations of such Person to pay a specified purchase price
for goods or services whether or not delivered or accepted, I.E., take-or-pay
and similar obligations, (vii) all net obligations of such Person under
Interest Rate Agreements and (viii) all Contingent Obligations of such
Person, (other than Contingent Obligations arising from the guaranty by such
Person of the obligations of the Borrower and/or its Subsidiaries to the
extent such guaranteed obligations do not constitute Indebtedness and are
otherwise permitted hereunder) provided that Indebtedness shall not include
trade payables and accrued expenses, in each case arising in the ordinary
course of business.
"Initial Borrowing Date" shall have the meaning provided in the
Original Credit Agreement.
"Interest Period" with respect to any Loan shall mean the interest
period applicable thereto, as determined pursuant to Section 1.09.
"Interest Rate Agreement" shall mean any interest rate swap agreement,
any interest rate cap agreement, any interest rate collar agreement or other
similar agreement or arrangement designed to protect the Borrower or any
Subsidiary against fluctuations in interest rates.
"Investment" shall mean, with respect to any Person, all investments
by such Person in other Persons (including Affiliates and Subsidiaries) in the
forms of loans, guarantees, advances or capital contributions (excluding
commission, travel and similar advances to officers and employees made in the
ordinary course of business), purchases or other acquisitions for consideration
of Indebtedness, Capital Stock or other securities and all other items that are
or would be classified as investments on a balance sheet prepared in accordance
with GAAP.
"Kelso" shall mean Kelso & Company, L.P., a Delaware limited
partnership doing business as Kelso & Company.
"Kelso Designees" shall mean William A. Marquard, John F.
McGillicuddy, David M. Roderick, John Rutledge IRA, Michael Rapoport, Patricia
Hetter Kelso and George L. Shinn.
"LaSalle" shall mean LaSalle National Bank.
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"LaSalle Loan Agreement" shall mean the Amended and Restated Loan and
Security Agreement made as of March 22, 1995 by and between the Borrower and
LaSalle, as in effect on the Initial Borrowing Date immediately prior to
termination thereof.
"Leasehold" of any Person means all of the right, title and interest
of such Person as lessee or licensee in, to and under leases or licenses of
land, improvements and/or fixtures.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement or any
lease in the nature thereof).
"Loan" shall have the meaning provided in Section 1.01.
"Loan Conversion" shall have the meaning provided in Section 1.01(B).
"Management Agreements" shall have the meaning provided in the
Original Credit Agreement.
"Management Investors" shall mean Daniel Simon and Brian Clingen.
"Margin Reduction Discount" shall mean zero, provided that the Margin
Reduction Discount shall be increased to 1/4 of 1%, 1/2 of 1%, 1% or 1-1/2%, as
the case may be, as specified in clauses (i), (ii), (iii) or (iv) below, at any
time after the Restatement Effective Date, when, and for so long as, the ratio
set forth in such clause has been satisfied as at the Relevant Determination
Date:
(i) the Margin Reduction Discount shall be 1/4 of 1% in the event
that at the Relevant Determination Date the Modified Holdings Leverage
Ratio is equal to or greater than 5.0 to 1 but less than 6.0 to 1;
(ii) the Margin Reduction Discount shall be 3/4 of 1% in the event
that as at the Relevant Determination Date the Modified Holdings Leverage
Ratio is equal to or greater than 4.0 to 1 but less than 5.0 to 1;
(iii) the Margin Reduction Discount shall be 1-1/4% in the event
that as at the Relevant Determination Date the Modified Holdings Leverage
Ratio is equal to or greater than 3.0 to 1 but less than 4.0 to 1; or
(iv) the Margin Reduction Discount shall be 1-3/4% in the event that
as at the Relevant Determination Date the Modified Holdings Leverage Ratio
is less than 3.0 to 1.
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The Modified Holdings Leverage Ratio shall be determined (x) for the last day of
a fiscal month, quarter or year, by delivery of an officer's certificate of the
Borrower to the Banks pursuant to Section 7.01(e)(i) and (y) for the date of the
incurrence of Consolidated Debt after delivery of the officer's certificate
referred to in clause (x), by delivery of an officer's certificate of the
Borrower to the Banks pursuant to Section 7.01(e)(ii), each of which
certificates shall set forth the calculation of the Modified Holdings Leverage
Ratio. The Margin Reduction Discount so determined shall apply, except as set
forth below, from five Business Days after the date on which such officer's
certificate is delivered to the Agent to the earlier of (x) the date on which
the next certificate is delivered to the Agent pursuant to Section 7.01(e)(i) or
(ii) and (y) the 30th day following the end of the fiscal month in which such
first certificate was delivered to the Agent pursuant to Section 7.01(e)(i).
Notwithstanding anything to the contrary contained above, the Margin Reduction
Discount shall be zero (x) if no officer's certificate has been delivered to the
Banks pursuant to Section 7.01(e) (i) which sets forth the Modified Holdings
Leverage Ratio for the Relevant Determination Date or the financial statements
upon which any such calculations are based have not been delivered, until such a
certificate and/or financial statements are delivered and (y) at all times when
there shall exist a violation of Section 9.01 or an Event of Default. It is
understood and agreed that the Margin Reduction Discount as provided above shall
in no event be cumulative and only the Margin Reduction Discount applicable
under either clause (i), (ii), (iii) or (iv), if any, contained in this
definition shall be applicable.
"Margin Stock" shall have the meaning provided in Regulation U.
"Material Adverse Effect" shall mean a material adverse effect on the
business, property, assets, liabilities, operations, condition (financial or
otherwise) or prospects of (x) Holdings and its Subsidiaries taken as a whole,
(y) the Borrower and its Subsidiaries taken as a whole and/or (z) with respect
to any reference to such term in Section 5, OAH and its Subsidiaries taken as a
whole.
"Maximum Purchase Amount" shall mean the maximum aggregate amount that
will be expended by Holdings and the Borrower to Purchase Senior Notes and
Discount Notes (x) within 50 days after the date of the consummation of the
Proposed Equity Issuance if the Maximum Purchase Amount is to be determined at
the time of such consummation and (y) within 20 days after the date of the
issuance of Permitted Subordinated Debt if the Maximum Purchase Amount is to be
determined at such time of such issuance, in each case to equal the aggregate
principal amount of all Senior Notes and Discount Notes then outstanding plus an
amount to pay premiums in respect of such Purchases (including consent fees) as
estimated in good faith by the Borrower and agreed to by the Agent.
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"Measurement Date" shall mean (x) the last day of each fiscal quarter
of the Borrower and (y) the last day of the last month ended prior to the date
of a Tested Borrowing.
"Minimum Borrowing Amount" shall mean (i) for Loans maintained as Base
Rate Loans, $500,000 and (ii) for Loans maintained as Eurodollar Loans,
$1,000,000.
"Modified Available Amount" shall mean, with respect to any Dividend
to be paid under Section 8.09(a)(v) (and as determined prior to Holdings making
any Purchase of Discount Notes with the proceeds of such Dividend), (x) an
amount equal to the Holdback Proceeds at such time, (y) if the Holdings Leverage
Ratio is less than 5.00 to 1.0 at the time, the Available ECF Amount at such
time plus (z) the Available Equity Amount at such time less the portion thereof
attributable to proceeds of equity issued by Holdings to the extent not
theretofore contributed as common equity to the Borrower.
"Modified Holdings Leverage Ratio" shall mean, with respect to any
Relevant Measurement Date, the Holdings Leverage Ratio determined as of such
date, modified by the inclusion in the computation thereof of any incremental
Consolidated Debt of Holdings incurred after such Relevant Measurement Date and
prior to the delivery of an officer's certificate pursuant to Section 7.01(e)(i)
in respect of the next Relevant Measurement Date.
"Mortgage" shall have the meaning provided in Section 5.01(i)(IV).
"Mortgage Policies" shall have the meaning provided in the Original
Credit Agreement.
"Mortgaged Properties" shall mean the Real Properties subject to the
Mortgages.
"Naegele" shall mean Naegele Outdoor Advertising Company, a Delaware
corporation.
"Net Cash Proceeds" shall mean, with respect to any Asset Sale, the
Cash Proceeds resulting therefrom net of expenses of sale or recovery (including
payment of principal, premium and interest of Indebtedness secured by the assets
which are the subject of the Asset Sale and required to be, and which is, repaid
under the terms thereof as a result of such Asset Sale), and incremental taxes
paid or payable as a result thereof.
"New Mortgage" shall have the meaning provided in Section 7.10.
"Non-Defaulting Bank" shall mean each Bank other than a Defaulting
Bank.
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"Note" shall mean and include each B Term Note, each AR Note and each
A Term Note.
"Notice of Borrowing" shall have the meaning provided in Section 1.03.
"Notice of Conversion" shall have the meaning provided in Section
1.06.
"Notice Office" shall mean the office of the Agent at 130 Liberty
Street, New York, New York or such other office as the Agent may designate to
the Borrower from time to time.
"OAH" shall mean Outdoor Advertising Holdings, Inc., a Delaware
corporation.
"Obligations" shall mean all amounts, direct or indirect, contingent
or absolute, of every type or description, and at any time existing, owing to
the Agent, the Collateral Agent or any Bank pursuant to the terms of this
Agreement or any other Credit Document.
"Original Credit Agreement" shall have the meaning provided in the
first recital to this Agreement.
"Payment Office" shall mean the office of the Agent at 130 Liberty
Street, New York, New York or such other office as the Agent may designate to
the Borrower from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"Permitted Acquisition" shall mean any acquisition (including through
a stock acquisition) of property or assets of a nature or type, or which will be
used in a business, permitted to be held or engaged in by Section 8.01 provided
that (x) the Holdings Leverage Ratio as of the last Measurement Date prior to
the consummation of such acquisition was less than 5.50 to 1.0 or (y) aggregate
amount expended for all such acquisitions after the Restatement Effective Date
to the extent not effected in compliance with clause (x) above or clause (z)
below does not exceed $50,000,000 or (z) consented to in writing by the Super-
Majority Banks.
"Permitted Asset Sale" shall mean an Asset Sale (x) permitted by the
expressed language of Section 8.02 (and not by the parenthetical in the lead in
paragraph of Section 8) and (y) resulting from a casualty or taking of assets of
the Borrower or any Subsidiary.
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"Permitted Encumbrances" shall mean, with respect to the Mortgaged
Property, such exceptions to title as are set forth in the title insurance
policy or title commitment delivered with respect thereto, all of which
exceptions must be reasonably acceptable to the Agent.
"Permitted Exit Amendments" shall mean the exit amendments referred to
in clause (y) of the definition of Guaranty Commencement Date.
"Permitted Holders" means Kelso and its Affiliates, the Kelso
Designees, the Management Investors, any employee stock ownership plan
established by the Borrower for the benefit of the employees of the Borrower or
any Subsidiary and their Permitted Transferees.
"Permitted Investments" shall mean (a) cash and Cash Equivalents, (b)
Investments in Naegele and/or Peterson, (c) Investments in all other
Subsidiaries up to $1,000,000 in the aggregate, including Investments in a
Person that becomes a Subsidiary of the Borrower immediately after such
Investment, provided (i) an Event of Default has not occurred and is continuing
and will not occur as a result of, in connection with or after giving effect to
such Investment and (ii) such Person, at the time of such Investment or at the
time such Person becomes a Subsidiary, engages exclusively in the business
permitted to be engaged in by Borrower and its Subsidiaries pursuant to Section
8.01, (c) loans and advances of money in the ordinary course of business and
consistent with past practice to officers and employees of Borrower or any of
its Subsidiaries, (d) investments in receivables owing to the Borrower and/or
any Subsidiary, if created or acquired in the ordinary course of business and
payable or dischargeable in accordance with customary trade terms, and (e)
investments (including debt obligations) received in connection with the
bankruptcy or reorganization of suppliers and customers and in settlement of
delinquent obligations of, and other disputes with, customers and suppliers
arising in the ordinary course of business.
"Permitted Liens" shall mean Liens described in clauses (a), (b) and
(d) of Section 8.03.
"Permitted Subordinated Debt" shall mean up to $200 million of
subordinated debt of the Borrower as contemplated by the "red herring"
prospectus dated September 25, 1996 relating to subordinated debt of the
Borrower and issued on the terms and conditions described in such prospectus or
otherwise on terms and conditions reasonably satisfactory to the Required Banks.
"Permitted Subordinated Debt Documents" shall mean all indentures,
agreements, notes and other instruments governing or evidencing Permitted
Subordinated Debt, all of which shall be reasonably satisfactory to the Agent.
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"Permitted Transferees" means (i) in the case of Kelso, (A) any
Affiliate thereof (other than any corporation or other Person (except for any
corporation or other Person engaged in a business similar, complementary or
related to the nature or type of the business of Holdings and its Subsidiaries)
controlled by, or any investment fund (other than Kelso Investment Associates V,
L.P. or any investment fund that is solely comprised of current and former
professionals of Kelso) managed by, Kelso), (B) any managing director, general
partner, limited partner, director, officer or employee of Kelso or any
Affiliate thereof (collectively, "Kelso Associates"), (C) the heirs, executors,
administrators, testamentary trustees, legatees or beneficiaries of any Kelso
Associate or Kelso Designee and (D) any trust, the beneficiaries of which, or a
corporation or partnership, the stockholders or partners of which, include only
a Kelso Associate or Kelso Designee, his spouse, parents, siblings, or direct
lineal descendants, and (ii) in the case of any Management Investors, (A) his
executor, administrator, testamentary trustee, legatee or beneficiaries, (B) his
spouse, parents, siblings, members of his or her immediate family (including
adopted children) and/or direct lineal descendants or (C) a trust, the
beneficiaries of which, or a corporation or partnership, the stockholders or
partners of which, include only the Management Investor, as the case may be, and
his spouse, parents, siblings, members of his or her immediate family (including
adopted children) and/or direct lineal descendants.
"Person" shall mean any individual, partnership, joint venture, firm,
corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.
"Peterson" shall mean Peterson Outdoor Advertising Corp., a Delaware
corporation, and shall include the surviving corporation of a merger between OAH
(as the survivor of the Merger referred to in the Acquisition Agreement) and
Peterson to be effected on or prior to the Restatement Effective Date.
"Plan" shall mean any multi-employer or single-employer plan as
defined in Section 4001 of ERISA, which is maintained or contributed to by (or
to which there is an obligation to contribute of) Holdings, the Borrower, a
Subsidiary or an ERISA Affiliate, and each such plan for the five year period
immediately following the latest date on which Holdings, the Borrower, a
Subsidiary, or an ERISA Affiliate maintained, contributed to or had an
obligation to contribute to such plan.
"Pledge Agreements" shall mean the Borrower Pledge Agreement and the
UOH Pledge Agreement and once executed the Additional Pledge Agreement and the
Holdings Pledge Agreement.
"Pledged Securities" shall mean all the Pledged Securities as defined
in the relevant Pledge Agreement.
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"Prime Lending Rate" shall mean the rate which Bankers Trust Company
announces from time to time as its prime lending rate, the Prime Lending Rate to
change when and as such prime lending rate changes. The Prime Lending Rate is a
reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. Bankers Trust Company may make commercial
loans or other loans at rates of interest at, above or below the Prime Lending
Rate.
"Proposed Equity Issuance" shall mean the issuance by Holdings of
Common Stock of Holdings as contemplated by the "red herring prospectus" dated
September 25, 1996 relating to Common Stock of Holdings, provided that, if the
Permitted Subordinated Debt has not yet then been issued, such issuance occurs
on or prior to November 30, 1996.
"Purchase" shall mean repay, redeem, purchase, repurchase or otherwise
acquire for value.
"RCRA" shall mean the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. Section 6901 ET SEQ.
"Real Property" of any Person shall mean all of the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing reserve requirements.
"Regulation U" shall mean Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing margin requirements.
"Reinvestment Assets" shall mean any assets to be employed in the
business of the Borrower and its Subsidiaries as permitted by Section 8.01.
"Reinvestment Election" shall have the meaning provided in Section
4.02(A)(c).
"Reinvestment Notice" shall mean a written notice signed by an
Authorized Officer of the Borrower stating that the Borrower, in good faith,
intends and expects to use all or a specified portion of the Net Cash Proceeds
of a Permitted Asset Sale to purchase, construct or otherwise acquire
Reinvestment Assets.
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"Reinvestment Prepayment Amount" shall mean, with respect to any
Reinvestment Election, the amount, if any, on the Reinvestment Prepayment Date
relating thereto by which (a) the Anticipated Reinvestment Amount in respect of
such Reinvestment Election exceeds (b) the aggregate amount thereof expended by
the Borrower and its Subsidiaries to acquire Reinvestment Assets.
"Reinvestment Prepayment Date" shall mean, with respect to any
Reinvestment Election, the earliest of (i) the date, if any, upon which the
Agent, on behalf of the Required Banks, shall have delivered a written
termination notice to the Borrower, provided that such notice may only be given
while an Event of Default exists, (ii) the date occurring 180 days after such
Reinvestment Election and (iii) the date on which the Borrower shall have
determined not to, or shall have otherwise ceased to, proceed with the purchase,
construction or other acquisition of Reinvestment Assets with the related
Anticipated Reinvestment Amount.
"Relevant Determination Date" shall mean, at any time, (x) the last
day of the then most recently ended fiscal month, quarter or year of Holdings
with respect to which an officer's certificate has been, or is required to be,
delivered to the Banks pursuant to Section 7.01(e)(i) or (y) if the Margin
Reduction Discount is then greater than zero, the last date subsequent to the
date specified in clause (x) on which any Consolidated Debt of Holdings and its
Subsidiaries has been incurred.
"Reportable Event" shall mean an event described in Section 4043(c) of
ERISA with respect to a Plan as to which the 30-day notice requirement has not
been waived by the PBGC.
"Required Banks" shall mean Non-Defaulting Banks whose outstanding
Term Loans and AR Commitments (or, if after the AR Termination Date, outstanding
AR Loans) constitute greater than 50% of the sum of (i) the total outstanding
Term Loans of Non-Defaulting Banks and (ii) the Adjusted Total AR Commitment
(or, if after the AR Termination Date, the total outstanding AR Loans of Non-
Defaulting Banks).
"Restatement Effective Date" shall have the meaning provided in
Section 5.01.
"Revolving Facility Termination Date" shall mean the date on which the
Total Revolving Commitment under and as defined in the RF Credit Agreement has
been terminated, whether by action of the Borrower, the Agent, in accordance
with the expressed terms of the RF Credit Agreement or otherwise.
"Revolving Loans" shall mean the Revolving Loans under and as defined
in the RF Credit Agreement.
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"RF Bank" shall mean at any time a financial institution that is then
a Bank under and as defined in the RF Credit Agreement.
"RF Credit Agreement" shall mean the Amendment and Restatement dated
as of the date hereof to the Revolving Credit Agreement among the Borrower, the
Banks, LaSalle as Co-Agent and BTCo as Agent providing for the revolving credit
specified therein, as in effect on the Restatement Effective Date hereunder and
as the same may be modified, amended or supplemented in accordance with the
terms thereof to the extent such amendment is permitted hereunder.
"Scheduled Repayment" shall have the meaning provided in Section
4.02(A)(b).
"SEC" shall have the meaning provided in Section 7.01(h).
"SEC Regulation D" shall mean Regulation D as promulgated under the
Securities Act of 1933, as amended, as the same may be in effect from time to
time.
"Security Agreement" shall have the meaning provided in Section
5.01(i)(II).
"Security Agreement Collateral" shall mean all "Collateral" as defined
in the Security Agreement.
"Security Documents" shall mean each Pledge Agreement, the Security
Agreement, each Mortgage and, once executed, each Additional Security Document,
if any.
"Senior Leverage Ratio" shall mean, at any Measurement Date, the ratio
of (x) Consolidated Senior Debt of the Borrower on such date to (y) Adjusted
EBITDA of the Borrower for the 12-month period (taken as one accounting period)
ending on such date.
"Senior Note Documents" shall mean and include each of the documents,
instruments (including the Senior Notes) and other agreements entered into by
the Borrower (including, without limitation, the Senior Note Indenture) relating
to the issuance by the Borrower of the Senior Notes, as in effect on the
Restatement Effective Date and as the same may be supplemented, amended or
modified from time to time in accordance with the terms hereof and thereof.
"Senior Note Indenture" shall mean the Indenture entered into by and
between the Borrower and United States Trust Company of New York, as trustee
thereunder, with respect to the Senior Notes as in effect on the Restatement
Effective Date and as the same may be modified, amended or supplemented from
time to time in accordance with the terms hereof and thereof.
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"Senior Notes" shall mean the 11% Senior Notes due 2003 issued by the
Borrower under the Senior Note Indenture, as in effect on the Restatement
Effective Date and as the same may be supplemented, amended or modified from
time to time in accordance with the terms thereof and hereof.
"Shareholders' Agreements" shall have the meaning provided in the
Original Credit Agreement.
"Smith Note" shall have the meaning provided in Section 8.04(g).
"Subordinated Debt" shall mean and include the Permitted Subordinated
Debt and the Additional Subordinated Debt, in each case once issued.
"Subordinated Debt Documents" shall mean and include the Permitted
Subordinated Debt Documents and the execution version of all indentures,
agreements, notes and instruments governing, or evidencing Additional
Subordinated Debt.
"Subsidiary" of any Person shall mean and include (i) any corporation
more than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person directly or
indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity in which such Person directly or indirectly through
Subsidiaries, has more than a 50% equity interest at the time. Unless otherwise
expressly provided, all references herein to "Subsidiary" shall mean a
Subsidiary of the Borrower.
"Subsidiary Guarantor" shall mean each Subsidiary (x) that executes
and delivers a Subsidiary Guarantor pursuant to Section 7.10(a) and (y) each
Domestic Subsidiary created after the Section 7.10(a) actions are taken that
executes and delivers a counterpart of the Subsidiary Guaranty, provided that at
such time such Subsidiary also takes the other actions that it would have been
required to take under Section 7.10(a) if it were a Subsidiary on the Guaranty
Commencement Date.
"Subsidiary Guaranty" shall have the meaning provided in Section
7.10(a).
"Super-Majority Banks" shall mean the Non-Defaulting Banks which would
constitute the Required Banks if the reference to "50%" in the definition of
Required Banks were to read "66 2/3%."
"Syndication Date" shall mean the earlier of (x) the date which is 90
days after the Restatement Effective Date and (y) the date upon which the Agent
determines in
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its sole discretion (and notifies the Borrower) that the primary syndication
(and the resulting addition of institutions as Banks pursuant to Section
12.04) has been completed.
"Tax Sharing Agreement" shall mean the Tax Sharing Agreement dated as
of November 18, 1993 between the Borrower and Holdings in the form delivered to
the Banks prior to the Restatement Effective Date and as the same may be
modified with the consent of the Required Banks.
"Taxes" shall have the meaning provided in Section 4.04(a).
"Term Commitment" shall mean, with respect to each Bank, the amount,
if any, set forth opposite such Bank's name on Annex I hereto directly below the
column entitled "Term Commitment" as the same may be reduced or terminated
pursuant to Section 3.03.
"Term Facility" shall mean the Facility evidenced by the Total Term
Commitment.
"Term Loans" shall mean and include the A Term Loans and the B Term
Loans.
"Tested Borrowing" shall mean any incurrence of AR Loans after the
Restatement Effective Date in which the aggregate amount of AR Loans incurred,
when added to the aggregate amount of AR Loans and Revolving Loans incurred
during the immediately preceding 30 day period (to the extent (x) incurred after
the Restatement Effective Date, (y) still outstanding and (z) not included in
establishing an earlier Tested Borrowing), equal or exceed $1,000,000.
"Total A Term Commitment" shall mean the sum of the A Term Commitments
of each of the Banks.
"Total AR Commitment" shall mean the sum of the AR Commitments of each
of the Banks.
"Total Commitment" shall mean the sum of the Total A Term Commitment,
the Total Term Commitment and the Total AR Commitment.
"Total Term Commitment" shall mean the sum of the Term Commitments of
each of the Banks.
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"Transaction" shall mean and include (i) the Acquisition, (ii) the
entering into and borrowing under the RF Credit Agreement and (iii) the entering
into and borrowing under this Agreement.
"Transaction Documents" shall mean the Acquisition Documents, the
Credit Documents and the RF Credit Agreement.
"Transaction Expenses" shall mean all fees and expenses incurred in
connection with, and payable prior to or substantially concurrently with the
closing of, the Transaction and including all fees paid to any of the Banks and
the Agent hereunder, fees paid to Kelso or its Affiliates permitted hereunder;
attorney's fees, accountants' fees, placement agents' fees, discounts and
commissions and brokerage, and consultant fees. Transaction Expenses shall
include the amortization of any such fees and expenses that are capitalized and
not classified as an expense on the date incurred.
"Type" shall mean any type of Loan determined with respect to the
interest option applicable thereto, I.E., a Base Rate Loan or Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code.
"Unfunded Current Liability" of any Plan shall mean the amount, if
any, by which the actuarial present value of the accumulated plan benefits under
the Plan as of the close of its most recent plan year determined in accordance
with Statement of Financial Accounting Standards No. 35, based upon the
actuarial assumptions used by the Plan's actuary in the most recent annual
valuation of the Plan, exceeds the fair market value of the assets thereof,
determined in accordance with Section 412 of the Code.
"UOH Pledge Agreement" shall have the meaning provided in Section
5.01(i)(III).
"Working Capital" shall mean the excess of Consolidated Current Assets
over Consolidated Current Liabilities.
"Written" or "in writing" shall mean any form of written communication
or a communication by means of telex, facsimile transmission, telegraph or
cable.
SECTION 11. THE AGENT.
11.01 APPOINTMENT. The Banks hereby designate Bankers Trust Company
as Agent (for purposes of this Section 11, the term "Agent" shall include BTCo
in its capacity as Collateral Agent pursuant to the Security Documents) to act
as specified herein and in the other Credit Documents. Each Bank hereby
irrevocably authorizes, and each
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holder of any Note by the acceptance of such Note shall be deemed irrevocably
to authorize, the Agent to take such action on its behalf under the
provisions of this Agreement, the other Credit Documents and any other
instruments and agreements referred to herein or therein and to exercise such
powers and to perform such duties hereunder and thereunder as are
specifically delegated to or required of the Agent by the terms hereof and
thereof and such other powers as are reasonably incidental thereto. The
Agent may perform any of its duties hereunder by or through its respective
officers, directors, agents, employees or affiliates. The Co-Agent shall
have no duties or liabilities in acting in such capacity hereunder.
11.02 NATURE OF DUTIES. The Agent shall not have any duties or
responsibilities except those expressly set forth in this Agreement and the
Security Documents. Neither the Agent nor any of its respective officers,
directors, agents, employees or affiliates shall be liable for any action taken
or omitted by it or them hereunder or under any other Credit Document or in
connection herewith or therewith, unless caused by its or their gross negligence
or willful misconduct. The duties of the Agent shall be mechanical and
administrative in nature; the Agent shall not have by reason of this Agreement
or any other Credit Document a fiduciary relationship in respect of any Bank or
the holder of any Note; and nothing in this Agreement or any other Credit
Document, expressed or implied, is intended to or shall be so construed as to
impose upon the Agent any obligations in respect of this Agreement or any other
Credit Document except as expressly set forth herein or therein.
11.03 LACK OF RELIANCE ON THE AGENT. Independently and without
reliance upon the Agent, each Bank and the holder of each Note, to the extent it
deems appropriate, has made and shall continue to make (i) its own independent
investigation of the financial condition and affairs of Holdings, the Borrower
and its Subsidiaries in connection with the making and the continuance of the
Loans and the taking or not taking of any action in connection herewith and (ii)
its own appraisal of the creditworthiness of Holdings, the Borrower and its
Subsidiaries and, except as expressly provided in this Agreement, the Agent
shall not have any duty or responsibility, either initially or on a continuing
basis, to provide any Bank or the holder of any Note with any credit or other
information with respect thereto, whether coming into its possession before the
making of the Loans or at any time or times thereafter. The Agent shall not be
responsible to any Bank or the holder of any Note for any recitals, statements,
information, representations or warranties herein or in any document,
certificate or other writing delivered in connection herewith or for the
execution, effectiveness, genuineness, validity, enforceability, perfection,
collectibility, priority or sufficiency of this Agreement or any other Credit
Document or the financial condition of the Borrower and its Subsidiaries or be
required to make any inquiry concerning either the performance or observance of
any of the terms, provisions or conditions of this Agreement or any other Credit
Document, or the financial condition of Holdings,
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the Borrower and its Subsidiaries or the existence or possible existence of
any Default or Event of Default.
11.04 CERTAIN RIGHTS OF THE AGENT. If the Agent shall request
instructions from the Required Banks (or, where applicable, the Super-Majority
Banks) with respect to any act or action (including failure to act) in
connection with this Agreement or any other Credit Document, the Agent shall be
entitled to refrain from such act or taking such action unless and until the
Agent shall have received instructions from the Required Banks (or, where
applicable, the Super-Majority Banks); and the Agent shall not incur liability
to any Person by reason of so refraining. Without limiting the foregoing,
neither any Bank nor the holder of any Note shall have any right of action
whatsoever against the Agent as a result of the Agent acting or refraining from
acting hereunder or under any other Credit Document in accordance with the
instructions of the Required Banks (or, where applicable, the Super-Majority
Banks).
11.05 RELIANCE. The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram,
radiogram, order or other document or telephone message signed, sent or made by
any Person that the Agent believed to be the proper Person, and, with respect to
all legal matters pertaining to this Agreement and any other Credit Document and
its duties hereunder and thereunder, upon advice of counsel selected by the
Agent.
11.06 INDEMNIFICATION. To the extent the Agent is not reimbursed and
indemnified by the Borrower, the Banks will reimburse and indemnify the Agent,
in proportion to their respective Loans and Commitments as used in determining
the Required Banks, for and against any and all liabilities, obligations,
losses, damages, penalties, claims, actions, judgments, costs, expenses or
disbursements of whatsoever kind or nature which may be imposed on, asserted
against or incurred by the Agent in performing its respective duties hereunder
or under any other Credit Document, in any way relating to or arising out of
this Agreement or any other Credit Document; provided that no Bank shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Agent's gross negligence or willful misconduct.
11.07 THE AGENT IN ITS INDIVIDUAL CAPACITY. With respect to its
obligation to make Loans under this Agreement, the Agent shall have the rights
and powers specified herein for a "Bank" and may exercise the same rights and
powers as though it were not performing the duties specified herein; and the
term "Banks," "Required Banks," "Super-Majority Banks," "holders of Notes" or
any similar terms shall, unless the context clearly otherwise indicates, include
the Agent in its individual capacity. The Agent may accept deposits from, lend
money to, and generally engage in any kind of banking, trust or other
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business with the Borrower or any Affiliate of the Borrower as if it were not
performing the duties specified herein, and may accept fees and other
consideration from the Borrower for services in connection with this
Agreement and otherwise without having to account for the same to the Banks.
11.08 HOLDERS. The Agent may deem and treat the payee of any Note as
the owner thereof for all purposes hereof unless and until a written notice of
the assignment, transfer or endorsement thereof, as the case may be, shall have
been filed with the Agent. Any request, authority or consent of any Person who,
at the time of making such request or giving such authority or consent, is the
holder of any Note shall be conclusive and binding on any subsequent holder,
transferee, assignee or indorsee, as the case may be, of such Note or of any
Note or Notes issued in exchange therefor.
11.09 RESIGNATION BY THE AGENT. (a) The Agent may resign from the
performance of all its functions and duties hereunder and/or under the other
Credit Documents at any time by giving 15 Business Days' prior written notice to
the Borrower and the Banks. Such resignation shall take effect upon the
appointment of a successor Agent pursuant to clauses (b) and (c) below or as
otherwise provided below.
(b) Upon any such notice of resignation, the Banks shall appoint a
successor Agent hereunder or thereunder who shall be the Co-Agent or such other
commercial bank or trust company as is reasonably acceptable to the Borrower.
(c) If a successor Agent shall not have been so appointed within such
15 Business Day period, the Agent, with the consent of the Borrower, shall then
appoint a successor Agent who shall serve as Agent hereunder or thereunder until
such time, if any, as the Banks appoint a successor Agent as provided above.
(d) If no successor Agent has been appointed pursuant to clause (b)
or (c) above by the 20th Business Day after the date such notice of resignation
was given by the Agent, the Agent's resignation shall become effective and the
Required Banks shall thereafter perform all the duties of the Agent hereunder
and/or under any other Credit Document until such time, if any, as the Banks
appoint a successor Agent as provided above.
SECTION 12. MISCELLANEOUS.
12.01 PAYMENT OF EXPENSES, ETC. The Borrower agrees to: (i) whether
or not the transactions herein contemplated are consummated, pay all reasonable
out-of-pocket costs and expenses of the Agent and the Co-Agent in connection
with the negotiation, preparation, execution and delivery of the Credit
Documents and the documents and instruments referred to therein and any
amendment, waiver or consent relating thereto
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(including, without limitation, the reasonable fees and disbursements of
their respective counsel) and of the Agent, the Co-Agent and each of the
Banks in connection with the enforcement of the Credit Documents and the
documents and instruments referred to therein (including, without limitation,
the reasonable fees and disbursements of counsel for the Agent, the Co-Agent
and for each of the Banks); (ii) pay and hold each of the Banks harmless from
and against any and all present and future stamp and other similar taxes with
respect to the foregoing matters and save each of the Banks harmless from and
against any and all liabilities with respect to or resulting from any delay
or omission (other than to the extent attributable to such Bank) to pay such
taxes; and (iii) indemnify each Bank (including in its capacity as the Agent
or Co-Agent), its officers, directors, employees, representatives and agents
from and hold each of them harmless against any and all losses, liabilities,
claims, damages or expenses incurred by any of them as a result of, or
arising out of, or in any way related to, or by reason of, (a) any
investigation, litigation or other proceeding (whether or not any Bank is a
party thereto) related to the entering into and/or performance of any
Transaction Document or the use of the proceeds of any Loans hereunder or the
Transaction or the consummation of any transactions contemplated in any
Credit Document, or (b) the actual or alleged presence of Hazardous Materials
in the air, surface water or groundwater or on the surface or subsurface of
any Real Property owned or at any time operated by the Borrower or any of its
Subsidiaries, the release, generation, storage, transportation, handling or
disposal of Hazardous Materials at any location, whether or not owned or
operated by the Borrower or any of its Subsidiaries, the non-compliance of
any Real Property with foreign, federal, state and local laws, regulations,
and ordinances (including applicable permits thereunder) applicable to any
Real Property, or any Environmental Claim asserted against the Borrower, any
of its Subsidiaries or any Real Property owned or at any time operated by the
Borrower or any of its Subsidiaries, including, in each case, without
limitation, the reasonable fees and disbursements of counsel incurred in
connection with any such investigation, litigation or other proceeding (but
excluding any such losses, liabilities, claims, damages or expenses to the
extent incurred by reason of the gross negligence or willful misconduct of
the Person to be indemnified).
12.02 RIGHT OF SETOFF. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, if an Event of Default then exists, each Bank is hereby authorized
at any time or from time to time, without presentment, demand, protest or other
notice of any kind to the Borrower or to any other Person, any such notice being
hereby expressly waived, to set off and to appropriate and apply any and all
deposits (general or special) and any other Indebtedness at any time held or
owing by such Bank (including without limitation by branches and agencies of
such Bank wherever located) to or for the credit or the account of the Borrower
against and on account of the Obligations and liabilities of the Borrower to
such Bank under this Agreement or under any of the other Credit Documents,
including, without limitation, all interests in Obligations purchased by such
Bank pursuant to Section 12.06(b), and all other claims of any nature or
description arising out of or connected with this Agreement
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or any other Credit Document, irrespective of whether or not such Bank shall
have made any demand hereunder and although said Obligations, liabilities or
claims, or any of them, shall be contingent or unmatured.
12.03 NOTICES. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, telecopier or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered, if to the Borrower, at
the address specified opposite its signature below; if to any Bank, at its
address specified for such Bank on Annex II hereto; or, at such other address as
shall be designated by any party in a written notice to the other parties
hereto. All such notices and communications shall be mailed, telegraphed,
telexed, telecopied, or cabled or sent by overnight courier, and shall be
effective when received.
12.04 BENEFIT OF AGREEMENT. (a) This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective successors
and assigns of the parties hereto, provided that the Borrower may not assign or
transfer any of its rights or obligations hereunder without the prior written
consent of the Banks. Each Bank may at any time grant participations in any of
its rights hereunder or under any of the Notes to another financial institution,
provided that in the case of any such participation, the participant shall not
have any rights under this Agreement or any of the other Credit Documents (the
participant's rights against such Bank in respect of such participation to be
those set forth in the agreement executed by such Bank in favor of the
participant relating thereto) and all amounts payable by the Borrower hereunder
shall be determined as if such Bank had not sold such participation, except that
the participant shall be entitled to the benefits of Sections 1.10 and 4.04 of
this Agreement to the extent that such Bank would be entitled to such benefits
if the participation had not been entered into or sold, and, provided further
that no Bank shall transfer, grant or assign any participation under which the
participant shall have rights to approve any amendment to or waiver of this
Agreement or any other Credit Document except to the extent such amendment or
waiver would (i) extend the final scheduled maturity of any Loan or Note in
which such participant is participating (it being understood that any waiver of
the application of any prepayment or the method of any application of any
prepayment to, the amortization of the Loans shall not constitute an extension
of the final maturity date), or reduce the rate or extend the time of payment of
interest or Fees thereon (except in connection with a waiver of the
applicability of any post-default increase in interest rates), or reduce the
principal amount thereof, or increase such participant's participating interest
in any Commitment over the amount thereof then in effect (it being understood
that a waiver of any Default or Event of Default or of a mandatory reduction in
the Total Commitment, or a mandatory prepayment, shall not constitute a change
in the terms of any Commitment), (ii) release all or substantially all of the
Collateral or (iii) consent to the assignment or transfer by the Borrower of any
of its rights and obligations under this Agreement or any other Credit Document.
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(b) Notwithstanding the foregoing, (x) any Bank may assign all or a
portion of its outstanding Term Loans and/or AR Loans and/or AR Commitment and
its rights and obligations hereunder to another Bank, and (y) with the consent
of the Agent and, to the extent such consent shall not be unreasonably withheld,
the Borrower, any Bank may assign all or a portion of its outstanding Term Loans
and/or AR Loans and/or AR Commitment and its rights and obligations hereunder to
one or more commercial banks or other financial institutions (including one or
more Banks), provided that all assignments hereunder (other than assignments of
the B Term Loans) must be PRO RATA between the A Term Loans, if any, on one hand
and the AR Loans and AR Commitments on the other hand. No assignment pursuant
to the immediately preceding sentence shall to the extent such assignment
represents an assignment to an institution other than one or more Banks
hereunder, be in an aggregate amount less than $5,000,000 unless the entire
Loans and Commitment of the assigning Bank are so assigned. If any Bank so
sells or assigns all or a part of its rights hereunder or under the Notes, any
reference in this Agreement or the Notes to such assigning Bank shall thereafter
refer to such Bank and to the respective assignee to the extent of their
respective interests and the respective assignee shall have, to the extent of
such assignment (unless otherwise provided therein), the same rights and
benefits as it would if it were such assigning Bank. Each assignment pursuant
to this Section 12.04(b) shall be effected by the assigning Bank and the
assignee Bank executing an Assignment Agreement substantially in the form of
Exhibit K (appropriately completed). In the event of any such assignment (x) to
a commercial bank or other financial institution not previously a Bank
hereunder, either the assigning or the assignee Bank shall pay to the Agent a
nonrefundable assignment fee of $3,500 (PROVIDED, that in the event of
simultaneous assignments relating to this Agreement and the RF Credit Agreement,
the fees for such assignments shall total $3,500) and (y) to a Bank, either the
assigning or assignee Bank shall pay to Agent a nonrefundable assignment fee of
$2,000 (PROVIDED, that in the event of simultaneous assignments relating to this
Agreement and the RF Credit Agreement, the fees for such assignments shall total
$2,000), and at the time of any assignment pursuant to this Section 12.04(b),
(i) Annex I shall be deemed to be amended to reflect the Commitment of the
respective assignee (which shall result in a direct reduction to the Commitment
of the assigning Bank) and of the other Banks, and (ii) the Borrower will issue
new Notes to the respective assignee and to the assigning Bank in conformity
with the requirements of Section 1.05. Each Bank and the Borrower agree to
execute such documents (including without limitation amendments to this
Agreement and the other Credit Documents) as shall be necessary to effect the
foregoing. Nothing in this clause (b) shall prevent or prohibit any Bank from
pledging its Notes or Loans to a Federal Reserve Bank in support of borrowings
made by such Bank from such Federal Reserve Bank. Notwithstanding any of the
foregoing provisions of this Section 12.04, no assignment may be made hereunder
of A Term Loans and/or AR Loans and AR Commitments unless a concurrent
assignment is made by the assigning Bank under the RF Credit Agreement of a
percentage of its Revolving Commitment thereunder equal to the percentage of its
A Term Loans, AR Loans and AR Commitment being assigned by it hereunder.
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(c) Notwithstanding any other provisions of this Section 12.04, no
transfer or assignment of the interests or obligations of any Bank hereunder or
any grant of participation therein shall be permitted if such transfer,
assignment or grant would require the Borrower to file a registration statement
with the SEC or to qualify the Loans under the "Blue Sky" laws of any State.
(d) Each Bank initially party to this Agreement hereby represents,
and each Person that becomes a Bank pursuant to an assignment permitted by this
Section 12 will, upon its becoming party to this Agreement, represent that it is
a commercial lender, other financial institution or other "accredited" investor
(as defined in SEC Regulation D) which makes loans in the ordinary course of its
business and that it will make or acquire Loans for its own account in the
ordinary course of such business, provided that subject to the preceding clauses
(a) and (b), the disposition of any promissory notes or other evidences of or
interests in Indebtedness held by such Bank shall at all times be within its
exclusive control.
12.05 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the
part of the Agent or any Bank in exercising any right, power or privilege
hereunder or under any other Credit Document and no course of dealing between
the Borrower and the Agent or any Bank shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder
or under any other Credit Document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder or
thereunder. The rights and remedies herein expressly provided are cumulative
and not exclusive of any rights or remedies which the Agent or any Bank would
otherwise have. No notice to or demand on the Borrower in any case shall
entitle the Borrower to any other or further notice or demand in similar or
other circumstances or constitute a waiver of the rights of the Agent or the
Banks to any other or further action in any circumstances without notice or
demand.
12.06 PAYMENTS PRO RATA. (a) The Agent agrees that promptly after
its receipt of each payment from or on behalf of the Borrower in respect of any
Obligations hereunder, it shall distribute such payment to the Banks (other than
any Bank that has expressly waived its right to receive its pro rata share
thereof) PRO RATA based upon their respective shares, if any, of the Obligations
with respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise) which is applicable to the payment of the principal of, or interest
on, the Loans or Fees, of a sum which with respect to the related sum or sums
received by other Banks is in a greater proportion than the total of such
Obligation
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then owed and due to such Bank bears to the total of such Obligation then
owed and due to all of the Banks immediately prior to such receipt, then such
Bank receiving such excess payment shall purchase for cash without recourse
or warranty from the other Banks an interest in the Obligations to such Banks
in such amount as shall result in a proportional participation by all of the
Banks in such amount, provided that if all or any portion of such excess
amount is thereafter recovered from such Bank, such purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest.
(c) Notwithstanding anything to the contrary contained herein, the
provisions of the preceding Sections 12.06(a) and (b) shall be subject to the
express provisions of this Agreement which require, or permit, differing
payments to be made to Non-Defaulting Banks as opposed to Defaulting Banks.
12.07 CALCULATIONS; COMPUTATIONS. (a) The financial statements to
be furnished to the Banks pursuant hereto shall be made and prepared in
accordance with GAAP consistently applied throughout the periods involved
(except as set forth in the notes thereto or as otherwise disclosed in writing
by the Borrower to the Banks), provided that (x) except as otherwise
specifically provided herein, all computations determining compliance with
Section 8, including definitions used therein, shall utilize accounting
principles and policies in effect at the time of the preparation of, and in
conformity with those used to prepare, the December 31, 1995 historical
financial statements of the Borrower delivered to the Banks pursuant to Section
6.10(b) and (y) that if at any time the computations determining compliance with
Section 8 utilize accounting principles different from those utilized in the
financial statements furnished to the Banks, such financial statements shall be
accompanied by reconciliation work-sheets.
(b) All computations of interest and Fees hereunder shall be made on
the actual number of days elapsed over a year of 360 days.
12.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF
JURY TRIAL. (a) This Agreement and the other Credit Documents and the rights
and obligations of the parties hereunder and thereunder shall be construed in
accordance with and be governed by the law of the state of New York. Any legal
action or proceeding with respect to this Agreement or any other Credit Document
may be brought in the courts of the State of New York or of the United States
for the Southern District of New York, and, by execution and delivery of this
Agreement, the Borrower hereby irrevocably accepts for itself and in respect of
its property, generally and unconditionally, the jurisdiction of the aforesaid
courts. The Borrower further irrevocably consents to the service of process out
of any of the aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
the Borrower located outside New York City and by hand delivery to the Borrower
located within New York City, at its address for notices pursuant to Section
12.03, such service to become effective
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30 days after such mailing. The Borrower hereby irrevocably designates
appoints and empowers CT Corporation System, with offices on the date hereof
located at 1633 Broadway, New York, New York 10019, as its agent for service
of process in respect of any such action or proceeding. Nothing herein shall
affect the right of the Agent or any Bank to serve process in any other
manner permitted by law or to commence legal proceedings or otherwise proceed
against the Borrower in any other jurisdiction.
(b) The Borrower hereby irrevocably waives any objection which it may
now or hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement or any other
Credit Document brought in the courts referred to in clause (a) above and hereby
further irrevocably waives and agrees not to plead or claim in any such court
that any such action or proceeding brought in any such court has been brought in
an inconvenient forum.
(c) Each of the parties to this agreement hereby irrevocably waives
all right to a trial by jury in any action, proceeding or counterclaim arising
out of or relating to this Agreement, the other Credit Documents or the
transactions contemplated hereby or thereby.
12.09 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Agent.
12.10 EXECUTION. This Agreement shall be deemed executed by all
parties when the Borrower and each of the Banks shall have signed a copy hereof
(whether the same or different copies) and shall have delivered the same to the
Agent at the Payment Office of the Agent or, in the case of the Banks, shall
have given to the Agent telephonic (confirmed in writing), written telex or
facsimile transmission notice (actually received) at such office that the same
has been signed and mailed to it.
12.11 HEADINGS DESCRIPTIVE. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
12.12 AMENDMENT OR WAIVER. Neither this Agreement nor any other
Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by the Borrower and the Required Banks, provided that no such
change, waiver, discharge or termination shall, without the consent of each Bank
(other than a Defaulting Bank) affected thereby, (i) extend the Final Maturity
Date, the AR Maturity Date or AR Termination Date, as the case may be (it being
understood that any waiver of the application of any
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<PAGE>
prepayment of or the method of application of any prepayment to the
amortization of, the Loans shall not constitute any such extension), or
reduce the rate or extend the time of payment of interest (other than as a
result of waiving the applicability of any post-default increase in interest
rates) or Fees thereon, or reduce the principal amount thereof, or increase
the Commitment of any Bank over the amount thereof then in effect (it being
understood that a waiver of any Default or Event of Default, or the Loan
Conversion or of a mandatory reduction in the Total Commitment, shall not
constitute a change in the terms of any Commitment of any Bank), (ii) release
or permit the release of all or substantially all of the Collateral except as
expressly provided in the Credit Documents, (iii) amend, modify or waive any
provision of this Section 12.12, (iv) reduce the percentage specified in, or
otherwise modify, the definition of Required Banks or (v) consent to the
assignment or transfer by the Borrower of any of its rights and obligations
under this Agreement provided further that no such change, waiver, discharge
or termination shall without the consent of the Super-Majority Banks change
directly or indirectly the definition of Permitted Acquisition or
Super-Majority Banks. No provision of Section 11 may be amended without the
consent of the Agent and to the extent any such amendment would affect the
Co-Agent solely in its capacity as such, the Co-Agent.
12.13 SURVIVAL. All indemnities set forth herein including, without
limitation, in Section 1.10, 1.11, 4.04, 11.06 or 12.01 shall survive the
execution and delivery of this Agreement and the making and repayment of the
Loans.
12.14 DOMICILE OF LOANS. Each Bank may transfer and carry its Loans
at, to or for the account of any branch office, subsidiary or affiliate of such
Bank, provided that the Borrower shall not be responsible for costs arising
under Section 1.10 or 4.04 resulting from any such transfer (other than a
transfer pursuant to Section 1.12) to the extent not otherwise applicable to
such Bank prior to such transfer.
12.15 CONFIDENTIALITY. Subject to Section 12.04, the Banks shall
hold all non-public information obtained pursuant to the requirements of this
Agreement which has been identified as such by the Borrower in accordance with
its customary procedure for handling confidential information of this nature and
in accordance with safe and sound banking practices and in any event may make
disclosure reasonably required by any BONA FIDE transferee or participant in
connection with the contemplated transfer of any Loans or participation therein
(so long as such transferee or participant agrees to abide by the provisions of
this Section 12.15) or as required or requested by any governmental agency or
representative thereof or pursuant to legal process, provided that, unless
specifically prohibited by applicable law or court order, each Bank shall notify
the Borrower of any request by any governmental agency or representative thereof
(other than any such request in connection with an examination of the financial
condition of such Bank by such governmental agency) for disclosure of any such
non-public information prior to disclosure
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<PAGE>
of such information, and provided further that in no event shall any Bank be
obligated or required to return any materials furnished by the Borrower or
any Subsidiary.
12.16 SPECIAL AMENDMENTS. The parties hereto agree that, upon the
occurrence of the Guaranty Commencement Date and the execution and delivery of
the Holdings Guaranty and the Holdings Pledge Agreement, this Agreement will be
modified with the consent of the Borrower, the Required Banks under and as
defined in the RF Credit Agreement and the Required Banks hereunder to (x)
incorporate herein the Total Revolving Commitment as defined in the RF Credit
Agreement, (y) incorporate herein any representation, covenant or event of
default in the RF Credit Agreement not contained herein and (z) otherwise make
such changes as appropriate to reflect the incorporation of such Total Revolving
Commitment herein (e.g., to the definition of Required Banks to reflect same)
and to eliminate the restrictions imposed on the Borrower and its Subsidiaries
by the Senior Notes and/or Discount Notes and upon such amendment the RF Credit
Agreement shall terminate.
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<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Agreement to be duly executed and delivered as of the date
first above written.
Address
- -------
321 N. Clark Street UNIVERSAL OUTDOOR, INC.
Suite 1010 as Borrower
Chicago, Illinois
Attention: Brian T. Clingen
Tel. No.: (312) 644-8673 By:
Fax No.: (312) 644-8071 ------------------------------
Name:
Title:
<PAGE>
BANKERS TRUST COMPANY,
Individually and as Agent
By
---------------------------------
Name:
Title:
<PAGE>
LA SALLE NATIONAL BANK,
Individually and as Agent
By
---------------------------------
Name:
Title:
<PAGE>
BANK OF AMERICA ILLINOIS
By
---------------------------------
Name:
Title:
<PAGE>
FIRST NATIONAL BANK OF BOSTON
By
---------------------------------
Name:
Title:
<PAGE>
UNION BANK
By
---------------------------------
Name:
Title:
<PAGE>
ANNEX I
COMMITMENTS
Term AR
Bank Commitment Commitment
---- ---------- ----------
Bankers Trust
Company
La Salle National
Bank
----------- ------------
Total: $75,000,000 $212,500,000
----------- ------------
----------- ------------
<PAGE>
ANNEX II
BANK ADDRESSES
Bankers Trust Company 130 Liberty Street
New York, New York 10006
Attention: Dana Klein
Tel. No.: (212) 250-1724
Fax No.: (212) 250-7218
La Salle National Bank 120 South LaSalle Street
Chicago, Illinois 60603
Attention: Jeffrey D. Steele
Tel. No.: (312) 904-2721
Fax No.: (312) 904-4364
<PAGE>
ANNEX III
GOVERNMENT APPROVALS
<PAGE>
ANNEX IV
SUBSIDIARIES
<PAGE>
ANNEX V
PROPERTIES
<PAGE>
ANNEX VI
EXISTING INDEBTEDNESS
<PAGE>
ANNEX VII
INSURANCE POLICIES
<PAGE>
ANNEX VIII
EXISTING LIENS
<PAGE>
ANNEX IX
MANAGEMENT FEES
FIRST NATIONAL BANK OF BOSTON
By
Name:
Title:
<PAGE>
EXHIBIT 10.8
AMENDMENT TO OPTION EXCHANGE AGREEMENT
AMENDMENT to OPTION EXCHANGE AGREEMENT, dated July 26, 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 85% and Mr. Clingen
contributing 15% 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 85% or $110,500 and Mr. Clingen receiving
15% or $19,500.
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>
Exhibit 10.9
as of July 26, 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 26, 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 of
<PAGE>
Page 2
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.
<PAGE>
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 26, 1996
KELSO & COMPANY, L.P.
By: Kelso & Companies, Inc.,
its general partner
By:------------------------
Name:
Title:
<PAGE>
Exhibit 10.10
REGISTRATION RIGHTS AGREEMENT
Dated as of July 26, 1996
<PAGE>
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
i
<PAGE>
7. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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
ii
<PAGE>
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of July 26, 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
26, 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 26, 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);
<PAGE>
(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
2
<PAGE>
another permitted form is of material importance to the success of the offering,
then such registration shall be on such other permitted form.
(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
3
<PAGE>
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 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
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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 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
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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 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
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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 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;
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(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 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 witrawal 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;
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<PAGE>
(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.
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
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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 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.
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(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 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
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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 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
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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 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
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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 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
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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
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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 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.
17
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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
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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 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
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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 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
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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 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.
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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 PROCEEDING 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.
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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
<PAGE>
Exhibit 10.11
JOINT MANAGEMENT AGREEMENT
This Joint Management Agreement (this "Agreement") is made as of this
12th day of September, 1996 by and between Tanner.Peck, L.L.C. ("Tanner"), a
Tennessee limited liability company and Universal Outdoor Management Company
("Manager"), an Illinois corporation and a wholly-owned subsidiary of Universal
Outdoor, Inc. ("Universal").
WHEREAS, Tanner owns and operates an outdoor advertising business in
Memphis, Tennessee, and the surrounding area including, but not limited to,
Shelby County, Fayette County, Tipton County and Hardin County, Tennessee, and
Desoto County, Tunica County and Acorn County, Mississippi, and Crittenden
County and Marion County, Arkansas (the "Business");
WHEREAS, Tanner desires to enter into this Agreement pursuant to which
Manager and Tanner will manage and operate the Business currently conducted by
Tanner and in furtherance thereof shall provide Tanner with the services of
certain officers of Manager as well as managerial, financial, administrative,
tax, operational, advisory services and any other services necessary to operate
the Business; and
WHEREAS, Manager desires to manage and operate the Business in
conjunction with Tanner and to provide such officers and services to Tanner.
NOW, THEREFORE, in consideration of the premises and mutual covenants
and obligations set forth herein, the parties hereto agree as follows:
SECTION 1. PERFORMANCE OF SERVICES.
(a) Subject to the terms and conditions of this Agreement, the
Manager and Tanner shall be directly responsible for the day-to-day management
and operation of the Business (the "Services"). The Manager and Tanner shall
perform the Services in a careful and professional manner, but shall operate and
manage the Business as they deem appropriate. In the case of any dispute
between Tanner and the Manager as to the Manager's performance of the Services
or the operation and management of the Business, Tanner's decision shall take
precedence over
<PAGE>
any conflicting view or proposal of the Manager, PROVIDED,
HOWEVER, that the mutual consent of both the Manager and Tanner must be obtained
for any of the following:
(i) new Sign Location Leases;
(ii) Advertising Contracts in excess of $25,000;
(iii) the sale of any Assets;
(iv) the hiring or termination of any employees; and
(v) the construction of any new Displays.
Without limiting the generality of the foregoing:
(i) subject to the terms and conditions of this Agreement, the
parties hereto shall cause the individuals listed in Schedule I hereto to
have all authority of the Manager and Tanner to effect the operation of
Tanner as is necessary to provide the Services. During the term of this
Agreement, Manager shall make available the services of such other
individuals as are reasonably necessary in order to further the intentions
of this Agreement; and
(ii) subject to the terms and conditions of this Agreement, the
Manager and Tanner shall perform for Tanner managerial, financial,
administrative, operational, other advisory services, and any other
services necessary to operate the Business, including but not limited to,
accounting, tax, marketing, technical and human resources services, legal
support services and day-to-day operational services and supervision.
(b) The Manager and Tanner shall in all respects operate the day-to-
day operations of the Business and in furtherance thereof and without limiting
the generality of the foregoing, shall carry out the following functions on
behalf of Tanner:
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(i) negotiate and execute on behalf of Tanner all agreements,
contracts, documents, certificates, permits or instruments relating to the
operation of the Business;
(ii) collect and deposit, for the account of Tanner, all
revenues, cash, checks, loan proceeds, funds or any other payments or
revenues relating to the Business and disburse such funds from Tanner's
account as are necessary to pay the expenses of the Business;
(iii) make decisions with respect to the employment and
termination of employment of employees, consultants and advisors of Tanner;
(iv) perform all bookkeeping and other handling of financial and
accounting matters for Tanner and maintain the financial and tax records of
the Business; and
(v) purchase any materials, supplies and equipment necessary for
the operation of the Business.
SECTION 2. FEES; PAYMENT.
(a) Tanner shall pay to the Manager, by wire transfer of immediately
available funds, a management fee (the "Management Fee") in exchange for the
Services described in Section 1 hereof, on or prior to the fifth business day of
each calendar month an amount equal to $82,000 per month, and such Management
Fee shall be prorated for any period during which the Manager provides the
Services which is less than one month.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF EACH PARTY.
Each of the parties hereto represents and warrants to the other that,
as of the date hereof:
(a) it is duly organized, validly existing and in good standing under
the laws of the jurisdiction in which it is formed and has all requisite
authority to own
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its property and assets and to conduct its business as
presently conducted or proposed to be conducted under this Agreement;
(b) it has the power and authority to execute, deliver and perform
its obligations under this Agreement;
(c) all necessary action has been taken to authorize its execution,
delivery and performance of this Agreement and this Agreement constitutes its
legal, valid and binding obligation enforceable against it in accordance with
its respective terms, except as such enforcement may be limited by applicable
bankruptcy, insolvency, moratorium and other similar laws affecting the rights
of creditors generally and by general principles of equity;
(d) neither its execution and delivery of this Agreement nor the
performance of its obligations hereunder will:
(i) conflict with or violate any provision of its organizational
documents;
(ii) conflict with, violate or result in a breach of any
constitution, law, judgment, regulation or order of any governmental
authority applicable to it; or
(iii) conflict with, violate or result in a breach of or constitute a
default under or result in the imposition or creation of any mortgage,
pledge, lien, security interest or other encumbrance under any term or
condition of any mortgage, indenture, loan agreement or other agreement to
which it is a party or by which its properties or assets are bound;
(e) no approval, authorization, order or consent of, or declaration,
registration or filing with any governmental authority or third party is
required for its valid execution, delivery and performance of this Agreement,
except such as have been duly obtained or made; and
(f) there is no action, suit or proceeding, at law or in equity, by
or before any court, tribunal or governmental authority or third party pending,
or, to its
4
<PAGE>
knowledge, threatened, which, if adversely determined, would
materially and adversely affect its ability to perform its obligations hereunder
or the validity or enforceability of this Agreement.
SECTION 4. COVENANTS OF TANNER.
(a) Tanner hereby covenants that it will, and will cause its members,
officers, managers, agents and representatives to cooperate fully with the
Manager in the Managers' provision of the Services and to otherwise act at all
times in a manner consistent with this Agreement.
(b) During the term of this Agreement, Tanner shall supply or make
available to the Manager the books and records of Tanner and such other
information as the Manager shall reasonably require in the performance of the
Services. Manager shall keep in confidence and shall not disclose any
information supplied to it to any other person, except as may be required by
applicable law.
(c) Tanner hereby agrees to provide and maintain in full force and
effect throughout the term of this Agreement all insurance and insurance
policies in effect on the date hereof.
(d) Tanner shall provide the individuals serving in the capacities
specified in Section 1(a)(i) with (a) coverage available to the senior officers
of Tanner under Tanner's policies of director and officers insurance, if any,
and (b) indemnification agreements or other arrangements, if any, that are or
have been provided by Tanner to its senior officers.
SECTION 5. TERM AND TERMINATION.
(a) This Agreement shall be effective as of the date hereof and
shall terminate on the earliest of (i) the termination of the Option and
Asset Purchase Agreement, dated September 12, 1996 by and among Tanner, TOA
Enterprises, L.P., William B. Tanner, WBT Outdoor, Inc., The Weatherley
Tanner Trust, Tanner Acquisition Corporation and Universal (the "Option and
Asset Purchase Agreement"), (ii) the consummation of the purchase of the
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<PAGE>
Business pursuant to the exercise of the option contained in the Option and
Asset Purchase Agreement, or (iii) the mutual agreement of the parties hereto.
(b) In the event of a termination of this Agreement, except for
unpaid Management Fees and obligations pursuant to Section 7, Section 2 and
the last sentence of Section 4(b), each of which shall survive termination of
this Agreement, the parties shall have no further obligations to each other
pursuant to the terms of this Agreement.
SECTION 6. STATUS OF MANAGER.
Manager shall perform and execute its obligations under this
Agreement at all times as an independent contractor to Tanner and shall not
be an employee or agent of Tanner. Nothing contained in this Agreement shall
be construed as creating a joint venture or partnership. For tax purposes,
Tanner shall not take any position inconsistent with this Section 6. The
Manager shall retain complete control over its personnel, workers,
subcontractors and operators for performance of the Services.
SECTION 7. LIMITATION OF LIABILITY; NO RECOURSE.
(a) Tanner agrees, to the fullest extent permitted by law, to
defend, indemnify and hold harmless Manager, its parents, and their
respective officers, directors, employees, agents, representatives and
stockholders, from and against, any and all actions, claims (including claims
by any governmental or taxing authority), demands, suits, proceedings,
liabilities, judgments, awards, losses, damages, and to pay and advance any
costs, expenses (including reasonable legal fees and expenses in connection
with, and other costs of investigating, preparing or defending any such
action or claim or enforcing its rights under this Agreement) and damages in
any action or amounts constituting a settlement of any claim with respect to
any losses or liabilities arising out of the performance of this Agreement,
whether or not arising out of third party claims or in connection with
litigation in which any such person is a party and whether or not based on
contract, tort (including negligence),
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violation of law,theory of strict liability, or infringement of proprietary
rights, for bodily injury (including death), destruction of third party
property and the loss of use or other loss or expense related thereto,
arising out of or in any manner caused or occasioned, in whole or in part, by
any act, omission, error, fault or negligence of Manager, any affiliate of
Manager or anyone acting on Manger's behalf, including, without limitation,
subcontractors and affiliates of the foregoing. Such losses, costs, expenses
and damages shall be paid as and when incurred. Neither Manager nor its
officers, directors, employees, agents, representatives and stockholders
shall have any liability or responsibility, including, without limitation, to
Tanner and its members, officers, employees, agents and representatives, for
any damages or losses arising out of the performance under this Agreement or
any default of the provisions hereof; PROVIDED, HOWEVER, that such waiver
shall not apply to the extent that a court of competent jurisdiction has
finally adjudicated that such damages resulted directly from the gross
negligence or willful misconduct of Manager. Tanner, by execution of this
Agreement, waives and releases all such persons from all such liabilities.
(b) Tanner agrees to defend, indemnify and hold harmless Manager
and, to the fullest extent permitted by law, its officers against, and to pay
any costs and damages in any action or amounts constituting a settlement of
any claim with respect to any losses or liabilities incurred or paid by
either Tanner or Manager in connection with the Business during the term of
this Agreement, PROVIDED, HOWEVER, that Tanner shall not be required to
indemnify Manager to the extent that a court of competent jurisdiction has
finally adjudicated that such damages resulted directly from the gross
negligence or willful misconduct of Manager.
(c) Notwithstanding any provision to the contrary contained in
this Agreement, Manager shall have no liability to Tanner for (i) its
performance of the Services contemplated hereby or (ii) its failure to
perform the Services contemplated hereby; except to the extent that a court
of competent jurisdiction has finally adjudicated that any damages to the
Business are the direct result of the Manager's gross negligence and willful
misconduct, in which case Manager's liability to
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Tanner shall be limited to the aggregate of the Management Fees paid by
Tanner to Manager.
SECTION 8. FORCE MAJEURE. Neither Manager nor Tanner shall be
responsible for any failure or delay in performance of its obligations under
this Agreement because of circumstances beyond its reasonable control
including, but not limited to, acts of God, fires, floods, wars, civil
disturbances, sabotage, accidents, labor disputes (whether or not the
employees' demands are reasonable and within the party's power to satisfy),
governmental actions or transportation delays. Any party may terminate this
Agreement without any liability to Manager or Tanner, as the case may be, if
such party is substantially unable to perform its obligations under this
Agreement for an uninterrupted period of 30 days or for 30 or more days
during any 60 day period.
SECTION 9. NOTICES.
(a) Any notice required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been sufficiently given when (i)
hand delivered by one party to the other party at the addresses set forth below,
(ii) deposited in the United States mail, postage prepaid, for mailing by
certified or registered mail, return receipt requested, (iii) sent by way of
recognized overnight courier service with instructions to deliver on the next
business day or (iv) transmitted by telecopy (with receipt of such transmission
confirmed), addressed as follows:
If to Manager, addressed to:
Universal Outdoor Management Company, Inc.
321 North Clark Street
Suite 1010
Chicago, Illinois 60601
Attention: Paul G. Simon
Telecopy: (312) 664-8371
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If to Tanner, addressed to:
Tanner.Peck L.L.C.
William B. Tanner, Chief Manager
4330 Chickasaw Road
Memphis, TN 38117
or to such other address or addresses as may be specified from time to time in a
written notice given by such party.
(b) Notwithstanding the foregoing, routine instructions, requests,
directions and notices dealing with day to day operations under this Agreement
may be given in such manner to such persons as may be agreed by the parties from
time to time and as is reasonable and practicable.
SECTION 10. MISCELLANEOUS.
(a) This Agreement constitutes the entire Agreement between the
parties with respect to the supply or performance of Services for Tanner by
Manager, and is a complete allocation of risks between them as to the subject
matter hereof. This Agreement supersedes all previous oral or written
negotiations, representations, undertakings and agreements heretofore made
between the parties in respect to the subject matter hereof.
(b) If any term or provision of this Agreement is held to be invalid
or unenforceable by reason of any rule of law or public policy, then this
Agreement shall be deemed amended to delete therefrom the term or provision held
to be invalid or unenforceable and all of the remaining terms and provisions of
this Agreement shall remain in full force and effect.
(c) Neither party to this Agreement may assign its rights hereunder
without the prior written consent of the other, and any such assignment of such
rights hereunder without such consent shall be voidable at the option of the
other party.
(d) This Agreement shall inure to the benefit of and shall be binding
upon the successors, heirs, assigns, and legal representatives of the parties
hereto.
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(e) Each of the parties hereto agrees to submit to binding
arbitration any and all differences and disputes which may arise between them,
their heirs, successors, assigns, employees, officers, directors, affiliates,
subsidiaries, or shareholders which are related to this Agreement. Prior to
initiating arbitration, the parties shall first meet face-to-face to effect a
resolution of the differences. Any differences which the parties are unable to
resolve in said face-to-face meeting shall be heard and finally settled at a
mutually agreed upon location by the parties, by binding arbitration in
accordance with the Commercial Rules of the American Arbitration Association.
If the parties do not agree upon a location, the arbitration proceeding shall be
conducted in St. Louis, Missouri. Any award entered in any such arbitration
shall be final, binding, and may be entered and enforced in any court of
competent jurisdiction. The arbitrator shall make such orders, conduct and
schedule all proceedings in connection with the arbitration so that final
arbitration commences no less than thirty (30) days and concludes no later than
seventy-five (75) days after a party files the initial notice of arbitration,
and so that the final arbitration award is made and delivered to the parties
within ninety (90) days after the filing of the initial notice of arbitration.
The cost of such arbitration shall be apportioned as determined by the
arbitrator, in any manner determined by him/her based upon the fault or lack
thereof by the respective parties. If the cost of such arbitration is not
apportioned by the arbitrator, then the cost shall be borne equally between the
Manager and Tanner. Nothing herein contained shall be construed as preventing
any party from instituting legal or equitable action in any jurisdiction against
any of the other parties for temporary or similar provisional relief to the full
extent permitted under the laws applicable to this Agreement, or any such other
written agreement between the parties or the performance hereof or thereof or
otherwise pending final settlement of any dispute, difference or question by
arbitration. Any such provisional relieve may be modified or amended in any way
by the arbitrator at any time after his appointment.
(f) Tanner and the Manager (i) agree that any suit, action or
proceeding arising out of or relating to this Agreement will be brought
solely in the federal courts of the State of Missouri, sitting in the City of
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St. Louis, Missouri; (ii) consent to the exclusive jurisdiction of each such
court in any suit, action or proceeding relating to or arising out of this
Agreement; (iii) waive any objection which it may have to the laying of venue
in any such suit, action or proceeding in any such court, and (iv) agree that
service of any court paper may be made in any manner as may be provided under
applicable laws or court rules governing service of process in such court.
(g) This Agreement shall be interpreted, construed and governed under
and by the laws of the State of Delaware, without regard to its choice of law
rules.
(h) Neither this Agreement nor any provision hereof may be waived,
released, discharged, abandoned, changed or modified in any manner, orally or
otherwise, except by an instrument in writing signed by duly authorized officers
or representatives of the parties.
(i) Nothing herein contained shall be construed to place the parties
in the relationship of partners, joint venturers, principal and agent, or
employer and employee.
(j) This Agreement may be executed in counterparts, each of which
shall constitute an original but all of which, taken together, shall constitute
a single instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective duly authorized officers or representatives as
of the day and year first above written.
TANNER.PECK L.L.C.
By:
----------------------------------------
UNIVERSAL OUTDOOR MANAGEMENT COMPANY, INC.
By:
----------------------------------------
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SCHEDULE I
For Universal
Name
- --------------
Dan Simon
Brian Clingen
Paul Simon
Mike Scheid
Cindy Ogle
Dave Weigman
Jeanine Zachary
One Person To Be Designated
Bruce Davies
For Tanner
Name
- ------------------
William B. Tanner
<PAGE>
Exhibit 21.1
(i) Quantum Structures & Designs, Inc., an Illinois corporation
(ii) Naegele Outdoor Advertising Company, a Delaware corporation
(iii) Outdoor Advertising Holdings, Inc., a Delaware corporation
(iv) Tanner Acquisition Corporation, a Delaware corporation
(v) Universal Outdoor Management Company, a Delaware corporation
(vi) Matthew Acquisition Corp., a Delaware corporation
(vii) Universal Outdoor, Inc., an Illinois corporation*
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* The Company owns 100% of the outstanding shares of Universal Outdoor, Inc.
The entities set forth in (i) through (vi) are owned by Universal Outdoor,
Inc.
