<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 333-5351
UNIVERSAL OUTDOOR HOLDINGS, INC.
DELAWARE 36-3766705
- --------------------------------- ---------------------------------
(STATE OR OTHER JURISDICTION (IRS EMPLOYER IDENTIFICATION NO.)
OF INCORPORATION OR ORGANIZATION)
321 NORTH CLARK STREET, SUITE 1010, CHICAGO, ILLINOIS 60610
REGISTRANT'S TELEPHONE NUMBER: (312) 644-8673
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS.
YES /X/ NO / /
THE NUMBER OF SHARES OUTSTANDING OF THE REGISTRANT'S COMMON STOCK, $0.01
PAR VALUE, AS OF JUNE 30, 1996 WAS 812,500.
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PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNIVERSAL OUTDOOR HOLDINGS, INC.
AND SUBSIDIARY
BALANCE SHEETS
(Dollars in Thousands)
ASSETS
June 30, December 31,
1996 1995
-------- ----------
CURRENT ASSETS:
Cash $ 59 $ 19
Accounts receivable 9,654 5,059
Other receivables 563 201
Prepaid land rents 2,644 1,043
Prepaid insurance and other 1,594 1,029
-------- -------
Total current assets 14,514 7,351
-------- -------
PROPERTY AND EQUIPMENT 152,279 55,346
-------- -------
OTHER ASSETS:
Noncomplete agreements, net of accumulated
amortization of $5,155 and $4,505 1,426 1,995
Finance costs, net of accumulated
amortization of $1,497 and $1,171 7,434 5,113
Excess of cost over fair value of
assets acquired, net of accumulated
amortization of $261 and $230 2,952 700
Other costs associated with acquisitions,
net of accumulated amortization of $781
and $686 548 525
Deposits 22 20
-------- -------
Total other assets 12,382 8,353
-------- -------
$179,175 $71,050
-------- -------
-------- -------
LIABILITIES AND COMMON STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Current maturities of long term debt $ - $ 58
Accounts payable 1,281 1,225
Accrued interest 998 1,054
Deferred revenue 487 468
Accrued expenses 3,403 409
-------- -------
Total current liabilities 6,169 3,214
-------- -------
LONG TERM DEBT, less current maturities 182,673 106,362
-------- -------
COMMON STOCKHOLDER'S DEFICIT:
Common stock, $.01 par value, 1,500,000
shares authorized; and 437,500 shares
issued and outstanding - -
Additional paid in capital 31,451 1,451
Common stock warrants 2,500 2,500
Accumulated deficit (43,618) (42,477)
-------- -------
Total common stockholders' deficit (9,667) (38,526)
-------- -------
$179,175 $71,050
-------- -------
-------- -------
See accompanying notes to financial statements.
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UNIVERSAL OUTDOOR HOLDINGS, INC.
AND SUBSIDIARY
STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in Thousands)
For the For the
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1996 1995 1996 1995
------- ------- ------- -------
Revenues $20,034 $10,267 $29,366 $18,292
Less agency commissions 2,222 1,092 3,127 1,881
------- ------- ------- -------
Net revenues 17,812 9,175 26,239 16,411
------- ------- ------- -------
Operating expenses:
Direct cost of revenues 5,949 3,158 9,520 6,266
General and administrative
expenses 1,859 1,161 3,086 2,233
Depreciation and amortization 2,642 1,801 4,674 3,538
Non cash compensation for common
stock warrants 9,000 9,000
------- ------- ------- -------
19,450 6,120 26,280 12,037
------- ------- ------- -------
Operating income (1,638) 3,055 (41) 4,374
------- ------- ------- -------
Other (income) expenses:
Interest expense 4,683 3,069 8,113 6,007
Interest expense - amortization
of deferred financing costs 164 186 328 335
Miscellaneous 1,750 1,750
(Gain) loss on disposal of
assets and other expenses (87) 15 (76) 25
------- ------- ------- -------
Total other expense 6,510 3,270 10,115 6,367
------- ------- ------- -------
Net income (loss) ($ 8,148) ($ 215) ($10,156) ($1,993)
------- ------- ------- -------
------- ------- ------- -------
See accompanying notes to financial statements.
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UNIVERSAL OUTDOOR HOLDINGS, INC.
AND SUBSIDIARY
STATEMENTS OF CASH FLOW
(Unaudited)
(Dollars in Thousands)
For the six For the
months ended year ended
June 30, December 31,
1996 1995
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($ 10,156) ($1,993)
Depreciation and amortization 6,191 5,793
Costs related to acquisition 1,750 -
Non-cash compensation related to warrants 9,000 -
(Gain) loss on sale of property and equipment - -
Changes in assets and liabilities:
Accounts receivable and other receivables (1,254) (672)
Prepaid land rents, insurance and other (209) (73)
Accounts payable and accrued expenses 866 (407)
Accrued interest (72) (44)
Other - 14
-------- ------
Net cash from operating activities 6,116 2,618
-------- ------
CASH FLOWS USED IN FROM INVESTING ACTIVITIES:
Capital expenditures (2,943) (2,521)
Acquisitions net of cash acquired (107,106) (2,164)
Other payments (2) -
Acquisition costs (74) -
-------- ------
Net cash used in investing activities (110,125) (4,685)
-------- ------
CASH FLOWS USED IN FINANCING ACTIVITIES:
Proceeds from issuance of LTD 75,000 (147)
Principal payments of LTD (1,173) (52)
Net borrowings (repayments) of LOC LaSalle (9,478) -
Net borrowings (repayments) of LOC Bankers Trust 9,700 -
Deferred financing costs - -
Additional paid in capital 30,000 -
Other - 2,267
-------- ------
Net cash used/received in financing 104,049 2,068
-------- ------
NET INCREASE (DECREASE) IN CASH 40 -
CASH AT BEGINNING 19 15
-------- ------
CASH AT END $ 59 $ 16
-------- ------
-------- ------
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid during the period $ 9,807 $4,095
-------- ------
-------- ------
See accompanying notes to financial statements.
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<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC.
AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION OF UNAUDITED FINANCIAL STATEMENTS:
The financial statements contained herein have been prepared by management and
are unaudited. The financial statements should be read in conjunction with the
financial statements and the notes thereto included in the Annual Report on Form
10-K of Universal Outdoor Holdings, Inc.(the Holding Company) for the year ended
December 31, 1995.
In the opinion of management, the accompanying unaudited financial statements
contain all adjustments, considering only of normal recurring adjustments,
necessary to present fairly the financial position of the Holding Company as of
March 31, 1996, and the results of its operations and its cash flows for the
periods presented herein.
Earnings per share calculations have not been prepared because the Holding
Company is closely held and owned by a private investor group. Accordingly,
earnings per share is not required or meaningful.
The Holding Company (previously known as Universal Outdoor II Holding Company,
Universal Outdoor, Inc. (Universal), Outdoor Properties, Inc. Midwest Outdoor
Management, Inc. and CBT Development, Inc. were under common ownership and
control. In connection with the 1993 Refinancing Plan (see Note 2)), (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. acquired all the assets, in
consideration of the assumption of all the liabilities, of each of Outdoor
Properties, Inc., Midwest Outdoor Management, Inc. and CBT Development, Inc. In
conjunction with the 1993 Refinancing Plan, 2,649 shares of Class A Common Stock
of Universal Outdoor, Inc. were exchanged for an equal number of common shares
of the Holding Company, and 1,556 shares of Class B Common stock of Universal
Outdoor, Inc. were exchanged for 48,000 shares of Series B Voting Preferred
Stock of the Holding Company.
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NOTE 2 - REFINANCING PLAN:
Effective November 18, 1993, Universal executed a Refinancing Plan to extend the
average life of its obligations, thereby enhancing its operations 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 Outdoor, Inc. 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 $65.0 million 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.
NOTE 3 - ACQUISITIONS:
On April 5, 1996 the Company purchased all outstanding stock of NOA Holding
Company, Inc. for approximately $85 million. As a result of the acquisition,
Universal acquired signboards in the Minneapolis/St. Paul, Minnesota and
Jacksonville, Florida markets. The Company financed the acquisition with $84.7
million in bank borrowings and $30 million in cash proceeds from the sale of
equity of the Holding Company to an investor group.
In the first quarter of 1996, the Company acquired signboards in the Chicago
market through two asset purchase agreements. In January, the Company purchased
160 display faces from Adsign, Inc. For $12.5 million which was paid in cash.
In March 1996, the Company purchased 18 structures from Image Media, Inc. for
$1.2 million which was paid in cash. Both investments were financed with
borrowings against the Acquisition Line of Credit.
NOTE 4 - RELATED PARTY TRANSACTIONS:
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 by the Units were $25.4 million which
were used by the Holding Company (i) to purchase, for approximately $18.4
million, 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.
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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 $2.5 million in total.
NOTE 5 - COMMITMENTS AND CONTINGENCIES:
Universal is subject to various litigation in the normal course of business.
Such litigation includes claims by municipalities that certain outdoor
advertising structures should be removed. The ultimate outcome of current and
future litigation cannot be presently determined. Management believes the
outcome of current litigation will not have a significant impact on Universal.
NOTE 6 - THE 1996 WARRANT PLAN:
The 1996 Warrant Plan was adopted by the Board of Directors of the Company in
April 1996 and amended in July 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. 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. The
warrants are exercisable at (i) $.01 below the closing common stock price on the
day preceding exercise, or (ii) $5.00 per share of Common Stock when the average
closing price of the Company's common stock for any 30 consecutive days exceeds
specified targets. At August 12, 1996, 823,536 warrants were exercisable at
$5.00 per share with the remainder exercisable at $.01 below the closing common
stock price on the day preceding exercise. All warrants are fully vested and
are exercisable for a period of 10 years from the date of grant. No warrants
have been exercised or forfeited through June 30, 1996.
The fair market value of the warrants on the date of grant was estimated using
the Black-Scholes option-pricing model with the following assumptions:
Risk free interest rate 6.28%
Expected lives 3 years
Volatility 39.42%
Dividend yield 0
The weighted average fair value of warrants issued in April 1996 of $9 million
was recognized as compensation expense on the date of grant.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSES OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
COMPARISON OF SIX MONTHS ENDED JUNE 30, 1996 AND JUNE 30, 1995
The Registrant conducts its business operations through its wholly-owned
subsidiary, Universal Outdoor, Inc. and its subsidiaries (collectively,
"Universal"). Unless otherwise indicated, references to Universal in the
following discussion refer to the consolidated operations of the Registrant
and Universal.
Net revenues increased 59.8% to $26.2 million during the first six
months of 1996 compared to $16.4 million in the corresponding 1995 period.
This increase was a result of inclusion of approximately $6.8 million of
revenues from the Minneapolis and Jacksonville markets (the "Naegele
Markets") which were acquired from NOA Holding Company ("Naegele") in April
1996 (the "Naegele Acquisition"). The remaining $3.0 million or 18.3%
increase in net revenues was a result of higher advertising rates and
occupancy levels on the Company's signboards and inclusion for the full
quarter of signboard revenues resulting from the acquisitions of Image Media,
Inc. and AdSign. Overall net revenues from tobacco advertising increased to
$3.4 million in the first six months of 1996 compared to $2.1 million in the
1995 period. This increase was due mainly to the inclusion of tobacco
revenues from the acquired Naegele Markets. As a percentage of net revenues,
tobacco advertising sales increased to 13.1% in the first six months of 1996
compared to 13.0% in the 1995 period.
Direct cost of revenues increased to $9.5 million in the first six
months of 1996 compared to $6.3 million in the 1995 period. The Naegele
Markets accounted for $2.1 million of the increase. As a percentage of net
revenues, however, direct cost of revenues decreased to 36.3% in the first
six months of 1996 compared to 38.4% in the 1995 period as a result of
economies of scale associated with the 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. As a
percentage of net revenues, general and administrative expenses decreased to
11.8% in the first six months of 1996 compared to 13.4% in the 1995 period.
This percentage decrease was due to the addition of the new markets' revenues
without a significant increase in staffing or other corporate overhead
expenses.
Depreciation and amortization expense increased to $4.7 million in the
first six months of 1996 compared to $3.5 million in the 1995 period. This
increase was due to significant increases in the fixed assets as a result of
the acquisitions.
Non-cash compensation related for common stock warrants consisted of a
$9.0 million charge arising from the issuance of common stock warrants in the
Naegele Acquisition.
Total interest expense increased to $8.6 million in the first six months
of 1996 compared to $6.3 million in the 1995 period. The increase resulted
from increased debt outstanding under the credit facility which was incurred
to finance the Naegele Acquisition.
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Other expenses increased to $1.8 million in 1996. This consisted of a
$1.8 million one-time charge for expenses arising out of the Naegele
Acquisition.
The foregoing factors contributed to Universal's $10.2 million net loss
in the first six months of 1996 compared to $2.0 million net loss in the 1995
period.
COMPARISON OF THREE MONTHS ENDED JUNE 30, 1996 AND JUNE 30, 1995
Net revenues increased 93.4% to $17.8 million during the three months
ended June 30, 1996 compared to $9.2 million in the corresponding 1995
period. The recently acquired Naegele Markets contributed $6.8 million of
this increase. The remaining $1.8 million or 19.6% increase in net revenues
was a result of higher advertising rates and occupancy levels on Universal's
signboards and inclusion for the full quarter of signboard revenues from the
acquisitions of Image Media, Inc. and AdSign. Overall net revenues from
tobacco advertising increased to $2.2 million in the second quarter of 1996
from $1.1 in the comparable 1995 period as a result of the Naegele
Acquisition. As a percentage of net revenues, tobacco advertising sales
increased to 12.3% for the three months ended June 30, 1996 from 12.0% in the
1995 period.
Direct cost of revenues increased to $5.9 million in the second quarter
of 1996 compared to $3.2 million in the 1995 period. The Naegele Markets
accounted for $2.1 million of the increase. As a percentage of net revenues,
however, direct cost decreased to 33.1% for the second quarter of 1996
compared to 34.8% for the 1995 period as a result of economies of scale
associated with increased revenues.
General and administrative expenses increased to $1.9 million in the
second quarter of 1996 from $1.2 million in the 1995 period. The Naegele
Markets accounted for $.8 million of the increase. As a percentage of net
revenues, general and administrative expenses decreased to 10.6% for the 1996
period compared to 13.0% in the 1995 period, reflecting further economies of
scale associated with the increased revenues.
Depreciation and amortization expense increased to $2.6 million for the
three months ended June 30, 1996 from $1.8 million for the 1995 period. This
increase was due to significant increases in the fixed assets as a result of
the acquisitions.
Non-cash compensation related for common stock warrants consisted of a
$9.0 million charge arising from the issuance of common stock warrants in the
Naegele Acquisition.
Total interest expense increased to $4.6 million in the second quarter
of 1996 compared to $3.3 million in the 1995 period. The increase resulted
from increased debt outstanding under the credit facility which was
incurred to finance the Naegele Acquisition.
Other expenses increased to $1.7 million in 1996. This consisted of a
$1.8 million one-time charge for expenses arising out of the Naegele
Acquisition.
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The foregoing factors contributed to Universal's $8.2 million net loss
for the three months ended June 30, 1996 compared to the $.2 million net
income in the 1995 period.
LIQUIDITY AND CAPITAL RESOURCES
Universal has pursued and continues to pursue a strategy of growth
primarily through (i) the development of new outdoor advertising structures
in each of its existing markets and (ii) the acquisition of existing outdoor
advertising properties. In April 1996, Universal consummated the Naegele
Acquisition pursuant to which Universal acquired approximately 2,550 display
faces (of which approximately 1,455 are located in the Minneapolis/St. Paul
market and approximately 1,095 are located in the Jacksonville market) and
approximately 840 painted bulletin faces (of which approximately 440 are
located in the Minneapolis/St. Paul market and approximately 400 are located
in the Jacksonville market). The purchase price of the Naegele Acquisition,
including fees and expenses associated with the transaction, was
approximately $90 million. In connection therewith, Universal, its current
lender, LaSalle National Bank ("LaSalle"), and an additional bank, Bankers
Trust Company (together with LaSalle, the "Lenders"), agreed to (i) refinance
Universal's existing credit facility with a revolving credit facility for
working capital purposes (the "Revolving Credit Facility") and (ii) provide
an additional extension of credit for purposes of acquisition financing (the
"Acquisition Credit Facility") and, specifically, the financing, in part, of
the Naegele Acquisition.
At June 30, 1996 approximately $84.7 million was outstanding under the
Acquisition Credit Facility. The Acquisition Credit Facility consists of 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 availability
of $87.5 million. In addition, the Lenders have extended 12.5 million under
the Revolving Credit Facility, of which nothing was outstanding at June 30,
1996.
In addition to the amounts drawn under the Acquisition Credit Facility,
the Registrant 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 the existing indebtedness.
The credit agreements governing the Revolving Credit Facility and the
Acquisition Credit Facility contain certain restrictions with respect to
Universal's ability to (i) incur additional indebtedness and contingent
liabilities, (ii) create liens and (iii) pay dividends and effect certain
other transactions involving the capital stock of Universal. In addition,
the indenture governing Universal's outstanding senior notes (the
"Indenture") contains a number of restrictive covenants including limitations
on additional debt incurrence based on a cash flow ratio test and limitations
on distributions to shareholders based on a net income test.
On July 23, 1996 the Registrant completed an initial public offering of
7,130,000 shares of Common Stock (the "Offering") which included the
Underwriters' exercise of their over-allotment option. Proceeds to the
Registrant from the Offering totaled $62.4 million. All of the proceeds were
used to reduce the outstanding indebtedness. In conjunction with this,
Universal modified the terms of the Acquisition Credit Facility to provide
for a single acquisition revolving credit line in the amount of $87.5 million.
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Net cash provided by operating activities increased to $6.1 million for
the six months ended June 30, 1996 from $2.9 million for the 1995 period.
Net cash provided by operating activities reflects Universal's net loss
adjusted for non-cash items and the use or source of cash for the net change
in working capital.
Universal'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. Capital
expenditures have been made primarily to develop new structures in each of
its markets. Universal intends to continue to develop new structures in its
markets and to consider potential acquisitions in the Midwest and in markets
contiguous to existing markets. Management believes that its internally
generated funds, together with available borrowings under the Revolving
Credit Facility and the Acquisition Credit Facility, will be sufficient to
satisfy its cash requirements, including anticipated capital expenditures,
for the foreseeable future.
For the six months ended June 30, 1996, $104.1 million was provided by
financing activities due to increased borrowings on the Acquisition Credit
Facility and the sale of capital stock, as compared to the 1995 period, when
$2.1 million was provided by financing activities as a result of borrowings
on the Revolving Credit Facility.
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PART II
OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
By unanimous written consent of the shareholders of the Registrant,
dated April 5, 1996, the shareholders elected the following persons
directors of the Registrant: Daniel L. Simon, Brian T. Clingen, Michael B.
Goldberg and Michael J. Roche.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Certain of the documents listed below have heretofore been filed
with the Securities Exchange Commission either by the Registrant
(Commission File No. 333-5351) or by Universal Outdoor, Inc., the wholly-
owned subsidiary of the Registrant (Commission File No. 33-72810), and each
such document is incorporated herein by reference as indicated below:
NUMBER DESCRIPTION
------ -----------
2.1 Amendment No. 1 to NOA Stock Purchase Agreement
(incorporated by reference to Exhibit 2.2 of
Universal Outdoor, Inc.'s Form 8-K (Commission File No. 33-
72810) (the "Universal Statement"))
3.1 Amended and Restated Certificate of Incorporation
of the Registrant (incorporated by reference to Exhibit
3.1 of the Registrant's Amendment No. 2 to Form S-1
(Commission File No. 333-5351) (the "Registrant's
Statement"))
3.2 Second Amended and Restated By-Laws of the Registrant
(incorporated by reference to Exhibit 3.2 of the
Registrant's Statement)
10.1 Revolving Credit Agreement of Universal (incorporated
by reference to Exhibit 10.1 of the Universal Statement)
10.2 Acquisition Credit Agreement of Universal (incorporated
by reference to Exhibit 10.2 of the Universal Statement)
10.3 1996 Warrant Plan of the Registrant (incorporated by
reference to Exhibit 10.3 of the Registrant's Statement)
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10.4 Stock Purchase Agreement between the Registrant, Kelso
Investment Associates V, L.P. and Kelso Equity Partners V,
L.P. dated April 5, 1996.
27 Financial Data Schedule
(b) REPORTS ON FORM 8-K - The Registrant filed a Current Report on
Form 8-K dated April 5, 1996 during the quarter ended June 30, 1996. Such
Current Report contained the financial statements of NOA Holding Company
and reported the acquisition of such company by the Registrant.
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<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Universal Outdoor Holdings, Inc.
(Registrant)
/s/ Brian T. Clingen
August 13, 1996 ------------------------------------------
Brian T. Clingen
Vice President and Chief Financial Officer
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<PAGE>
INDEX TO EXHIBITS
NUMBER DESCRIPTION PAGE
------ ----------- ----
2.1 Amendment No. 1 to NOA Stock Purchase Agreement
(incorporated by reference to Exhibit 2.2 of
Universal Outdoor, Inc.'s Form 8-K (Commission File No. 33-
72810) (the "Universal Statement"))
3.1 Amended and Restated Certificate of Incorporation
of the Registrant (incorporated by reference to Exhibit
3.1 of the Registrant's Amendment No. 2 to Form S-1
(Commission File No. 333-5351) (the "Registrant's
Statement"))
3.2 Second Amended and Restated By-Laws of the Registrant
(incorporated by reference to Exhibit 3.2 of the
Registrant's Statement)
10.1 Revolving Credit Agreement of Universal (incorporated
by reference to Exhibit 10.1 of the Universal Statement)
10.2 Acquisition Credit Agreement of Universal (incorporated
by reference to Exhibit 10.2 of the Universal Statement)
10.3 1996 Warrant Plan of the Registrant (incorporated by
reference to Exhibit 10.3 of the Registrant's Statement)
10.4 Stock Purchase Agreement between the Registrant, Kelso
Investment Associates V, L.P. and Kelso Equity Partners V,
L.P. dated April 5, 1996.
27 Financial Data Schedule
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STOCK PURCHASE AGREEMENT
BETWEEN
UNIVERSAL OUTDOOR HOLDINGS, INC.
KELSO INVESTMENT ASSOCIATES V, L.P.
AND
KELSO EQUITY PARTNERS V, L.P.
DATED AS OF APRIL 5, 1996
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . 2
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
SALE OF SHARES . . . . . . . . . . . . 7
2.1 Purchase and Sale of the Shares . . . . . . . . . . . . . . . . . . . 7
2.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER. . . . . . 8
3.1 Corporate Organization; Etc.. . . . . . . . . . . . . . . . . . . . . 8
3.2 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.3 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.4 Authority Relative to this Agreement. . . . . . . . . . . . . . . . . 11
3.5 Consents and Approvals; No Violations . . . . . . . . . . . . . . . . 11
3.6 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . 12
3.7 Absence of Certain Changes. . . . . . . . . . . . . . . . . . . . . . 13
3.8 No Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . . 13
3.9 No Default; Compliance with Laws. . . . . . . . . . . . . . . . . . . 13
3.10 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.11 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.12 SEC Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.13 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.14 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . 16
3.15 Sign Location Leases . . . . . . . . . . . . . . . . . . . . . . . . 17
3.16 Projections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. . . . 18
4.1 Organization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.2 Authority Relative to this Agreement. . . . . . . . . . . . . . . . . 18
4.3 Consents and Approvals; No Violations . . . . . . . . . . . . . . . . 18
4.4 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.5 Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.6 Acquire Entirely for Own Account. . . . . . . . . . . . . . . . . . . 20
4.7 Reliance Upon Purchasers' Representations . . . . . . . . . . . . . . 20
4.8 Access to Records . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.9 Restricted Securities . . . . . . . . . . . . . . . . . . . . . . . . 20
4.10 Legend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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ARTICLE V
COVENANTS. . . . . . . . . . . . . . 21
5.1 Conduct of the Business Pending the Closing Date. . . . . . . . . . . 21
5.2 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . 22
5.3 Consents and Approvals. . . . . . . . . . . . . . . . . . . . . . . . 23
5.4 Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.5 Covenant to Satisfy Conditions. . . . . . . . . . . . . . . . . . . . 23
5.6 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.7 Amended and Restated Certificate and Amended By-Laws; Issuance of
Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.8 Management Warrants . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.9 Conversion of Class C Common Stock. . . . . . . . . . . . . . . . . . 24
5.10 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.11 Transaction Expenses . . . . . . . . . . . . . . . . . . . . . . . . 25
5.12 Certain Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.13 Additional Purchases By Kelso. . . . . . . . . . . . . . . . . . . . 26
ARTICLE VI
CONDITIONS TO SELLER'S OBLIGATIONS . . . . . . . 26
6.1 Representations and Warranties True . . . . . . . . . . . . . . . . . 26
6.2 Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.3 Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.4 No Injunction or Proceeding . . . . . . . . . . . . . . . . . . . . . 27
6.5 Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.6 HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.7 NOA Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE VII
CONDITIONS TO THE PURCHASERS' OBLIGATIONS. . . . . . 28
7.1 Representations and Warranties True . . . . . . . . . . . . . . . . . 28
7.2 Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.3 Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.4 No Injunction or Proceeding . . . . . . . . . . . . . . . . . . . . . 28
7.5 Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.6 HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.7 NOA Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.8 Amended and Restated Certificate and Amended By-Laws; Issuance of
Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.9 Fee Letter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.10 Subscription Agreements Sales. . . . . . . . . . . . . . . . . . . . 29
7.11 Delivery of Opinion of Winston & Strawn. . . . . . . . . . . . . . . 29
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ARTICLE VIII
TERMINATION AND ABANDONMENT . . . . . . . . . 30
8.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE IX
INDEMNIFICATION . . . . . . . . . . . . 30
9.1 Agreement to Indemnify. . . . . . . . . . . . . . . . . . . . . . . . 30
9.2 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.3 Limitation on Claims. . . . . . . . . . . . . . . . . . . . . . . . . 31
9.4 Losses Defined. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.5 Notice and Opportunity to Defend. . . . . . . . . . . . . . . . . . . 31
9.6 Material Adverse Effect Definition. . . . . . . . . . . . . . . . . . 33
ARTICLE X
MISCELLANEOUS. . . . . . . . . . . . . 33
10.1 Amendment and Modification . . . . . . . . . . . . . . . . . . . . . 33
10.2 Extension; Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.3 Entire Agreement; Assignment . . . . . . . . . . . . . . . . . . . . 33
10.4 Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.5 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.6 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.7 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . 35
10.8 Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.9 Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . . 35
10.10 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.11 Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . 36
EXHIBITS
Exhibit A: Second Amended and Restated Certificate of Incorporation of
Seller
Exhibit A-1: Second Restated Articles of Incorporation of Outdoor
Exhibit B: Amended and Restated By-Laws of Seller
Exhibit B-1: Amended and Restated By-Laws of Outdoor
Exhibit C: Fee Letter
Exhibit D: Warrant Plan
Exhibit E: Subscription Agreement
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STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of April 5,
1996, by and among Universal Outdoor Holdings, Inc., a Delaware corporation
("Seller"), Kelso Investment Associates V, L.P., a Delaware limited partnership
("KIA V"), and Kelso Equity Partners V, L.P., a Delaware limited partnership
("KEP V", and collectively with KIA V, "Kelso").
WHEREAS, Universal Outdoor, Inc. ("Outdoor"), a wholly-owned
subsidiary of Seller, has entered into a Stock Purchase Agreement (as the same
may be amended from time to time in accordance with the terms thereof, the "NOA
Agreement"), dated as of February 27, 1996, between Wind Point Partners II,
L.P., Marquette Venture Partners, L.P., Chemical Equity Associates, a California
Limited Partnership, Banc One Venture Corporation, certain management
shareholders set forth therein and Outdoor pursuant to which Outdoor will
acquire of all of the outstanding capital stock of NOA Holding Corporation (the
"NOA Acquisition"); and
WHEREAS, in connection with the NOA Acquisition, Seller is
contemplating the issuance and sale of certain classes of common stock to
outside equity investors (the "Investment"), and in order to effect such
Investment, Seller wishes to amend its existing Amended and Restated Certificate
of Incorporation (the "Current Charter") to authorize and issue two new classes
of common stock entitled Class B Common Stock, par value $.01 per share (the
"Class B Common Stock") and Class C Common Stock, par value $.01 per share (the
"Class C Common Stock") of Seller, in each case having the terms set forth in
the Second Amended and Restated Certificate of Incorporation attached hereto as
Exhibit A (the "Amended and Restated Certificate"); and
WHEREAS, Seller wishes to sell to the Purchasers (as defined herein)
and the Purchasers wish to acquire from the Seller 186,500 shares of Class B
Common Stock (the "Class B Shares") and 188,500 shares of Class C Common Stock
(the "Class C Shares", and collectively with the Class B Shares, the "Shares"),
in each case in accordance with and subject to the terms and conditions set
forth in this Agreement; and
WHEREAS Seller wishes to grant to certain members of the management of
Seller the Management
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Warrants (as defined herein) to acquire shares of Common Stock in accordance
with and subject to the terms of this Agreement; and
WHEREAS, the Purchasers and Seller desire to make certain
representations and warranties and desire to make certain agreements in
connection with the foregoing and also desire to set forth various conditions
precedent thereto.
NOW, THEREFORE, in consideration of the foregoing, including the
mutual representations, warranties, covenants and agreements herein contained,
Kelso and Seller hereby agree as follows:
ARTICLE I
DEFINITIONS
1 DEFINITIONS. The terms defined in this Article I, whenever used
herein, shall have the following meanings for all purposes of this Agreement.
"Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated
under the Exchange Act.
"Aggregate Purchase Price" shall mean $30,000,000, calculated as the
total number of Shares multiplied by the Purchase Price.
"Agreement" shall have the meaning set forth in the preamble hereof.
"Amended and Restated Certificate" shall have the meaning set forth in
the second whereas clause hereof.
"Amended By-Laws" shall have the meaning set forth in Section 5.7
hereof.
"Audited 1995 Balance Sheet" shall mean the audited consolidated
balance sheet of Seller, Outdoor and Quantum dated as of the Balance Sheet Date,
including the notes thereto.
"Balance Sheet Date" shall mean December 31, 1995.
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"By-Laws" shall mean the by-laws of Seller as in effect on the date
hereof.
"CERCLA" shall have the meaning set forth in Section 3.14 hereof.
"Class B Common Stock" shall have the meaning set forth in the second
whereas clause hereof.
"Class B Shares" shall have the meaning set forth in the third whereas
clause hereof.
"Class C Common Stock" shall have the meaning set forth in the second
whereas clause hereof.
"Class C Shares" have the meaning set forth in the third whereas
clause hereof.
"Closing" shall have the meaning set forth in Section 2.2 hereof.
"Closing Date" shall have the meaning set forth in Section 2.2 hereof.
"Common Stock" shall mean the Common Stock, par value $.01 per share,
of the Seller.
"Current Charter" shall have the meaning set forth in the second
whereas clause hereof.
"DOJ" shall have the meaning set forth in Section 3.5 hereof.
"Encumbrance" shall mean any lien, encumbrance, security interest,
charge, hypothecation, mortgage, pledge, restriction on transfer or voting or
other encumbrance or restriction of any nature whatsoever other than the
aforesaid as previously disclosed in the Financial Statements dated December 31,
1995.
"Environmental Laws" shall mean any federal, state or local law,
ordinance, regulation, order or permit pertaining to the environment, natural
resources or public health or safety as presently in effect.
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"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC thereunder.
"Financial Statements" shall have the meaning set forth in Section 3.6
hereof.
"FTC" shall have the meaning set forth in Section 3.5 hereof.
"GAAP" shall mean United States generally accepted accounting
principles as in effect as of the date of or for the period with respect to
which such defined term refers.
"Governmental Entity" shall have the meaning set forth in Section 3.5
hereof.
"HSR Act" shall have the meaning set forth in Section 3.5 hereof.
"Indemnified Parties" shall have the meaning set forth in Section 9.1
hereof.
"Indemnifying Party" shall have the meaning set forth in Section 9.5
hereof.
"Indenture" shall mean the Indenture, dated as of June 30, 1994,
between Seller and United States Trust Company of New York as Trustee relating
to the 14% Series A and Series B Senior Secured Discount Notes due 2004 of
Seller.
"Insurance Policies" shall have the meaning set forth in Section 3.13
hereof.
"Investment" shall have the meaning set forth in the second whereas
clause hereto.
"Kelso" shall have the meaning set forth in the preamble hereof.
"KEP V" shall have the meaning set forth in the preamble hereof.
"KIA V" shall have the meaning set forth in the preamble hereof.
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"Losses" shall have the meaning set forth in Section 9.4 hereof.
"Management Group" shall have the meaning set forth in Section 5.8
hereof.
"Management Warrants" shall mean, collectively the Series I Common
Stock Warrants, Series II Common Stock Warrants and Series III Common Stock
Warrants issued subject to the provisions of the Warrant Plan.
"Material Adverse Effect" shall have the meaning set forth in Section
3.1 hereof.
"NOA Acquisition" shall have the meaning set forth in the first
whereas clause hereof.
"NOA Agreement" shall have the meaning set forth in the first whereas
clause hereof.
"Notice" shall have the meaning set forth in Section 9.5 hereof.
"Outdoor" shall have the meaning set forth in the first whereas clause
hereof.
"Outdoor Indenture" shall mean the Indenture, dated November 15, 1993,
between Outdoor and United States Trust Company of New York relating to the 11%
Senior Notes due 2003 of Outdoor.
"Outstanding Warrants" shall mean the warrants to purchase shares of
Common Stock presently issued and outstanding pursuant to the provisions of the
Warrant Agreement.
"Person" shall mean any individual, corporation, partnership, trust or
other entity.
"Preferred Stock" shall have the meaning set forth in Section 3.2
hereof.
"Purchase Price" shall mean $80.00.
"Purchasers" shall have the meaning set forth in Section 2.1 hereof.
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"Quantum" shall mean Quantum Structures & Design Inc., an Illinois
corporation and a wholly-owned subsidiary of Outdoor.
"SEC" shall mean the United States Securities and Exchange Commission.
"SEC Documents" shall have the meaning set forth in Section 3.12
hereof.
"Securities Act" shall mean the Securities Act of 1933, and the rules
and regulations of the SEC thereunder.
"Seller" shall have the meaning set forth in the preamble hereof.
"Shares" shall have the meaning set forth in the third whereas clause
hereof.
"Subsidiary" shall mean, with respect to any Person, any corporation,
partnership, joint venture, or other legal entity of which such Person (either
alone or through or together with any other Subsidiary) owns, directly or
indirectly, more than 50% or more of the outstanding stock or other equity
interests the holders of which are generally entitled to vote for the election
of the board of directors.
"Tax Return" shall have the meaning set forth in Section 3.11 hereof.
"Taxes" shall have the meaning set forth in Section 3.11 hereof.
"Threshold Amount" shall have the meaning set forth in Section 9.3
hereof.
"Warrant Agreement" shall mean the Warrant Agreement, dated as of June
30, 1994, between Seller and United States Trust Company of New York, as Warrant
Agent.
"Warrant Plan" shall mean Seller's 1996 Warrant Plan substantially in
the form attached hereto as Exhibit D.
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Additional definitions are set forth within this Agreement and shall
have the meanings given them in this Agreement.
ARTICLE II
SALE OF SHARES
1 PURCHASE AND SALE OF THE SHARES. (a) Seller and Kelso hereby agree
that upon the terms and subject to the satisfaction or waiver, if permissible,
of the conditions hereof, Seller will issue, sell and deliver to each Kelso
entity listed on Schedule 2.1 (or such other Affiliates of Kelso as Kelso shall
designate at least two days prior to the Closing Date (each, a "Kelso
Designee")), and each such entity (each a "Purchaser," and collectively, the
"Purchasers") will acquire and purchase from Seller, free and clear of all
Encumbrances, the number and class of Shares set forth opposite such entity's
name on Schedule 2.1 for a per share purchase price equal to the Purchase Price,
payable as specified below. All title to, and all rights, interest, and risk of
loss and beneficial ownership in, all Shares shall transfer, be vested in, and
pass to, the entity indicated on Schedule 2.1 from Seller at the time and place
when and where the Closing is held pursuant to Section 2.2(a) hereof.
(b) In the event that any Kelso Designee shall purchase Shares,
simultaneously with the closing hereof, the Seller shall sell to such Kelso
Designees and such Kelso Designees shall purchase from the Seller the number of
Class C Shares specified in the subscription agreements (the "Subscription
Agreements") to be entered into by each such Kelso Designees with the Seller
pursuant to which such Shares shall be sold substantially in the form attached
hereto as Exhibit E. Each of the representations, warranties, agreements and
indemnities made herein by Seller to Kelso shall be deemed to be made to and for
the benefit of the Kelso Designees, PROVIDED, THAT, with respect to any
indemnification right of any such Kelso Designee, KIA V shall enforce such
rights on behalf of the Kelso Designees.
2 CLOSING. (a) The closing (the "Closing") of the purchase and sale
of the Shares and the consummation of the other transactions contemplated here-
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by shall, subject to the satisfaction or, if permissible, waiver of all of the
conditions set forth in Articles VI and VII hereof, be held at the offices of
Skadden, Arps, Slate, Meagher & Flom in New York, New York, on the same date as
the closing under the NOA Agreement, substantially concurrent with, but
immediately prior to, the closing under the NOA Agreement (the "Closing Date").
(b) At the Closing, Seller will deliver the following to Kelso:
(i) Stock certificates representing the Shares registered
in the name of the appropriate Kelso entities set forth on Schedule 2.1.
(ii) Certain other deliveries as are contemplated by Article
VII hereof.
(c) At the Closing, Kelso will deliver or cause to be delivered
the following to Seller:
(i) An amount equal to the Aggregate Purchase Price, by
wire transfer of immediately available funds to a bank account which has
been designated by Seller at least two business days prior to the Closing
Date.
(ii) Certain other deliveries as are contemplated by Article
VI hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to each of the Purchasers as
follows:
1 CORPORATE ORGANIZATION; ETC. Each of Seller, Outdoor and Quantum
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite corporate
power and authority to conduct its business as it is now being conducted and to
own, lease and operate its property and assets. Each of Seller, Outdoor and
Quantum is qualified or licensed to do business as a foreign corporation and is
in good standing in each jurisdiction in which the ownership of
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property or the conduct of its business requires such qualification or license,
and is not required to be qualified or licensed in any other jurisdictions
except where the failure to be so qualified or licensed would not be reasonably
likely either to (i) have a material adverse effect on the business, operations,
earnings, assets or financial condition of Seller, Outdoor and Quantum taken as
a whole or (ii) materially impair, hinder or adversely affect the ability of
Seller to perform any of its obligations under or as contemplated by this
Agreement or the NOA Agreement or to consummate the transactions contemplated
hereby or thereby (including the debt financing thereof) (either of such
effects, a "Material Adverse Effect"). True and complete copies of the Current
Charter and By-Laws of Seller and the certificate of incorporation and by-laws
of Outdoor and Quantum have been heretofore delivered to Kelso.
2 CAPITALIZATION. The authorized capital stock of Seller as of the
date of this Agreement consists of (i) 1,500,000 shares of Common Stock, and
(ii) 178,000 shares of Preferred Stock consisting of 130,000 shares of Series A
Preferred Stock and 48,000 shares of Series B Preferred Stock, each with no par
value (collectively, the "Preferred Stock"), of which 437,500 shares of Common
Stock are issued and outstanding as of the date of this Agreement. No shares of
Preferred Stock are issued and outstanding. Upon the Closing, the authorized
capital stock of Seller shall consist of (i) 750,000 shares of Common Stock of
which 437,500 shares of Common Stock will be issued and outstanding, (ii)
300,000 shares of Class B Common Stock of which 186,500 shares of Class B Common
Stock will be issued and outstanding, (iii) 300,000 shares of Class C Common
Stock of which 188,500 shares of Class C Common Stock will be issued and
outstanding, and (iv) 178,000 shares of Preferred Stock of which no shares will
be issued and outstanding. As of the date of this Agreement, 62,500 shares of
Common Stock are reserved for issuance upon the exercise of the Outstanding
Warrants. The transactions contemplated by this Agreement (including but not
limited to the issuance of the Shares, the Investment and the sales pursuant to
the Subscription Agreements) will not affect the terms and provisions of, and
will not alter the rights of holders of, the Outstanding Warrants, including but
not limited to any anti-dilution adjustments to the number of Outstanding
Warrants, the exercise price thereof or the number of
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shares of Common Stock to be acquired upon exercise thereof. The authorized
capital stock of Outdoor consists of 1,000,000 shares of common stock, par value
$.01 per share, of which 10,000 of such shares are issued and outstanding. The
authorized capital stock of Quantum consists of 1,000 shares of common stock,
par value $1.00 per share, of which 1,000 of such shares are issued and
outstanding. As of the date of this Agreement and as of the Closing Date, all
the issued and outstanding shares of capital stock of Seller (including the
Common Stock, the Class B Common Stock and the Class C Common Stock), Outdoor
and Quantum are, and all shares of Common Stock which are to be issued pursuant
to the exercise of the Management Warrants will be, when issued in accordance
with the respective terms thereof, duly authorized, validly issued, fully paid
and non-assessable and free of any preemptive rights in respect thereof. All of
the issued and outstanding shares of capital stock of Outdoor are owned
beneficially and of record by Seller, and Seller has and as of the Closing Date
will have good title thereto, free and clear of all Encumbrances. All of the
issued and outstanding shares of capital stock of Quantum are owned beneficially
and of record by Outdoor, and Outdoor has and as of the Closing Date will have
good title thereto, free and clear of all Encumbrances. Except as set forth
above and on Schedule 3.2, there is no existing option, warrant, call,
commitment or other security or agreement of any kind to which Seller, Outdoor
or Quantum is a party requiring, and there are no securities (other than
Outstanding Warrants) of Seller, Outdoor or Quantum outstanding which upon
conversion, exchange or exercise would require or give any Person or entity the
right to require, the issuance, sale or transfer of any shares of capital stock
of Seller, Outdoor or Quantum or other securities convertible into or
exchangeable or exercisable for shares of capital stock or any debt or equity
security of Seller, Outdoor or Quantum of any kind.
3 SUBSIDIARIES. Outdoor is Seller's sole Subsidiary, and Quantum is
Outdoor's sole Subsidiary. None of Seller, Outdoor or Quantum has ever held,
directly or indirectly, any interest in a partnership. There is no obligation
on the part of Seller, Outdoor or Quantum to make any investment in any other
Person other than pursuant to the NOA Agreement.
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4 AUTHORITY RELATIVE TO THIS AGREEMENT. Seller has all requisite
authority and power to execute and deliver this Agreement and the Subscription
Agreements and to issue and sell the Shares to the Purchasers and the shares of
Class C Common Stock to be sold pursuant to the Subscription Agreements and to
otherwise consummate the transactions contemplated hereby and thereby, and such
issuance, sale and delivery of the Shares to the Purchasers and the shares of
Class C Common Stock to certain investors will convey to the Purchasers good and
marketable title to such shares free and clear of all Encumbrances except for
such Encumbrances incurred in connection with the NOA Acquisition. The
execution and delivery of this Agreement and the Subscription Agreements and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized by all required corporate action on the part of Seller
and no other corporate proceedings on the part of Seller or any Subsidiary
thereof are necessary to authorize this Agreement or the Subscription Agreements
or to consummate the transactions contemplated hereby or thereby. This
Agreement has been duly and validly executed and delivered by Seller and,
assuming this Agreement has been duly executed and delivered by Kelso, this
Agreement constitutes a valid and binding agreement of Seller, enforceable
against Seller in accordance with its terms.
5 CONSENTS AND APPROVALS; NO VIOLATIONS. Neither the execution,
delivery nor performance of this Agreement or the Subscription Agreements by
Seller, the amendment of the Current Charter and the By-Laws, the Warrant Plan,
the NOA Acquisition, the financing in connection with the NOA Acquisition, nor
the consummation of the other transactions contemplated hereby and thereby by
Seller or any Subsidiary thereof will (a) violate any provision of the Current
Charter, the Amended and Restated Certificate, the By-Laws or the Amended By-
Laws of Seller or the articles of incorporation (or similar organizational
documents) or by-laws of Outdoor or Quantum, (b) require any consent, waiver,
approval, authorization or permit of, or filing with or notification to, any
domestic or foreign governmental or regulatory authority, agency or commission,
including courts of competent jurisdiction (a "Governmental Entity"), except for
(i) filings with the Federal Trade Commission (the "FTC") and with the Antitrust
Division of the United
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States Department of Justice (the "DOJ") pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the "HSR Act"), which filings have been made by Seller,
(ii) such consents, waivers, approvals, authorizations, permits, filings or
notifications which, in the aggregate, could not be reasonably likely to have a
Material Adverse Effect, and (iii) such consents, waivers, approvals,
authorizations, permits, filings and notifications which are required due to
laws, regulations or rulings applicable prior to the execution of this Agreement
to Kelso, their Affiliates or the businesses conducted by any of them, (c)
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
amendment, cancellation or acceleration or any obligation to repay) under, any
of the terms, conditions or provisions of any indenture, mortgage, note, bond,
license, government registration, contract, lease, agreement or other instrument
or obligation to which Seller, Outdoor or Quantum is a party or by which Seller,
Outdoor or Quantum or any of their respective properties or assets may be bound,
except such violations, breaches and defaults which, individually or in the
aggregate, would not be reasonably likely to have a Material Adverse Effect or
(d) violate any order, writ, judgment, injunction, decree, law, statute,
ordinance, rule or regulation of any Governmental Entity applicable to Seller,
Outdoor or Quantum, except such violations which, individually or in the
aggregate, have not had and are not reasonably likely to have a Material Adverse
Effect.
6 FINANCIAL STATEMENTS. True and complete copies of the consolidated
balance sheets and the related consolidated statements of operations and cash
flows (including any related notes) of Seller for the fiscal years ended
December 31, 1993, December 31, 1994 and December 31, 1995 (the "Financial
Statements") have been previously delivered by Seller to Kelso. The Financial
Statements and the financial statements contained in the SEC Documents have been
prepared from, and are in accordance with, the books and records of Seller,
Outdoor and Quantum and fairly present the consolidated financial position and
the consolidated results of operations and cash flows of Seller and its
consolidated Subsidiaries as of the dates and for the periods presented therein
in
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conformity with GAAP, applied on a consistent basis during the periods involved,
except as otherwise noted therein. Except as set forth in Schedule 3.6, since
the Balance Sheet Date, none of Seller, Outdoor or Quantum has incurred any
indebtedness, issued any debt securities, expanded any existing credit
facilities or assumed, guaranteed or endorsed the obligations of any other
person except for the incurrence of debt pursuant to the Credit Agreement with
LaSalle Bank dated March 22, 1995, as amended, as in existence on the date
hereof.
7 ABSENCE OF CERTAIN CHANGES. Since the Balance Sheet Date, no event
has occurred which has had or is reasonably likely to have a Material Adverse
Effect. Without limiting the foregoing, except as set forth in Schedule 3.7,
since the Balance Sheet Date, none of Seller, Outdoor or Quantum has (a)
conducted its business in any material respect not in the ordinary and usual
course consistent with past practice, or (b) except for dividends by Quantum or
Outdoor on their capital stock, declared or paid any dividend or distribution
on, or redeemed, purchased or otherwise acquired, any shares of its capital
stock.
8 NO UNDISCLOSED LIABILITIES. To the knowledge of the Seller, none
of Seller, Outdoor or Quantum had, as at the Balance Sheet Date, any
indebtedness or liabilities (whether accrued, absolute, contingent or otherwise,
and whether due or to become due, nor have any facts arisen or occurred which
could form a basis therefor) which is not shown on the Audited 1995 Balance
Sheet, the notes to the Financial Statements or disclosed on Schedule 3.8
hereto, except for those in the aggregate which are not reasonably likely to
have a Material Adverse Effect.
9 NO DEFAULT; COMPLIANCE WITH LAWS. Except as set forth in Schedule
3.9(a), none of Seller, Outdoor or Quantum is in default or violation (and no
event has occurred which with notice or the lapse of time or both would
constitute a default or violation) of any term, condition or provision of (i)
the Current Charter, the Amended and Restated Certificate, the By-Laws or the
Amended By-Laws of Seller or the articles of incorporation (or similar
organizational documents) or by-laws of Outdoor or Quantum, or (ii) any order,
writ, judgment, injunction, decree, statute, ordinance, rule or
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regulation of any Governmental Entity applicable to Seller, Outdoor or Quantum,
except such defaults and violations which in the aggregate have not had and are
not reasonably likely to have a Material Adverse Effect. Except as set forth in
Schedule 3.9(b), none of Seller, Outdoor or Quantum is in violation of, or, to
the knowledge of Seller, under investigation with respect to or have been
threatened to be charged with or given notice that the continued operation of
any assets does or will violate, any order, writ, judgment, injunction, decree,
law, statute, ordinance, rule or regulation of any Governmental Entity
applicable to Seller, Outdoor or Quantum, or their property or assets except
such violations which, individually or in the aggregate, have not had and are
not reasonably likely to have a Material Adverse Effect.
10 LITIGATION. Except as set forth in Schedule 3.10(a), there is no
action, suit or proceeding pending, or, to the knowledge of Seller, threatened,
against Seller, Outdoor or Quantum before any Governmental Entity which has had
or is reasonably likely to have a Material Adverse Effect. Except as set forth
in Schedule 3.10(b), Seller, Outdoor and Quantum are not, nor have they received
notice alleging that any of them are, subject to any outstanding injunction,
writ, judgment, order, or decree of any Governmental Entity or any statute,
rule, regulation or policy which has had or is reasonably likely to have a
Material Adverse Effect.
11 TAXES. (a) Except as set forth in Schedule 3.11(a), Seller,
Outdoor and Quantum have, within the time and manner prescribed by law, (i)
filed with the appropriate taxing authorities all Tax Returns (as hereinafter
defined) required to be filed by or with respect to Seller, Outdoor or Quantum
in respect of any Taxes (as hereinafter defined) other than those Tax Returns
the failure of which to file would not have a Material Adverse Effect and such
Tax Returns are true, correct and complete in all material respects and (ii)
paid in full or have made adequate provision for in the Financial Statements (in
accordance with GAAP) all Taxes (whether or not shown to be due and payable
thereon). No deficiencies for any Taxes have been asserted in writing or
assessed by any taxing authority against Seller, Outdoor or Quantum which remain
unpaid or unsettled and which, in the aggregate, are material to the business or
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financial condition of Seller, Outdoor and Quantum taken as a whole, or which
are not being contested in good faith by appropriate proceedings (the subject of
any such contest to be set forth in Schedule 3.11(b)).
(b) No power of attorney granted by Seller, Outdoor or Quantum
with respect to any Taxes is currently in force.
(c) None of Seller, Outdoor or Quantum are subject to liabilities
for Taxes of any other person, including, without limitation, liability arising
from the application of U.S. Treasury Regulation Section 1.1502-6 or any
analogous provision of U.S. Tax law.
(d) Except for the existing tax sharing agreement between Seller
and Outdoor, none of Seller, Outdoor or Quantum are parties to or are bound by
or have any obligation under any Tax sharing, allocation or indemnity agreement
or similar contract or arrangement.
(e) There are no Encumbrances for Taxes upon any of the assets of
Seller, Outdoor or Quantum except liens for Taxes not yet due and payable or
liens for taxes which in the aggregate would not have a Material Adverse Effect.
(f) For purposes of this Agreement, (i) the term "Taxes"
(including, with correlative meaning, the term "Tax") shall mean (X) all taxes,
charges, fees, levies or other assessments, including, without limitation, all
net income, gross income, gross receipts, sales, use, service, service use, ad
valorem, transfer, franchise, profits, license, lease, withholding, social
security, payroll, employment, excise, estimated, severance, stamp, recording,
occupation, real and personal property, gift, windfall profits or other taxes,
customs, duties, fees, assessments or charges of any kind whatsoever, whether
computed on a separate consolidated, unitary, combined or other basis, together
with any interest, fines, penalties, additions to tax or other additional
amounts imposed thereon or with respect thereto imposed by any taxing authority
(domestic or foreign) and (Y) any liability of Seller, Outdoor or Quantum for
the payment of any amount of the type described in clause (X) as a result of
being a member of an affiliated, unitary, or combined group except for such
liabilities as would
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not in the aggregate have a Material Adverse Effect; and (ii) "Tax Return" shall
mean any return, statement, report, information or withholding return or other
document (including any related or supporting information and including amended
returns) with respect to Taxes.
12 SEC DOCUMENTS. Seller, Outdoor and Quantum have filed with the
SEC, and Seller has heretofore made available to Kelso, true and complete copies
of, all forms, reports, schedules, statements and other documents required to be
filed by them since January 1, 1993 under the Securities Act or the Exchange Act
(collectively, the "SEC Documents"). As of their respective dates or, if
amended, as of the date of the last such amendment, the SEC Documents, (i) did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading and (ii) complied in all material respects with the applicable
requirements of the Exchange Act and the Securities Act, as the case may be.
The financial statements of Seller, Outdoor or Quantum, as the case may be,
included in the SEC Documents have complied with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto.
13 INSURANCE. All material insurance policies (the "Insurance
Policies") with respect to the property, assets, operations and business of
Seller, Outdoor and Quantum are in full force and effect and will not lapse by
reason of the transactions contemplated by this Agreement or by the NOA
Agreement. Except as set forth in Schedule 3.13, there are no pending material
claims against the Insurance Policies by Seller, Outdoor and Quantum.
14 ENVIRONMENTAL MATTERS.
(a) Except as set forth in Schedule 3.14(a), Seller, Outdoor and
Quantum hold, and are in substantial compliance with, all material permits,
licenses and government authorizations required for Seller, Outdoor and Quantum
to conduct their respective businesses under Environmental Laws, and Seller,
Outdoor and Quantum are otherwise in compliance with all applicable
Environmental Laws, except where the failure
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to be in compliance has not had and is not reasonably likely to have a Material
Adverse Effect.
(b) Except as set forth in Schedule 3.14(b), neither Seller,
Outdoor nor Quantum has received any written request for information, or has
received written notice of any asserted or potential claim with respect to
liability under the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended ("CERCLA"), or any similar state law with
respect to any on-site or off-site location.
(c) Except as set forth in Schedule 3.14(c), none of Seller,
Outdoor or Quantum is subject to any judgment, decree, order or agreement or, to
the knowledge of the Seller, investigation relating to compliance with any
Environmental Law or to investigation or cleanup of substances regulated, or
with respect to which cleanup liability may be imposed, under any Environmental
Law.
(d) Other than as disclosed in Schedule 3.14(d), there are no
pending actions against Seller, Outdoor or Quantum under any Environmental Laws,
and none of Seller, Outdoor or Quantum has received written notice of such
action or of a threatened action.
(e) Other than as disclosed in Schedule 3.14(e), to the knowledge
of Seller, there has been no release or threatened release of a hazardous
substance on any property owned, leased or operated by Seller, Outdoor or
Quantum which would require a cleanup under CERCLA or similar state law which is
reasonably likely to have a Material Adverse Effect.
15 SIGN LOCATION LEASES. Seller, Outdoor and Quantum are each in
compliance with, and to Seller's knowledge any other party thereto is in
compliance with, each lease, license, or other agreement between Seller, Quantum
or Outdoor and any other Person pursuant to which Seller, Quantum or Outdoor has
obtained the right to erect, place or maintain outdoor advertising sign
structures on any ground space, roof or wall space or upon any other improvement
to real estate except where the failure to be in compliance has not had and is
not reasonably likely to have a Material Adverse Effect
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16 PROJECTIONS. The projections presented to Kelso by Seller with
respect to the future prospects of the business of Seller, Outdoor and Quantum
have been prepared in good faith by management of Seller. Kelso acknowledges
that the projections were based on various estimates and assumptions, and as
such Seller provides no guarantee as to the accuracy of such projections other
than the fact that they were prepared in good faith by management of Seller.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each of the Purchasers hereby represent and warrant to Seller as
follows:
1 ORGANIZATION. (a) 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.
2 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of KIA V and KEP V has
full authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of each of KIA V and KEP V. This
Agreement has been duly executed and delivered by each of KIA V and KEP V and,
assuming this Agreement has been duly authorized, executed and delivered by
Seller, this Agreement constitutes a valid and binding agreement of each of KIA
V and KEP V, enforceable against each of KIA V and KEP V in accordance with its
terms.
3 CONSENTS AND APPROVALS; NO VIOLATIONS. Neither the execution and
delivery of this Agreement by KIA V or KEP V nor the consummation of the
transactions contemplated hereby by KIA V and KEP V will (a) violate any
provision of the certificate of limited partnership (or other comparable
governing documents) of either KIA V or KEP V, (b) require any consent, waiver,
approval, authorization or permit of, or filing with or
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notification to, any Governmental Entity, except for (i) filings with the FTC
and the DOJ pursuant to the HSR Act, which filings have been made, (ii) such
consents, waivers, approvals, authorizations, permits, filings and notifications
which, in the aggregate, could not be reasonably likely to have a material
adverse effect Kelso, as a whole, and (iii) such consents, waivers, approvals,
authorizations, permits, filings and notifications which are required due to
laws, regulations or rulings applicable prior to the execution of this Agreement
to Seller, its Affiliate or the business conducted by any of them, (c) result in
a violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation
or acceleration or any obligation to repay) under, any of the terms, conditions
or provisions of any indenture, mortgage, note, bond, encumbrance, license,
government registration, contract, lease, agreement or other instrument or
obligation to which either KIA V or KEP V is a party or by which either KIA V or
KEP V or any of their properties or assets may be bound, except such violations,
breaches and defaults which, in the aggregate, would not be reasonably likely to
have a material adverse effect on Kelso, as a whole, or (d) violate any order,
writ, judgment, injunction, decree, statute, ordinance, rule or regulation of
any Governmental Entity applicable to either KIA V or KEP V, except such
violations which, in the aggregate, are not reasonably likely to have a material
adverse effect on Kelso, as a whole.
4 LITIGATION. There is no action, suit or proceeding pending, or, to
the knowledge of Kelso, threatened, against either KIA V or KEP V before any
Governmental Entity which is reasonably likely to materially impair, hinder or
adversely affect the ability of the Purchasers to perform any of its obligations
under or as contemplated by this Agreement. Kelso is not, nor has it received
notice alleging that either KIA V or KEP V are, subject to any outstanding
injunction, writ, judgment, order or decree of any Governmental Entity or any
statute, rule, regulation or policy which is reasonably likely to materially
impair, hinder or adversely affect the ability of either KIA V or KEP V to
perform any of their respective obligations under or as contemplated by this
Agreement.
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5 FINANCING. Kelso has, or has access to, sufficient funds and
financing to pay the Purchase Price on the Closing Date.
6 ACQUIRE ENTIRELY FOR OWN ACCOUNT. The Shares to be acquired by the
Purchasers will be acquired for investment for each Purchaser's own account, not
as a nominee or agent, and not with a view to the resale or distribution of any
part thereof, and that each Purchaser has no present intention of selling,
granting any participation in, or otherwise distributing the same. By executing
this Agreement, each Purchaser further represents that, they do not have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participation to such person or to any third person with
respect to any of the Shares.
7 RELIANCE UPON PURCHASERS' REPRESENTATIONS. Each Purchaser
understands that the Shares are not registered under the Securities Act on the
ground that the acquisition provided for in this Agreement and the issuance of
securities hereunder is exempt from registration under the Securities Act
pursuant to Section 4(2) thereof, and that the Seller's reliance on such
exemption is predicated on the representations of each Purchaser set forth
herein.
8 ACCESS TO RECORDS. Each Purchaser is a sophisticated purchaser
with respect to the Shares, has been given the opportunity to access the records
of Seller and its Subsidiaries and has made its own independent analysis and
investigation into the business, operations, financial condition and general
creditworthiness of Seller and has made its own independent decision to acquire
the Shares pursuant to the terms and conditions set forth in this Agreement.
9 RESTRICTED SECURITIES. Each Purchaser understands that the Shares
may not be sold, transferred, or otherwise disposed of without registration
under the Securities Act or an exemption therefrom. In particular, each
Purchaser is aware that the Shares may not be sold pursuant to Rule 144
promulgated under the Securities Act unless all of the conditions of Rule 144
are met.
10 LEGEND. Each certificate or other document evidencing any of the
Shares being acquired hereunder
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shall be endorsed with the legend set forth below, and each Purchaser covenants
that, except to the extent such restrictions are waived by Seller, each
Purchaser shall not transfer the shares represented by any such certificate
without complying with the restrictions on transfer described in the legend
endorsed on such certificate:
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND
MAY NOT BE SOLD, TRANSFERRED, ASSIGNED PLEDGED, OR HYPOTHECATED IN THE
ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO SUCH
SHARES UNDER SUCH ACT OR LAWS OR UNLESS THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT
SUCH REGISTRATION IS NOT REQUIRED."
ARTICLE V
COVENANTS
1 CONDUCT OF THE BUSINESS PENDING THE CLOSING DATE. Except as
contemplated by this Agreement or with the prior written consent of KIA V during
the period from the date of this Agreement to the Closing Date, Seller will,
will cause Outdoor to, and will cause Outdoor to cause Quantum to, conduct its
business and operations according to its ordinary and usual course of business
consistent with past practice and will use all reasonable efforts consistent
therewith to preserve intact its properties, assets and business organizations,
to keep available the services of its officers and employees and to maintain
satisfactory relationships with customers, suppliers, distributors and others
having commercially beneficial business relationships with it, in each case in
the ordinary course of business consistent with past practice. Without limiting
the generality of the foregoing, and except as otherwise provided in this
Agreement, none of Seller, Outdoor or Quantum will, prior to the Closing Date,
without the prior written consent of KIA V:
(a) issue, sell or pledge, or authorize or propose the issuance,
sale or pledge of, or purchase or acquire (i) shares of capital stock of any
class, or securities convertible into or exchangeable or
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exercisable for any such shares, or any rights, warrants or options to acquire
any such shares or other convertible securities, other than the issuance of
shares of Common Stock pursuant to the exercise of Outstanding Warrants
outstanding on the date hereof, or (ii) any other securities in respect of, in
lieu of, or in substitution for, Common Stock outstanding on the date hereof;
(b) except in the ordinary course of business and consistent with
past practice, (i) incur any material indebtedness, issue any debt securities,
expand any existing credit facilities or assume, guarantee or endorse the
obligations of any other person, or (ii) pay or prepay any principal amounts of
or owing under any such agreements or instruments;
(c) sell, transfer or otherwise dispose of, any of its material
property or assets, or create any Encumbrance on any of its material properties
or assets;
(d) enter into any agreement, commitment or contract providing
for the acquisition of material assets or properties or of securities or
business of any other Person;
(e) agree in writing to take any of the foregoing actions; or
(f) take any action which would cause any representation and
warranty contained in Article III to be false at Closing.
2 ACCESS TO INFORMATION. From the date of this Agreement to the
Closing Date, for the purposes of the conduct by Kelso of due diligence, Seller
will, will cause Outdoor to, and will cause Outdoor to cause Quantum to (i) give
Kelso and its authorized representatives reasonable access to all employees,
books, records, offices and other facilities and properties of Seller, Outdoor
and Quantum, (ii) permit Kelso to make such inspections thereof as Kelso may
reasonably request and (iii) cause its officers to furnish Kelso with such
financial and operating data and other information with respect to the business
and properties of Seller, Outdoor and Quantum as Kelso may from time to time
reasonably request; PROVIDED, HOWEVER, that any such access shall be
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conducted at a reasonable time and in such a manner as not to interfere
unreasonably with the operation of the business of Seller, Outdoor and Quantum.
3 CONSENTS AND APPROVALS. Each of the parties hereto shall use its
reasonable best efforts to obtain as promptly as practicable all consents,
authorizations, approvals and waivers required to be obtained by it in
connection with the consummation of the transactions contemplated by this
Agreement.
4 FILINGS. Promptly, after the execution of this Agreement, each of
the parties hereto shall prepare and make or cause to be made any required
filings, submissions and notifications under the laws of any domestic or foreign
jurisdiction to the extent that such filings by it are necessary for it to
consummate the transactions contemplated hereby and will use its reasonable best
efforts to take all other actions necessary for it to consummate the
transactions contemplated hereby in a manner consistent with applicable law.
Each of the parties hereto will furnish to the other parties such necessary
information and reasonable assistance as such other parties may reasonably
request in connection with the foregoing. Each of the parties hereto will
promptly inform the other party hereto upon learning of any information which
could cause such party's representations and warranties not to be true at
Closing or which could otherwise result in the failure of a condition contained
in Articles VI or VII not to be satisfied.
5 COVENANT TO SATISFY CONDITIONS. Kelso and Seller will use their
respective reasonable best efforts to ensure that the conditions set forth in
Articles VI and VII hereof are satisfied, insofar as such matters are within
each such person's control.
6 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
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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 AMENDED AND RESTATED CERTIFICATE AND AMENDED BY-LAWS; ISSUANCE OF
SHARES. Prior to the Closing Date, Seller shall (i) take such action as is
necessary to cause (A) the Board of Directors of Seller and Outdoor to each
consist of, effective as of the Closing Date, four directorships, as provided in
the Amended and Restated Certificate and the amended certificate of
incorporation of Outdoor, (B) the Board of Directors of Seller and Outdoor to
consist of the individuals set forth on Schedule 5.7 hereof, (C) the Amended and
Restated Certificate to be in full force and effect, having received the
requisite shareholder vote and having been filed with the Secretary of State of
the State of Delaware, and (D) the articles of incorporation of Outdoor to be
amended to and adopted in the form attached hereto as Exhibit A-1, and such
amended articles to be in full force and effect having received the required
shareholder vote and having been filed with the Secretary of the State of
Illinois, (ii) take such action as is necessary to cause the By-Laws of Seller
and Outdoor to be amended to be in substantially the form set forth in Exhibit B
(the "Amended By-Laws") and Exhibit B-1, respectively, attached hereto, and
(iii) authorize and issue the Shares.
8 MANAGEMENT WARRANTS. Promptly following the Closing, Seller shall
(i) adopt the Warrant Plan, and (ii) issue to each member of management of
Seller listed on Schedule 5.8 (the "Management Group") Series I Warrants, Series
II Warrants and Series III Warrants (as indicated on Schedule 5.8) to purchase
the number of shares of Common Stock set forth next to each such member's name,
subject to the provisions of the Warrant Plan.
9 CONVERSION OF CLASS C COMMON STOCK. Following the Closing Date,
Seller, at KIA V's request (in its sole discretion), will use its reasonable
best efforts (including to the extent necessary effecting an
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amendment to the Amended and Restated Certificate and the Amended By-Laws), to
provide that (x) KIA V and KEP V, in addition to any other voting rights which
they may have pursuant to the laws of the State of Delaware or as otherwise
provided in the Amended and Restated Certificate as holders of shares of Class C
Common Stock, be entitled to one vote for each such share of Class C Common
Stock on all matters, (y) in addition to any other rights to appoint directors
pursuant to the laws of the State of Delaware or as otherwise provided in the
Amended and Restated Certificate, KIA V and KEP V, as holders of shares of Class
C Common Stock, shall be entitled to designate one director and that the size of
the Board of Directors of the Company shall be expanded to accommodate such
director, upon the occurrence of any of the following events: (i) each of the
Indenture and the Outdoor Indenture is terminated in accordance with its terms,
(ii) the 14% Series A and Series B Senior Secured Discount Notes of Seller
issued pursuant to the Indenture are repaid, redeemed or acquired by Seller or a
Subsidiary thereof and no such securities remain outstanding and the 11% Senior
Notes due 2003 of Outdoor issued pursuant to the Outdoor Indenture are repaid,
redeemed or acquired by Seller or a Subsidiary thereof and no such securities
remain outstanding, or (iii) the provisions of the Indenture and the Outdoor
Indenture restricting investments in Seller to less than 30% of its outstanding
voting securities are (X) amended or modified to allow for investments in excess
30% of Seller's outstanding voting securities or (Y) are no longer applicable.
10 USE OF PROCEEDS. Seller agrees to transfer the proceeds to be
received by Seller from the sale of Shares to Kelso to Outdoor and to cause
Outdoor to use such transferred proceeds to consummate the NOA Acquisition
pursuant to the terms of the NOA Agreement.
11 TRANSACTION EXPENSES. Whether or not the transactions
contemplated by this Agreement are consummated, all reasonable legal and other
costs and expenses incurred by Seller and Kelso in connection with this
Agreement and the NOA Agreement and the transactions contemplated hereby and
thereby shall be paid by Seller. Following the earlier to occur of the Closing
Date or the termination of this Agreement pursuant to Section 8.1, Seller shall
promptly reimburse Kelso for all such legal
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and other costs and expenses (including any transfer taxes, real property
transfer taxes, stamp duties and real property gains taxes).
12 CERTAIN AGREEMENTS. The Seller shall not, and shall cause Outdoor
not to, (i) enter into or execute any agreement providing for the financing of
the acquisition contemplated by the NOA Agreement, (ii) amend, alter or agree to
amend or alter any provision or term set forth in the commitment letter from
Bankers Trust dated February 21, 1996 relating to the financing of the NOA
Acquisition, or (iii) amend, modify or waive any provision of the NOA Agreement,
in the case of each of clauses (i), (ii) and (iii) above, without the prior
consent of KIA V.
13 ADDITIONAL PURCHASES BY KELSO. For a period of three months
following the Closing Date, the parties hereto agree that any agreement or
understanding with respect to additional issuance and sale of capital stock of
Seller to Kelso or its Affiliates agreed to by the parties hereto within such
three month period shall be at a price per share equal to the Purchase Price
(irrespective of whether such transaction is consummated within such three month
period).
ARTICLE VI
CONDITIONS TO SELLER'S OBLIGATIONS
The obligations of Seller to sell the Shares shall be subject to the
fulfillment, or written waiver by Seller, at or prior to the Closing of each of
the following conditions:
1 REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of Kelso contained herein shall be true and correct in all respects
as of the date hereof and shall be true and correct in all material respects at
and as of the Closing Date as though such representations and warranties were
made at and as of such date unless limited by their terms to a prior date.
2 PERFORMANCE. The Purchasers shall have performed and complied in
all material respects with all agreements, obligations, covenants and conditions
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required by this Agreement to be performed or complied with by it on or prior to
the Closing.
3 CERTIFICATES. Kelso Partners V, L.P., the general partner of KIA
V, shall have furnished Seller with such certificates of a general partner of
KIA V to evidence its compliance with the conditions set forth in Sections 6.1
and 6.2 hereof as Seller may reasonably request.
4 NO INJUNCTION OR PROCEEDING. No statute, rule, regulation,
executive order, decree, preliminary or permanent injunction or restraining
order shall have been enacted, entered, promulgated or enforced by any
Governmental Entity which prohibits or restricts the consummation of the
transactions contemplated hereby. No action or proceeding shall have been
commenced (and be pending) or have been threatened against the Purchasers or
Seller or any of their respective Affiliates, associates, officers or directors
seeking to prevent or delay the transactions contemplated hereby or challenging
any of the terms or provisions of this Agreement or seeking material damages in
connection therewith or claiming any default under either the Indenture or the
Outdoor Indenture, as to which (in the case of a plaintiff other than a
Governmental Entity) it is reasonably likely that the plaintiff will prevail.
5 CONSENTS. All consents and approvals of Governmental Entities
necessary for consummation of the sale of the Shares by Seller pursuant to this
Agreement shall have been obtained, other than those which, if not obtained,
would not have a material adverse effect on Kelso.
6 HSR ACT. All required waiting periods applicable to this Agreement
and the transactions contemplated hereby under the HSR Act shall have expired or
been terminated.
7 NOA ACQUISITION. All conditions set forth in the NOA Agreement
shall have been satisfied or waived pursuant to the terms thereof and hereof,
and Outdoor shall, substantially concurrently with the Closing, be purchasing
all of the outstanding shares of capital stock of NOA pursuant to the NOA
Agreement.
27
<PAGE>
ARTICLE VII
CONDITIONS TO THE PURCHASERS' OBLIGATIONS
The obligation of the Purchasers to purchase the Shares shall be
subject to the fulfillment, or written waiver by KIA V at or prior to the
Closing of each of the following conditions:
1 REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of Seller contained herein (other than Section 3.2) shall be true and
correct in all material respects as of the date hereof and shall be true and
correct in all material respects at and as of the Closing Date as though such
representations and warranties were made at and as of such date unless limited
by their terms to a prior date. The representations and warranties of Seller
contained in Section 3.2 shall be true and correct in all respects as of the
date hereof and at and as of the Closing Date as though such representation and
warranty was made at and as of such date.
2 PERFORMANCE. Seller shall have performed and complied in all
material respects with all agreements, obligations, covenants and conditions
required by this Agreement to be performed or complied with by it on or prior to
the Closing.
3 CERTIFICATES. Seller shall have furnished KIA V with such
certificates of its Chief Executive Officer and Chief Financial Officer to
evidence its compliance with the conditions set forth in Sections 7.1 and 7.2 as
Kelso may reasonably request.
4 NO INJUNCTION OR PROCEEDING. No statute, rule, regulation,
executive order, decree, preliminary or permanent injunction or restraining
order shall have been enacted, entered, promulgated or enforced by any
Governmental Entity which prohibits or restricts the consummation of the
transactions contemplated hereby. No action or proceeding shall have been
commenced (and be pending) or have been threatened against Kelso, Seller or any
of their respective Affiliates, associates, officers or directors seeking to
prevent or delay the transactions contemplated hereby or challenging any of the
terms or provisions of this Agreement or seeking material damages in connection
therewith as to which (in the case of a
28
<PAGE>
plaintiff other than a Governmental Entity) it is reasonably likely that the
plaintiff will prevail.
5 CONSENTS. All consents and approvals of Governmental Entities
necessary for consummation of the transactions contemplated hereby shall have
been obtained, other than those which, if not obtained, would not have a
Material Adverse Effect or a material adverse effect on Kelso, as a whole.
6 HSR ACT. All required waiting periods applicable to this Agreement
and the transactions contemplated hereby under the HSR Act shall have expired or
been terminated.
7 NOA ACQUISITION. All conditions set forth in the NOA Agreement
shall have been satisfied or waived pursuant to the terms thereof and hereof,
and Outdoor shall have substantially concurrently with the Closing be purchasing
all of the outstanding shares of capital stock of NOA pursuant to the NOA
Agreement.
8 AMENDED AND RESTATED CERTIFICATE AND AMENDED BY-LAWS; ISSUANCE OF
SHARES. The Amended and Restated Certificate and Amended By-Laws shall be in
full force and effect. The amended and restated articles of incorporation and
amended by-laws of Outdoor shall be in full force and effect. The Shares shall
have been duly authorized and issued.
9 FEE LETTER. Seller shall have executed and delivered to Kelso the
Fee Letter in the form attached hereto as Exhibit C.
10 SUBSCRIPTION AGREEMENTS SALES. The closings under the
Subscription Agreements shall have occurred simultaneously with the Closing.
11 DELIVERY OF OPINION OF WINSTON & STRAWN. Kelso shall have
received a copy of the opinion of Winston & Strawn delivered to certain lenders
in connection with the financing obtained by Seller for the NOA Acquisition,
upon which opinion Kelso may rely.
29
<PAGE>
ARTICLE VIII
TERMINATION AND ABANDONMENT
1 TERMINATION. This Agreement may be terminated at any time prior to
the Closing:
(a) by mutual consent in writing of Seller and KIA V; or
(b) by either Seller or KIA V upon termination of the NOA
Agreement in accordance with its terms.
In the event that this Agreement shall be terminated pursuant to this
Article VIII, all further obligations of the parties under this Agreement (other
than Section 5.11) shall terminate without further liability of either party to
the other.
ARTICLE IX
INDEMNIFICATION
1 AGREEMENT TO INDEMNIFY. (a) Subject to the limitations set forth
in this Article IX, Seller shall indemnify Kelso (and the Kelso Designees as
contemplated by Section 2.1(b)), their officers, directors, Affiliates,
employees and agents (the "Indemnified Parties") and hold the Indemnified
Parties harmless from and against any and all Losses (as hereinafter defined)
incurred by the Indemnified Parties by reason of, relating to or in connection
with (i) the failure of any representation or warranty contained in Article III
to be true and correct at Closing, and (ii) the breach of any covenant or
agreement of Seller contained herein.
(b) No claim based upon a breach of any representation or
warranty may be asserted after such representation or warranty has been
extinguished, except that claims asserted in writing prior to the extinguishment
thereof shall not thereafter be barred.
2 SURVIVAL. The parties hereto agree that none of the
representations or warranties contained in this Agreement or in any certificate,
document or instrument delivered in connection herewith, shall
30
<PAGE>
survive the Closing hereunder or the consummation of the transactions
contemplated hereby except that (i) those contained in Section 3.2 and Section
3.4 shall survive without limitation, and (ii) those contained in Sections 3.1,
3.3, 3.5, 3.6, 3.7, 3.8, 3.11 and 3.14 shall expire on the first anniversary of
the Closing Date, and that none of the parties hereto shall have any rights or
obligations arising out of any of such representations or warranties after the
Closing hereunder or the termination of this Agreement pursuant to Article XIII
hereof, except for those contained in Sections 3.1, 3.2, 3.3, 3.4, 3.5, 3.6,
3.7, 3.8, 3.11 and 3.14 hereof. All covenants and agreements contained herein
shall survive without limitation.
3 LIMITATION ON CLAIMS. Seller shall have no liability with respect
to Section 9.1 (i) in excess of the Aggregate Purchase Price, and (ii) unless
and until the aggregate amount of all such claims against the Seller exceeds
$2,000,000 (the "Threshold Amount") and then only to the extent that such claims
exceed the Threshold Amount.
4 LOSSES DEFINED. As used in this Article IX, "Losses" means any
liability, loss, claim, deficiency, damage, lost profits, 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 attorney's fees incurred in the investigation or
defense thereof or the enforcement of rights hereunder) incurred by an
Indemnified Party.
5 NOTICE AND OPPORTUNITY TO DEFEND. If an event occurs that entitles
an Indemnified Party, or that an Indemnified Party believes entitles it, to
indemnification pursuant to this Article IX, the Indemnified Party shall
promptly notify the party obligated or believed to be obligated to provide
indemnification therefor (the "Indemnifying Party"). If the claim for
indemnification arises out of a claim by a third party, such notice (the
"Notice") shall occur within 15 days of the Indemnified Party's receipt of
written notice of such claim; provided, however, that the failure to so notify
the Indemnifying Party shall not relieve the Indemnifying Party of its
obligations hereunder, except to the extent that they are actually
31
<PAGE>
prejudiced by such failure. The Indemnifying Party shall have the right to
undertake, conduct and control the defense thereof by so notifying the
Indemnified Party in writing, provided that the Indemnifying Party (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 Indemnified Party in accordance with the
terms contained in this Agreement, and (iii) promptly reimburses the Indemnified
Party for all reasonable out-of-pocket expenses incurred as a result of the
assumption by the Indemnifying Party of control of such settlement or defense.
If the Indemnifying Party provides written notice to the Indemnified Party that
it elects to defend such claim, such Indemnifying Party shall be obligated to
defend such claim, at its own expense and by counsel chosen by it and reasonably
satisfactory to the Indemnified Party. In the event the Indemnifying Party
elects to provide the defense of such claim pursuant to this Section 9.5, the
Indemnified Party shall cooperate fully with the Indemnifying Party and its
counsel in the defense of such claim and shall be entitled to full access to
information with respect thereto and to participate in the defense thereof at
its own cost and expense. Any compromise, settlement or offer of settlement of
such claim by the Indemnifying Party shall require the prior written consent of
the Indemnified Party, which consent shall not be unreasonably withheld and
unless such consent is obtained, the Indemnifying Party shall continue the
defense of such claim; provided, however, that if the Indemnified Party refuses
its consent to a bona fide offer of settlement that the Indemnifying Party
wishes to accept and that involves no payment by the Indemnified Party not paid
by the Indemnifying Party, the Indemnifying Party may reassign the defense of
such claim to the Indemnified Party, who may then continue to pursue the defense
of such matter, free of any participation by the Indemnifying Party, at the sole
cost and expense of the Indemnified Party. In such event, the obligation of the
Indemnifying Party with respect thereto shall not exceed the amount of the offer
of settlement that the Indemnified Party refused to accept plus the costs and
expenses of the Indemnified Party prior to the date the Indemnifying Party
notified the Indemnified Party of the offer of settlement. If the Indemnifying
Party does not elect to defend any such claim, it shall nevertheless
32
<PAGE>
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.
6 MATERIAL ADVERSE EFFECT DEFINITION. A "Material Adverse Effect"
(as such term is used in any representation or warranty contained in Section 3)
shall, for purposes of this Article IX, be deemed to have occurred if the
aggregate of all Losses related to all representations and warranties shall have
a material adverse effect on the business, prospects, operations, earnings,
assets or financial condition of Seller, Outdoor and Quantum, taken as a whole.
ARTICLE X
MISCELLANEOUS
1 AMENDMENT AND MODIFICATION. This Agreement may be amended,
modified or supplemented at any time only by an instrument in writing signed on
behalf of Seller and Kelso.
2 EXTENSION; WAIVER. At any time prior to the Closing, the parties
hereto entitled to the benefits of the respective term or provision may (i)
extend the time for the performance of any of the obligations or other acts of
the other parties hereto, (ii) waive any inaccuracies in the representations and
warranties contained herein or in any document, certificate or writing delivered
pursuant hereto or (iii) waive compliance with any obligation, covenant,
agreement or condition contained herein. Any agreement on the part of any party
to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed by Seller and Kelso.
3 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement (a) constitutes the
entire agreement among the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and oral,
among the parties or any of them with respect to the subject matter hereof and
(b) shall not be assigned (other than by KIA V or KEP V to any of their
Affiliates) by operation of law or otherwise.
33
<PAGE>
4 VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, each of which shall remain in full force and
effect.
5 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if 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 Seller to:
Universal Outdoor Holdings, Inc.
321 North Clark Street
Suite 1010
Chicago, Illinois 60610
Attention: Daniel L. Simon, Esq.
Telecopy: (312) 664-8371
With a copy to:
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attention: Leland E. Hutchinson, Esq.
Telecopy: (312) 558-5700
If to the Purchasers to:
Kelso & Company
320 Park Avenue
24th Floor
New York, New York 10022
Telecopy: (212) 223-2379
Attention: James J. Connors II, Esq.
34
<PAGE>
With a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attention: Lou R. Kling, Esq.
Telecopy: (212) 735-2001
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).
6 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.
7 SPECIFIC PERFORMANCE. The parties hereto agree that if any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached, irreparable damage would occur, no
adequate remedy at law would exist and damages would be difficult to determine,
and that the parties shall be entitled to specific performance of the terms
hereof, in addition to any other remedy at law or equity.
8 PUBLICITY. Except as otherwise required by law, at any time prior
to the Closing, neither Seller or Kelso shall issue or cause the publication of
any press release or other public announcement with respect to the transactions
contemplated by this Agreement without providing Seller or Kelso, as the case
may be, with a reasonable opportunity to review and comment on any such
announcement.
9 DESCRIPTIVE HEADINGS. The descriptive headings herein are inserted
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall
35
<PAGE>
be deemed to be an original, but all of which shall constitute one and the same
agreement.
11 PARTIES IN INTEREST. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto (except as set forth in Section
2.1(b) and Section 5.8) and nothing in this Agreement, express or implied, is
intended by or shall confer upon any other person or persons any rights,
benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
36
<PAGE>
IN WITNESS WHEREOF, the parties hereto 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:
KELSO EQUITY PARTNERS V, L.P.
By
---------------------------------
Name:
Title:
<PAGE>
Schedule 2.1
Class B Class C
Kelso Entity Common Stock Common Stock
- ------------ ------------ ------------
KIA V 176,253 172,487
KEP V 10,247 10,138
Class B Class C
Kelso Designee Common Stock Common Stock
- -------------- ------------ ------------
William Marquard 0 625
David Roderick 0 1,250
Michel Rapoport 0 1,875
George Shinn 0 250
Patricia Hetter Kelso 0 937.5
John McGillicuddy 0 625
John Rutledge 0 312.5
<PAGE>
Schedule 5.7
Daniel L. Simon
Brian T. Clingen
Michael J. Roche
Michael B. Goldberg
<PAGE>
Schedule 5.8
SERIES I WARRANTS
Number of Shares of
Eligible Person Common Stock
- --------------- ------------
Daniel Simon 43,750
Brian Clingen 7,721
SERIES II WARRANTS
Number of Shares of
Eligible Person Common Stock
- --------------- ------------
Daniel Simon 43,750
Brian Clingen 7,721
SERIES III WARRANTS
Number of Shares of
Eligible Person Common Stock
- --------------- ------------
Daniel Simon 43,750
Brian Clingen 7,721
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS FOUND IN
THE COMPANY'S 10-Q FOR THE YEAR TO DATE AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 59
<SECURITIES> 0
<RECEIVABLES> 10,716
<ALLOWANCES> 500
<INVENTORY> 4,239
<CURRENT-ASSETS> 14,514
<PP&E> 199,958
<DEPRECIATION> 35,297
<TOTAL-ASSETS> 179,175
<CURRENT-LIABILITIES> 6,169
<BONDS> 182,673
0
0
<COMMON> 2,500
<OTHER-SE> (12,167)
<TOTAL-LIABILITY-AND-EQUITY> 179,175
<SALES> 29,366
<TOTAL-REVENUES> 26,239
<CGS> 0
<TOTAL-COSTS> 17,280
<OTHER-EXPENSES> 9,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,115
<INCOME-PRETAX> (10,156)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10,156)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
