<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 25, 1997
REGISTRATION NO. 33-93852
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
POST-EFFECTIVE AMENDMENT NO. 5
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
UNIVERSAL OUTDOOR HOLDINGS, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 7312 36-3766705
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation) Classification Code Number) Identification
No.)
</TABLE>
321 CLARK STREET, SUITE 1010
CHICAGO, ILLINOIS 60610
(312) 644-8673
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive office)
----------------
PAUL G. SIMON
GENERAL COUNSEL
UNIVERSAL OUTDOOR HOLDINGS, INC.
321 CLARK STREET, SUITE 1010
CHICAGO, ILLINOIS 60610
(312) 644-8673
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
----------------
COPY TO:
Leland E. Hutchinson
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
(312) 558-5600
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act of 1933 registration statement number
of the earlier effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Section 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
PROSPECTUS SUPPLEMENT DATED JUNE , 1997
24,200 Warrants to Purchase Common Stock
387,200 Shares of Common Stock
UNIVERSAL OUTDOOR HOLDINGS, INC.
SELLING SECURITYHOLDERS AND PLAN OF DISTRIBUTION
Each capitalized term used in this Prospectus Supplement has the respective
meaning ascribed to such term in the Prospectus dated June , 1997 attached
hereto.
SELLING SECURITYHOLDERS
As of the date hereof, the Noteholder Warrants are held in the form of the
Global Warrant registered in the name of Cede & Co., the nominee for the
Depository. The following is a list of the Selling Securityholders and number of
Securities each such Selling Securityholder owns as of the date of this
Prospectus Supplement:
<TABLE>
<CAPTION>
NUMBER OF SHARES
SELLING SECURITYHOLDERS OF COMMON STOCK(1)
- ------------------------------------------------------------------------------------------- ---------------------
<S> <C>
State Street............................................................................... 171,200
</TABLE>
- ------------------------
(1) The shares of Common Stock were issued upon exercise of the Noteholder
Warrants owned by each Selling Securityholder.
METHOD OF SALE
The Selling Securityholders may sell any or all the Securities through
underwriters or dealers, through brokers or other agents, or directly to one or
more purchasers in one or more transactions in the over-the-counter market, if
such a market develops, or in privately negotiated transactions, or in a
combination of such transactions. Such transactions may be effected by the
Selling Securityholders at market prices prevailing at the time of sale, at
prices related to such prevailing market prices, at negotiated prices, or at
fixed prices, which may be changed. Such underwriters, dealers, brokers or other
agents may receive compensation in the form of discounts, concessions or
commissions from the Selling Securityholders and may receive commissions from
the purchasers of the Securities for whom they act as agent.
Any Selling Securityholder and any dealer, broker or other agent selling
Securities for the Selling Securityholders or purchasing any Securities from a
Selling Securityholder for purposes of resale may be deemed to be an underwriter
under the Securities Act and any profit from the sale of the Securities or any
compensation received by such Selling Securityholder, dealer, broker or other
agent may be deemed underwriting compensation. Neither the Company nor the
Selling Securityholders can presently estimate the amount of such compensation.
The Company knows of no existing arrangements between any Selling Securityholder
and any other Selling Securityholder, underwriter, dealer, or broker or other
agent.
The Company will issue and sell the shares of Common Stock issuable upon
exercise of the Noteholder Warrants, from time to time, to registered holders of
the Noteholder Warrants upon the exercise thereof.
To comply with certain states' securities laws, if applicable, the
Securities may be sold in such states only through registered or licensed
brokers or dealers. In addition, in certain states the Securities may not be
sold unless they have been registered or qualified for sale in such state or an
exemption from registration or qualification is available and is complied with.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.
<PAGE>
PROSPECTUS
24,200 WARRANTS TO PURCHASE COMMON STOCK
387,200 SHARES OF COMMON STOCK
UNIVERSAL OUTDOOR HOLDINGS, INC.
---------
This prospectus relates to the offer and sale by the Selling Securityholders
(as defined below) of (i) 24,200 outstanding warrants (the "Noteholder
Warrants"), each of which entitles the holder thereof to purchase sixteen shares
of common stock, par value $.01 per share ("Common Stock"), of Universal Outdoor
Holdings, Inc., a Delaware corporation (the "Company"), and (ii) 387,200 shares
of Common Stock issuable by the Company upon exercise of the Noteholder Warrants
(together with the Noteholder Warrants, the "Securities"). See "Selling
Securityholders and Plan of Distribution." Of the 62,500 Noteholder Warrants
originally offered for sale, 38,300 Noteholder Warrants were exercised in
exchange for Common Stock pursuant to and the Common Stock was sold pursuant to
a Prospectus Supplement dated July 25, 1996. This Prospectus also relates to the
offer and sale by the Company of 387,200 shares of Common Stock issuable upon
exercise of the Noteholder Warrants.
The Noteholder Warrants have been issued pursuant to a Warrant Agreement
(the "Warrant Agreement"), dated as of June 30, 1994, between the Company and
the Warrant Agent (as defined herein). The Noteholder Warrants entitle the
holders thereof to purchase, at an exercise price of $.000625 per share, an
aggregate of 1,000,000 shares of Common Stock. Prior to July 1, 1999, the
Noteholder Warrants are exercisable only upon certain Trigger Events (as defined
herein under "Description of Noteholder Warrants"), including an Initial Public
Offering, a Disposition, a Non-Surviving Combination and a Change of Control (in
each case, as defined herein under "Description of Noteholder Warrants"). The
Company completed an Initial Public Offering on July 26, 1996 of 4,630,000
shares of its Common Stock (the "Offering"). See "Description of Noteholder
Warrants -- Exercise of Noteholder Warrants". The Noteholder Warrants will
expire on July 1, 2004. See "Description of Noteholder Warrants."
The Noteholder Warrants and the shares of Common Stock issuable upon
exercise of the Noteholder Warrants to which this Prospectus relates may be sold
by the holders thereof (the "Selling Securityholders") from time to time through
underwriters or dealers, through brokers or other agents, or directly to one or
more purchasers, at market prices prevailing at the time of sale or at prices
otherwise negotiated. See "Selling Securityholders and Plan of Distribution."
The Company will receive no proceeds from the sale by any Selling Securityholder
of the Noteholder Warrants or the shares of Common Stock issuable upon exercise
of the Noteholder Warrants, but will receive the exercise price from Noteholder
Warrants that are exercised for shares of Common Stock, if any. If all
Noteholder Warrants are exercised, the aggregate exercise price payable to the
Company will be $625. The Company will pay all expenses incident to the
registration of the Securities to which this Prospectus relates, except for
commissions of brokers or dealers. The Selling Securityholders and any
broker-dealer, agent or underwriter that participates with any Selling
Securityholder in the distribution of the Noteholder Warrants or the shares of
Common Stock issuable upon exercise of the Noteholder Warrants may be deemed to
be an "underwriter" within the meaning of the Securities Act of 1933, as amended
(the "Securities Act"), and any commissions received by them and any profit on
the resale of such Securities purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. See "Selling Securityholders
and Plan of Distribution" for indemnification arrangements between the Company
and the Selling Securityholders.
There is currently no public market for the Noteholder Warrants and there
can be no assurance that an active public market for the Noteholder Warrants
will develop. The Common Stock is quoted on the Nasdaq National Market under the
symbol "UOUT."
SEE "RISK FACTORS" BEGINNING ON PAGE 11 OF THIS PROSPECTUS FOR A DISCUSSION OF
CERTAIN INFORMATION THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS JUNE , 1997.
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND CONSOLIDATED FINANCIAL STATEMENTS, INCLUDING NOTES THERETO,
APPEARING ELSEWHERE IN THIS PROSPECTUS. AS USED HEREIN, THE "COMPANY" MEANS
UNIVERSAL OUTDOOR HOLDINGS, INC., TOGETHER WITH ITS CONSOLIDATED SUBSIDIARIES,
UNLESS THE CONTEXT OTHERWISE REQUIRES. "UOI" REFERS TO UNIVERSAL OUTDOOR, INC.
AND ITS CONSOLIDATED SUBSIDIARIES, WHICH CONSTITUTE THE OPERATING SUBSIDIARIES
OF THE COMPANY. THE TERM "OCTOBER OFFERINGS" REFERS TO THE OFFERING BY UOI OF
$225 MILLION OF ITS 9 3/4% SENIOR SUBORDINATED NOTES DUE 2006 (THE "OCTOBER
NOTES") AND THE OFFERING BY THE COMPANY OF 6.5 MILLION SHARES OF ITS COMMON
STOCK. THE "TRANSACTIONS" CONSIST OF THE POA ACQUISITION (AS DEFINED), THE DEBT
TENDER OFFERS (AS DEFINED), THE EXECUTION OF THE NEW CREDIT FACILITY (AS
DEFINED), THE MEMPHIS/TUNICA ACQUISITION (AS DEFINED), THE REVERE ACQUISITION
(AS DEFINED), THE MATTHEW ACQUISITION (AS DEFINED) AND THE ADDITIONAL
ACQUISITION (AS DEFINED). SEE "THE TRANSACTIONS." "ACQUISITIONS" MEANS,
COLLECTIVELY, THE POA ACQUISITION, THE MEMPHIS/TUNICA ACQUISITION, THE REVERE
ACQUISITION, THE MATTHEW ACQUISITION AND THE ADDITIONAL ACQUISITIONS. THE TERM
"DECEMBER OFFERING" REFERS TO THE OFFERING BY UOI OF $100 MILLION OF ITS 9 3/4%
SENIOR SUBORDINATED NOTES DUE 2006 (THE "DECEMBER NOTES") WHICH NOTES WERE
SUBSEQUENTLY EXCHANGED IN MAY, 1997 FOR $100,000,000 9 3/4% SERIES B SENIOR
SUBORDINATED EXCHANGE NOTES DUE 2006 WITH IDENTICAL TERMS TO THE DECEMBER NOTES
IN A TRANSACTION REGISTERED UNDER THE SECURITIES ACT. THE TERM "MARKET" REFERS
TO THE GEOGRAPHIC AREA CONSTITUTING A METROPOLITAN STATISTICAL AREA DELINEATED
BY THE U.S. CENSUS BUREAU. "EBITDA" HAS THE MEANING SET FORTH IN FOOTNOTE (5) ON
PAGE 9 HEREOF AND "EBITDA MARGIN" HAS THE MEANING SET FORTH IN FOOTNOTE (6) ON
PAGE 9 HEREOF.
THE COMPANY
The Company is a leading outdoor advertising company operating approximately
32,929 advertising display faces in three distinct regions, including the
Midwest (Chicago, Minneapolis/St. Paul, Indianapolis, Milwaukee, Des Moines,
Evansville (IN) and Dallas), the Southeast (Orlando, Jacksonville, Palm Beach,
Ocala and the Atlantic Coast and Gulf Coast areas of Florida, Memphis/Tunica and
Chattanooga (TN) and Myrtle Beach (SC)) and the East Coast (New York, Washington
D.C., Philadelphia, Northern New Jersey, Wilmington (DE), Salisbury (MD) and
Hudson Valley (NY)). After giving effect to the Acquisitions, the Company is the
third largest pure-play outdoor advertising company in the United States on the
basis of net revenues. For the year ended December 31, 1996, on a pro forma
basis the Company had net revenues and EBITDA of $176.6 million and $85.8
million, respectively, which compare favorably to the pro forma results for the
same period in 1995 of $162.8 million and $75.7 million, respectively. The
Company believes that its 1996 EBITDA Margin of 51.3%, or 48.6% on a pro forma
basis after giving effect to the Acquisitions, is among the highest in the
industry. There can be no assurance that the Company's future net revenues and
EBITDA Margins will equal or exceed that which have been achieved to date. In
addition, the Company has historically had net losses and has substantial
indebtedness. See "Risk Factors -- Substantial Indebtedness of the Company;
Potential Inability to Service Indebtedness" and
"--Prior Period Losses."
3
<PAGE>
The Acquisitions have significantly expanded and diversified the Company's
presence into new major metropolitan markets. The following table sets forth, as
of April 30, 1997, certain information with respect to the Company's outdoor
markets after giving effect to the Acquisitions:
<TABLE>
<CAPTION>
1996 % OF 1996 TOTAL
PRO FORMA PRO FORMA 30-SHEET 8-SHEET DISPLAY
MARKET NET REVENUES NET REVENUES BULLETINS POSTERS POSTERS FACES
- ------------------------- ---------------------- ------------ --------- -------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
MIDWEST:
Chicago................ $ 17,990 10.2% 655 -- 3,609 4,264
Minneapolis/St. Paul... 17,320 9.8 455 1,339 -- 1,794
Indianapolis........... 10,533 6.0 257 1,106 101 1,994
Milwaukee.............. 4,818 2.7 261 -- 338 599
Des Moines............. 3,539 2.0 86 578 9 673
Evansville............. 3,435 1.9 278 699 -- 977
Dallas................. 1,261 0.8 254 -- 1,210 1,464
SOUTHEAST:
Orlando................ 25,145 14.2 808 1,082 -- 1,890
Jacksonville........... 8,528 4.9 448 788 -- 1,236
Ocala.................. 5,240 3.0 859 204 -- 1,063
Memphis/Tunica......... 14,705 8.3 653 1,185 99 2,457
Chattanooga............ 5,470 3.1 333 648 -- 981
Myrtle Beach........... 9,495 5.4 711 472 -- 1,183
Atlantic Coast area
(FL).................. 5,132 2.9 664 -- 664
Gulf Coast area (FL)... 1,712 1.0 457 -- -- 457
EAST COAST:
Philadelphia........... 13,939 7.9 357 2,085 -- 2,634
Washington, D.C........ 6,289 3.6 86 586 -- 672
Salisbury.............. 3,435 1.9 394 479 -- 873
Wilmington............. 4,576 2.6 159 917 45 1,121
Baltimore.............. 2,295 1.3 209 1,234 -- 3,360
Mall Media............. 2,636 1.5 -- -- -- 1,582
Northern NJ............ 4,256 2.4 162 5 6 173
Metro New York......... 3,375 1.9 42 364 -- 406
Hudson Valley.......... 1,312 0.7 125 260 27 412
---------- ----- --------- -------- ------- -------
Total................ $176,611 100.0% 8,713 14,031 5,444 32,929(1)
---------- ----- --------- -------- ------- -------
---------- ----- --------- -------- ------- -------
</TABLE>
- ------------------------
(1) Includes 530 transit display faces located in Indianapolis, 192 bus shelters
in Philadelphia, 1,917 transit display faces in Baltimore, 520 transit
display faces in Memphis and 1,582 kiosk displays in malls throughout the
United States.
4
<PAGE>
OPERATING STRATEGY
The Company's objective is to be the leading provider of outdoor advertising
services in each of its three regional operating areas and to expand its
presence in attractive new markets. The Company believes that regional clusters
provide it with significant opportunities to increase revenue and achieve cost
savings by delivering to local and national advertisers efficient access to
multiple markets or highly targeted areas. Management intends to implement the
following operating strategy:
- MAXIMIZE RATES AND OCCUPANCY. Through continued emphasis on customer
sales and service, quality displays and inventory management, the Company seeks
to maximize advertising rates and occupancy levels in each of its markets.
- INCREASE MARKET PENETRATION. The Company seeks to expand operations
within its existing markets through new construction and acquisitions of
additional advertising display faces in its existing markets.
- PURSUE STRATEGIC ACQUISITIONS. The Company seeks to grow by acquiring
additional advertising display faces in new, closely proximate markets which
allow the Company to capitalize on the operating efficiencies and cross-market
sales opportunities associated with operating in multiple markets within
distinct regions.
- CAPITALIZE ON TECHNOLOGICAL ADVANCES. The Company seeks to capitalize on
technological advances that enhance its productivity and increase its ability to
effectively respond to its customers' needs.
- MAINTAIN LOW COST STRUCTURE. Through continued adherence to strict cost
controls, centralization of administrative functions and maintenance of low
corporate overhead, the Company seeks to maximize its EBITDA Margin, which it
believes to be among the highest in the industry.
- DEVELOP OTHER OUT-OF-HOME MEDIA. The Company seeks to develop other
forms of out-of-home media such as bus shelter or transit advertising in order
to enhance revenues in existing markets or provide access to new markets.
The Company believes that its experienced senior management team is an
important asset in the successful implementation of its operating strategy.
Daniel L. Simon, President and Chief Executive Officer and the founder of the
Company, has spent his entire professional career of 23 years in the outdoor
advertising business. Brian T. Clingen, Vice President and Chief Financial
Officer, and Paul G. Simon, Vice President and General Counsel, together possess
over 24 years of experience in the industry. As of December 31, 1996, this
management team has successfully completed and integrated 17 acquisitions since
1989.
The Company was incorporated in Delaware in 1991 and its principal executive
office is located at 321 North Clark Street, Chicago, Illinois 60610, and its
telephone number is (312) 644-8673.
RECENT ACQUISITIONS
Consistent with its operating strategy, the Company has acquired the assets
or capital stock of four outdoor advertising companies. The Company believes
that these acquisitions will significantly strengthen its market presence in the
midwest and southeast regions of the United States, create a substantial
presence in the east coast region and allow the Company to capitalize on the
operating efficiencies and cross-market sales opportunities associated with
operating in closely proximate markets.
THE POA ACQUISITION. In October 1996, the Company acquired the outstanding
capital stock of Outdoor Advertising Holdings, Inc. ("OAH") for approximately
$240 million in cash, pursuant to a merger of a subsidiary of the Company with
and into OAH (the "POA Acquisition"). As a result of the POA Acquisition, the
Company acquired a total of approximately 6,337 advertising display faces
consisting of bulletins and posters in five markets located in the southeast
United States, including Orlando, Ocala and Palm Beach, as well as the East
Coast and Gulf Coast areas of Florida, and Myrtle Beach and Chattanooga.
5
<PAGE>
THE REVERE ACQUISITION. In December 1996, the Company acquired the
outstanding capital stock of Revere Holding Corp. ("Revere") for approximately
$125 million in cash (the "Revere Acquisition"). As a result of the Revere
Acquisition, the Company acquired a total of approximately 8,853 advertising
display faces located in markets in the east coast of the United States,
including Philadelphia, Washington D.C., Wilmington and Salisbury, as well as
1,917 transit display faces located in Baltimore and 1,582 kiosk displays
located in malls throughout the United States.
THE MEMPHIS/TUNICA ACQUISITION. In September 1996, the Company, through a
newly-formed subsidiary, agreed to acquire a total of approximately 2,018
advertising display faces consisting of bulletins and posters located in and
around Memphis, Tennessee and Tunica County, Mississippi (the "Memphis/Tunica
Acquisition"). The Memphis/Tunica Acquisition was subsequently consummated in
January 1997 for a purchase price of approximately $71 million plus 100,000
shares of the Company's Common Stock.
THE MATTHEW ACQUISITION. In December 1996, the Company agreed to acquire
certain of the assets of Matthew Outdoor Advertising Acquisition Co. L.P.
("Matthew") for approximately $40 million in cash and assumption by the Company
of certain liabilities of Matthew (the "Matthew Acquisition"). As a result of
the Matthew Acquisition, consummated in January 1997, the Company acquired a
total of approximately 1,035 advertising display faces located in three markets,
including metro New York, northern New Jersey and Hudson Valley.
THE ADDITIONAL ACQUISITIONS. In September 1996, the Company purchased
certain assets of (i) Iowa Outdoor Displays for approximately $1.8 million in
cash (the "Iowa Acquisition") and (ii) The Chase Company for approximately $5.8
million in cash (the "Dallas Acquisition," and together with the Iowa
Acquisition, the "Additional Acquisitions"). As a result of the Additional
Acquisitions, the Company acquired approximately 160 advertising display faces
consisting primarily of posters in and around Des Moines and approximately 245
advertising display faces consisting primarily of bulletins in and around
Dallas.
For more information on these acquisitions, see "The Transactions."
DESCRIPTION OF SECURITIES
On June 30, 1994, the Company issued and sold to Bear, Stearns & Co. Inc. as
the Initial Purchaser (the "Initial Purchaser") 50,000 Units (the "Units")
consisting of $50,000,000 principal amount at maturity of 14% Series A Senior
Secured Discount Notes due 2004 (the "Old Notes") and 50,000 Noteholder Warrants
for an aggregate offering price of approximately $25.4 million (the "Warrant
Offering"). In connection with the Warrant Offering, Bear, Stearns & Co. Inc.,
in its individual capacity and not as Initial Purchaser, received compensation
in the form of 12,500 Noteholder Warrants. Each Unit consisted of $1,000
principal amount at maturity of the Old Notes and one Noteholder Warrant, and
the Old Notes and Noteholder Warrants were immediately detachable and separately
transferable, subject to compliance with applicable federal and state securities
laws. The sale to the Initial Purchaser was exempt from registration under the
Securities Act of 1933 (the "Securities Act"). On December 9, 1994, in a
transaction registered under the Securities Act, the Company issued $50,000,000
principal amount at maturity of its 14% Senior Secured Discount Notes due 2004
(the "Existing Company Notes") in exchange for all of the issued and outstanding
Old Notes. The 24,200 Noteholder Warrants to which this Prospectus relates are
the Noteholder Warrants issued in the Warrant Offering and the Noteholder
Warrants issued to Bear, Stearns & Co. Inc. in its individual capacity.
<TABLE>
<S> <C>
Securities.................................. 24,200 Noteholder Warrants to purchase Common
Stock, each of which entitles the holder
thereof to purchase sixteen shares of Common
Stock for a purchase price of $.000625 per
share, and 387,200 shares of Common Stock
issuable upon exercise of the Noteholder
Warrants. See "Description of Noteholder
Warrants -- General."
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
Exercise of Noteholder Warrants............. Prior to July 1, 1999, the Noteholder Warrants
are exercisable only upon certain Trigger
Events (as defined herein under "Description
of Noteholder Warrants"), including an Initial
Public Offering, a Disposition, a
Non-Surviving Combination and a Change of
Control (in each case, as defined herein under
"Description of Noteholder Warrants"). The
Company completed an Initial Public Offering
of 4,630,000 shares of its Common Stock
(including 930,000 shares sold pursuant to
exercise of underwriters' over-allotment
options) on July 26, 1996 and therefore, the
Noteholder Warrants are currently exercisable.
Of the 62,500 Noteholder Warrants originally
offered for sale, 38,300 Noteholders Warrants
were exercised in exchange for Common Stock
pursuant to and the Common Stock was sold
pursuant to a Prospectus Supplement dated July
25, 1996. The Noteholder Warrants will expire
on July 1, 2004. See "Description of
Noteholder Warrants -- Exercise of Noteholder
Warrants."
Anti-Dilution............................... The number of shares of Common Stock issuable
upon exercise of the Noteholder Warrants is
subject to certain anti-dilution adjustments.
See "Description of Noteholder Warrants --
Anti-Dilution Adjustments."
</TABLE>
SELLING SECURITYHOLDERS AND PLAN OF DISTRIBUTION
The Securities may be sold from time to time by the Selling Securityholders
through underwriters or dealers, through brokers or other agents, or directly to
one or more purchasers at market prices then prevailing at the time of sale or
at prices otherwise negotiated. The Company has agreed to bear the expenses
incurred in connection with the registration of the Securities, except for
commissions of brokers or dealers, and to indemnify the Selling Securityholders
against certain liabilities, including liabilities under the Securities Act. See
"Selling Securityholders and Plan of Distribution."
RISK FACTORS
See "Risk Factors" for a discussion of certain factors to be considered by
prospective investors, including the Company's substantial leverage and possible
inability to service its debt, the potential difficulties the Company may face
in integrating acquisitions and the recent trends in the advertising business
and tobacco regulation that could adversely affect the Company's business.
RECENT DEVELOPMENTS
In February 1997, the Company agreed to acquire the stock of Penn-Baltimore,
Inc. ("Penn") from Lamar Advertising Company ("Lamar") for $46.5 million in cash
(the "Penn Acquisition"). The Penn Acquisition was consummated on June 3, 1997
and the Company acquired approximately 1,450 advertising display faces in the
Baltimore metropolitan area.
In April 1997, the Company agreed to acquire certain assets of Allied
Outdoor Advertising, Inc. ("Allied") for $51.2 million in cash (the "Allied
Acquisition"). Upon consummation of the Allied Acquisition, the Company will
acquire 90 advertising display faces in New York City and New Jersey.
7
<PAGE>
SUMMARY PRO FORMA FINANCIAL INFORMATION
The following sets forth summary unaudited consolidated pro forma financial
information derived from the information contained under the caption "Pro Forma
Financial Information" elsewhere in this Prospectus. The summary unaudited pro
forma combined statement of operations for the year ended December 31, 1996
gives effect to (i) the Transactions, (ii) the December Offering and the October
Offerings and the application of the estimated net proceeds therefrom, (iii) the
acquisitions of NOA Holding Company ("Naegele")(1), Ad-Sign, Inc.(2), Image
Media, Inc.(3) and consummation of the Offering and the application of the
estimated net proceeds therefrom, and (iv) the net reduction in operating
expenses of the businesses acquired as if each had occurred at January 1, 1996.
Pro forma financial information has not been updated through March 31, 1997 due
to significant acquisitions occurring in early January 1997. As such, pro forma
information would not be significantly different from actual.
The summary unaudited combined pro forma financial information does not
purport to present the actual financial position or results of operations of the
Company had the transactions and events assumed therein in fact occurred on the
dates specified, nor are they necessarily indicative of the results of
operations that may be achieved in the future. The summary unaudited pro forma
combined financial information is based on certain assumptions and adjustments
described in the notes contained in "Pro Forma Financial Information" and should
be read in conjunction therewith. See "Management's Discussion and Analysis of
Results of Operations and Financial Condition," the Consolidated Financial
Statements and the Notes thereto of the Company, the Consolidated Financial
Statements and the Notes thereto of NOA Holding Company, the Statement of
Revenues and Direct Expenses and the Notes thereto of Ad-Sign, the Financial
Statements and Notes thereto of POA Acquisition Corporation, and the
Consolidated Financial Statements and Notes thereto of Revere Holding Corp.
included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
PRO FORMA
YEAR ENDED DECEMBER
31, 1996
----------------------
(DOLLARS IN THOUSANDS)
<S> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues(4)......................................................................... $ 176,611
Direct cost of revenues................................................................. 69,988
General and administrative expenses..................................................... 20,848
Depreciation and amortization........................................................... 50,818
Non cash compensation for common stock warrants......................................... 9,000
Operating income........................................................................ 25,957
Interest expense........................................................................ 44,235
Other expense........................................................................... 1,811
Income (loss) before income taxes and extraordinary items............................... (20,089)
OTHER DATA:
EBITDA(5)............................................................................... $ 85,775
EBITDA Margin(6)........................................................................ 48.6%
Deficiency in earnings to cover fixed charges........................................... (20,089)
Ratio of total indebtedness to EBITDA(7)................................................ 5.40
Ratio of EBITDA to total interest(8).................................................... 1.9x
</TABLE>
8
<PAGE>
- ------------------------------
(1) Naegele was purchased in April 1996. In the stock transaction, the Company
acquired approximately 2,550 poster faces and 840 bulletin faces in the
Minneapolis/St. Paul, Minnesota and Jacksonville, Florida markets.
(2) Ad-Sign, Inc. was purchased in January 1996 in an asset transaction. The
Company acquired approximately 160 painted bulletin faces in the Chicago
market.
(3) Image Media, Inc. was purchased in March 1996 in an asset transaction. The
Company acquired approximately 18 painted bulletin and painted wall faces in
the Chicago market.
(4) Net revenues are gross revenues less agency commissions.
(5) "EBITDA" is operating income before depreciation and amortization and other
noncash charges. EBITDA is not intended to represent net cash flow provided
by operating activities as defined by generally accepted accounting
principles and should not be considered as an alternative to net income
(loss) as an indicator of the Company's operating performance or to net cash
provided by operating activities as a measure of liquidity. The Company
believes EBITDA is a measure commonly reported and widely used by analysts,
investors and other interested parties in the media industry. Accordingly,
this information has been disclosed herein to permit a more complete
comparative analysis of the Company's operating performance relative to
other companies in the media industry.
(6) "EBITDA Margin" is EBITDA stated as a percentage of net revenues.
(7) Amounts represent (i) total long-term debt divided by (ii) EBITDA.
(8) Amounts represent the ratio of (i) EBITDA (ii) interest expense on funded
debt.
9
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
---------------------------------------------------------------- --------------------
1991 1992 1993 1994 1995 1996 1996 1997
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Gross revenues......................... $ 21,435 $ 27,896 $ 28,710 $ 33,180 $ 38,101 $ 84,939 $ 9,332 $ 47,575
Net revenues(1)........................ 18,835 24,681 25,847 29,766 34,148 76,138 8,427 44,008
Direct advertising expenses............ 7,638 10,383 10,901 11,806 12,864 26,468 3,571 18,445
General and administrative expenses.... 3,515 3,530 3,357 3,873 4,645 10,648 1,227 4,401
Depreciation and amortization.......... 5,530 7,817 8,000 7,310 7,402 18,286 2,032 12,859
Non cash compensation for common stock
warrants............................. 9,000
Operating income....................... 2,152 2,951 3,589 6,777 9,237 11,736 1,597 8,303
Interest expense....................... 6,599 9,591 9,299 11,809 12,894 19,567 3,594 10,735
Other (expense) income, net............ (53) 291 (351) (134) (46) (1,398) 11 (182)
Income (loss) before extraordinary
item(2).............................. (4,500) (6,349) (6,061) (5,166) (3,703) (9,229) (2,008) (2,250)
Income (loss) before income tax........ (4,500) (6,349) (9,321) (5,166) (3,703) (35,803) (2,008) (2,250)
Net loss per share..................... (0.59) (0.83) (1.22) (0.67) (0.48) (2.27) (.26) (.09)
Weighted average common and equivalent
shares outstanding................... 7,654 7,654 7,654 7,654 7,654 15,787 7,654 24,096
OTHER DATA:
EBITDA(3).............................. $ 7,682 $ 10,768 $ 11,589 $ 14,087 $ 16,639 $ 39,022 $ 3,629 $ 21,162
EBITDA Margin(4)....................... 40.8% 43.1% 44.8% 47.3% 48.7% 51.3% 43.1% 48.1%
Capital expenditures................... 2,047 2,352 2,004 4,668 5,620 7,178 1,966 3,584
FINANCIAL RATIOS:
Percentage of indebtedness to total
capitalization(5).................... 121.4% 142.8% 186.7% 153.7% 156.8% 60.6% 150.8% 66.5%
Ratio of EBITDA to total interest(6)... 1.2x 1.1x 1.2x 1.2x 1.3x 2.0x 1.0x 2.0x
</TABLE>
<TABLE>
<CAPTION>
MARCH 31,
--------------------
1996 1997
--------- ---------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital.......................................................................... $ 2,534 $ (2,358)
Total assets............................................................................. 84,747 790,867
Total long-term debt..................................................................... 120,248 451,220
Common stockholders' equity (deficit).................................................... (40,533) 227,678
</TABLE>
- ----------------------------------
(1) Net revenues are gross revenues less agency commissions.
(2) Extraordinary item represents loss on early extinguishment of debt.
(3) "EBITDA" is operating income before depreciation and amortization and other
non cash charges. EBITDA is not intended to represent net cash provided by
operating activities as defined by generally accepted accounting principles
and should not be considered as an alternative to net income (loss) as an
indicator of the Company's operating performance or to net cash provided by
operating activities as a measure of liquidity. The Company believes EBITDA
is a measure commonly reported and widely used by analysts, investors and
other interested parties in the media industry. Accordingly, this
information has been disclosed herein to permit a more complete comparative
analysis of the Company's operating performance relative to other companies
in the media industry.
(4) "EBITDA Margin" is EBITDA stated as a percentage of net revenues.
(5) Amounts represent (i) total long-term debt divided by (ii) total long-term
debt plus common stockholders' equity (deficit).
(6) Amounts represent the ratio of (i) EBITDA (ii) interest expense on total
long-term debt.
10
<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, THE FOLLOWING
FACTORS SHOULD BE CONSIDERED CAREFULLY IN EVALUATING AN INVESTMENT IN THE
SECURITIES OFFERED BY THIS PROSPECTUS.
SUBSTANTIAL INDEBTEDNESS OF THE COMPANY; POTENTIAL INABILITY TO SERVICE
INDEBTEDNESS. The Company has substantial indebtedness. On a pro forma basis
after giving effect to the Acquisitions and indebtedness incurred as a result of
the Acquisitions and borrowings under the Company's credit facility, the
issuance of the October Notes and the December Notes (collectively, the "Notes")
as of December 31, 1996, the Company's total long-term debt was approximately
$462.8 million, and interest expense was approximately $44.2 million, or 25.0%
of net revenues. The Company's level of consolidated indebtedness could have
important consequences to the holders of Common Stock, including the following:
(i) a substantial portion of the Company's cash flow from operations must be
dedicated to the payment of the principal of and interest on its indebtedness
and will not be available for other purposes; (ii) the ability of the Company to
obtain financing in the future for working capital needs, capital expenditures,
acquisitions, investments, general corporate purposes or other purposes may be
materially limited or impaired; and (iii) the Company's level of indebtedness
may reduce the Company's flexibility to respond to changing business and
economic conditions. Subject to certain limitations contained in its outstanding
debt instruments, credit agreement and the Notes, the Company or its
subsidiaries may incur additional indebtedness to finance working capital or
capital expenditures, investments or acquisitions or for other purposes. See
"Description of Indebtedness and Other Commitments." There can be no assurance
that the Company's EBITDA will continue to exceed its fixed charges. A decline
in EBITDA could impair the Company's ability to meet its obligations, including
for debt service, and to make scheduled principal repayments. See "Selected
Consolidated Financial and Operating Data" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
PRIOR PERIOD LOSSES. The Company has historically had net losses which have
resulted in significant part from substantial depreciation and amortization
expenses relating to assets purchased in the Company's acquisitions, interest
expense associated with related indebtedness and deferred financing costs
charged to extraordinary losses. Moreover, additional acquisitions will result
in increased depreciation, amortization and interest expenses. There can be no
assurance that the Company will generate net income in the future.
RESTRICTIONS IMPOSED BY THE COMPANY'S INDEBTEDNESS. The banks under the New
Credit Facility (as defined in "Description of Indebtedness and Other
Commitments") have a lien on substantially all of the assets of UOI, including
the capital stock of its subsidiaries, to secure the indebtedness of UOI under
such credit facility. The New Credit Facility and the Notes contain restrictions
on UOI's ability to incur additional indebtedness, create liens, pay dividends,
sell assets and make acquisitions. Furthermore, the New Credit Facility contains
certain maintenance tests. There can be no assurance that UOI and its
subsidiaries will be able to comply with the provisions of their respective debt
instruments, including compliance by UOI with the financial ratios and tests
contained in the New Credit Facility. Breach of any of these covenants or the
failure to fulfill the obligations thereunder and the lapse of any applicable
grace periods would result in an event of default under the applicable debt
instruments, and the holders of such indebtedness could declare all amounts
outstanding under the applicable instruments to be due and payable immediately.
There can be no assurance that the assets or cash flow of the Company or the
Company's subsidiaries, as the case may be, would be sufficient to repay in full
borrowings under their outstanding debt instruments whether upon maturity or
earlier or if such indebtedness were to be accelerated upon an event of default
or certain repurchase events or that UOI would be able to refinance or
restructure its payments on such indebtedness or repurchase the Notes. If such
indebtedness were not so repaid, refinanced or restructured, the lenders or
noteholders, as applicable, could proceed to realize on their collateral. In
addition, any event of default or declaration of acceleration under one debt
instrument could also result in an event of default under one or more of UOI's
other debt instruments. See "-- Substantial Indebtedness of the Company;
Potential Inability to Service Indebtedness" and "Description of Indebtedness
and Other Commitments."
11
<PAGE>
COMPANY'S DEPENDENCY ON UOI; HOLDING COMPANY STRUCTURE. The Company is a
holding company with no business operations of its own. The Company's only
material asset is all of the outstanding capital stock of UOI, through which the
Company conducts its business operations. Accordingly, the Company will be
dependent on the earnings and cash flow, and dividends and distributions from
UOI to pay its expenses and to pay any cash dividends or distributions on the
Common Stock that may be authorized by the Board of Directors of the Company.
UOI has substantial cash interest expense due on the Notes. There can be no
assurance that UOI will generate sufficient cash flow to pay dividends or
distribute funds to the Company or that applicable state law and contractual
restrictions, including negative covenants contained in the debt instruments of
UOI, will permit such dividends or distributions. The terms of the New Credit
Facility and the Notes currently restrict UOI from paying dividends or making
distributions except in very limited circumstances, including paying certain
expenses of the Company. See "-- Substantial Indebtedness of the Company;
Potential Inability to Service Indebtedness" and "Description of Indebtedness
and Other Commitments."
POTENTIAL INABILITY TO MAKE OR FINANCE ACQUISITIONS. The Company's growth
has been facilitated by strategic acquisitions that have substantially increased
the Company's inventory of advertising display faces. One element of the
Company's operating strategy is to make acquisitions in new and existing
markets. There can be no assurance that suitable acquisition candidates can be
found. The Company is likely to face competition from other outdoor advertising
and media companies for acquisition opportunities that are available. In
addition, if the prices sought by sellers of outdoor advertising display faces
and companies continue to rise, the Company may find fewer acceptable
acquisition opportunities. There can be no assurance that the Company will have
sufficient capital resources to complete acquisitions or that acquisitions can
be completed on terms acceptable to the Company. Also, in the Minneapolis/St.
Paul market, the Company is subject to a consent judgment that restricts the
Company's ability to purchase outdoor advertising display faces until February
1, 2001. See "Business -- Government Regulation." As part of its regular
on-going evaluation of strategic acquisition opportunities, the Company may from
time to time engage in discussions concerning possible acquisitions, some of
which may be material in size. The purchase price of such acquisitions may
require additional debt or equity financing on the part of the Company.
THE ACQUISITIONS; CHALLENGES OF INTEGRATION. The Company will face
significant challenges in integrating the operations acquired in connection with
the Acquisitions with those of the Company, particularly in geographic regions
where the Company has not previously operated. The Company has never integrated
an acquisition the size of the POA Acquisition or the Revere Acquisition.
Integration of such operations will require substantial attention from the
Company's management. Diversion of management attention from the Company's
existing business could have an adverse impact on the revenues and operating
results of the Company. There can be no assurance the Company will be able to
integrate such operations successfully. Furthermore, there can be no assurance
that the Penn Acquisition will be consummated.
NEGATIVE IMPLICATIONS OF TOBACCO INDUSTRY REGULATION ON OUTDOOR
ADVERTISING. On a pro forma basis taking into account the Acquisitions,
approximately 10.8% of the Company's net revenues in 1996 were derived from
tobacco advertising. In August 1996, the U.S. Food and Drug Administration
issued final regulations governing certain marketing practices in the tobacco
industry. Among other things, the regulations prohibit tobacco product billboard
advertisements within 1,000 feet of schools and playgrounds and require that
tobacco product advertisements on billboards be in black and white and contain
only text. In addition, one major tobacco manufacturer recently proposed federal
legislation banning 8-sheet billboard advertising and transit advertising of
tobacco products. There can be no assurance as to the effect of these
regulations or this legislation on the Company's business and on its net
revenues, EBITDA and financial position. A reduction in billboard advertising by
the tobacco industry could cause an immediate reduction in the Company's direct
revenue from such advertisers and would simultaneously increase the available
space on the existing inventory of billboards in the outdoor advertising
industry. This could in turn result in a lowering of rates throughout the
industry or limit the ability of industry participants to increase rates for
some period of time. Any such consequence could
12
<PAGE>
have the effect of reducing the Company's EBITDA, which could in turn reduce the
Company's ability to meet its financial obligations under the indentures
governing the Notes and the New Credit Facility (as defined in "The
Transactions"). The tobacco industry has recently engaged in negotiations to
settle litigation against such industry. The tobacco companies have reached a
proposed settlement that, upon the approval of Congress, will become final and
binding. Such proposed settlement would require a total ban of tobacco
advertising on outdoor billboards and signs. Any such ban may have a material
adverse effect on the Company's revenues at least in the immediate period
following the imposition of such ban while alternate sources of advertising are
secured. The competition in the outdoor advertising business for any such
alternate sources of advertising following the imposition of a total ban on
tobacco advertising on outdoor billboards and signs is expected to be intense.
There can be no assurance that the Company will immediately replace such
advertising revenue currently attributed to the tobacco industry in the event of
a total ban of tobacco advertising on outdoor billboards and signs. Furthermore,
state and local governments have recently proposed and some have enacted
regulations restricting or banning outdoor advertising of tobacco in certain
jurisdictions. Continued passage of restrictions or bans on outdoor advertising
in the Company's markets may adversely affect the Company's revenues at least in
the immediate period following such regulation. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business --
Customers" and "Business -- Government Regulation."
REGULATION OF OUTDOOR ADVERTISING. Outdoor advertising displays are subject
to governmental regulation at the federal, state and local levels. These
regulations, in some cases, limit the height, size, location and operation of
billboards and, in limited circumstances, regulate the content of the
advertising copy displayed on the billboards. Some governmental regulations
prohibit the construction of new billboards or the replacement, relocation,
enlargement or upgrading of existing structures. Some cities have adopted
amortization ordinances under which, after the expiration of a specified period
of time, billboards must be removed at the owner's expense and without the
payment of compensation. Ordinances requiring the removal of a billboard without
compensation, whether through amortization or otherwise, are being challenged in
various state and federal courts with conflicting results. Other than in the
Company's newly acquired Jacksonville market, amortization ordinances have not
materially affected operations in the Company's markets. As a result of a
settlement of litigation related to certain assets in the Jacksonville market
prior to their acquisition, the Company has removed 165 outdoor advertising
structures in 1995 and is required to remove an additional 546 (of its total of
1,493) outdoor advertising structures over the next 19 years with 317 of such
structures to be removed between 1995 and 1998. There can be no assurance that
these removals will not adversely affect the Company's results of operations. In
addition, no assurance can be given as to the effect on the Company of existing
laws and regulations or of new laws and regulations that may be adopted in the
future. Certain state and local governments have recently proposed and some have
enacted regulations restricting or banning outdoor advertising of tobacco and
liquor in certain jurisdictions. Continued restrictions and bans on outdoor
advertising in the Company's markets may adversely affect the Company's revenues
at least in the immediate period following such regulations. See "-- Negative
Implications of Tobacco Industry Regulation on Outdoor Advertising" and
"Business -- Customers" and "Business -- Government Regulation."
NEGATIVE EFFECTS OF A DECLINE IN GENERAL ECONOMIC CONDITIONS ON ADVERTISING
TRENDS. The Company relies on sales of advertising space for its revenues and
its operating results therefore are affected by general economic conditions as
well as trends in the advertising industry. A reduction in advertising
expenditures available for the Company's displays could result from a general
decline in economic conditions, a decline in economic conditions in particular
markets where the Company conducts business or a reallocation of advertising
expenditures to other available media by significant users of the Company's
displays.
COMPETITION. The Company faces competition for advertising revenues from
other outdoor advertising companies, as well as from other media such as radio,
television, print media and direct mail marketing. The Company also competes
with a wide variety of other out-of-home advertising media, the range and
diversity of which has increased substantially over the past several years,
including advertising
13
<PAGE>
displays in shopping centers and malls, airports, stadiums, movie theaters and
supermarkets, and on taxis, trains, buses and subways. Some of the Company's
competitors are substantially larger, better capitalized and have access to
greater resources than the Company. There can be no assurance that outdoor
advertising media will be able to compete with other types of media, or that the
Company will be able to compete either within the outdoor advertising industry
or with other media. See "Business -- Competition."
POTENTIAL LITIGATION AGAINST THE COMPANY. From time to time, the Company is
involved in litigation in the ordinary course of business, including disputes
involving advertising contracts, site leases, employment claims and construction
matters. The Company is also involved in routine administrative and judicial
proceedings regarding permits and fees relating to outdoor advertising
structures and compensation for condemnations. None of those proceedings, in the
opinion of management, is likely to have a material adverse effect on the
Company.
RELIANCE ON KEY EXECUTIVES. The Company's success depends to a significant
extent upon the continued services of its executive officers and other key
management and sales personnel, in particular its President and Chief Executive
Officer, Daniel L. Simon. The Company has few employment contracts with its
employees, and very few of its employees are bound by non-competition
agreements. The Company maintains key man insurance on Daniel L. Simon. The
unavailability of the continuing services of its executive officers and other
key management and sales personnel could have a material adverse effect on the
Company's business. See "Management."
CONTROL BY EXECUTIVE OFFICERS AND DIRECTORS. Upon consummation of the
Offering, the Company's officers and directors became beneficial owners of
(including for this purpose options exercisable within 60 days, the Warrant
Shares issued upon exercise of the Noteholder Warrants (as defined in
"Description of Capital -- The Noteholder Warrants"), the Common Stock issuable
upon exercise of the Warrants exercisable upon consummation of the Offering
pursuant to the 1996 Warrant Plan (as defined in "Description of Capital Stock
- -- The 1996 Warrant Plan") and shares over which such persons have voting
control) approximately 46.61% of the outstanding shares of the Company's Common
Stock. See "Principal Stockholders." Such persons, if acting together, would
have sufficient voting power to control the outcome of corporate actions
submitted to the stockholders for approval and to control the management and
affairs of the Company, including the election of the Board of Directors of the
Company. As a result of such control, certain transactions may not be possible
without the approval of such stockholders, including proxy contests, mergers
involving the Company and tender offers or other purchases of Common Stock that
could give stockholders of the Company the opportunity to realize a premium over
the then-prevailing market price for their shares of Common Stock. See
"Principal Stockholders" and "Description of Capital Stock -- Special Provisions
of the Certificate of Incorporation, Bylaws and Delaware Law."
DIFFICULTY IN ESTABLISHING A CHANGE OF CONTROL OR MANAGEMENT; ANTI-TAKEOVER
PROVISIONS. The level of stock ownership of the management of the Company and
KIA V and KEP V (each as hereinafter defined), as well as the provisions of
Delaware corporation law and the Certificate of Incorporation and Bylaws (each
as defined in "Description of Capital Stock"), may have the effect of deterring
hostile takeovers, delaying or preventing changes in control or changes in
management, or limiting the ability of stockholders to approve transactions that
they may deem to be in their best interests. In addition, under the Company's
Certificate of Incorporation, the Board of Directors has the authority to issue
shares of Preferred Stock and establish the rights and preferences thereof
without obtaining stockholder approval. The Company has no present plans to
issue any shares of Preferred Stock. See "Description of Capital Stock."
ABSENCE OF PUBLIC MARKET. There is currently no public market for the
Noteholder Warrants offered hereby and there can be no assurance that an active
public market for the Noteholder Warrants will develop. The Common Stock is
quoted on the Nasdaq National Market under the symbol "UOUT."
REJECTION OF WARRANTS IN BANKRUPTCY PROCEEDINGS. If a bankruptcy or
reorganization case were commenced by or against the Company, a bankruptcy court
might hold that unexercised Noteholder
14
<PAGE>
Warrants are executory contracts that may be subject to rejection by the Company
(with the approval of the bankruptcy court), in which event, even if sufficient
funds were available, holders of the Noteholder Warrants might receive nothing
or a lesser amount than they would be entitled to receive if they had exercised
their Noteholder Warrants prior to the commencement of such case.
SUBSTANTIAL PREVIOUSLY RESTRICTED COMMON STOCK ELIGIBLE FOR FUTURE
SALE. 180 days after the date of the Offering (upon expiration of certain
lockup agreements with the underwriters for the Offering), 10,432,400 shares of
Common Stock outstanding as of the date of this Prospectus, became eligible for
sale immediately in reliance on Rule 144A and at prescribed times, subject to
volume and manner of sale restrictions, in reliance on Rule 144, each
promulgated under the Securities Act. Sales of substantial amounts of Common
Stock (including shares issued upon exercise of stock options), or the
perception that such sales could occur, could adversely affect prevailing market
prices for the Common Stock. An additional 2,470,608 shares have been issued
under the 1996 Warrant Plan and upon issuance will be eligible for sale under
Rule 144. Moreover, KIA V (as defined) and KEP V and their respective partners
and certain officers of the Company, who in the aggregate beneficially own
10,432,400 shares of Common Stock have certain registration rights with respect
thereto. See "Management -- The 1996 Warrant Plan" and "Description of
Noteholder Warrants."
CAUTIONARY STATEMENTS FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This Prospectus contains certain forward-looking statements that involve
substantial risks and uncertainties. When used in this Prospectus, the words
"anticipate," "believe," "estimate," and "expect" and similar expressions as
they relate to the Company or its management are intended to identify such
forward-looking statements. The Company's actual results, performance or
achievements could differ materially from the results expressed in, or implied
by, these forward-looking statements. Factors that could cause or contribute to
such differences include those discussed in "Risk Factors."
THE TRANSACTIONS
THE ACQUISITIONS
THE POA ACQUISITION. On August 27, 1996, the Company entered into the
Agreement and Plan of Merger pursuant to which it agreed to acquire the
outstanding capital stock of OAH for approximately $240 million in cash. The POA
Acquisition was effectuated pursuant to a merger of a subsidiary of the Company
with and into OAH with OAH continuing as the surviving corporation following the
merger. As a result of the POA Acquisition, the Company acquired a total of
approximately 6,337 advertising display faces consisting of bulletins and
posters in five markets located in the southeast United States, including
Orlando, Ocala, Palm Beach, Myrtle Beach and Chattanooga, as well as the
Atlantic Coast and Gulf Coast areas of Florida.
The Company believes that the POA Acquisition will substantially strengthen
its operations in the southeast United States, particularly in Florida, where
the Company believes it has the largest number of outdoor advertising display
faces and the largest market share in each of its markets, except Palm Beach.
The Company believes that the southeast United States is a particularly
attractive region due to its (i) high concentration of destination cities and
resorts; (ii) above average population growth; (iii) extensive highway/roadway
systems; and (iv) temperate climate that promotes outdoor lifestyles.
THE REVERE ACQUISITION. In December 1996, the Company acquired the
outstanding capital stock of Revere for approximately $125 million in cash. As a
result of the Revere Acquisition, the Company acquired a total of approximately
8,853 advertising display faces located in four markets in the northeast United
States, including Philadelphia, Washington D.C., Wilmington and Salisbury, as
well as 1,917 transit display faces located in Baltimore and 1,582 kiosk
displays located in malls throughout the United States.
THE MEMPHIS/TUNICA ACQUISITION. On September 12, 1996, the Company entered
into an Option and Asset Purchase Agreement with Tanner-Peck, L.L.C., TOA
Enterprises, L.P., William B. Tanner, WBT
15
<PAGE>
Outdoor, Inc. and The Weatherley Tanner Trust (collectively, the "Memphis/Tunica
Sellers") pursuant to which a newly-formed subsidiary of the Company acquired
the option to purchase certain assets of the Memphis/Tunica Sellers (the
"Memphis/Tunica Option"). The Company exercised the Memphis/Tunica Option and
consummated the acquisition on January 2, 1997 for a purchase price of
approximately $71 million, including $5 million previously paid in connection
with the Memphis/Tunica Option, plus 100,000 shares of Common Stock of the
Company.
As a result of the Memphis/Tunica Acquisition, the Company acquired a total
of approximately 2,018 advertising display faces consisting of bulletins and
posters in and around Memphis, Tennessee and Tunica County, Mississippi. A
significant portion of these display faces were purchased by the Memphis/Tunica
Sellers from Naegele in November, 1995. The Company believes that the
Memphis/Tunica Acquisition will complement the Chattanooga operations which are
being acquired by the Company in the POA Acquisition. This will give the Company
a leading presence in two of the largest markets in Tennessee and strengthen its
presence in the southeast United States.
THE MATTHEW ACQUISITION. In December 1996, the Company agreed to acquire
certain of the assets of Matthew. In mid-January, 1997, the Matthew Acquisition
was consummated and Matthew Acquisition Corp. acquired certain assets of Matthew
for approximately $40 million in cash and the assumption by the Company of
certain liabilities of Matthew. As a result of the Matthew Acquisition, the
Company acquired a total of approximately 1,035 advertising display faces
located in three markets in the northeast United States, including Metro New
York, Northern New Jersey and Hudson Valley.
THE ADDITIONAL ACQUISITIONS. On September 12, 1996, the Company entered
into an Asset Purchase Agreement with Iowa Outdoor Displays pursuant to which
the Company agreed to purchase certain assets of Iowa Outdoor Displays for
approximately $1.8 million in cash. The Iowa Acquisition was consummated on
September 16, 1996. On September 11, 1996, the Company entered into an Asset
Purchase Agreement with The Chase Company pursuant to which the Company agreed
to purchase certain assets of The Chase Company for approximately $5.8 million
in cash. The Dallas Acquisition was consummated on September 19, 1996.
As a result of the Additional Acquisitions, the Company acquired
approximately 160 advertising display faces consisting primarily of posters in
and around Des Moines and approximately 245 advertising display faces consisting
primarily of bulletins in and around Dallas. The Company believes that the
Additional Acquisitions will further enhance its current presence in each of the
Des Moines and Dallas markets and provide increased revenue opportunities in the
midwest United States.
THE NEW CREDIT FACILITY
The Company financed the purchase price of certain of the Acquisitions and
the related refinancing of certain existing bank indebtedness of the Company and
paid the fees and expenses associated with the Acquisitions in part through a
total commitment of $300 million under a new credit facility (the "New Credit
Facility"). Following the completion of the October Offerings, the outstanding
amounts under the New Credit Facility were repaid in full and the maximum
commitment of the New Credit Facility was reduced to $225 million. In May 1997,
the Company amended the New Credit Facility (the "Amended Credit Facility") to
provide for a $75 million term loan increasing the total commitment under the
Amended Credit Facility back up to $300 million. As of May 31, 1997, the
Company's borrowings under the Amended Credit Facility totaled approximately
$138 million.
THE DEBT TENDERS OFFERS
THE COMPANY DEBT TENDER OFFER. In June 1994 the Company completed an
offering of $50 million of its 14% Senior Secured Discount Notes due 2004 (the
"Existing Company Notes"), the proceeds from which were used to redeem all of
the Company's outstanding preferred stock and a portion of the Company's
outstanding Common Stock and for working capital purposes. In connection with
the Acquisitions, the Company completed a tender offer and consent solicitation
(the "Company Debt
16
<PAGE>
Tender Offer") to purchase all of the outstanding Existing Company Notes. The
Company Debt Tender Offer expired on October 18, 1996, at which time the Company
purchased all the Existing Company Notes.
THE UOI DEBT TENDER OFFER. In connection with the Acquisitions, UOI
commenced a tender offer (the "UOI Debt Tender Offer," and together with the
Company Debt Tender Offer, the "Debt Tender Offers") to purchase all of its
outstanding 11% Senior Notes due 2003 (the "Existing UOI Notes" and together
with the Existing Company Notes, the "Existing Notes"). The UOI Debt Tender
Offer expired on October 18, 1996, at which time UOI purchased all the Existing
UOI Notes.
USE OF PROCEEDS
The Company will receive no proceeds from the sale by the Selling
Securityholders of the Noteholder Warrants or the shares of Common Stock
issuable upon exercise of the Noteholder Warrants, but will receive the exercise
price from Noteholder Warrantholders with respect to Noteholder Warrants that
are exercised for shares of Common Stock, if any. If all Noteholder Warrants are
exercised, the aggregate exercise price payable to the Company will be $625. The
proceeds from the exercise of the Noteholder Warrants, if any, will be used by
the Company for general corporate purposes. All of the expenses incurred in
connection with the registration of the Noteholder Warrants and the shares of
Common Stock issuable upon exercise of the Noteholder Warrants to which this
Prospectus relates will be paid by the Company, except for commissions of
brokers or dealers and any transfer fees incurred in connection with sales of
the Noteholder Warrants and the shares of Common Stock issuable upon the
exercise of the Noteholder Warrants by the Selling Securityholders, which will
be paid by the Selling Securityholders.
DIVIDEND POLICY
The Company has not paid dividends on its Common Stock and does not
anticipate paying dividends in the foreseeable future. The Company intends to
retain any future earnings for reinvestment in the Company. Any future
determination as to the payment of dividends will be at the discretion of the
Company's Board of Directors and will depend on the Company's results of
operations, financial condition, capital requirements and other factors deemed
relevant by the Board of Directors.
PRICE RANGE OF COMMON STOCK
The Common Stock is quoted on the Nasdaq National Market under the symbol
"UOUT." The following table sets forth, for the periods indicated, the high and
low closing sales prices for the Common Stock as reported by the Nasdaq National
Market. Prior to July 23, 1996, the day on which the Common Stock was first
publicly traded, there was no public market for the Common Stock.
<TABLE>
<CAPTION>
1996 HIGH LOW
- ---------------------------------------------------------------------------- --------- ---------
<S> <C> <C>
Third Quarter (beginning July 23, 1996)..................................... 36.25 16.50
Fourth Quarter (through December 31, 1996).................................. 37.75 23.12
1997
- ----------------------------------------------------------------------------
First Quarter (through March 31, 1997)...................................... 33.50 22.25
</TABLE>
On December 31, 1996, the last reported sale price per share for the Common
Stock on the Nasdaq National Market was $23.50 per share. As of June 23, 1997,
the last reported sale price per share for the Common Stock on the Nasdaq
National Market was $32.75 per share.
17
<PAGE>
CAPITALIZATION
The following table sets forth the unaudited capitalization of the Company
at March 31, 1997 and as adjusted to give effect to the Amended Credit Facility.
The table should be read in conjunction with the Consolidated Financial
Statements and related notes included elsewhere herein.
<TABLE>
<CAPTION>
MARCH 31, 1997
-----------------------------
AS ADJUSTED (1)
---------------
ACTUAL
------------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Long-term debt:
Existing Credit Facilities:
Revolving Credit Loan.......................................................... $ 122,030 $ 47,030
Acquisition Term Loan.......................................................... -- 75,000
9 3/4% Senior Subordinated Notes due 2006........................................ 223,645 223,645
9 3/4% Series B Senior Subordinated Notes due 2006............................... 101,463 101,463
Other notes...................................................................... 4,082 4,082
Other obligations................................................................ -- --
------------ ---------------
Total long-term debt and other obligations................................... 451,220 451,220
Common stockholders' equity........................................................ 227,678 227,678
------------ ---------------
Total capitalization......................................................... $ 678,898 $ 678,898
------------ ---------------
------------ ---------------
</TABLE>
- ------------------------
(1) Represents actual amounts adjusted to give effect to the Amended Credit
Facility.
18
<PAGE>
PRO FORMA FINANCIAL INFORMATION
The unaudited pro forma combined statement of operations for the year ended
December 31, 1996 gives effect to (i) the Transactions, (ii) the Offering and
the October Offerings and the application of the net proceeds therefrom, (iii)
the acquisitions of Naegele, Ad-Sign, Inc., Image Media, Inc. and consummation
of the Offering and the application of the net proceeds therefrom, and (iv) the
net reduction in operating expenses of the businesses acquired as if each had
occurred at the beginning of the period.
The detail assumptions used to prepare the unaudited pro forma combined
statement of operations is contained in the notes to unaudited pro forma
combined statement of operations. The unaudited pro forma combined statement of
operations reflects the use of the purchase method of accounting for all
acquisitions during 1996.
Pro forma adjustments for all acquisitions are based upon preliminary
estimates, available information and certain assumptions that management of the
Company deems appropriate. Final adjustments may differ from the pro forma
adjustments presented herein. The unaudited pro forma combined statement of
operations does not purport to present the actual financial position or results
of operations of the Company had the transactions and events assumed therein in
fact occurred on the dates specified, nor are they necessarily indicative of the
results of operations that may be achieved in the future. The unaudited pro
forma combined statement of operations is based on certain assumptions and
adjustments described in the notes thereto and should be read in conjunction
with the notes to unaudited pro forma combined statement of operations and the
separate historical financial statements and notes which are contained elsewhere
herein. Income (loss) is shown before income taxes and extraordinary items
because the Company has sufficient net operating loss carryforwards to offset
taxable income for the periods presented. Therefore, the presentation of income
taxes is neither required nor meaningful. See "Management's Discussion and
Analysis of Results of Operations and Financial Condition," the Consolidated
Financial Statements and the Notes thereto of the Company, the Consolidated
Financial Statements and the Notes thereto of NOA Holding Company, the Statement
of Revenues and Direct Expenses and the Notes thereto of Ad-Sign, the Financial
Statements and Notes thereto of POA Acquisition Corporation, and the
Consolidated Financial Statements and Notes thereto of Revere Holding Corp.
included elsewhere in this Prospectus.
The unaudited pro forma combined statement of operations includes certain
adjustments relating to the acquisitions of the common stock of Naegele, OAH and
Revere. The unaudited pro forma adjustments reflect an allocation of a portion
of the total acquisition cost to goodwill and the establishment of acquisition
liabilities and deferred tax liabilities for the effects of the significant
differences between the tax basis of the assets acquired and the estimated fair
value of the assets, primarily property and equipment, recorded for financial
statement purposes. Since it is not deductible for tax purposes, no deferred
taxes are required to be recorded for amounts allocated to goodwill. The
unaudited pro forma adjustments in previous filings were prepared on the belief
that the recordable differences in book and tax bases of the assets acquired
would not be significant. As a result of the allocation of total acquisition
cost in this filing, depreciation expense has been decreased by approximately
$7.5 million and goodwill amortization increased by approximately $9.7 million.
Pro forma adjustments for all acquisitions are based upon preliminary estimates,
available information and certain assumptions that the management of the Company
deems appropriate. Final adjustments may differ from the pro forma adjustments
presented herein.
19
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC.
PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
UNIVERSAL
OUTDOOR AD-SIGN, INC MEMPHIS/
HOLDINGS, AND IMAGE POA TUNICA ADDITIONAL REVERE
INC. MEDIA NAEGELE ACQUISITION(1) ACQUISITION ACQUISITIONS ACQUISITION
--------- ------------ ------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenue............ 76,138 $ 842 $5,832 $35,815 14,705 $1,166 29,047
--------- ------------ ------- ----------- ----------- ------------ -----------
Operating expenses:
Direct cost of
revenues............ 26,468 322 2,616 10,788 6,315 564 17,333
General and
administrative
expenses............ 10,648 100 1,459 9,613 2,743 304 4,118
Depreciation and
amortization........ 18,286 160 1,053 6,004 1,546 38 5,542
Non cash compensation
for common stock
warrants............ 9,000
--------- ------------ ------- ----------- ----------- ------------ -----------
64,402 582 5,128 26,405 10,604 906 26,993
--------- ------------ ------- ----------- ----------- ------------ -----------
Operating income....... 11,736 260 704 9,410 4,101 260 2,054
Interest expense....... 19,567 -- 468 5,558 89 52 3,392
Other expense.......... 1,398 -- -- (21) -- (84) (8,410)
--------- ------------ ------- ----------- ----------- ------------ -----------
Income (loss) before
income taxes and
extraordinary
items............... (9,229) $ 260 $ 236 $ 3,873 4,012 $ 292 7,072
--------- ------------ ------- ----------- ----------- ------------ -----------
--------- ------------ ------- ----------- ----------- ------------ -----------
<CAPTION>
JULY AND OCTOBER PRO FORMA
MATTHEW OFFERINGS PRO FORMA OFFERING AS
ACQUISITION ACQUISITION ADJUSTMENTS ADJUSTMENTS AS ADJUSTED ADJUSTMENTS ADJUSTED
----------- ------------------------ ------------------ ------------ ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Net revenue............ 8,943 $ 4,123(2)(3) $ -- 176,611 $ -- $176,611
----------- ---------- ---------- ------------ ----------- --------
Operating expenses:
Direct cost of
revenues............ 3,558 2,024(2)(3) -- 69,988 -- 69,988
General and
administrative
expenses............ 1,550 (9,687)(2)(3)(4) -- 20,848 -- 20,848
Depreciation and
amortization........ 993 17,196(2)(3)(5) -- 50,818 -- 50,818
Non cash compensation
for common stock
warrants............ 9,000 9,000
----------- ---------- ---------- ------------ ----------- --------
6,101 9,533 -- 150,654 -- 150,654
----------- ---------- ---------- ------------ ----------- --------
Operating income....... 2,842 (5,410) -- 25,957 -- 25,957
Interest expense....... -- 37,869(2)(3)(6)(7) (23,938)(9) 43,057 1,178(10) 44,235
Other expense.......... -- 8,928(2)(3)(8) -- 1,811 -- 1,811
----------- ---------- ---------- ------------ ----------- --------
Income (loss) before
income taxes and
extraordinary
items............... 2,842 $ (52,207) $ 23,938 $(18,911) $ (1,178) $(20,089)
----------- ---------- ---------- ------------ ----------- --------
----------- ---------- ---------- ------------ ----------- --------
</TABLE>
See accompanying notes to pro forma combined statements of operations.
20
<PAGE>
NOTES TO UNAUDITED COMBINED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
The following explanations describe the assumptions used in determining the
pro forma adjustments necessary to present the pro forma results of operations
of the Company giving effect to the Transactions, the Offering, the October
Offerings, the December Offering and the application of the estimated net
proceeds therefrom, and the net reduction in operating expenses of the
businesses acquired as if each had occurred at the beginning of the period.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1996
--------------
<C> <S> <C>
1. POA Acquisition Corporation, a wholly-owned subsidiary of OAH, acquired certain assets and
liabilities in the outdoor advertising industry in Florida during May 1996. The historical
financial information includes revenues and expenses associated with the new market prior to
the acquisition:
$ 955
Net revenues............................................................................
710
Direct cost of revenues.................................................................
2. Prior to acquisition by the Company, Revere disposed of certain assets and liabilities in
the outdoor advertising industry in Texas. The following entry eliminates revenues and
expenses associated with the Texas market prior to the acquisition:
$ (3,661)
Net revenue.............................................................................
(2,128)
Direct cost of revenues.................................................................
(568)
General and administrative expenses.....................................................
(765)
Depreciation and amortization...........................................................
(367)
Interest expense........................................................................
(853)
Other...................................................................................
3. Entry records statement of operations activity of Revere from September 30, 1996 through the
date of closing (December 10, 1996):
$ 7,784
Net revenue...............................................................................
4,152
Direct cost of revenues...................................................................
1,081
General and administrative................................................................
1,764
Depreciation and amortization.............................................................
770
Interest expense..........................................................................
848
Other expense.............................................................................
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1996
--------------
<C> <S> <C>
4. Entry records reduction in general and administrative expenses relating
to elimination of certain duplicate corporate expenses, principally
relating to employee costs and costs relating to other corporate
activities. Amounts have been determined based upon specific employees
identified for termination plus actual benefits costs incurred, and
expenses associated with leased facilities which will not be assumed or
will be canceled upon consummation of the acquisition.
$ 1,875
Naegele, Ad-Sign and Image Media.......................................
-----------
-----------
$ 2,100
POA Acquisition........................................................
1,000
Memphis/Tunica Acquisition.............................................
255
Additional Acquisitions................................................
-----------
$ 3,355
-----------
-----------
$ 3,770
Revere Acquisition.....................................................
1,200
Matthew Acquisition....................................................
-----------
$ 4,970
-----------
-----------
5. Entry records the increase in depreciation and amortization expense
arising from purchase accounting adjustments to advertising structures
and goodwill amortized over a period of 15 years:
$ 460
Naegele, Ad-Sign and Image Media (acquired in March 1996)..............
-----------
-----------
$ 8,480
POA Acquisition (acquired in October 1996).............................
3,101
Memphis/Tunica Acquisition (acquired in January 1997)..................
236
Additional Acquisitions (acquired in September 1996)...................
-----------
$ 11,817
-----------
-----------
$ 2,210
Revere Acquisition (acquired in December 1996).........................
1,710
Matthew Acquisition (acquired in January 1997).........................
-----------
$ 3,920
-----------
-----------
6. Entry records additional interest expense at an assumed rate of 8.25% per $ 5,604
annum to be incurred in connection with the acquisition of Naegele,
Ad-Sign and Image Media which occurred in March of 1996 (debt incurred of
$60.0 million less $1.4 million of interest expense for debt not
assumed).................................................................
-----------
-----------
7. Entry to record additional interest expense at an assumed rate of 8.5%
per annum in connection with the Transactions:
$ 20,400
POA Acquisition (debt incurred of $240.0 million)......................
6,018
Memphis/Tunica Acquisition (debt incurred of $70.8 million)............
646
Additional Acquisitions................................................
-----------
27,064
(5,699)
Actual interest expense for POA Acquisition, Memphis/Tunica Acquisition
and Additional Acquisitions..........................................
-----------
$ 21,365
-----------
-----------
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER
31, 1996
-----------
<C> <S> <C> <S> <C>
$ 10,489
Revere Acquisition (debt incurred of $123.4 million)......................................
3,400
Matthew Acquisition (debt incurred of $40.0 million)......................................
--------------
13,889
(3,392)
Actual interest expense for Revere Acquisition and Matthew Acquisition....................
--------------
$ 10,497
--------------
--------------
8. Entry to reduce other income from Revere for the gain recognized on the sale of the Texas $ 8,933
markets.....................................................................................
--------------
--------------
9. Entry to record changes in interest expense:
$ (5,304)
Proceeds of $62.4 million from the offering of Class A Common Stock in July at an assumed
rate of 8.5%............................................................................
(2,550)
KEA V and KEP V and Kelso Designees (as hereafter defined) Investment of $30.0 million at
an assumed rate of 8.5%.................................................................
(17,175)
October Equity Offering proceeds of $202.0 million at an assumed rate of 8.5%.............
2,813
October Notes of $225 million at 9.75% versus assumed rate of 8.5%........................
(1,771)
Refinanced 14% Series A Senior Secured Discount Notes due 2004 of
$50 million at an assumed rate of 9.75% for 10 of 12 months.............................
(677)
Refinanced 11% Series A Senior Secured Discount Notes due 2003 of
$65 million at an assumed rate of 9.75% for 10 of 12 months.............................
726
Amortization of financing costs...........................................................
--------------
$ (23,938)
--------------
--------------
10. Entry to record the changes in interest expense:
$ 1,250
December Notes of $100 million at 9.75% versus an assumed rate of 8.5%....................
(72)
Amortization of deferred financing costs..................................................
--------------
$ 1,178
--------------
--------------
</TABLE>
11. The above pro-forma statement of
operations do not reflect the following
extraordinary losses on the early
retirement of debt:
14% Series A Senior Secured Discount
Notes due 2004:
September 1996...................... $ 1,400
October 1996........................ 10,725
11% Series A Senior Secured Discount
Notes due 2003:
October 1996........................ 14,448
--------
$26,573
--------
--------
23
<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
The selected financial data presented below as of and for the year ended
December 31, 1996 and three months ended March 31, 1997 and 1996 are derived
from the Consolidated Financial Statements of the Company. The selected
financial data as of and for the years ended December 31, 1992, 1993, 1994 and
1995 are derived from the financial statements of the Company. Certain of such
financial statements were unaudited. The financial statements of the Company for
the three years in the period ended December 31, 1996 were audited by Price
Waterhouse LLP, independent accountants, as indicated in their report included
elsewhere in this Prospectus. The selected financial data as of and for the
three months ended March 31, 1996 and 1995 are derived from the consolidated
financial statements included herein and include all normal and recurring
adjustments necessary for a fair presentation of such data. The data set forth
below should be read in conjunction with "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and the Consolidated Financial
Statements, including the Notes thereto, appearing elsewhere in this Prospectus.
Due to the significant development and acquisition of additional structures, the
data set forth below is not necessarily comparable on a year-to-year basis and
data set forth for certain periods is not indicative of results for the full
year.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------------------------------- ---------------------
1991 1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Gross revenue........................... $ 21,435 $ 27,896 $ 28,710 $ 33,180 $ 38,101 $ 84,939 $ 9,332 $ 47,575
Net revenues(1)......................... 18,835 24,681 25,847 29,766 34,148 76,138 8,427 44,008
Direct advertising expenses............. 7,638 10,383 10,901 11,806 12,864 26,468 3,571 18,445
General and administrative expenses..... 3,515 3,530 3,357 3,873 4,645 10,648 1,227 4,401
Depreciation and amortization........... 5,530 7,817 8,000 7,310 7,402 18,286 2,032 12,859
Non cash compensation for common stock
warrants.............................. -- -- -- -- -- 9,000 -- --
Operating income........................ 2,152 2,951 3,589 6,777 9,237 11,736 1,597 8,303
Interest expense........................ 6,599 9,591 9,299 11,809 12,894 19,567 3,594 10,735
Other (expense) income, net............. (53) 291 (351) (134) (46) (1,398) (11) 182
Income (loss) before extraordinary
item(2)............................... (4,500) (6,349) (6,061) (5,166) (3,703) (9,299) (2,008) (2,250)
Net income (loss)....................... (4,500) (6,349) (9,321) (5,166) (3,703) (35,803) (2,008) (2,250)
Capital expenditures.................... 2,047 2,352 2,004 4,668 5,620 7,178 1,966 3,584
FINANCIAL RATIOS:
Percentage of indebtedness to total
capitalization(3)..................... 121.4% 142.8% 186.6% 153.7% 156.8% 60.6% 150.8% 66.5%
Ratio of EBITDA to total interest(4).... 1.2x 1.1x 1.2x 1.2x 1.3x 2.0x 1.0x 2.0x
OTHER DATA:
EBITDA(5)............................... $ 7,682 $ 10,768 $ 11,589 $ 14,087 $ 16,639 $ 39,022 $ 3,629 $ 21,162
EBITDA Margin(6)........................ 40.8% 43.6% 44.8% 47.3% 48.7% 51.3% 43.1% 48.1%
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
----------------------------------------------------- --------------------
1991 1992 1993 1994 1995 1996 1997
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital(7)................................... $ (361) $ (5,332) $ 1,481 $ 2,787 $ 4,137 $ 2,534 $ (2,358)
Total assets......................................... 71,682 65,754 61,816 68,253 71,050 84,747 790,867
Total long-term debt and other obligations........... 65,076 59,363 69,254 99,669 106,362 120,248 451,220
Redeemable preferred stock........................... 13,442 15,055 21,505 -- -- -- --
Common stockholders' equity (deficit)................ (11,450) (17,799) (32,157) (34,823) (38,526) (40,533) 227,678
</TABLE>
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
24
<PAGE>
(FOOTNOTES FOR PREVIOUS TABLE)
- ------------------------------
(1) Net revenues are gross revenues less agency commissions.
(2) Extraordinary item represents loss on early extinguishment of debt.
(3) Amounts represent (i) total long-term debt divided by (ii) total long-term
debt plus common stockholders' equity (deficit).
(4) Amounts represent the ratio of (i) EBITDA (ii) interest expense on total
long-term debt.
(5) "EBITDA" is operating income before depreciation and amortization and other
non-cash charges. EBITDA is not intended to represent net cash flow provided
by operating activities as defined by generally accepted accounting
principles and should not be considered as an alternative to net income
(loss) as an indicator of the Company's operating performance or to net cash
provided by operating activities as a measure of liquidity. The Company
believes EBITDA is a measure commonly reported and widely used by analysts,
investors and other interested parties in the media industry. Accordingly
this information has been disclosed herein to permit a more complete
comparative analysis of the Company's operating performance relative to
other companies in the media industry.
(6) "EBITDA Margin" is EBITDA stated as a percentage of net revenues.
(7) Working capital is current assets less current liabilities (excluding
current maturities of long-term debt and other obligations). Other
obligations totalled $2,850 at December 31, 1992.
25
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion of the consolidated results of operations of the
Company for the three years ended December 31, 1996 and financial condition at
December 31, 1996 should be read in conjunction with the Consolidated Financial
Statements of the Company and the related notes included elsewhere in this
Prospectus. Except as otherwise indicated, the following discussion relates to
the Company on a historical basis without acquisitions completed after December
31, 1996.
GENERAL
The Company has grown significantly since 1989 through the acquisition of
outdoor advertising businesses and individual display faces in specific markets,
improvements in occupancy and advertising rates, and the development of new
display faces in existing markets. Between January 1, 1989 and April 30, 1997,
the Company spent in excess of $515 million to acquire additional display faces,
increasing the number of its display faces from approximately 600 in 1989 to
approximately 32,929 at April 30, 1997. During this period, the Company's net
revenues increased from $10.3 million in 1989 to $76.1 million in 1996. The
following table lists the Company's acquisitions between January 1, 1989 and
April 30, 1997:
<TABLE>
<CAPTION>
APPROXIMATE NUMBER AND TYPE OF
DISPLAY FACES ACQUIRED
----------------------------------------------
YEAR OF 30-SHEET 8-SHEET
ACQUISITION MARKETS BULLETINS POSTERS POSTERS TOTAL
- -------------- ------------------------------------------------------ ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C>
1989........ Milwaukee, Chicago 270 -- -- 270
1990........ Chicago 12 -- -- 12
1991........ Indianapolis, Des Moines, Evansville, Chicago 421 2,480 140 3,041
1994........ Chicago, Milwaukee 20 -- 4,151 4,171
1995........ Chicago, Dallas 9 -- 1,127 1,136
1996........ Chicago, Minneapolis/St. Paul, Jacksonville, Dallas, 6,195 9,181 43 15,419
Iowa, Southeast United States, Atlantic Coast of
Florida, Gulf Coast of Florida, Northeast United
States, Philadelphia, Washington D.C., Wilmington,
Salisbury, Memphis, Chattanooga, Metro New York,
Northern New Jersey, Hudson Valley
1997........ Baltimore, Evansville, New Jersey 218 1,364 -- 1,582
----------- ----------- --------- ---------
Total............................................................. 7,145 13,025 5,461 25,631
----------- ----------- --------- ---------
----------- ----------- --------- ---------
</TABLE>
In addition, in 1996 the Company acquired 437 transit display faces in
Indianapolis, 1,539 kiosk displays in malls throughout the United States, 1,917
transit display faces in Baltimore and 146 bus shelters in Philadelphia. In 1997
the Company acquired 520 transit display faces in Memphis, Tennessee.
The Company's acquisitions have been financed through bank borrowings and
the issuance of long-term debt, as well as with internally-generated funds. The
Acquisitions were financed, in part, from the proceeds of the October Offerings,
the December Offering and the New Credit Facility. All acquisitions, including
the Acquisitions, have been accounted for using the purchase method of
accounting, and consequently, operating results from acquired operations are
included from the respective dates of those acquisitions. As a result of these
acquisitions and the effects of consolidation of operations following each
acquisition, the operating performance of certain markets and of the Company as
a whole reflected in the Company's Consolidated Financial Statements and other
financial and operating data included herein are not necessarily comparable on a
year-to-year basis.
The Company recognized a one-time non-cash compensation charge of
approximately $9 million in the quarter to be ended June 30, 1996 relating to
the issuance of the Warrants under the 1996 Warrant Plan. See "Management -- The
1996 Warrant Plan."
26
<PAGE>
HISTORICAL RESULTS OF OPERATIONS
The following table presents certain operating statement items in the
Consolidated Statements of Operations as a percentage of net revenues:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31,
YEAR ENDED DECEMBER 31, (UNAUDITED)
--------------------------------- ---------------
1993 1994 1995 1996 1997 1996
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Net revenues................................. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Direct advertising expenses................ 42.2 39.7 37.7 34.8 41.9 42.4
General and administrative expenses........ 13.0 13.0 13.6 14.0 10.0 14.5
------ ------ ------ ------ ------ ------
EBITDA (1)................................... 44.8 47.3 48.7 51.2 48.1 43.1
Depreciation and amortization................ 30.9 24.5 21.6 24.0 29.2 24.1
Non cash compensation expense................ -- -- -- 11.8 -- --
------ ------ ------ ------ ------ ------
Operating income............................. 13.9 22.8 27.1 15.4 18.9 19.0
Other expense, primarily interest............ 37.3 40.2 37.9 27.5 24.0 42.8
------ ------ ------ ------ ------ ------
Net loss before extraordinary item........... (23.4) (17.4) (10.8) (12.1) (5.1) (23.8)
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
</TABLE>
- ------------------------
(1) "EBITDA" is operating income before depreciation and amortization and other
non-cash charges. EBITDA is not intended to represent net cash flow provided
by operating activities as defined by generally accepted accounting
principles and should not be considered as an alternative to net income
(loss) as an indicator of the Company's operating performance or to net
cash provided by operating activities as a measure of liquidity. The
Company believes EBITDA is a measure commonly reported and widely used by
analysts, investors and other interested parties in the media industry.
Accordingly this information has been disclosed herein to permit a more
complete comparative analysis of the Company's operating performance
relative to other companies in the media industry.
Revenues are a function of both the occupancy of the Company's display faces
and the rates that the Company charges for their use. The Company focuses its
sales effort on maximizing occupancy levels while maintaining rate integrity in
its markets. Additionally, the Company believes it is important to the overall
sales effort to continually attempt to develop new inventory in growth areas of
its existing markets in order to enhance overall revenues.
Net revenues represent gross revenues less commissions paid to advertising
agencies that contract for the use of advertising displays on behalf of
advertisers. Approximately 76% of the Company's gross revenues are contracted
for directly from local advertisers. Agency commissions on those revenues which
are contracted through agencies are typically 15% of gross revenues on local
sales and 16 2/3% of gross revenues on national sales. The Company considers
agency commissions as a reduction in gross revenues, and measures its operating
performance based upon percentages of net revenues rather than gross revenues.
Direct advertising expenses consist of the following five catagories: lease,
production, sales, maintenance and illumination. The lease expense consists
mainly of rental payments to owners of the land underlying the signs. The
production category consists of all of the costs to produce advertising copy and
install it on the display faces. Sales expense consists mainly of the cost of
staffing a sales force to sell within a specific market. The maintenance
category includes minor repair and miscellaneous maintenance of the sign
structures and the illumination category consists mainly of electricity costs to
light the display faces. The majority of these direct expenses are variable
costs (other than lease costs) that will fluctuate with the overall level of
revenues. In 1996, these expenses amounted to the following approximate
percentages of net revenues: lease 15.6%, production 10.5%, sales 4.9%,
maintenance 1.9% and illumination 1.9%.
General and administrative expenses occur at both the market and corporate
levels. At the market level these expenses contain various items of office
overhead pertaining to both the personnel and the facility required to
administer a given market. The corporate general and administrative costs
represent staff and facility expenses for the executive offices and the
centralized accounting function. Both types of general and administrative
expenses are primarily fixed expenses in the operation of the business.
27
<PAGE>
At December 31, 1996, the Company and its subsidiaries had net operating
loss and credit carryforwards for federal income tax purposes of approximately
$86 million. Included in total net operating loss carryforwards is approximately
$45 million of operating loss and credit carryforwards generated by certain
acquired companies prior to their acquisition by the Company. Total
carryforwards expire between 2005 and 2011. The Company experienced an ownership
change within the meaning of Section 382 of the Internal Revenue Code. As such,
the utilization of net operating loss carryforwards are subject to an annual
limitation based upon the value of the Company on the change date. The
acquisition of OAH and Revere resulted in an "ownership change" and a limitation
is imposed on the acquired net operating loss carryforwards in these companies.
Furthermore, the Company's use of net operating loss carryforwards are subject
to limitations applicable to corporations filing consolidated federal income tax
returns. During the current fiscal year, the Company did not use any net
operating loss or credit carryforwards.
COMPARISON OF THREE MONTHS ENDED MARCH 31, 1997 AND MARCH 31, 1996
Net revenues increased 423.8% to $44.0 million during the first three months
of 1997 compared to $8.4 million in the corresponding 1996 period. This increase
was a result of inclusion of approximately $6.9 million of revenues from the
Minneapolis and Jacksonville markets (the "Naegele Markets") which were acquired
from Naegele in April 1996 (the "Naegele Acquisition"). Additionally, $11.9
million of revenues is attributable to markets acquired from OAH in October 1996
and $10.2 million is attributable to markets acquired from Revere in December
1996 and Matthew in January 1997. Revenues from markets located in and around
Memphis (TN) and Tunica County (MS) which were acquired by the Company in
January 1997 in the Memphis/Tunica Acquisition contributed $4.3 million. The
remaining $2.3 million or 27.4% increase in net revenues resulted from higher
advertising rates and occupancy levels on the Company's signboards and inclusion
for the full quarter of signboard revenues from advertising display faces in the
Des Moines and Dallas markets which were acquired in 1996. Overall net revenues
from tobacco advertising increased to $4.4 million in the first three months of
1997 compared to $1.2 million for the first three months of 1996. This increase
was due mainly to the inclusion of tobacco revenues from the acquired markets.
As a percentage of net revenues, tobacco advertising sales decreased to 10.0% in
the first three months of 1997 compared to 14.3% for the first three months of
1996.
Direct cost of revenues increased to $18.4 million in the first three months
of 1997 compared to $3.6 million for the first three months in 1996. The Naegele
Markets and the POA Acquisition accounted for $2.9 million and $4.1 of the
increase, respectively. The Revere Acquisition, the Matthew Acquisition and the
Memphis/Tunica Acquisition accounted for $7.0 million. As a percentage of net
revenues, however, direct cost of revenues decreased to 41.8% in the first three
months of 1997 compared to 42.9% in the corresponding 1996 period as a result of
economies of scale associated with the increased revenues.
General and administrative expenses increased to $4.4 million in the first
three months of 1997 from $1.2 million in the corresponding 1996 period. As a
percentage of net revenues, general and administrative expenses decreased to
10.0% in the first three months of 1997 compared to 14.3% in the corresponding
1996 period. This percentage decrease was due to the addition of the new
markets' revenues without a significant increase in staffing or other corporate
overhead expenses.
Depreciation and amortization expense increased to $12.9 million in the
first three months of 1997 compared to $2.0 million in the corresponding 1996
period. This increase was due to significant increases in the fixed assets and
goodwill as a result of the acquisitions.
Total interest expense increased to $10.7 million in the first three months
of 1997 compared to $3.6 million in the 1996 period. The increase resulted from
increased debt outstanding under the Company's credit facility which was
incurred to finance the Revere, Matthew and Memphis/Tunica Acquisitions and from
the issuance by UOI of $225 million 9 3/4% Senior Subordinated Notes due 2006 in
October 1996 and $100 million 9 3/4% Series B Senior Subordinated Notes due 2006
in December 1996.
The foregoing factors contributed to the Company's $2.3 million net loss in
the first three months of 1997 compared to $2.0 million net loss in the 1996
period.
28
<PAGE>
COMPARISON OF YEARS ENDED DECEMBER 31, 1996 AND DECEMBER 31, 1995
Net revenues increased 123.2% to $76.1 million during 1996 compared to $34.1
million in the corresponding 1995 period. This increase was a result of
inclusion of approximately $20.2 million of revenues from the Minneapolis and
Jacksonville markets (the "Naegele Markets") which were acquired in the Naegele
Acquisition and approximately $13.0 million of revenues from the markets
acquired in the POA Acquisition. The remaining $8.8 million or 25.8% increase in
net revenues was a result of higher advertising rates and occupancy levels on
the Company's signboards and inclusion for the three quarters of signboard
revenues from the acquisitions of Image Media, Inc. and AdSign, Inc. and a full
quarter of signboard revenues from the Additional Acquisitions. Overall net
revenues from tobacco advertising increased to $10.0 million in 1996 compared to
$4.5 million in the 1995 period. This increase was due mainly to the inclusion
of tobacco revenues from the Acquisitions. However, as a percentage of net
revenues, tobacco advertising sales remained constant at 13.2% in 1996 and 1995.
Direct cost of revenues increased to $26.5 million in 1996 compared to $12.9
million in the 1995 period. The Naegele Markets and the POA Acquisition
accounted for $7.3 million and $3.0 million, respectively, of the increase. As a
percentage of net revenues, however, direct cost of revenues decreased to 34.8%
in 1996 compared to 37.8% in the 1995 period as a result of economies of scale
associated with the increased revenues.
General and administrative expenses increased to $10.6 million in 1996 from
$4.6 million in the 1995 period. As a percentage of net revenues, general and
administrative expenses increased to 13.9% in 1996 compared to 13.5% in the 1995
period. This percentage increase was due to an increase in staffing required in
conjunction with the significant increase in the size of the Company's
operations.
Depreciation and amortization expense increased to $18.3 million in 1996
compared to $7.4 million in the 1995 period. This increase was due to
significant increases in the fixed assets as a result of the acquisitions
consummated in such period.
Non cash compensation for common stock warrants consisted of a $9.0 million
non-recurring charge arising from the issuance of common stock warrants in the
Naegele Acquisition. This non cash charge represents the fair market value of
the common stock warrants on the date of the grant.
Total interest expense increased to $19.6 million in 1996 compared to $12.2
million in the 1995 period. The increase resulted from increased debt
outstanding under the Existing Credit Facility which was incurred to finance the
Naegele Acquisition and from the issuance of the October Notes and December
Notes.
Other expenses increased to $1.4 million in 1996, consisting of a $1.7
million one-time charge for expenses arising out of the Naegele Acquisition
offset by miscellaneous other income relating to condemnation proceeds of $.3
million.
COMPARISON OF YEARS ENDED DECEMBER 31, 1995 AND DECEMBER 31, 1994
Net revenues increased 14.7% to $34.1 million during 1995 from $29.8 million
in 1994, reflecting higher advertising rates and occupancy levels and increased
sales to local and regional advertisers. Net revenues from tobacco advertising
increased between 1994 and 1995 from $3.8 million to $4.5 million. As a
percentage of net revenues, tobacco advertising sales increased slightly to
13.3% in 1995 from 13.1% in 1994.
Direct cost of revenues increased to $12.9 million in 1995 from $11.8
million in 1994 as a result of higher sales during the 1995 period. As a
percentage of net revenues, however, direct cost of revenues decreased to 37.7%
in 1995 as a result of economies of scale associated with increased revenues.
29
<PAGE>
General and administrative expenses in 1995 increased to $4.6 million from
$3.9 million in 1994 due to the incremental payroll costs associated with
additional employees. As a percentage of net revenues, general and
administrative expenses increased to 13.6% from 13.0% in the prior year. This
increase was primarily due to the expenses related to acquisitions.
Depreciation and amortization expenses increased slightly to $7.4 million in
1995 from $7.3 million in 1994 due to large increases in the fixed assets offset
by reduced depreciation of the older fixed assets.
Total interest expense increased to $12.9 million in 1995 from $11.8 million
in 1994 due to interest expense associated with additional borrowings and the
accretion of interest due to a larger amount of principal outstanding, partially
offset by the elimination of the accretion of dividends on redeemable preferred
stock.
The foregoing factors contributed to the Company's $3.7 million net loss in
1995 compared to a net loss of $5.2 million in 1994. Because the Company
incurred net losses in 1995, 1994 and 1993, it had no provision for income taxes
in those years.
COMPARISON OF YEARS ENDED DECEMBER 31, 1994 AND DECEMBER 31, 1993
Net revenues increased 15.2% to $29.8 million during 1994 from $25.8 million
in 1993, reflecting higher advertising rates and occupancy levels and increased
sales to local advertisers. Increases in revenue from the advertising structures
acquired in certain acquisitions, offset by declines in revenues from the
January 1994 sale of the Company's 97 bulletin display faces in Jacksonville,
accounted for approximately $700,000 of the increased revenues in 1994. Net
revenues from tobacco advertising remained constant between 1994 and 1993 at
approximately $3.8 million. However, as a percentage of net revenues, tobacco
advertising sales decreased to 13.1% in 1994 from 14.8% in the prior year. The
Company offset the decline in tobacco revenues with increased sales to local
advertisers, particularly gaming companies, and to regional and other national
advertisers. There can be no assurance that the Company will be able to replace
lost tobacco revenues in the future.
Direct cost of revenues increased to $11.8 million in 1994 from $10.9
million in 1993 as a result of higher sales during the 1994 period. As a
percentage of net revenues, however, direct cost of revenues decreased to 39.7%
in 1994 as a result of economies of scale associated with increased revenues.
General and administrative expenses in 1994 increased to $3.9 million from
$3.4 million in 1993 due to the incremental payroll costs associated with
additional employees. As a percentage of net revenues, however, general and
administrative expenses remained flat at 13.0%.
As a result of the above factors, EBITDA increased by 21.6% to $14.1 million
in 1994 from $11.6 million in 1993.
Depreciation and amortization expenses decreased to $7.3 million (24.5% of
net revenues) in 1994 from $8.0 million (31.0% of the net revenues) in 1993 due
to scheduled depreciation of the fixed assets.
Total interest expense increased to $11.8 million in 1994 from $9.3 million
in 1993 as a result of incremental interest associated with the offering of the
Existing Company Notes and the additional borrowings in 1994, which were
partially offset by the elimination of the accretion of dividends on the
redeemable preferred stock (such stock was redeemed in June 1994).
The foregoing factors contributed to the Company's $5.2 million net loss in
1994 compared to a net loss of $9.3 million in 1993 (which included a $3.3
million extraordinary charge recorded in the fourth quarter of 1993). Because
the Company incurred net losses in 1994 and 1993, it had no provision for income
taxes in those years.
30
<PAGE>
QUARTERLY COMPARISONS
The following table sets forth certain quarterly financial information of the
Company for each quarter of 1994, 1995 and 1996. The information has been
derived from the quarterly financial statements of the Company which are
unaudited but which, in the opinion of management, have been prepared on the
same basis as the financial statements included herein and include all
adjustments (consisting only of normal recurring items) necessary for a fair
presentation of the financial result for such periods. This information should
be read in conjunction with the Consolidated Financial Statements and the Notes
thereto and the other financial information appearing elsewhere in this
Prospectus. The operating results for any quarter are not necessarily indicative
of results for any future period.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30, DEC. 31,
1994 1994 1994 1994 1995 1995 1995 1995
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net revenues........... $ 6,102 $ 7,803 $ 7,973 $ 7,888 $ 7,236 $ 9,175 $ 8,940 $ 8,797
Operating income....... 924 2,333 2,002 1,518 1,319 3,055 2,458 2,405
Net income (loss)...... (2,053) (498) (1,099) (1,516) (1,778) (215) (811) (899)
PERCENTAGE OF NET
REVENUES:
Operating income....... 15.1% 29.9% 25.1% 19.2% 18.2% 33.3% 27.5% 27.3%
Net income (loss)...... (33.6) (6.4) (13.8) (19.2) (24.6) (2.3) (9.1) (10.2)
OTHER DATA:
EBITDA (1)............. $ 2,709 $ 3,998 $ 3,885 $ 3,495 $ 3,056 $ 4,856 $ 4,308 $ 4,419
EBITDA Margin (2)...... 44.4% 51.2 % 48.7 % 44.3 % 42.2 % 52.9 % 48.2 % 50.2%
<CAPTION>
MARCH 31, JUNE 30, SEPT. 30, DEC. 31,
1996 1996 1996 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net revenues........... $ 8,427 $ 17,812 $ 18,643 $ 31,256
Operating income....... 1,597 (1,638) 5,874 5,903
Net income (loss)...... (2,008) (8,148) 591 (26,238)
PERCENTAGE OF NET
REVENUES:
Operating income....... 19.0% (9.2)% 31.5% 18.9%
Net income (loss)...... (23.8) 45.7 3.2 (83.9)
OTHER DATA:
EBITDA (1)............. $ 3,629 $ 10,004 $ 10,406 14,983
EBITDA Margin (2)...... 43.1 % 56.2 % 55.8 % 47.9 %
</TABLE>
- ------------------------------
(1) EBITDA is operating income before depreciation and amortization. EBITDA is
not intended to represent net cash provided by operating activities as
defined by generally accepted accounting principles and should not be
considered as an alternative to net income (loss) as an indicator of the
Company's operating performance or to net cash provided by operating
activities as a measure of liquidity. The Company believes EBITDA is a
measure commonly reported and widely used by analysts, investors and other
interested parties in the media industry. Accordingly, this information has
been disclosed herein to permit a more complete comparative analysis of the
Company's operating performance relative to other companies in the media
industry.
(2) EBITDA Margin is EBITDA stated as a percentage of net revenues.
31
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically satisfied its working capital requirements with
cash from operations and revolving credit borrowings. Its acquisitions have been
financed primarily with borrowed funds and, to a lesser extent, with stock.
In April 1996, UOI, its current lender, LaSalle National Bank ("LaSalle"),
and an additional bank, Bankers Trust Company ("Bankers Trust"; together with
LaSalle, the "Lenders"), agreed to (i) refinance the Company's existing credit
facility with a revolving credit facility (the "Existing Revolving Credit
Facility") and (ii) provide an additional extension of credit for purposes of
acquisition financing (the "Existing Acquisition Credit Facility," and together
with the Existing Revolving Credit Facility, the "Existing Credit Facilities")
and, specifically, the financing, in part, of the Naegele Acquisition. The
Lenders extended an acquisition term loan in the amount of $75 million and an
acquisition revolving credit line in the amount of $12.5 million for a total
commitment of $87.5 million, of which $84.5 million was drawn at the closing of
the Naegele Acquisition. In addition, the Lenders extended a working capital
revolving credit line in the amount of $12.5 million, of which no amount has
been drawn. In addition to the amounts drawn under the Existing Acquisition
Credit Facility, the Company sold a minority portion of its capital stock for
$30 million in cash proceeds which was used to finance the remaining amount of
the Naegele Acquisition and to refinance existing indebtedness. In October 1996,
UOI and the Lenders amended and restated the Existing Credit Facilities which
became the "New Credit Facility". The New Credit Facility provided for a total
loan commitment of $300 million, $75 million of which consisted of a term loan
drawn by the Company to finance, in part, the Acquisitions. In October 1996, the
maximum commitment under the New Credit Facility was reduced to $225 million.
The New Credit Facility has been drawn upon from time to time in order to
finance acquisitions and as of April 1997, $123 was outstanding. In May 1997,
under the Amended Credit Facility the Company increased the total commitment
back to $300 million by adding a $75 million term loan which was drawn by the
Company in order to pay down outstanding amounts owed by the Company under the
New Credit Facility. See "Description of Indebtedness and Other Commitments".
The Company completed its initial public offering of 4,630,000 shares of its
Common Stock (including 930,000 shares sold pursuant to exercise of
underwriters' over-allotment options) on July 26, 1996, resulting in net
proceeds to the Company of $60.4 million. The Company used a portion of the net
proceeds to redeem $9.5 million of the Existing Company Notes and repaid a
portion of the amounts outstanding under the Existing Acquisition Credit
Facility.
In October 1996, the Company completed the October Offerings with net
proceeds of $425.7 million. The net proceeds of the October Offerings were used
to complete the Transactions including, but not limited to the Debt Tender
Offers. In December 1996, UOI completed the December Offering with net proceeds
of $98.0 million. The net proceeds of the December Offering were used to pay
outstanding amounts under the New Credit Facility.
Net cash provided by operating activities increased to $14.0 million in 1996
from $7.0 million in the 1995 period. Net cash provided by operating activities
increased to $7.0 million in 1995 from $4.9 million in 1994. Net cash provided
by operating activities reflects the Company's net loss adjusted for non-cash
items and the use or source of cash for the net change in working capital.
The Company's net cash used in investing activities of $498.0 million in
1996 includes cash used for acquisitions of $490.8 million and other capital
expenditures of $7.2 million. The Company's net cash used in investing
activities of $9.1 million for the year ended December 31, 1995 includes cash
used for acquisitions of $1.9 million and other capital expenditures of $5.6
million. Capital expenditures have been made primarily to develop new structures
in each of its markets. The Company intends to continue to develop new
structures in its markets and to consider other potential acquisitions.
Management established the Existing Credit Facilities, the New Credit Facility
and the Amended Credit Facility for the purpose of financing acquisitions and
capital expenditures relating to the development and improvement of advertising
structures and for working capital purposes. The Company believes that its cash
from operations, together with available borrowings under the New Credit
Facility, will be sufficient to satisfy its cash requirements, including
anticipated capital expenditures, for the foreseeable future. However, in
32
<PAGE>
the event cash from operations, together with available funds under the Amended
Credit Facility are insufficient to satisfy its cash requirements, the Company
may incur additional indebtedness to finance its operations including, without
limitation, additional acquisitions.
For the year ended December 31, 1996, $495.6 million was provided by
financing activities primarily due to the issuance of senior subordinated debt,
increased borrowings under the Existing Credit Facilities and New Credit
Facility and the sale of capital stock. In 1995, net cash of $2.0 million was
provided by financing activities, primarily due to borrowings under the prior
credit facility. For the years ended December 31, 1995 and 1994, $2.0 million
and $3.3 million, respectively, was provided by financing activities, primarily
as a result of additional borrowings under the prior credit facility.
Net cash provided by operating activities increased to $11.8 million for the
three months ended March 31, 1997 from $2.9 million for the corresponding 1996
period. Net cash provided by operating activities reflects the Company's net
loss adjusted for non-cash items and the use or source of cash for the net
change in working capital.
The Company's net cash used in investing activities of $131.7 million for
the three months ended March 31, 1997 includes cash used for acquisitions of
$128.1 million and other capital expenditures of $3.6 million. Capital
expenditures have been made primarily to develop new structures in each of its
markets. The Company intends to continue to develop new structures in its
markets and to consider potential acquisitions in the Midwestern, Southeastern
and Eastern regions and contiguous markets. Management believes that its
internally generated funds, together with available borrowings under its credit
facility, will be sufficient to satisfy its cash requirements, including
anticipated capital expenditures, for the foreseeable future. However, in the
event cash from operations, together with available funds under the Company's
credit facility are insufficient to satisfy its cash requirements, the Company
may obtain funds from additional sources of indebtedness and/or equity offerings
to finance its operations, including without limitation, additional
acquisitions.
For the three months ended March 31, 1997, $100.9 million was provided by
financing activities due to increased borrowings under the Company's credit
facility. For the three months ended March 31, 1996, $12.8 million was used in
financing activities primarily due to acquisitions.
The Company expects to fund its capital expenditures primarily with cash
from operations and expects its capital expenditures to be primarily for
development of additional structures. The Company intends to utilize its cash
from operations to continue to develop new advertising structures in each of its
markets, and, as appropriate opportunities arise, to acquire additional outdoor
advertising operations in its existing markets, in geographically proximate
markets and in contiguous markets. The Company is also exploring the development
of other forms of out-of-home media, such as bus shelter advertising and transit
advertising that management believes would complement the Company's existing
outdoor operations. The restrictions imposed by the Amended Credit Facility, and
the indentures governing the Notes may limit the Company's use of cash from
operations for these purposes.
The Company's ability to make scheduled payments of principal of, or to pay
interest on, or to refinance its indebtedness (including the Notes) depends on
its future performance and financial results, which to a certain extent, is
subject to general economic, financial, competitive, legislative, regulatory and
other factors beyond its control. Based upon the current level of operations and
anticipated growth, management of the Company believes that available cash flow,
together with available borrowings under the Amended Credit Facility and other
sources of liquidity, will be adequate to meet the Company's anticipated future
requirements for working capital, capital expenditures and scheduled payments of
principal of, and interest on the Notes. However, there can be no assurance that
the Company's business will generate sufficient cash flow from operations or
that future borrowings will be available in an amount sufficient to enable the
Company to service its indebtedness, including the Notes, or to make necessary
capital expenditures, or that any refinancing would be available on commercially
reasonable terms or at all.
33
<PAGE>
IMPACT OF RETIREMENT OF DEBT ON NET INCOME
The Company used a portion of the proceeds from the Offering and the October
Offerings to complete the Debt Tender Offers. In connection with the early
retirement of the Existing Notes, the Company incurred an extraordinary loss
approximating $26.6 million representing the difference between the redemption
amount and the accreted value of the Existing Notes.
INFLATION
Inflation has not had a significant impact on the Company over the past
three years. The floating rate on the Amended Credit Facility could increase in
an inflationary environment, but management believes that because a significant
portion of the Company's costs are fixed, inflation will not have a material
adverse effect on its operations. However, there can be no assurance that a high
rate of inflation in the future will not have an adverse effect on the Company's
operations.
NEW ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards (SFAS) No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION,
which established a new accounting principle for stock-based compensation. In
accordance with the provisions of SFAS No. 123, the Company applies fair value
accounting for its stock-based compensation.
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards (SFAS) No. 128, EARNINGS PER SHARE, which established a new
accounting principle for the calculation of earnings per share. This SFAS is
effective for accounting periods ending after December 15, 1997. The Company has
reviewed the effects of the provision and additional shares of Common Stock
would be considered antidilutive under the provision.
34
<PAGE>
BUSINESS
GENERAL
The Company is a leading outdoor advertising company operating approximately
31,049 advertising display faces in three large regional operating areas: the
Midwest (Chicago (IL), Minneapolis/St. Paul (MN), Indianapolis (IN), Milwaukee
(WI), Des Moines (IA), Evansville (IN) and Dallas (TX)), the Southeast (Orlando
(FL), Jacksonville (FL), Palm Beach (FL), Ocala and the Atlantic Coast and Gulf
Coast areas of Florida, Memphis (TN), Tunica (MS), Chattanooga (TN) and Myrtle
Beach (SC)) and the East Coast (New York (NY), Washington D.C., Philadelphia
(PA), Northern New Jersey, Wilmington (DE), Salisbury (MD) and Hudson Valley
(NY)).
Since beginning operations with a single outdoor advertising structure in
Chicago in 1973, the Company has achieved its leading position in the outdoor
advertising industry through its aggressive acquisition and development efforts.
INDUSTRY OVERVIEW
The outdoor advertising industry has experienced increased advertiser
interest and revenue growth in recent years. Outdoor advertising generated total
revenues of approximately $2.0 billion in 1996, or approximately 1.5% of the
total advertising expenditures in the United States, and the out-of-home
advertising industry generated revenues in excess of $3.8 billion in 1996,
according to estimates by the Outdoor Advertising Association of America (the
"OAAA"), the trade association for the outdoor advertising industry. Outdoor
advertising's 1996 revenue represents growth of approximately 7.3% over
estimated total revenues for 1995, which is slightly lower than the growth of
total U.S. advertising expenditures during the same period of approximately
8.2%, which takes into account an 11.8% increase in television advertising
expenditures attributable in part to the 1996 Olympic games.
Advertisers purchase outdoor advertising for a number of reasons. Outdoor
advertising offers repetitive impact and a relatively low cost
per-thousand-impressions, a commonly used media measurement, as compared to
television, radio, newspapers, magazines and direct mail marketing. Accordingly,
because of its cost-effective nature, outdoor advertising is a good vehicle to
build mass market support. In addition, outdoor advertising can be used to
target a defined audience in a specific location and, therefore, can be relied
upon by local businesses concentrating on a particular geographic area where
customers have specific demographic characteristics. For instance, restaurants,
motels, service stations and similar roadside businesses may use outdoor
advertising to reach potential customers close to the point of sale and provide
directional information. Other local businesses such as television and radio
stations and consumer products companies may wish to appeal more broadly to
customers and consumers in the local market. National brand name advertisers may
use the medium to attract customers generally and build brand awareness. In all
cases, outdoor advertising can be combined with other media such as radio and
television to reinforce messages being provided to consumers.
The outdoor advertising industry has experienced significant change in
recent periods due to a number of factors. First, the entire "out-of-home"
advertising category has expanded to include, in addition to traditional
billboards and roadside displays, displays in shopping centers and malls,
airports, stadiums, movie theaters and supermarkets, as well as on taxis,
trains, buses, blimps and subways. Second, while the outdoor advertising
industry has experienced a decline in the use of outdoor advertising by tobacco
companies, it has increased its visibility with and attractiveness to local
advertisers as well as national retail and consumer product-oriented companies.
Third, the industry has benefitted significantly from improvements in production
technology, including the use of computer printing, vinyl advertising copy and
improved lighting techniques, which have facilitated a more dynamic, colorful
and creative use of the medium. These technological advances have permitted the
outdoor advertising industry to respond more promptly and cost effectively to
the changing needs of its advertising customers and make greater use of
advertising copy used in other media. Lastly, the outdoor advertising industry
has benefitted from the growth in automobile travel time for business and
leisure due to increased highway congestion and continued demographic shifts of
residences and businesses from the cities to outlying suburbs.
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<PAGE>
The outdoor advertising industry is comprised of several large outdoor
advertising and media companies with operations in multiple markets, as well as
many smaller and local companies operating a limited number of structures in a
single or few local markets. While the industry has experienced some
consolidation within the past few years, the OAAA estimates that there are still
approximately 600 companies in the outdoor advertising industry operating
approximately 396,000 billboard displays. The Company expects the trend of
consolidation in the outdoor advertising industry to continue.
OPERATING STRATEGY
The Company's strategy is to be the leading provider of outdoor advertising
services in each of its three regional operating areas and to expand its
presence in attractive new markets. The Company believes that regional clusters
provide it with significant opportunities to increase revenue and achieve cost
savings by delivering to local and national advertisers efficient access to
multiple markets or highly targeted areas.
The following are the primary components of the Company's strategy:
-MAXIMIZE RATES AND OCCUPANCY. Through continued emphasis on customer sales
and service, quality displays and inventory management, the Company seeks
to maximize advertising rates and occupancy levels in each of its markets.
The Company has recruited and trained a strong local sales staff supported
by local managers operating under specific, sales-based compensation
targets designed to obtain the maximum potential from its display
inventory.
-INCREASE MARKET PENETRATION. The Company seeks to expand operations within
its existing markets through new construction, with an emphasis on painted
bulletins, which generally command higher rates and longer term contracts
from advertisers. In addition, the Company historically has acquired, and
intends to continue to acquire, additional advertising display faces in its
existing markets as opportunities become available.
-PURSUE STRATEGIC ACQUISITIONS. In addition to improved penetration of its
existing markets, the Company also seeks to grow by acquiring additional
display faces in closely proximate new markets. Such new markets allow the
Company to capitalize on the operating efficiencies and cross-market sales
opportunities associated with operating in multiple markets within distinct
regions. The Company intends to develop new regional operating areas in
regions where attractive growth and consolidation opportunities exist.
-CAPITALIZE ON TECHNOLOGICAL ADVANCES. The Company seeks to capitalize on
technological advances that enhance its productivity and increase its
ability to effectively respond to its customer's needs. The Company's
continued investment in equipment and technology provide for greater
ongoing benefits in the areas of sales, production and operation.
-MAINTAIN LOW COST STRUCTURE. Through continued adherence to strict cost
controls, centralization of administrative functions and maintenance of low
corporate overhead, the Company seeks to maximize its EBITDA Margin, which
it believes to be among the highest in the industry. The Company believes
its centralized administration provides opportunities for significant
operating leverage from further expansion in existing markets and from
future acquisitions.
-DEVELOP OTHER OUT-OF-HOME MEDIA. The Company seeks to develop other forms
of out-of-home media such as bus shelter or transit advertising in order to
enhance revenues in existing markets or provide access to new markets.
Through implementation of this business strategy, the Company has increased
its outdoor advertising presence from 500 display faces in a single market in
1988 to approximately 32,929 in its markets at April 30, 1997.
ACQUISITIONS
As of December 31, 1996 consistent with its operating strategy, the Company
has recently acquired the assets or capital stock of five outdoor advertising
companies and entered into agreements to
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<PAGE>
purchase the assets or capital stock of two additional outdoor advertising
companies. The Company believes that these acquisitions will significantly
strengthen its market presence in the midwest and southeast regions of the
United States, give the Company a substantial presence in the east coast region
and allow the Company to capitalize on the operating efficiencies and
cross-market sales opportunities associated with operating in closely proximate
markets.
THE POA ACQUISITION. In August 1996, the Company agreed to purchase OAH
pursuant to a merger of a subsidiary of the Company with and into OAH. As a
result of the POA Acquisition, the Company acquired a total of approximately
6,337 advertising display faces consisting of bulletins and posters in five
markets located in the southeast United States, including Orlando, Ocala and
Palm Beach, as well as the East Coast and Gulf Coast areas of Florida, and
Myrtle Beach and Chattanooga.
THE REVERE ACQUISITION. The Company recently acquired a total of
approximately 8,853 advertising display faces located in the east coast of the
United States, including Philadelphia, Washington, D.C., Salisbury and
Wilmington, as well as 1,917 transit display faces located in Baltimore and
1,582 kiosk displays located in malls throughout the United States.
THE MEMPHIS/TUNICA ACQUISITION. In early January 1997, the Company acquired
a total of approximately 2,018 advertising display faces consisting of bulletins
and posters in and around Memphis, Tennessee and Tunica County, Mississippi.
THE MATTHEW ACQUISITION. In mid-January 1997, the Company purchased certain
of the assets of Matthew Outdoor Advertising Acquisition Co., L.P. As a result
of the Matthew Acquisition, the Company acquired 1,035 advertising display faces
consisting of posters and bulletins in three east coast markets.
THE ADDITIONAL ACQUISITIONS. In September 1996, the Company purchased
certain assets of Iowa Outdoor Displays and The Chase Company. As a result of
the Additional Acquisitions, the Company acquired approximately 160 advertising
display faces consisting primarily of posters in and around Des Moines and
approximately 245 advertising display faces consisting primarily of bulletins in
and around Dallas.
THE NAEGELE ACQUISITION. In April 1996, the Company acquired operations in
the Minneapolis/ St. Paul and Jacksonville markets. In a stock purchase
transaction with NOA Holding Company (the "Naegele Acquisition"), the Company
acquired approximately 2,550 poster faces (of which approximately 1,455 are
located in the Minneapolis/St. Paul market and approximately 1,095 are located
in the Jacksonville market) and approximately 840 painted bulletin faces (of
which approximately 440 are located in the Minneapolis/St. Paul market and
approximately 400 are located in the Jacksonville market).
THE OTHER ACQUISITIONS. In April 1996, the Company acquired 4 painted
bulletin faces in the Chicago market from Paramount Outdoor, Inc. in an asset
purchase transaction. In March 1996, through an asset purchase transaction with
Image Media, Inc., the Company acquired 18 painted bulletin and painted wall
faces in the Chicago market. In a transaction with Ad-Sign, Inc. in January
1996, the Company acquired approximately 160 painted bulletin faces in the
Chicago market. In April 1995, the Company acquired approximately 6 painted
bulletin faces in the Chicago market pursuant to a stock purchase transaction
with O&B Outdoor, Inc. The Company has integrated the newly acquired faces from
these acquisitions into its existing Chicago operations.
In March 1995, the Company completed two acquisitions in the Dallas market.
In a stock purchase transaction with Harrington Associates, Inc., the Company
acquired approximately 740 junior (8-sheet) poster faces located in the Dallas
market. In a stock purchase transaction with Best Outdoor, the Company acquired
approximately 387 junior (8-sheet) poster faces in the Dallas market.
MARKETS
Each of the Company's markets generally possess demographic characteristics
that are attractive to national advertisers, allowing the Company to package its
displays in several of its markets in a single contract for advertisers in
national and regional campaigns. Each market also has unique local industries,
37
<PAGE>
businesses, sports franchises and special events that are frequent users of
outdoor advertising. The following sets forth certain information for each of
the Company's markets as of April 30, 1997 after giving effect to the
Acquisitions:
<TABLE>
<CAPTION>
1996 % OF 1996 TOTAL
PRO FORMA PRO FORMA 30-SHEET 8-SHEET DISPLAY
MARKET NET REVENUES NET REVENUES BULLETINS POSTERS POSTERS FACES
- ------------------------- ---------------------- ------------ --------- -------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
MIDWEST:
Chicago................ $ 17,990 10.2% 655 -- 3,609 4,264
Minneapolis/St. Paul... 17,320 9.8 455 1,339 -- 1,794
Indianapolis........... 10,533 6.0 257 1,106 101 1,994
Milwaukee.............. 4,818 2.7 261 -- 338 599
Des Moines............. 3,539 2.0 86 578 9 673
Evansville............. 3,435 1.9 278 699 -- 977
Dallas................. 1,261 0.8 254 -- 1,210 1,464
SOUTHEAST:
Orlando................ 25,145 14.2 808 1,082 -- 1,890
Jacksonville........... 8,528 4.9 448 788 -- 1,236
Ocala.................. 5,240 3.0 859 204 -- 1,063
Memphis/Tunica......... 14,705 8.3 653 1,185 99 2,457
Chattanooga............ 5,470 3.1 333 648 -- 981
Myrtle Beach........... 9,495 5.4 711 472 -- 1,183
Atlantic Coast area
(FL).................. 5,132 2.9 664 -- 664
Gulf Coast area (FL)... 1,712 1.0 457 -- -- 457
EAST COAST:
Philadelphia........... 13,939 7.9 357 2,085 -- 2,634
Washington, D.C........ 6,289 3.6 86 586 -- 672
Salisbury.............. 3,435 1.9 394 479 -- 873
Wilmington............. 4,576 2.6 159 917 45 1,121
Baltimore.............. 2,295 1.3 209 1,234 -- 3,360
Mall Media............. 2,636 1.5 -- -- -- 1,582
Northern NJ............ 4,256 2.4 162 5 6 173
Metro New York......... 3,375 1.9 42 364 -- 406
Hudson Valley.......... 1,312 0.7 125 260 27 412
---------- ----- --------- -------- ------- -------
Total................ $176,611 100.0% 8,713 14,031 5,444 32,929(1)
---------- ----- --------- -------- ------- -------
---------- ----- --------- -------- ------- -------
</TABLE>
- ------------------------
(1) Includes 530 transit display faces located in Indianapolis, 192 bus shelters
in Philadelphia, 1,917 transit display faces in Baltimore, 520 transit
display faces in Memphis and 1,539 kiosk displays in malls throughout the
United States.
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<PAGE>
INVENTORY
The Company operates three standard types of outdoor advertising display
faces and also has transit advertising as follows:
-BULLETINS generally are 14 feet high and 48 feet wide (672 square feet) and
consist of panels on which advertising copy is displayed. The advertising
copy is either hand painted onto the panels at the facilities of the
outdoor advertising company in accordance with design specifications
supplied by the advertiser and attached to the outdoor advertising
structure, or is printed with the computer-generated graphics on a single
sheet of vinyl that is wrapped around the structure. On occasion, to
attract more attention, some of the panels may extend beyond the linear
edges of the display face and may include three-dimensional embellishments.
Because of their greater impact and higher cost, bulletins are usually
located on major highways.
-30-SHEET POSTERS generally are 12 feet high by 25 feet wide (300 square
feet) and are the most common type of billboard. Advertising copy for
30-sheet posters consists of lithographed or silk-screened paper sheets
supplied by the advertiser that are pasted and applied like wallpaper to
the face of the display, or single sheets of vinyl with computer-generated
advertising copy that are wrapped around the structure. Thirty-sheet
posters are concentrated on major traffic arteries.
-JUNIOR (8-SHEET) POSTERS usually are 6 feet high by 12 feet wide (72 square
feet). Displays are prepared and mounted in the same manner as 30-sheet
posters, except that vinyl sheets are not typically used on junior posters.
Most junior posters, because of their smaller size, are concentrated on
city streets and target pedestrian traffic.
-TRANSIT ADVERTISING consists generally of posters and frames displayed on
the sides of public buses operating on city streets.
-MALL ADVERTISING consists generally of kiosks located in shopping malls.
Billboards generally are mounted on structures owned by the outdoor
advertising company and located on sites that are either owned or leased by it
or on which it has acquired a permanent easement. Billboard structures are
durable, have long useful lives and do not require substantial maintenance. When
disassembled, they typically can be moved and relocated at new sites. The
Company's outdoor advertising structures are made of steel and other durable
materials built to withstand variable climates, including the rigors of the
midwestern climate. The Company expects its structures to last 15 years or more
without significant refurbishment.
LOCAL MARKET OPERATIONS
In each of its principal markets, the Company maintains a complete outdoor
advertising operation including a sales office, a production, construction and
maintenance facility, a creative department equipped with advanced technology, a
real estate unit and support staff. The Company conducts its outdoor advertising
operations through these local offices, consistent with senior management's
belief that an organization with decentralized sales and operations is more
responsive to local market demand and provides greater incentives to employees.
At the same time, the Company maintains centralized accounting and financial
controls to allow it to closely monitor the operating and financial performance
of each market. Local general managers, who report directly to the Company's
President or a regional manager, are responsible for the day-to-day operations
of their respective markets and are compensated according to the financial
performance of such markets. In general, these local managers oversee market
development, production and local sales. The Company intends to incorporate the
operations acquired in the Acquisitions into this operational structure with
local offices handling the day-to-day operations and centralized accounting and
financial controls.
Although site leases (for land underlying an advertising structure) are
administered from the Company's headquarters in Chicago, each local office is
responsible for locating and ultimately procuring leases for appropriate sites
in its market. Site lease contracts vary in term but typically run from 10 to 20
years with various termination and renewal provisions. Each office maintains a
leasing department, with an extensive database containing information on local
property ownership, lease contract terms, zoning ordinances and permit
requirements. The Company has been very successful in developing new
39
<PAGE>
advertising display face inventory in each of its markets based on utilizing
these databases and developing an experienced staff of lease teams. Each such
team's sole responsibility is the procurement of sites for new locations in each
of the Company's markets.
SALES AND SERVICE
The Company's sales strategy is to maximize revenues from local advertisers.
Accordingly, it maintains a team of sales representatives headed by a sales
manager in each of its markets. The Company devotes considerable time and
resources to recruiting, training and coordinating the activities of its sales
force. A sales representative's compensation is heavily weighted to individual
performance, and the local sales manager's compensation is tied to the
performance of his or her sales team. One sales representative, based in
Chicago, manages sales to national advertisers. In total, as of December 31,
1996, 192 of the Company's employees are significantly involved in sales and
marketing activities.
In addition to the sales staff, the Company has established fully staffed
and equipped creative departments in each of its markets. Utilizing
technologically advanced computer hardware and software, the staff is able to
create original design copy for both local and national accounts which has
allowed the various creative departments to exchange work via modem or over the
Internet with each other or directly with clients or their agencies. This
ability has resulted in many fully staffed advertising agencies turning to the
Company for the creation of their outdoor campaigns. The Company believes that
its creative department's implementation of continuing technological advances
provides a significant competitive advantage in its sales and service area.
CUSTOMERS
Advertisers usually contract for outdoor displays through advertising
agencies, which are responsible for the artistic design and written content of
the advertising as well as the choice of media and the planning and
implementation of the overall campaign. The Company pays commissions to the
agencies for advertising contracts that are procured by or through those
agencies. Advertising rates are based on a particular display's exposure (or
number of "impressions" delivered) in relation to the demographics of the
particular market and its location within that market. The number of
"impressions" delivered by a display is measured by the number of vehicles
passing the site during a defined period and is weighted to give effect to such
factors as its proximity to other displays, the speed and viewing angle of
approaching traffic, the national average of adults riding in vehicles and
whether the display is illuminated. The number of impressions delivered by a
display is verified by independent auditing companies.
The size and geographic diversity of the Company's markets allow it to
attract national advertisers, often by packaging displays in several of its
markets in a single contract to allow a national advertiser to simplify its
purchasing process and present its message in several markets. National
advertisers generally seek wide exposure in major markets and therefore tend to
make larger purchases. The Company competes for national advertisers primarily
on the basis of price, location of displays, availability and service.
The Company also focuses efforts on local sales, and approximately 76% of
the Company's gross revenues in 1996, after giving effect to the Acquisitions,
were generated from local advertisers. Local advertisers tend to have smaller
advertising budgets and require greater assistance from the Company's production
and creative personnel to design and produce advertising copy. In local sales,
the Company often expends more sales efforts on educating customers regarding
the benefits of outdoor media and helping potential customers develop an
advertising strategy using outdoor advertising. While price and availability are
important competitive factors, service and customer relationships are also
critical components of local sales.
Tobacco revenues have historically accounted for a significant portion of
outdoor advertising revenues. Beginning in 1993, the leading tobacco companies
substantially reduced their expenditures for outdoor advertising due to a
declining population of smokers, societal pressures, consolidation in the
tobacco industry and price competition from generic brands. Since tobacco
advertisers often utilized some of the industry's prime inventory, the decline
in tobacco-related advertising expenditures made this space available for other
advertisers, including those that had not traditionally utilized outdoor
advertising. As a result of this decline in tobacco-related advertising revenues
and the increased use of outdoor
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<PAGE>
advertising by other advertisers, the range of the Company's advertisers has
become quite diverse. The following table illustrates the diversity of the
Company's advertising base, after giving effect to the Acquisitions:
1996 PRO FORMA NET REVENUES BY CATEGORY
<TABLE>
<CAPTION>
PERCENTAGE OF
NET REVENUES
---------------
<S> <C>
Retail/Consumer Products...................................................... 15.4%
Travel/Entertainment.......................................................... 15.3
Automotive & Related.......................................................... 11.0
Tobacco....................................................................... 10.8
Restaurant.................................................................... 8.6
Professional Services......................................................... 5.8
Home Developer/Real Estate.................................................... 5.6
Alcohol....................................................................... 4.4
Hotels/Motels................................................................. 3.5
Other......................................................................... 19.6
-----
Total..................................................................... 100.0%
-----
-----
</TABLE>
The tobacco industry has recently engaged in negotiations to settle
litigation against such industry. The tobacco companies have reached a proposed
settlement that, upon the approval of Congress, will become final and binding.
Such proposed settlement would require a total ban of advertising on outdoor
billboards and signs. Any such ban may have a material adverse effect on the
Company's revenues at least in the immediate period following the imposition of
such ban while alternate sources of advertising are secured. The competition in
the outdoor advertising business for any such alternate sources of advertising
following the imposition of a total ban on tobacco advertising on outdoor
billboards and signs is expected to be intense. There can be no assurance that
the Company will immediately replace such advertising revenue currently
attributed to the tobacco industry in the event of a total ban of tobacco
advertising on outdoor billboards and signs. Furthermore, state and local
governments have recently proposed and some have enacted regulations restricting
or banning outdoor advertising of tobacco in certain jurisdictions. Continued
passage of restrictions or bans on outdoor advertising in the Company's markets
may adversely affect the Company's revenues at least in the immediate period
following such regulations.
PRODUCTION
The Company has internal production facilities and staff to perform the full
range of activities required to develop, create and install outdoor advertising
in all of its markets. Production work includes creating the advertising copy
design and layout, painting the design or coordinating its printing and
installing the designs on its displays. In addition, the Company's substantial
new development activity has allowed it to vertically integrate its own sign
fabrication ability so that new signs are fabricated and erected in-house. The
Company usually provides its full range of production services to local
advertisers and to advertisers that are not represented by advertising agencies,
since national advertisers and advertisers represented by advertising agencies
often use preprinted designs that require only installation. However, the
Company's creative and production personnel frequently are involved in
production activities even when advertisers are represented by agencies due to
the development of new designs or adaptation of copy from other media for use on
billboards. The Company's artists also assist in the development of marketing
presentations, demonstrations and strategies to attract new advertisers.
With the increased use of vinyl and pre-printed advertising copy furnished
to the outdoor advertising company by the advertiser or its agency, outdoor
advertising companies are becoming less responsible for labor-intensive
production work since vinyl and pre-printed copy can be installed quickly. The
vinyl sheets are reusable, thereby reducing the Company's production costs, and
are easily transportable. Due
41
<PAGE>
to the geographic proximity of the Company's principal markets and the
transportability of vinyl sheets, the Company can shift materials among markets
to promote efficiency. The Company believes that this trend over time will
reduce operating expenses associated with production activities.
COMPETITION
The Company competes in each of its markets with other outdoor advertisers
as well as other media, including broadcast and cable television, radio, print
media and direct mail marketers. In addition, the Company also competes with a
wide variety of "out-of-home" media, including advertising in shopping centers
and malls, airports, stadiums, movie theaters and supermarkets, as well as on
taxis, trains, buses and subways. Advertisers compare relative costs of
available media and cost-per-thousand impressions, particularly when delivering
a message to customers with distinct demographic characteristics. In competing
with other media, outdoor advertising relies on its low
cost-per-thousand-impressions and its ability to repetitively reach a broad
segment of the population in a specific market or to target a particular
geographic area or population with a particular set of demographic
characteristics within that market.
The outdoor advertising industry is highly fragmented, consisting of several
large outdoor advertising and media companies with operations in multiple
markets as well as smaller and local companies operating a limited number of
structures in single or a few local markets. Although some consolidation has
occurred over the past few years, according to the OAAA there are approximately
600 companies in the outdoor advertising industry operating approximately
396,000 billboard displays. In several of its markets, the Company encounters
direct competition from other major outdoor media companies, including Outdoor
Systems, Inc. (formerly Gannett Co. Inc.), Eller Media, Inc. (formerly Patrick
Media Group) and 3M National Advertising Co. (a division of Minnesota Mining and
Manufacturing Company), each of which has a larger national network and greater
total resources than the Company. The Company believes that its emphasis on
local advertisers and its position as a major provider of advertising services
in each of its markets enable it to compete effectively with the other outdoor
media operators, as well as other media. The Company also competes with other
outdoor advertising companies for sites on which to build new structures. See
"Risk Factors -- Competition."
GOVERNMENT REGULATION
The outdoor advertising industry is subject to governmental regulation at
the federal, state and local level. Federal law, principally the Highway
Beautification Act of 1965, encourages states, by the threat of withholding
federal appropriations for the construction and improvement of highways within
such states, to implement legislation to restrict billboards located within 660
feet of, or visible from, interstate and primary highways except in commercial
or industrial areas. All of the states have implemented regulations at least as
restrictive as the Highway Beautification Act, including the prohibition on the
construction of new billboards adjacent to federally-aided highways and the
removal at the owner's expense and without any compensation of any illegal signs
on such highways. The Highway Beautification Act, and the various state statutes
implementing it, require the payment of just compensation whenever governmental
authorities require legally erected and maintained billboards to be removed from
federally-aided highways.
The states and local jurisdictions have, in some cases, passed additional
and more restrictive regulations on the construction, repair, upgrading, height,
size and location of, and, in some instances, content of advertising copy being
displayed on outdoor advertising structures adjacent to federally-aided highways
and other thoroughfares. Such regulations, often in the form of municipal
building, sign or zoning ordinances, specify minimum standards for the height,
size and location of billboards. In some cases, the construction of new
billboards or relocation of existing billboards is prohibited. Some
jurisdictions also have restricted the ability to enlarge or upgrade existing
billboards, such as converting from wood to steel or from non-illuminated to
illuminated structures. From time to time governmental authorities order the
removal of billboards by the exercise of eminent domain. Thus far, the Company
has been able to obtain satisfactory compensation for any of its structures
removed at the direction of governmental authorities, although there is no
assurance that it will be able to continue to do so in the future.
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<PAGE>
In recent years, there have been movements to restrict billboard advertising
of certain products, including tobacco and alcohol. No bills have become law at
the federal level except those requiring health hazard warnings similar to those
on cigarette packages and print advertisements. Its is uncertain whether
additional legislation of this type will be enacted on the national level or in
any of the Company's markets. Certain state and local governments have recently
proposed and some have enacted regulations restricting or banning outdoor
advertising of tobacco and liquor in certain jurisdictions. Continued passage of
restrictions or bans on outdoor advertising in the Company's markets may
adversely affect the Company's revenues at least in the immediate period
following such regulations.
In August 1996, the U.S. Food and Drug Administration issued final
regulations governing certain marketing practices in the tobacco industry. Among
other things, the regulations prohibit tobacco product billboard advertisements
within 1,000 feet of schools and playgrounds and require that tobacco product
advertisements on billboards be in black and white and contain only text. In
addition, one major tobacco manufacturer recently proposed federal legislation
banning 8-sheet billboard advertising and transit advertising of tobacco
products. A reduction in billboard advertising by the tobacco industry could
cause an immediate reduction in the Company's direct revenue from such
advertisers and would simultaneously increase the available space on the
existing inventory of billboards in the outdoor advertising industry. See
"Business -- Customers" and "Risk Factors -- Negative Implications of Tobacco
Industry Regulation on Outdoor Advertising."
Amortization of billboards has also been adopted in varying forms in certain
jurisdictions. Amortization permits the billboard owner to operate its billboard
as a non-conforming use for a specified period of time until it has recouped its
investment, after which it must remove or otherwise conform its billboard to the
applicable regulations at its own cost without any compensation. Amortization
and other regulations requiring the removal of billboards without compensation
have been subject to vigorous litigation in state and federal courts and cases
have reached differing conclusions as to the constitutionality of these
regulations. To date, regulations in the Company's markets have not materially
adversely affected its operations, except in the Jacksonville market, where the
Company has been subject to regulatory efforts and recently agreed to city
ordinances to remove a number of faces. On March 22, 1995, following litigation
over an ordinance and a municipal charter amendment, Naegele entered into an
agreement with the City of Jacksonville to remove 711 billboard faces over a
twenty year period starting January 1, 1995 and ending December 31, 2014. The
resolution specifies the following removal schedule:
<TABLE>
<CAPTION>
30-SHEET 8-SHEET
CALENDAR YEARS BULLETINS POSTERS POSTERS TOTAL
- -------------------------------------------------------------------------- ------------- ------------- ----------- -----
<S> <C> <C> <C> <C>
1995-1998................................................................. 73 242 167 482
1999-2004................................................................. 23 87 -- 110
2005-2014................................................................. 23 96 -- 119
--- --- --- ---
119 425 167 711
--- --- --- ---
--- --- --- ---
</TABLE>
Under the agreement, Naegele and the City of Jacksonville have agreed on the
removal of 445 pre-selected faces, including 167 (100%) of its 8-sheet faces.
Management of the Company has control over the selection and removal of an
additional 155 faces. The remaining 111 faces to be removed will be selected by
the Company from a pool of faces identified by the City. While the number of
signs being taken down represents a large percentage of Naegele's plant in the
Jacksonville market, the Company believes that Jacksonville has been overbuilt
for a number of years, leading to low occupancy levels and low advertising
rates. The removal of a number of marginally profitable boards is expected to
put upward pressure on rates. Additionally, the removals are staggered over 20
years, with management having substantial input on which signs are removed and
some rights of substitution and rebuilding of outdoor advertising structures in
the Jacksonville market.
On February 1, 1991, Naegele entered into a consent judgment to settle a
complaint brought by the Minnesota Attorney General under Minnesota anti-trust
laws pursuant to which Naegele and its successors are prohibited from purchasing
outdoor advertising displays in the Minneapolis/St. Paul market from other
operators of outdoor advertising displays until February 1, 2001. The consent
judgment also
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<PAGE>
prohibits the Company from enforcing certain covenants not to compete and from
entering into property leases in excess of 15 years. The consent judgment does
not affect the Company's ability to continue to develop and build new
advertising displays in the Minneapolis/St. Paul market. Additionally, the
Company can purchase displays from brokers or other non-operators.
The outdoor advertising industry is heavily regulated and at various times
and in various markets can be expected to be subject to varying degrees of
regulatory pressure affecting the operation of advertising displays.
Accordingly, although the Company's experience to date is that the regulatory
environment has not adversely impacted the Company's business, other than in the
newly acquired Jacksonville market, no assurance can be given that existing or
future laws or regulations will not materially adversely affect the Company at
some time in the future.
OUTDOOR ADVERTISING PROPERTIES; OFFICE AND PRODUCTION FACILITIES
OUTDOOR ADVERTISING SITES. After giving effect to the Acquisitions, the
Company owns or has permanent easements on approximately 364 parcels of real
property that serve as the sites for its outdoor displays. The Company's
remaining approximately 17,174 advertising display sites are leased or licensed.
The Company's leases are for varying terms ranging from month-to-month or
year-to-year to terms of ten years or longer, and many provide for renewal
options. There is no significant concentration of displays under any one lease
or subject to negotiation with any one landlord. The Company believes that an
important part of its management activity is to manage its lease portfolio and
negotiate suitable lease renewals and extensions.
OFFICE AND PRODUCTION FACILITIES. The Company's principal executive and
administration offices are located in Chicago, Illinois in a 6,956-square foot
space leased by the Company. In addition, after giving effect to the
Acquisitions, the Company has an office and complete production and maintenance
facility in each of Addison, Illinois (40,000 square feet); Orlando (20,500
square feet); Memphis (24,844 square feet); Chattanooga (14,580 square feet);
Ocala (11,700 square feet); Myrtle Beach (14,792 square feet); Milwaukee (18,367
square feet); Indianapolis (23,648 square feet); Des Moines (15,320 square
feet); Minneapolis/St. Paul (82,547 square feet); Jacksonville (16,000 square
feet); Evansville (16,000 square feet); Philadelphia (32,000 square feet);
Washington, D.C. (15,668 square feet); Salisbury (12,000 square feet);
Wilmington (5,700 square feet); Baltimore (8,000 square feet); Yonkers, NY
(4,900 square feet); and Kingston, NY (3,000 square feet) and a sales, real
estate and administration office in each of Dallas (2,000 square feet); New York
(6,000 square feet); and Orange County, CA (4,000 square feet). The
Indianapolis, Addison, Orlando, Milwaukee, Jacksonville, Myrtle Beach,
Chattanooga, Ocala, Evansville, Philadelphia, Washington, D.C., Salisbury,
Wilmington, Yonkers and Kingston facilities are owned and all other facilities
are leased. The Company considers its facilities to be well maintained and
adequate for its current and reasonably anticipated future needs.
EMPLOYEES
At December 31, 1996, the Company employed approximately 786 people, of whom
approximately 192 were primarily engaged in sales and marketing, 372 were
engaged in painting, bill posting and construction and maintenance of displays
and the balance were employed in financial, administrative and similar
capacities. Of those employees, the following number below to unions: Milwaukee
(16 employees), Minneapolis/St. Paul (22 employees), Philadelphia (45
employees), Washington D.C. (12 employees) and Wilmington (14 employees). The
Company considers its relations with the unions and with its employees to be
good.
LITIGATION
The Company is involved in litigation in the ordinary course of business,
including disputes involving advertising contracts, site leases, employment
claims and construction matters. The Company is also involved in routine
administrative and judicial proceedings regarding permits and fees relating to
outdoor advertising structures and compensation for condemnations. None of these
proceedings, in the opinion of management, is likely to have a material adverse
effect on the Company.
44
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The table below sets forth certain information with respect to the directors
and executive officers of the Company.
<TABLE>
<CAPTION>
YEARS WITH
NAME AGE POSITION COMPANY
- ------------------------- --- ----------------------------------------------------------- ---------------
<S> <C> <C> <C>
Daniel L. Simon* 45 Chief Executive Officer, President and Director 23
Brian T. Clingen 37 Vice President, Chief Financial Officer and Director 8
Paul G. Simon* 43 Vice President, Secretary and General Counsel 6
Michael J. Roche 46 Director 2
Michael B. Goldberg 49 Director **
Frank K. Bynum, Jr. 33 Director **
</TABLE>
- ------------------------
* Daniel L. and Paul G. Simon are brothers.
** Became a director in 1996.
DANIEL L. SIMON, a founder and a principal beneficial stockholder of the
Company, has been the President of the Company since 1989 and a director since
its formation. Mr. Simon has 23 years of experience in the outdoor advertising
industry and serves on the executive and legislative committees of the Outdoor
Advertising Association of America.
BRIAN T. CLINGEN has served as Vice President and Chief Financial Officer of
the Company since December 1987 and as a director since 1990. From 1983 to 1987,
Mr. Clingen worked for Elmore Group ("Elmore"), a diversified property and
service company, and served as Chief Financial Officer of an Elmore subsidiary.
Mr. Clingen is a certified public accountant.
PAUL G. SIMON has been Vice President and General Counsel of the Company
since 1989 and has served as Secretary of the Company since July 1991. Mr. Simon
was in the private practice of law in Illinois from 1978 to 1989, specializing
in commercial litigation, general corporate matters, real estate and mergers and
acquisitions. Mr. Simon represented the Company as outside counsel from 1981 to
1989.
MICHAEL J. ROCHE has been National Marketing Manager (Licensed Businesses)
for Sears, Roebuck and Co. since 1985. Prior thereto, he was an Assistant
Marketing Manager from 1984 to 1985 and a National Sales Promotion Manager from
1980 to 1984 for Sears, Roebuck and Co. In 1997, Mr. Roche became the Director
of Marketing for Sears Home Services. Mr. Roche has been a director of the
Company since November 1993.
MICHAEL B. GOLDBERG has been a director of the Company since April 5, 1996.
Mr. Goldberg has been a Managing Director of Kelso & Company, L.P. since October
1991. Mr. Goldberg served as a Managing Director and jointly managed the merger
and acquisitions department at The First Boston Corporation from 1989 to May
1991. Mr. Goldberg was a partner at the law firm of Skadden, Arps, Slate,
Meagher & Flom from 1980 to 1989. Mr. Goldberg is a director of Hosiery
Corporation of America, Inc. and United Refrigerated Services, Inc.
FRANK K. BYNUM, JR. has been a director of the Company since July 1996. Mr.
Bynum has been a Vice President of Kelso & Company, L.P. since July 1991, and
was an Associate of Kelso & Company, L.P. from October 1987 to July 1991. He is
a director of Hosiery Corporation of America, Inc., IXL Holdings, Inc. and
United Refrigerated Services, Inc.
For their services as directors, the members of the Board of Directors who
are not employees of the Company, UOI, or affiliates of Kelso & Company, L.P.
are paid an aggregate of $10,000 annually. All directors are reimbursed for
reasonable expenses associated with their attendance at meetings of the Board of
Directors.
45
<PAGE>
The Company instituted a classified Board of Directors immediately upon
consummation of the Offering. Upon the completion of their initial terms, which
vary from one to three years, all directors of the Company will hold office for
three-year terms until the next annual meeting of stockholders of the Company or
until their successors are duly elected and qualified. See "Description of
Capital Stock -- Special Provisions of Certificate of Incorporation, Bylaws and
Delaware Law." Executive officers of the Company are elected by the Board of
Directors on an annual basis and serve at the discretion of the Board of
Directors.
On December 23, 1992, Kelso & Companies, Inc., the general partner of Kelso
& Company, L.P., and its chief executive officer, without admitting or denying
the findings contained therein, consented to an administrative order in respect
of an inquiry by the Securities and Exchange Commission (the "Commission")
relating to the 1990 acquisition of a portfolio company by an affiliate of Kelso
& Companies, Inc. The order found that the tender offer filing by Kelso &
Companies, Inc. in connection with the acquisition did not comply fully with the
Commission's tender offer reporting requirements, and required Kelso &
Companies, Inc. and its chief executive officer to comply with these
requirements in the future.
The Company has an agreement with Kelso & Company, L.P. that permits Kelso &
Company, L.P. to nominate two persons for the Board of Directors to be voted
upon by the shareholders. Messrs. Goldberg and Bynum have been retained as
directors as a result of such agreement. The agreement also provides that at
least one of such nominees, if elected to the Board of Directors, will also
serve on the Board's compensation committee. See "Certain Transactions."
46
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding the
compensation paid during 1994, 1995 and 1996 to the Company's Chief Executive
Officer and each other executive officer whose total annual salary and bonus
that year exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------------------- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (2)
- ----------------------------------------------------------- --------- ----------- ----------- ------------------
<S> <C> <C> <C> <C>
Daniel L. Simon (1)........................................ 1996 $ 222,918 0 $ 1,000
President and 1995 244,379 0 1,000
Chief Executive Officer 1994 249,250 0 500
Brian T. Clingen (1)....................................... 1996 $ 144,867 0 $ 1,000
Chief Financial 1995 145,128 0 1,000
Officer and Vice 1994 145,852 0 500
President
Paul G. Simon (1).......................................... 1996 $ 168,507 $ 125,000 $ 1,000
Vice President, Secretary and 1995 158,176 0 1,000
General Counsel 1994 158,968 0 500
</TABLE>
- ------------------------
(1) Does not include value of warrants granted in April 1996 pursuant to the
1996 Warrant Plan to Daniel L. Simon, Brian T. Clingen and Paul G. Simon.
(2) Represents contributions made by the Company on behalf of the named
executive officers to a 401(k) plan.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
INDIVIDUAL GRANTS AT ASSUMED
- ------------------------------------------------------------------------------------------ ANNUAL RATES
NUMBER OF PERCENT OF OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM
OPTIONS EMPLOYEES IN PRICE EXPIRATION ------------------------
NAME GRANTED (#) FISCAL YEAR (1) ($/SH) DATE (2) 5% 10%
- --------------------------------- ------------ --------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Daniel L. Simon
Series I Warrants.............. 595,000 24.00% $ 5.00 4/5/2006 1,870,961 4,741,383
Series II Warrants............. 700,000 28.33% $ 5.00 4/5/2006 2,201,131 5,578,098
Series III Warrants............ 700,000 28.33% $ 5.00 4/5/2006 2,201,131 5,578,098
Brian T. Clingen
Series I Warrants.............. 105,006 4.25% $ 5.00 4/5/2006 330,188 836,762
Series II Warrants............. 123,536 5.00% $ 5.00 4/5/2006 388,455 984,422
Series III Warrants............ 123,536 5.00% $ 5.00 4/5/2006 388,455 984,422
Paul G. Simon
Series I Warrants.............. 123,530 5.00% $ 5.00 4/5/2006 388,436 984,375
</TABLE>
- ------------------------
(1) Warrants to purchase an aggregate of 2,470,608 shares of Common Stock
pursuant to the 1996 Warrant Plan were granted to the named executive
officers during 1996.
(2) The Expiration Date is the earlier of either (i) April 5, 2006 or (ii) the
date of resignation or termination of employment of the named executive
officer.
47
<PAGE>
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
SHARES ACQUIRED VALUE FISCAL YEAR-END, AT FISCAL YEAR-END,
ON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
NAME (#) ($) (#)(1) ($)(2)
- --------------------------------- ----------------- ------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Daniel L. Simon.................. -- -- 1,995,000/0 $ 36,907,500/0
Brian T. Clingen................. -- -- 352,078/0 $ 6,513,443/0
Paul G. Simon.................... -- -- 123,530/0 $ 2,285,305/0
</TABLE>
- ------------------------
(1) The number of securities underlying exercisable and unexercisable options
are expressed in shares of Common Stock.
(2) Valuation of these options is based on the closing price of $23.50 for
Common Stock, as quoted on the Nasdaq National Market on December 31, 1996.
The Company currently maintains two life insurance policies covering Daniel
L. Simon, each in the amount of $2.5 million. The Company is the sole
beneficiary under each policy. Pursuant to a buy-sell agreement between the
Company and Mr. Simon, the Company has agreed to use up to $3.5 million of the
proceeds from these policies to purchase a portion of Mr. Simon's shares of
Common Stock of the Company from his estate.
THE 1996 WARRANT PLAN
The 1996 Warrant Plan (the "1996 Warrant Plan") was adopted by the Board of
Directors of the Company in April 1996 in order to advance the interests of the
Company by affording certain key executives and employees an opportunity to
acquire a proprietary interest in the Company and thus to stimulate increased
personal interest in such persons in the success and future growth of the
Company. The 1996 Warrant Plan is administered by the Compensation Committee of
the Company. Pursuant to the 1996 Warrant Plan, Daniel L. Simon and Brian T.
Clingen were awarded warrants in April 1996 which have been divided into three
series (the "Series I Warrants," the "Series II Warrants" and the "Series III
Warrants," and collectively, the "Management Warrants"). In July 1996, the 1996
Warrant Plan was amended to, among other things (i) adjust the warrant exercise
price for the Series II Warrants and the Series III Warrants from $5.00 per
share (as adjusted to reflect the 16 for 1 stock split) to (X) in the case of
the Series II Warrants, the closing sale price of a share of Common Stock as
reported on the Nasdaq (the "Closing Price") for the day immediately preceding
any such exercise minus $.01, PROVIDED, HOWEVER, that if at any time the average
of the Closing Prices for any 30 consecutive trading days is equal to or greater
than $16.25 AND the Closing Price for the last day of such thirty day trading
period is equal to or greater than $16.25, then the warrant exercise price shall
thereafter be $5.00, and (Y) in the case of the Series III Warrants, the Closing
Price for the day immediately preceding any such exercise minus $.01, PROVIDED,
HOWEVER, that if at any time the average of the Closing Price for any 30
consecutive trading days is equal to or greater than $20.00 AND the Closing
Prices for the last day of such thirty day trading period is equal to or greater
than $20.00, then the warrant exercise price shall thereafter be $5.00; and (ii)
make each class of Warrants fully exercisable. The Series I Warrants Series II
Warrants and Series III Warrants are fully exercisable at a warrant exercise
price of $5.00 per share. The Warrants may not be sold, assigned, transferred,
exchanged or otherwise disposed of except under certain limited circumstances
including by will or the laws of descent and distribution. The Company consented
to an assignment by Daniel L. Simon and Brian T. Clingen to Paul G. Simon of
123,530 Series I Warrants. A total of 2,470,608 shares of Common Stock have been
reserved for issuance pursuant to the Warrants issued under the 1996 Warrant
Plan. As of the date of this Prospectus, Daniel L. Simon holds 595,000 Series I
Warrants, 700,000 Series II Warrants and 700,000 Series III Warrants; Brian T.
Clingen holds 105,006 Series I Warrants, 123,536
48
<PAGE>
Series II Warrants and 123,536 Series III Warrants; and Paul G. Simon holds
123,530 Series I Warrants. The Company recognized a one-time non-cash
compensation charge of approximately $9 million in the quarter to be ended June
30, 1996 relating to the issuance of the Warrants under the 1996 Warrant Plan.
AUDIT COMMITTEE; COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In July 1996, the Board of Directors formed an Audit Committee which is
responsible for reviewing the Company's accounting controls and recommending to
the Board of Directors the engagement of the Company's outside auditors. The
members of the Company's Audit Committee are Daniel L. Simon, Michael J. Roche
and Frank K. Bynum.
The Company did not have a compensation committee in 1995. Instead,
compensation decisions were made by the Board of Directors of the Company.
Daniel L. Simon, Lawrence J. Simon, (brother of Daniel L. Simon and Paul G.
Simon) and Brian T. Clingen served as a members of the Board of Directors of the
Company and as executive officers of the Company during 1995. Lawrence J. Simon
resigned as an officer and director of the Company in October 1995. No other
individual who was a director of the Company during 1995 was also an officer or
employee of the Company during 1995. In July 1996, the Board of Directors formed
a Compensation Committee which is responsible for reviewing and approving the
amount and type of consideration to be paid to senior management and for
administering the 1996 Warrant Plan. See "Management -- The 1996 Warrant Plan."
The members of the Company's Compensation Committee are Daniel L. Simon, Brian
T. Clingen and Michael B. Goldberg. The Company has agreed that a KIA V (as
defined below) designee will be on the Compensation Committee so long as there
is such a designee on the Board of Directors.
49
<PAGE>
CERTAIN TRANSACTIONS
On April 5, 1996, the Company issued to Kelso Investment Associates V, L.P.
("KIA V") and Kelso Equity Partners V, L.P. ("KEP V") and certain individuals
designated by Kelso & Company, L.P. (the "Kelso Designees") 186,500 shares of
Class B Common Stock and 188,500 shares of Class C Common Stock (prior to a
subsequent 16 for 1 stock split) in exchange for $30,000,000. At such time, the
Company also agreed to pay a one-time fee of $1,250,000 in cash and an annual
fee of $150,000 to Kelso & Company, L.P., an affiliate of KIA V and KEP V, for
consulting and advisory services to the Company. Messrs. Goldberg and Bynum,
directors of the Company, are Managing Director and Vice President,
respectively, of Kelso & Company, L.P., limited partners of the general partner
of KIA V and limited partners of KEP V.
In July 1996, the Company entered into agreements with KIA V, KEP V and
certain individual shareholders relating to certain rights of KIA V, KEP V and
certain individual shareholders as holders of Class B Common Stock and Class C
Common Stock of the Company. Pursuant to such agreements, the Company agreed to
reclassify the shares of Class B Common Stock and Class C Common Stock into a
total of 6,000,000 shares of Common Stock, of which 2,500,000 shares were sold
in the Offering. See "Principal Stockholders." Pursuant to such agreements, the
annual consulting and advisory fee of $150,000 payable to Kelso & Company, L.P.
was terminated but Kelso & Company, L.P.'s reimbursement of expenses and
indemnification rights in connection therewith remained in effect. In connection
with the Offering, Kelso & Company, L.P. received a one-time fee of $650,000. In
addition, as a result of the reclassification, KIA V, KEP V and certain
individual shareholders have the same rights as holders of Common Stock. In
connection with the reclassification, KIA V, KEP V and certain individual
shareholders were granted four demand registration rights, were granted
"piggy-back" registration rights, and KIA V was granted the right to nominate
two persons for seats on the Board of Directors to be voted upon by the
stockholders, with one of such directors, if elected, to be a member of the
Compensation Committee. Pursuant to such agreements, Daniel L. Simon, Brian T.
Clingen and Paul G. Simon were provided with four demand registration rights and
"piggy-back" registration rights.
As a component of its growth strategy, in July 1995, the company entered
into a consulting agreement with Urban Development, L.L.C. ("Urban") whereby
Urban shall consult with, and develop new sign locations in the Milwaukee and
Chicago markets for, the Company. Urban agreed to provide consulting services to
the Company over a period of 10 years in consideration of $1,400,000 which was
paid on such date. The managing member of Urban is Lawrence J. Simon, a former
officer and director of the Company, and the brother of Daniel L. Simon and Paul
G. Simon. Lawrence J. Simon resigned as a director and an executive vice
president of the Company on October 4, 1995.
In April 1996, the Company acquired four painted bulletin faces in Chicago
from Paramount Outdoor, Inc. ("Paramount") in an asset purchase transaction.
David L. Quas and Jay Sauber who are the General Managers and Sales Managers of
the Company are the owners of Paramount. In exchange for the four painted
bulletin faces, the Company agreed to pay $500,000 in cash at the time of
purchase, $1,400 monthly for the next 24 months and an additional $168,000
payable two years after such purchase date, provided, the gross revenues
received by the Company from the purchased assets equal or exceed $333,600. In
1993, Paramount had purchased the Chicago sites (including the lease rights,
permits and structures) from a joint venture between the Company and HMS, Inc.,
an unaffiliated entity, for $100,000, which the Company believes represented
market price.
All of the transactions described above were approved by the Company's
independent outside director. The Company will not engage in transactions with
its affiliates in the future unless the terms of such transactions are approved
by a majority of its independent outside directors. In addition, the UOI
Indentures and Amended Credit Facility impose limitations on the Company's
ability to engage in such transactions. See "Description of Indebtedness and
Other Commitments."
50
<PAGE>
PRINCIPAL STOCKHOLDERS
The table below sets forth the number and percentage of outstanding shares
of Common Stock that will be beneficially owned by (i) each director of the
Company, (ii) each executive officer identified under "Management -- Executive
Compensation," (iii) all directors and executive officers of the Company as a
group and (iv) each person known by the Company to own beneficially more than 5%
of the Common Stock. The Company believes that each individual or entity named
has sole investment and voting power with respect to shares of Common Stock
indicated as beneficially owned by them, except as otherwise noted.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP OF
COMMON STOCK
-----------------------------
NUMBER OF PERCENT OF
NAME OF BENEFICIAL OWNER SHARES CLASS
- --------------------------------------------------------------------------------------- --------------- ------------
<S> <C> <C>
Daniel L. Simon ....................................................................... 8,453,208(1) 32.3%
321 North Clark Street
Chicago, Illinois 60610
Brian T. Clingen ...................................................................... 1,279,938(2) 5.2
321 North Clark Street
Chicago, Illinois 60610
Paul G. Simon ......................................................................... 124,530(3) (4)
321 North Clark Street
Chicago, Illinois 60610
Michael J. Roche ...................................................................... 2,000 --(4)
333 Beverly Road, E5-312A
Hoffman Estates, Illinois 60179
Michael B. Goldberg (6)(8) ............................................................ 3,055,110 12.7
Director
Frank K. Bynum, Jr. (5)(6) ............................................................ 30,688 --(4)
Director
Kelso Investment Associates V, L.P. (6)(7)............................................. 2,847,871 11.8
Kelso Equity Partners V, L.P. (6)(7)................................................... 151,779 --(4)
Joseph S. Schuchert (6)(8)............................................................. 2,999,650 12.4
Frank T. Nickell (6)(8)................................................................ 3,134,879 13.0
George E. Matelich (6)(8).............................................................. 3,063,293 12.9
Thomas R. Wall, IV (6)(8).............................................................. 3,080,072 12.8
All directors and executive officers as a group (6 persons)(9) ........................ 8,672,156(9) 32.6
</TABLE>
- ------------------------
(1) Daniel L. Simon's beneficial ownership includes 4,933,220 shares that he
owns directly, 32,520 shares held by the Simon Family Foundation of which he
is a director, 88,000 shares held by The Simon Family Limited Partnership of
which he is a general partner, 1,995,000 shares issuable to him upon
exercise of the Management Warrants, 928,860 shares over which he has voting
control pursuant to certain voting trust agreements with Brian T. Clingen
and Paul G. Simon, and 475,608 shares issuable to Brian T. Clingen and Paul
G. Simon upon exercise of the Management Warrants over which Daniel L. Simon
has voting control pursuant to certain voting trust agreements.
(2) Brian T. Clingen owns 802,852 shares directly, 352,078 shares issuable to
him upon exercise of the Management Warrants, and 125,008 shares held by The
Clingen Family Limited Partnership of which he is a general partner, which
represent 5.2% of the Common Stock. The voting rights for such shares have
been granted to Daniel L. Simon pursuant to a voting trust agreement.
(3) Paul G. Simon owns 1,000 shares directly and 123,530 shares issuable to him
upon exercise of the Management Warrants which represent less than 1% of the
Common Stock, the voting rights of which have been granted to Daniel L.
Simon pursuant to a voting trust agreement.
51
<PAGE>
(4) Represents less than 1% of the Common Stock.
(5) Mr. Bynum may be deemed to share beneficial ownership of shares of Common
Stock owned of record by KIA V by virtue of his status as a limited partner
of the general partner of KIA V and as a limited partner of KEP V. Mr. Bynum
disclaims beneficial ownership of such securities. Mr. Bynum became a
director of the Company following consummation of the Offering.
(6) The business address for such person(s) is c/o Kelso & Company, 320 Park
Avenue, 24th Floor, New York, New York 10022.
(7) KIA V and KEP V due to their common control, could be deemed to beneficially
own each other's shares, but each disclaims such beneficial ownership.
(8) Messrs. Schuchert, Nickell, Matelich, Goldberg and Wall may be deemed to
share beneficial ownership of shares of Common Stock owned of record by KIA
V and KEP V, by virtue of their status as general partners of the general
partner of KIA V and as general partners of KEP V. Messrs. Schuchert,
Nickell, Matelich, Goldberg and Wall share investment and voting power with
respect to securities owned by KIA V and KEP V, but disclaim beneficial
ownership of such securities. Mr. Goldberg has been a director of the
Company since April 1996.
(9) Excludes KIA V and KEP V shares as well as shares that may be deemed to be
beneficially owned by Messrs. Schuchert, Nickell, Matelich, Goldberg and
Wall.
52
<PAGE>
DESCRIPTION OF NOTEHOLDER WARRANTS
GENERAL
The Noteholder Warrants were issued pursuant to a Warrant Agreement (the
"Warrant Agreement"), dated as of June 30, 1994, between the Company and United
States Trust Company of New York, as warrant agent (the "Warrant Agent"). The
Noteholder Warrants will expire on July 1, 2004. The Noteholder Warrants entitle
the holders thereof to purchase, at a price of $.000625 per share, an aggregate
of 1,000,000 shares of Common Stock of which 612,800 shares of Common Stock
received upon exercise of such Noteholder Warrants have been sold pursuant to a
Prospectus Supplement dated July 25, 1996. See "Selling Securityholders and Plan
of Distribution." Of the 62,500 Noteholder Warrants originally offered for sale,
38,300 Noteholder Warrants were exercised in exchange for Common Stock pursuant
to and such Common Stock was sold pursuant to a Prospectus Supplement dated July
25, 1996. This summary does not purport to be a complete description of the
Noteholder Warrants or the Warrant Agreement and is subject to the detailed
provisions of, and qualified in its entirety by reference to, the Noteholder
Warrants and the Warrant Agreement (including the definitions contained
therein).
EXERCISE OF NOTEHOLDER WARRANTS
Prior to July 1, 1999, the Noteholder Warrants were not exercisable except
in connection with an Initial Public Offering, a Disposition, a Non-Surviving
Combination or a Change of Control (each, as defined, and each, a "Trigger
Event"). The Company completed an Initial Public Offering on July 26, 1996 and
accordingly, the holders of the Noteholder Warrants (the "Noteholder
Warrantholders") are entitled to exercise all or a portion of their Noteholder
Warrants at any time on or prior to July 1, 2004, at which time all unexercised
Noteholder Warrants will expire, subject to earlier expiration where the
Noteholder Warrantholders have Bring Along Rights (as defined below). The
Company shall obtain, prior to the consummation of a Disposition where the
Noteholder Warrantholders do not have Bring Along Rights (as hereafter defined),
a written opinion of an independent nationally recognized investment banking
firm with assets in excess of $1.0 billion to the effect that such Disposition
is fair to the Noteholder Warrantholders from a financial point of view.
There is currently no public market for the Noteholder Warrants offered
hereby and there can be no assurance that an active public market for the
Noteholder Warrants will develop. The Noteholder Warrants were sold as part of
the Units in the offering consummated by the Company in June 1994. Because the
Noteholder Warrants were part of the Units, the exercise price of the Noteholder
Warrants was determined as a component of the overall offering price of the
Units, which was determined by negotiations among the Company and the Initial
Purchaser. Among the factors considered in making such determination were
prevailing market conditions, certain financial information of the Company, the
current state of the economy as a whole and other factors deemed relevant.
BRING ALONG RIGHTS
If the Company or the stockholders of the Company enter into a binding
agreement to effect (i) a Non-Surviving Combination, (ii) a Change of Control
involving a sale of 100% of the Common Stock of the Company or (iii) a
Disposition involving the sale of all of the Company's assets, the Company shall
deliver notice (the "Bring Along Notice") to the Warrant Agent and each
Noteholder Warrantholder, at least 35 days prior to the closing of that
transaction, setting forth the relevant terms of that transaction and each
Noteholder Warrantholder's right (the "Bring Along Right") to exercise the
Noteholder Warrants within a 30-day period commencing on the date of such notice
(the "Bring Along Period"). Exercise of the Noteholder Warrants following the
delivery of a Bring Along Notice will constitute agreement by the Noteholder
Warrantholder to the Disposition, Non-Surviving Combination or sale of 100% of
the Company's Common Stock, including such Noteholder Warrantholder's agreement
to sell the Common Stock (the "Warrant Shares") received upon exercise of
Noteholder Warrants, for the sale price and on the same terms as the other
stockholders of the Company. Any Noteholder Warrant that is not exercised during
the Bring Along Period will expire at the end of the Bring Along Period.
53
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REGISTRATION
Pursuant to Registration Rights Agreement, the Company agreed to file the
Registration Statement, of which this Prospectus forms a part, covering the
issuance by the Company of the Warrant Shares to the Noteholder Warrantholders
upon exercise of the Noteholder Warrants and resales by the Noteholder
Warrantholders of the Noteholder Warrants and the Warrant Shares, and to use its
best efforts to cause such Registration Statement to remain effective for a
period of not less than 3 years after the last exercise of a Noteholder Warrant
not covered by such Registration Statement. Holders of Noteholder Warrants and
Warrant Shares may be required to deliver certain information to be used in
connection with the continuing effectiveness of the Registration Statement. If
this Registration Statement is declared effective but thereafter shall cease to
be effective for any period in excess of five business days (each, a "Shelf
Registration Default"), the Company is obligated to pay to the Noteholder
Warrantholders and to holders of the Warrant Shares (other than a holder of
Noteholder Warrants or Warrant Shares that were acquired through a disposition
pursuant to an effective registration statement) liquidated damages in the
amount of $1.00 per Noteholder Warrant or Warrant Share for each 90-day period
(or portion thereof) immediately following such Shelf Registration Default until
the Registration Statement is declared effective or again becomes effective, as
the case may be, up to a maximum of $2.00 per Noteholder Warrant or Warrant
Share. All accrued liquidated damages shall be paid to holders of record of the
Noteholder Warrants or Warrant Shares on the last day of each calendar quarter
during which any such payment shall have become due.
LIQUIDATION OF THE COMPANY
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company, each Noteholder Warrantholder shall be entitled to
share, with respect to the Warrant Shares issuable upon exercise of his
Noteholder Warrants, equally and ratably in any cash or non-cash distributions
payable to holders of any class of Common Stock of the Company payable upon the
exercise of such Noteholder Warrant. Noteholder Warrantholders will not be
entitled to receive payment of any such distribution until the surrender to the
Warrant Agent of their Noteholder Warrants in accordance with the terms and
provisions of the Warrant Agreement.
CASH DIVIDENDS
If the Company pays any cash dividend on, or any other cash distribution in
respect of its Common Stock, it shall pay each Noteholder Warrantholder an
amount in cash equal to the amount such Noteholder Warrantholder would have
received if such Noteholder Warrantholder had been the record holder of the
Warrant Shares issuable upon exercise of his Noteholder Warrants immediately
prior to the record date for such dividend or distribution.
ANTI-DILUTION ADJUSTMENTS
The number of Warrant Shares issuable upon exercise of a Noteholder Warrant
will be adjusted upon the occurrence of certain events, including, without
limitation (i) the payment of a dividend on, or the making of any distribution
in respect of, Common Stock of the Company in (a) shares of the Company's
capital stock (including Common Stock), (b) options, warrants or rights to
purchase, or securities convertible into or exchangeable or exercisable for,
shares of Common Stock or other securities of the Company or any other person,
or (c) certain evidences of indebtedness of the Company or any assets of the
Company or (ii) the issuance of Common Stock or securities convertible into or
exercisable or exchangeable for shares of Common Stock at a price below fair
market value. An adjustment will also be made in the event of a combination,
subdivision or reclassification of the Common Stock. Adjustments will be made
whenever and as often as any specified event requires an adjustment to occur.
AMENDMENT
From time to time, the Company and the Warrant Agent, without the consent of
the Noteholder Warrantholders, may amend or supplement the Warrant Agreement for
certain purposes, including curing defects or inconsistencies or making any
change that does not materially adversely affect the rights of any Noteholder
Warrantholder. Any other amendment or supplement to the Warrant Agreement shall
require the written consent of the holders of a majority of the then outstanding
Noteholder Warrants. The
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consent of each Noteholder Warrantholder affected shall be required for any
amendment pursuant to which the exercise price would be increased or the number
of shares of Common Stock purchasable upon exercise of Noteholder Warrants would
be decreased (other than pursuant to adjustments provided in the Warrant
Agreement) or for any change in the Trigger Events (or rights or obligations
upon the occurrence of any such Trigger Event) in a manner adverse to any
Noteholder Warrantholder.
REPORTS
The Company will file with the Warrant Agent, to be provided to the
Noteholder Warrantholders within 15 days after it files them with the
Commission, copies of its annual and quarterly reports and the information,
documents and reports that the Company is required to file with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act. Notwithstanding that the
Company may not be required to remain subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, the Company shall continue to file with
the Commission and provide the Warrant Agent and the holders of Noteholder
Warrants with such annual reports and such information, documents and other
reports (or copies of such portion of any of the foregoing as the Commission may
by rules or regulations prescribe) which are specified in Sections 13 or 15(d)
of the Exchange Act.
FORM OF NOTEHOLDER WARRANTS
The Noteholder Warrants were initially issued in the form of a single, fully
registered global warrant (the "Global Warrant") with certain restricted
securities legends affixed thereto, and were available initially only in
book-entry form. The Global Warrant was deposited with the Warrant Agent as
custodian for The Depository Trust Company (the "Depository") and registered in
the name of Cede & Co., the Depository's nominee. Beneficial interests are
currently shown on, and transfers thereof are currently effected only through,
the records maintained by the Depository and its participants. All requirements
with respect to the Global Warrants and legends on Noteholder Warrants have
ceased to apply, and certificated Warrants without legends are available to the
Noteholder Warrantholders and transferees thereof.
MISCELLANEOUS
The Noteholder Warrant will not entitle the holder thereof to any of the
rights of a holder of capital stock of the Company, including, without
limitation, the right to vote at or receive notice of meetings of the
stockholders or the Company, except as specifically set forth in the Warrant
Agreement.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Warrant Agreement.
Reference is made to the Warrant Agreement for a complete description of all
such terms, as well as any other capitalized terms used herein for which no
definition is provided.
"CHANGE OF CONTROL" means the occurrence of one or more of the following
events: (a) the Permitted Holders shall cease to beneficially own (within the
meaning of Rule 13d-3 under the Exchange Act), directly or indirectly, Voting
Stock representing at least 40% of the total voting power of all Voting Stock of
the Company; (b) any Person or group (as such term is used in Section 13(d)(3)
of the Exchange Act), other than the Permitted Holders, shall beneficially own
(within the meaning of Rule 13d-3 under the Exchange Act), directly or
indirectly, Voting Stock representing more than 30% of the total voting power of
all Voting Stock of the Company; (c) the individuals who on the date of initial
issuance of the Secured Notes constitute the Board of Directors of the Company
(together with any new or replacement directors whose election was approved by a
vote of at least two-thirds of the directors of the Company then still in
office, other than new directors elected pursuant to the exercise of a class
voting right granted to the holders of any class or series of Capital Stock of
the Company) shall cease for any reason to constitute a majority of the Board of
Directors of the Company or a majority of the Board of Directors of UOI; (d) the
merger or consolidation of the Company with, or the sale, lease or transfer of
all or substantially all the Company's assets to, any Person or group (as such
term is used in Section 13(d)(3) under the Exchange Act); or (e) the
stockholders of the Company shall approve any plan or proposal for the
liquidation or dissolution of the Company.
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"INITIAL PUBLIC OFFERING" means an underwritten primary public offering of
the Common Stock of the Company pursuant to an effective registration statement
under the Securities Act which is the initial public offering of such Common
Stock.
"NON-SURVIVING COMBINATION" means the merger, consolidation or other
business combination with one or more other entities in a transaction in which
the Company is not the surviving entity.
"DISPOSITION" means a (a) merger, consolidation or other business
combination in which the Company is the surviving entity and the Company's
stockholders receive cash or non-cash consideration in exchange for or in
respect of their shares of capital stock or (b) the sale, lease, conveyance,
transfer or other disposition (other than to the Company or any of its
wholly-owned subsidiaries) in any single transaction or series of related
transactions (including a sale and leaseback transaction) of all or
substantially all the assets of the Company.
DESCRIPTION OF CAPITAL STOCK
As of the date of this Prospectus, the Company's authorized capital stock
consisted of 75,000,000 shares of Common Stock, $.01 par value per share, and
10,000,000 shares of preferred stock, $.01 par value per share (the "Preferred
Stock"). The following summary of the Company's capital stock is qualified in
its entirety by reference to the Company's Third Amended and Restated
Certificate of Incorporation (the "Certificate of Incorporation") and Second
Amended and Restated Bylaws (the "Bylaws"), each of which is filed as an exhibit
to the registration statement of which this Prospectus is a part.
COMMON STOCK
The Company was authorized to issue 75,000,000 shares of Common Stock, $.01
par value per share. As of the date of this Prospectus, 24,112,800 shares of
Common Stock are issued and outstanding (excluding 2,857,808 shares of Common
Stock issuable upon the exercise of all outstanding warrants including
Noteholder Warrants that have not been exercised.) See "Capitalization."
Holders of Common Stock are entitled to one vote per share on all matters on
which the holders of Common Stock are entitled to vote. Because holders of
Common Stock do not have cumulative voting rights and the Company has a
classified Board of Directors, the holders of a majority of the shares of Common
Stock voting for the election of directors can elect all of the members of the
Board of Directors standing for election at any particular meeting. The Common
Stock is not redeemable and has no conversion or preemptive rights. All of the
outstanding shares of Common Stock are, and all of the shares of Common Stock
issuable upon the exercise of the Noteholder Warrants offered hereby will be,
when issued and paid for, fully paid and nonassessable. In the event of the
liquidation or dissolution of the Company, the holders of Common Stock are
entitled to share pro rata in any of the corporate assets available for
distribution to them. The Company may pay dividends if, when and as declared by
the Board of Directors from funds legally available therefor, subject to the
restrictions set forth in the New Credit Facility and the indentures governing
the Notes. See "Dividend Policy."
PREFERRED STOCK
The Preferred Stock may be issued from time to time by the Board of
Directors as shares of one or more classes or series. Subject to the provisions
of the Certificate of Incorporation and limitations prescribed by law, the Board
of Directors is expressly authorized to adopt resolutions to issue the shares,
to fix the number of shares and to change the number of shares constituting any
series, and to provide for or change the voting powers, designations,
preferences and relative, participating, optional or other special rights,
qualifications, limitations or restrictions thereof, including dividend rights
(including whether dividends are cumulative), dividend rates, terms of
redemption (including sinking fund provisions), redemption prices, conversion
rights and liquidation preferences of the shares constituting any class or
series of the Preferred Stock, in each case without any further action or vote
by the stockholders. The Company has no current plans to issue any additional
shares of Preferred Stock of any class or series.
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One of the effects of undesignated Preferred Stock may be to enable the
Board of Directors to render more difficult or to discourage an attempt to
obtain control of the Company by means of a tender offer, proxy contest, merger
or otherwise, and thereby to protect the continuity of the Company's management.
The issuance of shares of the Preferred Stock pursuant to the Board of
Directors' authority described above may adversely affect the rights of the
holders of Common Stock. For example, Preferred Stock issued by the Company may
rank prior to the Common Stock as to dividend rights, liquidation preference or
both, may have full or limited voting rights and may be convertible into shares
of Common Stock. Accordingly, the issuance of shares of Preferred Stock may
discourage bids for the Common Stock or may otherwise adversely affect the
market price of the Common Stock.
THE 1996 WARRANT PLAN
The 1996 Warrant Plan was adopted by the Board of Directors of the Company
in April 1996 in order to advance the interests of the Company by affording
certain key executives and employees an opportunity to acquire a proprietary
interest in the Company and thus to stimulate increased personal interest in
such persons in the success and future growth of the Company. The 1996 Warrant
Plan is administered by the Compensation Committee of the Company. For a
description of the 1996 Warrant Plan, see "Management -- The 1996 Warrant Plan."
CERTAIN OUTSTANDING RIGHTS
On November 18, 1993, the Company entered into the Capital Appreciation
Right Agreement with Connecticut General Life Insurance Company, Cigna Property
and Casualty Insurance Company, Life Insurance Company of North America and
Aetna Life Insurance Company, pursuant to which the Company granted such parties
limited capital appreciation rights in the capital stock of the Company in
exchange for a waiver of the prepayment penalty in connection with the 1993
refinancing. Such capital appreciation rights are triggered by the occurrence of
any of the following: (i) liquidation or dissolution of the Company or UOI, (ii)
sale of all or substantially all of the issued and outstanding shares of common
stock or assets of the Company, or (iii) the merger or consolidation of the
Company or UOI, subject to certain exceptions. The maximum amount payable
pursuant to the agreement is $3.8 million and is required to be paid no later
than one year following the triggering event. The agreement expires June 30,
1998.
SPECIAL PROVISIONS OF THE CERTIFICATE OF INCORPORATION, BYLAWS AND DELAWARE LAW
Certain provisions of the Certificate of Incorporation and Bylaws as well as
certain provisions of Delaware law may be deemed to have an anti-takeover effect
or may delay, defer or prevent a tender offer or takeover attempt that a
stockholder might consider in such stockholder's best interest, including those
attempts that might result in a premium over the market price for the shares
held by a stockholder.
The Certificate of Incorporation provides that no director of the Company
shall be personally liable to the Company or its stockholders for monetary
damages for breach of duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the
Delaware General Corporation Law or (iv) for any transaction from which the
director derived an improper personal benefit. The effect of these provisions is
to eliminate the rights of the Company and its stockholders (through
stockholders' derivative suits on behalf of the Company) to recover monetary
damages against a director for breach of fiduciary duty as a director (including
breaches resulting from grossly negligent behavior), except in the situations
described above.
The Bylaws provide that the Company will indemnify its directors and
officers to the fullest extent permissible under Delaware General Corporation
Law. These indemnification provisions require the Company to indemnify such
persons against certain liabilities and expenses to which they may become
subject by reason of their service as a director or officer of the Company. The
provisions also set forth certain procedures, including the advancement of
expenses, that apply in the event of a claim for indemnification.
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DELAWARE ANTI-TAKEOVER LAW. Section 203 of the Delaware General Corporation
Law ("Section 203") generally provides that a person who, together with
affiliates and associates owns, or within three years did own, 15% or more of
the outstanding voting stock of a corporation (an "Interested Stockholder") but
less than 85% of such stock may not engage in certain business combinations with
the corporation for a period of three years after the date on which the person
became an Interested Stockholder unless (i) prior to such date, the
corporation's board of directors approved either the business combination or the
transaction in which the stockholder became an Interested Stockholder or (ii)
subsequent to such date, the business combination is approved by the
corporation's board of directors and authorized at a stockholders' meeting by a
vote of at least two-thirds of the corporation's outstanding voting stock not
owned by the Interested Stockholder. Section 203 defines the term "business
combination" to encompass a wide variety of transactions with or caused by an
Interested Stockholder, including mergers, asset sales, and other transactions
in which the Interested Stockholder receives or could receive a benefit on other
than a pro rata basis with other stockholders.
The provisions of Section 203, coupled with the Board's authority to issue
Preferred Stock without further stockholder action, could delay or frustrate the
removal of incumbent directors or a change in control of the Company. The
provisions also could discourage, impede or prevent a merger, tender offer or
proxy contest, even if such event would be favorable to the interests of
stockholders. The Company's stockholders, by adopting an amendment to the
Certificate of Incorporation, may elect not to be governed by Section 203 which
election would be effective 12 months after such adoption. Neither the
Certificate of Incorporation nor the Bylaws exclude the Company from the
restrictions imposed by Section 203.
CLASSIFIED BOARD OF DIRECTORS. The Certificate of Incorporation classifies
the Board of Directors into three classes. The first class consists of one
director whose initial term expires in 1997. The second class consists of two
directors whose initial term expires in 1998. The third class consists of two
directors whose initial term expires in 1999. At each annual meeting, the number
of directors equal to the number of directors in the class whose terms expire at
the time of such meeting shall be elected to hold office until the third
succeeding annual meeting. As a result of this classification of directors, no
shareholder or group of shareholders would be able to elect a majority of the
Board of Directors at any single meeting for the election of directors. In
addition, the Delaware General Corporation Law prohibits the removal of a
director of a classified board without cause. This could discourage a proxy
contest for control of the Board of Directors.
NOTICE PROVISIONS. The Bylaws provide that only business or proposals,
including director nominations, properly brought before an annual meeting of
shareholders may be conducted at such meeting. In order to bring business or a
proposal before an annual meeting, a shareholder is required to provide written
notice to the Company at least 45 days prior to the annual meeting which
describes the business or proposal to be brought before the annual meeting, the
name and address of the stockholder proposing the business, the class and number
of shares of stock held by such stockholder, and any material interest of the
stockholder in the business to be brought before the meeting. These procedures
may operate to limit the ability of stockholders to bring business before the
annual meeting, including with respect to the nominee of directors or
considering any transaction that could result in a change of control of the
Company.
WARRANT AGENT
The Warrant Agent for the Noteholder Warrants is United States Trust Company
of New York.
TRANSFER AGENT
The Company's transfer agent and registrar for the Common Stock is LaSalle
National Trust, N.A.
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SHARES ELIGIBLE FOR FUTURE SALE
No prediction can be made as to the effect, if any, that market sales of
shares of Common Stock or the availability of shares of Common Stock for sale
will have on the market price prevailing from time to time. Nevertheless, sales
of substantial amounts of Common Stock of the Company in the public market after
the restrictions described below lapse could adversely affect the prevailing
market price of the Common Stock and the ability of the Company to raise equity
capital in the future.
As of the date of this Prospectus, the Company will have outstanding
24,112,800 shares of Common Stock (excluding 2,857,808 shares of Common Stock
issuable pursuant to the 1996 Warrant Plan and Noteholder Warrants). See
"Capitalization" and "Description of Capital Stock." Of these shares, the
13,630,000 shares of Common Stock are freely tradable without restriction under
the Securities Act except for any shares purchased by "affiliates," as that term
is defined in the Securities Act, of the Company. The remaining shares are
"restricted securities" within the meaning of Rule 144 adopted under the
Securities Act (the "Restricted Shares"). The Restricted Shares generally may
not be sold unless they are registered under the Securities Act or are sold
pursuant to an exemption from registration, such as the exemption provided by
Rule 144 or Rule 144A under the Securities Act.
Certain of the Company's security holders and all of its executive officers
and directors have the power to dispose of a total of 8,672,156 shares
(including 2,470,608 shares issuable upon exercise of the Management Warrants).
These shares will not be eligible for sale in the public market without
registration unless such sales meet the conditions and restrictions of Rule 144
as described below. KIA V and KEP V expect to distribute shares of Common Stock
to their respective partners, and may in the future sell or otherwise dispose of
Common Stock, including additional distribution to their respective partners.
KIA V and KEP V distributed approximately 406,350 shares of Common Stock to
certain of its partners in lieu of cash in conjunction with the Offering. The
recipients of such distributions agreed with KIA V, KEP V and the underwriters
for the Offering not to offer, sell, or otherwise dispose of such shares of
Common Stock prior to March 31, 1997 without the prior written consent of KIA V
and Alex. Brown & Sons Incorporated. KIA V, KEP V and their partners, Daniel L.
Simon, Brian T. Clingen and Paul G. Simon and certain other individual
shareholders are entitled to four demand and certain "piggyback" registration
rights.
In general, under Rule 144 as currently adopted and in effect in April 1997,
any person (or persons whose shares are aggregated), including an affiliate, who
has beneficially owned shares for a period of at least one year (as computed
under Rule 144) is entitled to sell, within any three-month period, a number of
shares that does not exceed the greater of (i) 1% of the then-outstanding shares
of Common Stock (approximately 241,000 shares as of the date of this Prospectus
(including shares issuable pursuant to the 1996 Warrant Plan and Noteholder
Warrants)) and (ii) the average weekly trading volume in the Company's Common
Stock during the four calendar weeks immediately preceding the date on which the
notice of such sale on Form 144 is filed with the Commission. Sales under Rule
144 are also subject to certain provisions relating to notice and manner of sale
and the availability of current public information about the Company. In
addition, a person (or persons whose shares are aggregated) who has not been an
affiliate of the Company at any time during the 90 days immediately preceding a
sale, and who has beneficially owned the shares of at least two years (as
computed under Rule 144), would be entitled to sell such shares under Rule
144(k) without regard to the volume limitation and other conditions described
above. The foregoing summary of Rule 144 is not intended to be a complete
description thereof.
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DESCRIPTION OF INDEBTEDNESS AND OTHER COMMITMENTS
The following is a description of the principal agreements governing the
indebtedness of the Company and UOI as of May 31, 1996. The following summaries
of certain provisions of the Amended Credit Facility and the UOI Indentures (as
such terms are defined below) are qualified in their entirety by reference to
the agreement to which each summary relates, a copy of which is an exhibit to
the registration statement of which this Prospectus is a part. See "Available
Information." Defined terms used below and not defined have the meanings set
forth in the respective agreements.
THE DEBT TENDER OFFERS
On June 23, 1994, the Company issued $50 million aggregate principal amount
of the Existing Company Notes and 50,000 Warrants to purchase 1,000,000 shares
of Common Stock (after the consummation of the Offering and the stock split
contemplated immediately prior thereto) pursuant to an indenture (the "Secured
Note Indenture") between the Company and the United States Trust Company of New
York, as trustee. In October 1996, the Company completed the Company Debt Tender
Offer to purchase all of the outstanding Existing Company Notes. Simultaneously,
UOI completed the UOI Debt Tender Offer to purchase all of the then outstanding
Existing UOI Notes. These tender offers are sometimes referred to herein
collectively as the "Debt Tender Offers."
NEW CREDIT FACILITY AND AMENDED CREDIT FACILITY
In October 1996, UOI entered into the New Credit Facility and, as amended in
May 1997, the Amended Credit Facility, the terms and conditions of which are as
set forth below:
REVOLVING CREDIT FACILITY
COMMITMENT; INTEREST. The Revolving Credit Facility is a revolving line of
credit facility providing for borrowings of up to $12.5 million that may be used
for general corporate purposes including working capital requirements.
Borrowings under the Revolving Credit Facility may be in the form of eurodollar
loans or announced base rate loans as determined by UOI. UOI may prepay
borrowings under the Revolving Credit Facility, and may reborrow (up to the
amount of the commitment then in effect) any amounts that are repaid or prepaid.
TERMINATION OF COMMITMENT. The initial commitment of $12.5 million
terminates on September 30, 2004, unless extended, or upon the occurrence of a
Change of Control (as defined in the Amended Credit Facility). On each of these
dates, UOI is required to repay borrowings (together with fees and interest
accrued thereon and any additional amounts owing under the Revolving Credit
Facility) in excess of the commitment as reduced.
SECURITY. UOI's obligations under the Revolving Credit Facility are secured
by first priority liens (subject to certain permitted encumbrances) on
substantially all of the assets of UOI. In addition, UOI has pledged all of the
stock of its subsidiaries and the Company has pledged all of the stock of UOI as
security for UOI's obligations.
COVENANTS. The Revolving Credit Facility restricts UOI and its subsidiaries
from, among other things: (i) changes in business; (ii) with certain exceptions,
consolidation; mergers, sales or purchases of assets; (iii) with certain
exceptions, incurring, creating, assuming or suffering to exist any liens or
encumbrances upon property of UOI or assigning any right to receive income; (iv)
with certain exceptions, creating, incurring, assuming or suffering to exist any
indebtedness; (v) making investments or loans in any other person or entity or
acquiring or establishing any subsidiaries except for investments and
subsidiaries permitted under the Revolving Credit Facility; (vi) selling,
assigning or otherwise encumbering or disposing of the capital stock or other
securities of any subsidiary; (vii) making any optional or voluntary prepayments
on indebtedness; (viii) with certain exceptions, redeeming, retiring or
purchasing capital stock of UOI or declaring or paying dividends on the capital
stock of UOI; and (ix) except as to certain transactions that comply with the
terms of the Revolving Credit Facility, entering into transactions with
affiliates. With respect to additional acquisitions, such additional
acquisitions require the consent of the lenders unless such acquisitions do not
exceed $50,000,000 in the aggregate
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or the Holdings Leverage Ratio (as defined in the Amended Credit Facility) is
less than 5.50 to 1.0. In addition, the Revolving Credit Facility also requires
UOI to maintain certain levels of EBITDA and interest expense coverage, and
limits UOI's capital expenditures to $10 million in each fiscal year (in
addition to additional permitted expenditures not in excess of the "basket"
amount set forth therein), which amount is increased annually to 105% of the
maximum amount for the immediately preceding twelve-month period.
CHANGE OF CONTROL. A Change of Control of UOI (as defined in the Amended
Credit Facility) constitutes an event of default permitting the lenders to
accelerate indebtedness under and terminate the Revolving Credit Facility.
ACQUISITION CREDIT FACILITY
COMMITMENT; INTEREST. The Acquisition Credit Facility as originally
configured consisted of a total commitment in the amount of $287.5 million
pursuant to which $75 million was available under a term loan on the closing
date of the Acquisition Credit Facility in order to finance, in part, the
Acquisitions and $212.5 million which was and continues to be available under a
revolving/term loan facility. UOI drew an amount approximately equal to $285
million to finance the POA Acquisition and for fees and expenses in connection
therewith. The $212.5 million revolving loan facility may be reborrowed from
time to time; the $75 million term loan was repaid from the proceeds of the
October Offerings and may not be reborrowed. Borrowings under the Acquisition
Credit Facility may be in the form of eurodollar loans or announced base rate
loans as determined by UOI. See "Use of Proceeds."
TERMINATION OF COMMITMENT. The $212.5 million revolving loan matures on
September 30, 2003, or upon the occurrence of a Change of Control (as defined in
the Amended Credit Facility). The availability under the $212.5 million
revolving loan terminates in September 1999.
SECURITY. UOI's obligations under the Acquisition Credit Facility are
secured by first priority liens (subject to certain permitted encumbrances) on
substantially all of the assets of UOI. In addition, UOI has pledged all of the
stock of its subsidiaries and the Company has pledged all of the stock of UOI as
security for UOI's obligations.
COVENANTS. The Acquisition Credit Facility restricts UOI and its
subsidiaries from, among other things: (i) changes in business; (ii) with
certain exceptions, consolidation; mergers, sales or purchases of assets; (iii)
with certain exceptions, incurring, creating, assuming or suffering to exist any
liens or encumbrances upon property of UOI or assigning any right to receive
income; (iv) with certain exceptions, creating, incurring, assuming or suffering
to exist any indebtedness; (v) making investments or loans in any other person
or entity or acquiring or establishing any subsidiaries except for investments
and subsidiaries permitted under the Acquisition Credit Facility; (vi) selling,
assigning or otherwise encumbering or disposing of the capital stock or other
securities of any subsidiary; (vii) making any optional or voluntary prepayments
on indebtedness; (viii) with certain exceptions, redeeming, retiring or
purchasing capital stock of UOI or declaring or paying dividends on the capital
stock of UOI; and (ix) except as to certain transactions that comply with the
terms of the Acquisition Credit Facility, entering into transactions with
affiliates. With respect to additional acquisitions, such additional
acquisitions require the consent of the lenders unless such acquisitions do not
exceed $50,000,000 in the aggregate or the Holdings Leverage Ratio (as defined
in the Amended Credit Facility) is less than 5.50 to 1.0. In addition, the
Acquisition Credit Facility also requires UOI to maintain certain levels of
EBITDA and interest expense coverage, and limits UOI's capital expenditures to
$10 million in each fiscal year (in addition to additional permitted
expenditures not in excess of the "basket" amount set forth therein), which
amount is increased to 105% of the maximum amount for the immediately preceding
twelve-month period.
CHANGE OF CONTROL. A Change of Control of UOI (as defined in the Amended
Credit Facility) constitutes an event of default permitting the lenders to
accelerate indebtedness under and terminate the Acquisition Credit Facility.
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TERM LOAN FACILITY. The Term Loan Facility provides the Company with a $75
million term loan that was drawn upon by UOI in May 1997 in order to pay down
amounts owed under the Acquisition Credit Facility and has the same terms as the
Acquisition Credit Facility maturing on September 30, 2003.
THE UOI NOTES
THE OCTOBER NOTES. In October 1996, UOI issued $225 million of 9 3/4%
Senior Subordinated Notes due 2006 pursuant to an Indenture (the "Indenture")
entered into by UOI and the United States Trust Company of New York, as trustee.
The October Notes are general, unsecured obligations of UOI, subordinated in
right of payment to all Senior Debt (as defined in the Indenture pursuant to
which the October Notes were issued) of UOI.
The October Notes were issued only in fully registered form, without
coupons, in denominations of $1,000 and integral multiples thereof.
The October Notes mature on October 15, 2006. The October Notes bear
interest at the rate per annum of 9 1/2% from the date of issuance or from the
most recent interest payment date to which interest has been paid or provided
for, payable semi-annually on April 15 and October 15 of each year, commencing
April 15, 1997, to the persons in whose names such October Notes are registered
at the close of business on the April 1 or October 1 immediately preceding such
interest payment date. Interest will be calculated on the basis of a 360-day
year consisting of twelve 30-day months.
UOI will not have the right to redeem any October Notes prior to October 15,
2001 (other than out of the net cash proceeds of a public offering or a private
placement of equity securities of the Company, as described in the next
following paragraph). The October Notes will be redeemable for cash at the
option of UOI, in whole or in part, at any time on or after October 15, 2001,
upon not less than 30 days nor more than 60 days notice to each holder of
October Notes, at the following redemption prices (expressed as percentages of
the principal amount) if redeemed during the 12-month period commencing October
15 of the years indicated below, in each case (subject to the right of holders
of record on a record date to receive interest due on an interest payment date
that is on or prior to such redemption date) together with accrued and unpaid
interest thereon to the redemption date:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- --------------------------------------------------------------------------------- -----------
<S> <C>
2001............................................................................. 104.875%
2002............................................................................. 103.250%
2003............................................................................. 101.625%
2004 and thereafter.............................................................. 100.000%
</TABLE>
Until October 15, 1999, upon any public offering or private placement of
equity securities of the Company, in each case resulting in net cash proceeds of
$100 million or more which are then contributed in full to UOI, up to $35
million aggregate principal amount of the October Notes may be redeemed at the
option of UOI within 120 days of such public offering or private placement, on
not less than 30 days, but not more than 60 days, notice to each holder of the
October Notes to be redeemed, with cash from the net cash proceeds of such
public offering or private placement, at 110% of principal, (subject to the
right of holders of record on a record date to receive interest due on an
interest payment date that is on or prior to such redemption date) together with
accrued and unpaid interest to the date of redemption; PROVIDED, HOWEVER, that
immediately following such redemption not less than $65 million aggregate
principal amount of the October Notes are outstanding.
In the case of a partial redemption, the Trustee shall select the October
Notes or portions thereof for redemption on a PRO RATA basis, by lot or in such
other manner it deems appropriate and fair. The October Notes may be redeemed in
part in multiples of $1,000 only. The October Notes will not have the benefit of
any sinking fund. Notice of any redemption will be sent, by first class mail, at
least 30 days and not more than 60 days prior to the date fixed for redemption
to the holder of each October Note to be redeemed to such holder's last address
as then shown upon the registry books of the registrar.
62
<PAGE>
The Indenture restricts UOI and its subsidiaries from, among other things:
(i) incurring indebtedness and allowing subsidiaries to issue preferred stock;
(ii) incurring liens or guaranteeing obligations except for certain permitted
liens with certain exceptions; (iii) entering into mergers or consolidations;
(iv) selling or otherwise disposing of property, business or assets; (v) with
certain exceptions, declaring dividends or making loans or investments; (vi)
making optional payments or prepayments of indebtedness; (vii) entering into
transactions with affiliates; (viii) with certain exceptions, entering into
agreements prohibiting or limiting the ability of UOI or its subsidiaries to
create liens upon its property, assets or revenues in favor of the holders of
October Notes or pay dividends or indebtedness to UOI or its subsidiaries; and
(ix) engaging in any businesses other than the business of outdoor advertising.
Upon a change of control, each holder of October Notes may require UOI to
repurchase all or a portion of such holder's October Notes at a purchase price
equal to 101% of their accreted value on the date of purchase. A "change in
control" occurs upon (i) any merger or consolidation of UOI or the Company or
any sale, transfer or conveyance of the assets of UOI or the Company which as a
result, causes more than 50% of the voting power of the equity securities of UOI
or the Company to a party other than the Company or a permitted holder, (ii)
acquisition by any Person or group other than the Company or a permitted holder
of in excess of 50% of the voting power of the equity securities of UOI or the
Company, or (iii) the members of the Board of Directors as of the date of the
Indenture or their duly elected replacements, fail to constitute a majority of
the Board of Directors.
THE DECEMBER NOTES. In December 1996, UOI issued $100 million of 9 3/4%
Series B Senior Subordinated Notes due 2006 and in May 1997, UOI exchanged such
notes for $100 million 9 3/4% Series B Senior Subordinated Exchange Notes due
2006 with terms substantially the same as the October Notes in a transaction
registered under the Securities Act. The December Notes have terms and
conditions substantially similar to the October Notes.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material United States federal income tax
consequences of holding and disposing of the Noteholder Warrants. The summary is
based upon the Internal Revenue Code of 1986, as amended to the date hereof (the
"Code"), existing and proposed Treasury regulations, administrative
pronouncements and judicial decisions now in effect, all of which are subject to
change (possibly on a retroactive basis). This summary does not discuss all
aspects of federal income taxation that might be relevant to investors in light
of their particular circumstances or to certain types of investors subject to
special treatment under the federal income tax laws (for example, dealers in
securities, tax-exempt organizations, insurance companies and foreign
taxpayers). Furthermore, this summary does not discuss the consequences to an
investor under state, local or foreign tax laws. Prospective investors are
advised to consult their own tax advisors regarding the federal, state, local
and other tax considerations of holding and disposing of the Noteholder
Warrants. This discussion is not binding on the Internal Revenue Service or the
courts. The Company has not sought and will not seek any rulings from the
Internal Revenue Service with respect to the positions of the Company discussed
herein. There can be no assurance that the Internal Revenue Service will not
take a different position concerning the tax consequences of holding and
disposing of the Noteholder Warrants. The discussion assumes that holders of the
Noteholder Warrants will hold them as "capital assets" within the meaning of
Section 1221 of the Code.
The filing and effectiveness of this Registration Statement should not cause
Noteholder Warrantholders to realize taxable gain or loss for federal income tax
purposes.
No gain or loss will be recognized by a Noteholder Warrantholder on the
purchase of Common Stock for cash on the exercise of the Noteholder Warrant. The
basis of Common Stock purchased upon exercise of a Noteholder Warrant for cash
will include such Noteholder Warrantholder's basis in the Noteholder Warrant
plus the amount of cash consideration paid upon exercise. Any gain or loss
recognized on the sale or other disposition of a Noteholder Warrant (other than
upon exercise of the Noteholder Warrant) will generally be capital gain or loss.
The gain or loss will be equal to the difference between the amount
63
<PAGE>
realized on such sale or other disposition and the Noteholder Warrantholder's
tax basis in such Noteholder Warrant. If a Noteholder Warrant lapses
unexercised, the Noteholder Warrantholder generally will recognize a capital
loss equal to the Noteholder Warrantholder's tax basis in the Noteholder Warrant
at the time the Noteholder Warrant lapses. The Company has determined that the
tax basis of a Noteholder Warrant held by a Noteholder Warrantholder that
acquired the Noteholder Warrant as part of the initial offering of Units is $40.
Under current Treasury regulations, this determination will generally be binding
on all such Noteholder Warrantholders, except a Noteholder Warrantholder who
discloses to the Internal Revenue Service that such Noteholder Warrantholder is
adopting a different determination and attaches a form containing this
disclosure to such Noteholder Warrantholder's income tax return for the tax year
that includes the acquisition date of the Unit.
Although the tax treatment of payments by the Company with respect to a
Noteholder Warrant upon a Shelf Registration Default, as described above under
"Description of Noteholder Warrants -- Registration," is unclear at this time,
under one interpretation the tax basis in a Noteholder Warrant may be reduced by
the amount of such payments. Alternatively, such payments could be taxable to
Noteholder Warrantholders as a distribution paid with respect to stock of the
Company. Another alternative is that such payments will be taxed as ordinary
income. The tax treatment of payments by the Company of dividend equivalent
amounts described above under "Description of Noteholder Warrants -- Cash
Dividends" is unclear at this time. Such payments may be taxable as a
distribution paid with respect to stock of the Company. Another alternative is
that such payments will be taxed as ordinary income.
Adjustments in the exercise price of the Noteholder Warrants made pursuant
to the anti-dilution provisions of the Noteholder Warrants to reflect certain
distributions to the holders of Common Stock may result in taxable distributions
to Noteholder Warrantholders pursuant to the deemed dividend rules of Section
305 of the Code and the Treasury regulations promulgated thereunder. The basis
of a Noteholder Warrant should be increased by the amount of any such dividend.
THE FOREGOING DISCUSSION OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES IS NOT
TAX ADVICE. ACCORDINGLY, EACH PERSON CONSIDERING THE PURCHASE OF NOTEHOLDER
WARRANTS SHOULD CONSULT HIS, HER OR ITS OWN ADVISOR WITH RESPECT TO THE TAX
CONSEQUENCES TO HIM, HER OR IT OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
NOTEHOLDER WARRANTS, INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL AND
FOREIGN TAX LAWS AND OF CHANGES IN THE APPLICABLE TAX LAWS.
64
<PAGE>
SELLING SECURITYHOLDERS AND PLAN OF DISTRIBUTION
SELLING SECURITYHOLDERS
As of the date hereof, the Noteholder Warrants are held in the form of the
Global Warrant registered in the name of Cede & Co., the nominee for the
Depository. With respect to the offer and sale by any Selling Securityholder of
Securities pursuant to this Prospectus, a Prospectus Supplement that sets forth
the name of the Selling Securityholder and the Securities being offered for sale
will accompany this Prospectus. Because the Selling Securityholders may sell all
or a portion of their Securities at any time and from time to time after the
date hereof, no estimate can be made of the amount of Securities that each
Selling Securityholder may retain upon completion of the offering to which this
Prospectus relates.
METHOD OF SALE
The Selling Securityholders may sell any or all the Securities through
underwriters or dealers, through brokers or other agents, or directly to one or
more purchasers in one or more transactions in the over-the-counter market, if
such a market develops, or in privately negotiated transactions, or in a
combination of such transactions. Such transactions may be effected by the
Selling Securityholders at market prices prevailing at the time of sale, at
prices related to such prevailing market prices, at negotiated prices, or at
fixed prices, which may be changed. Such underwriters, dealers, brokers or other
agents may receive compensation in the form of discounts, concessions or
commissions from the Selling Securityholders and may receive commissions from
the purchasers of the Securities for whom they act as agent.
Any Selling Securityholder and any dealer, broker or other agent selling
Securities for the Selling Securityholders or purchasing any Securities from a
Selling Securityholder for purposes of resale may be deemed to be an underwriter
under the Securities Act and any profit from the sale of the Securities or any
compensation received by such Selling Securityholder, dealer, broker or other
agent may be deemed underwriting compensation. Neither the Company nor the
Selling Securityholders can presently estimate the amount of such compensation.
The Company knows of no existing arrangements between any Selling Securityholder
and any other Selling Securityholder, underwriter, dealer, or broker or other
agent.
In the event that any underwriters are used in the sale of any Securities, a
Prospectus Supplement or other appropriate document will be delivered with this
Prospectus which will describe any material arrangements for the distribution of
such Securities, including the name or names of any underwriters, the purchase
price of such Securities and the proceeds to the Selling Securityholders from
any such sale, any underwriting discounts and other items constituting
underwriters' compensation, any initial public offering price and any discounts
or concessions allowed or reallowed or paid to dealers, together with other
related information.
The Company will issue and sell the shares of Common Stock issuable upon
exercise of the Noteholder Warrants, from time to time, to registered holders of
the Noteholder Warrants upon the exercise thereof.
To comply with certain states' securities laws, if applicable, the
Securities may be sold in such states only through registered or licensed
brokers or dealers. In addition, in certain states the Securities may not be
sold unless they have been registered or qualified for sale in such state or an
exemption from registration or qualification is available and is complied with.
There is currently no public market for the Noteholder Warrants. The Company
does not currently intend to apply for listing of the Noteholder Warrants on any
stock exchange. Therefore, there is no assurance that an active public market
for the Noteholder Warrants will develop or that if such a market develops, that
it will continue. The Common Stock is quoted on the Nasdaq National Market under
the symbol "UOUT."
65
<PAGE>
EXPENSES
The Company has agreed to pay the expenses incurred in connection with the
preparation and filing of this Prospectus and the related Registration
Statement, except for commissions of brokers or dealers and may transfer fees
incurred in connection with the sales of the Securities by any Selling
Securityholder, which will be paid by such Selling Securityholder. The Company
has also agreed to pay the fees and expenses incurred in connection with the
registration or qualification of the Securities for sale under state securities
laws.
REGISTRATION OBLIGATIONS OF THE COMPANY
Pursuant to the Warrant Agreement, the Company has agreed to use its best
efforts to maintain the effectiveness of the Registration Statement, of which
this Prospectus forms a part, at all times, for so long as any Noteholder
Warrants remain outstanding and for 3 years from the date on which the last
Noteholder Warrant is exercised or such shorter period that will terminate when
all Noteholder Warrants and all Warrant Shares covered by this Registration
Statement, of which this Prospectus is a part, have been sold pursuant to such
Registration Statement.
INDEMNIFICATION
Pursuant to the provisions contained in the Registration Rights Agreement,
the Company is obligated under certain circumstances to indemnify the Selling
Securityholders who sell Securities pursuant to this Prospectus, their
respective officers, directors and agents, and controlling persons, and each
underwriter in an offering or sale of such Securities, against certain
liabilities related to such sale or disposition, including liabilities arising
under the Securities Act, or to contribute to payments which such persons or
entities may be required to make in respect thereof. Pursuant to the provisions
of the Registration Rights Agreement, the Company may, in certain circumstances,
also be entitled to indemnification or contribution by the Selling
Securityholders or underwriters participating in an offering of the Securities.
LEGAL MATTERS
The validity of the Noteholder Warrants and the Warrant Shares has been
passed upon for the Company by Sidley & Austin, Chicago, Illinois.
EXPERTS
The Consolidated Financial Statements of the Company as of December 31, 1995
and 1996 and for each of the three years in the period ended December 31, 1996,
the Statement of Revenues and Direct Expenses of Ad-Sign for the year ended
December 31, 1995 and the Financial Statements of POA Acquisition Corporation as
of September 30, 1996 and December 31, 1995 and 1994 and for the nine month
period ended September 30, 1996 and for each of the two years in the period
ended December 31, 1995 included in this Prospectus have been so included in
reliance on the report of Price Waterhouse LLP, independent accountants, given
on the authority of said firm as experts in auditing and accounting.
The Consolidated Financial Statements of NOA Holding Company at May 31, 1995
and 1994, and for each of the three years in the period ended May 31, 1995,
appearing in this Prospectus and Registration Statement have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
appearing elsewhere herein, and are included in reliance upon such report given
upon the authority of such firm as experts in accounting and auditing.
The Consolidated Financial Statements of Revere Holding Corp. and its
subsidiaries as of December 31, 1995 and for the year then ended included in
this Prospectus have been audited by Arthur Andersen LLP, independent public
accountants, as stated in their report with respect thereto, and are included in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
66
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934 (the "Exchange Act"), and, in accordance therewith, files
periodic reports and other information with the Commission. The Company has
filed with the Commission a Registration Statement (which term shall include all
amendments thereto) on Form S-1 under the Securities Act, with respect to the
Securities offered hereby. This Prospectus, which constitutes a part of the
Registration Statement, does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. Statements contained in this
Prospectus as to the contents of any contract, agreement or other document
referred to herein are not necessarily complete.
With respect to each report or other information filed with the Commission
pursuant to the Exchange Act, and such contract, agreement or document filed as
an exhibit to the Registration Statement, reference is made to such exhibit for
a more complete description, and each such statement is deemed to be qualified
in all respects by such reference. The Registration Statement and reports and
other information filed by the Company may be inspected, without charge, at the
offices of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and
at its regional offices at Seven World Trade Center, New York, New York 10048,
and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
materials may be obtained at prescribed rates from the Public Reference Section
of the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549.
The Commission maintains a World Wide Web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission and the address of such site is
http:\\www.sec.gov.
The Common Stock of the Company is quoted on the Nasdaq National Market.
Reports, proxy and other information concerning the Company can be inspected at
the Nasdaq National Market.
The Company intends to distribute to the holders of its shares of Common
Stock annual reports containing consolidated financial statements audited by an
independent accountant and quarterly reports containing unaudited condensed
consolidated financial information for the first three quarters of each year.
67
<PAGE>
INDEX TO FINANCIAL STATEMENTS
UNIVERSAL OUTDOOR HOLDINGS, INC.
AND SUBSIDIARY
<TABLE>
<S> <C>
Report of Independent Accountants..................................................... F-2
Consolidated Balance Sheets........................................................... F-3
Consolidated Statements of Operations................................................. F-4
Consolidated Statements of Cash Flows................................................. F-5
Consolidated Statements of Changes in Common Stockholders' Equity (Deficit)........... F-6
Notes to Consolidated Financial Statements............................................ F-7
NOA HOLDING COMPANY
Report of Independent Auditors........................................................ F-20
Consolidated Balance Sheets........................................................... F-21
Consolidated Statements of Operations................................................. F-22
Consolidated Statements of Stockholders' Equity....................................... F-23
Consolidated Statements of Cash Flows................................................. F-24
Notes to Consolidated Financial Statements............................................ F-25
AD-SIGN
Report of Independent Accountants..................................................... F-31
Statement of Revenues and Direct Expenses............................................. F-32
Notes to the Statement of Revenues and Direct Expenses................................ F-33
POA ACQUISITION CORPORATION
Report of Independent Accountants..................................................... F-34
Balance Sheets........................................................................ F-35
Statements of Operations.............................................................. F-36
Statements of Shareholder's Equity.................................................... F-37
Statements of Cash Flows.............................................................. F-38
Notes to Financial Statements......................................................... F-39
REVERE HOLDING CORP.
Report of Independent Public Accountants.............................................. F-45
Consolidated Balance Sheets........................................................... F-46
Consolidated Statements of Operations................................................. F-47
Consolidated Statements of Stockholders' Equity....................................... F-48
Consolidated Statements of Cash Flows................................................. F-49
Notes to Consolidated Financial Statements............................................ F-50
</TABLE>
F-1
<PAGE>
ITEM 8--FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Stockholders of Universal Outdoor Holdings, Inc.
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of changes in stockholders' equity
(deficit) and of cash flows present fairly, in all material respects, the
financial position of Universal Outdoor Holdings, Inc. and its subsidiary ("the
Company") at December 31, 1995 and 1996, and the results of their operations and
their cash flows for each of the three years in the period ended December 31,
1996, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
Chicago, Illinois
February 28, 1997
F-2
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1995 1996
-------------- -------------- MARCH 31,
1997
------------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash and equivalents............................................. $ 19 $ 11,631 $ 2,102
Cash held in escrow.............................................. -- 9,455
Accounts receivable, less allowance for doubtful accounts of
$106, $2,849, $106 and $2,123................................... 5,059 20,927 23,929
Other receivables................................................ 201 1,445 2,109
Prepaid land leases.............................................. 1,043 4,010 4,578
Prepaid insurance and other...................................... 1,029 4,173 4,722
-------------- -------------- ------------
Total current assets........................................... 7,351 51,641 37,440
-------------- -------------- ------------
Property and equipment, net (Note 5)............................... 55,346 382,555 513,475
Goodwill and intangible assets, net (Note 6)....................... 2,695 219,009 220,107
Other assets, net (Note 7)......................................... 5,658 25,114 19,845
-------------- -------------- ------------
Total assets....................................................... $ 71,050 $ 678,319 $ 790,867
-------------- -------------- ------------
-------------- -------------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current maturities of long-term debt............................. $ 58 $ -- $ --
Accounts payable................................................. 1,225 3,373 2,816
Accrued expenses (Note 8)........................................ 1,931 26,532 36,982
-------------- -------------- ------------
Total current liabilities...................................... 3,214 29,905 39,798
-------------- -------------- ------------
Long-term debt and other obligations (Note 9)...................... 106,362 349,141 451,220
Other long-term liabilities........................................ -- 485 471
Long-term deferred income tax liabilities (Note 11)................ -- 71,700 71,700
Commitments and contingencies (Notes 10 and 13).................... -- -- --
Stockholders' equity (deficit):
Preferred stock, $.01 par value, 10,000,000 shares authorized;
and no shares issued and outstanding............................ -- -- --
Common stock, $.01 par value, 75,000,000 shares authorized;
7,000,000, 23,992,800, 7,000,000 and 24,112,800 shares issued
and outstanding................................................. -- 239 241
Warrants......................................................... 2,500 9,967 9,967
Additional paid in capital....................................... 1,451 295,162 298,000
Accumulated deficit.............................................. (42,477) (78,280) (80,530)
-------------- -------------- ------------
Total stockholders' equity (deficit)........................... (38,526) 227,088 227,678
-------------- -------------- ------------
Total liabilities and stockholders' equity (deficit)............... $ 71,050 $ 678,319 $ 790,867
-------------- -------------- ------------
-------------- -------------- ------------
</TABLE>
See accompanying notes to consolidated financial statements
F-3
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS AND SHARES IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31, FOR THE THREE MONTHS ENDED
--------------------------------- --------------------------------
1994 1995 1996 MARCH 31, 1996 MARCH 31, 1997
--------- --------- ----------- --------------- ---------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues.................................... $ 33,180 $ 38,101 $ 84,939 $ 9,332 $ 47,575
Less agency commissions..................... 3,414 3,953 8,801 905 3,567
--------- --------- ----------- ------- ---------------
Net revenues.............................. 29,766 34,148 76,138 8,427 44,008
--------- --------- ----------- ------- ---------------
Operating expenses:
Direct advertising expenses............... 11,806 12,864 26,468 3,571 18,445
General and administrative expenses....... 3,873 4,645 10,648 1,227 4,401
Depreciation and amortization............. 7,310 7,402 18,286 2,032 12,859
Non-cash compensation expense (Note 12)... -- -- 9,000 -- --
--------- --------- ----------- ------- ---------------
22,989 24,911 64,402 6,830 35,705
--------- --------- ----------- ------- ---------------
Operating income............................ 6,777 9,237 11,736 1,597 8,303
--------- --------- ----------- ------- ---------------
Other expense:
Interest expense, including net
amortization of bond discount (premium)
of $1,818, $3,982, $4,256, $1,109 and
$(2)..................................... 9,836 12,234 19,567 3,594 10,735
Other expenses............................ 2,107 706 1,398 11 (182)
--------- --------- ----------- ------- ---------------
Total other expense..................... 11,943 12,940 20,965 3,605 10,553
--------- --------- ----------- ------- ---------------
Loss before extraordinary item.............. (5,166) (3,703) (9,229) (2,008) (2,250)
Extraordinary loss on early extinguishment
of debt.................................... -- -- 26,574 -- --
--------- --------- ----------- ------- ---------------
Net loss.................................... $ (5,166) $ (3,703) $ (35,803) $ (2,008) $ (2,250)
--------- --------- ----------- ------- ---------------
--------- --------- ----------- ------- ---------------
Loss per common and common equivalent share:
Loss before extraordinary item.............. $ (0.67) $ (0.48) $ (0.58) $ (0.26) $ (0.09)
Extraordinary loss.......................... -- -- $ (1.68) -- --
Net loss.................................... $ (0.67) $ (0.48) $ (2.27) $ (0.26) $ (0.09)
Weighted average common and common
equivalent shares outstanding.............. 7,654 7,654 15,787 7,654 24,096
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31, FOR THE THREE MONTHS ENDED
--------------------------------- --------------------------------
1994 1995 1996 MARCH 31, 1996 MARCH 31, 1997
--------- --------- ----------- --------------- ---------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss.................................. $ (5,166) $ (3,703) $ (35,803) $ (2,008) $ (2,250)
Depreciation.............................. 7,466 10,354 13,309 $ 2,405 8,474
Amortization.............................. 2,126 1,690 4,977 900 4,630
Noncash compensation related to
warrants................................. -- -- 9,000 -- --
Extraordinary loss........................ -- -- 26,574 -- --
Loss on sale of property and equipment.... 90 -- -- -- --
Accretion of preferred stock dividends.... 1,509 -- -- -- --
Changes in assets and liabilities, net of
effects from acquisitions:
Accounts receivable and other
receivables............................ (1,278) (762) (1,200) 113 (3,664)
Prepaid land leases, insurance and
other.................................. (223) (391) 435 (539) (98)
Accounts payable and accrued expenses
....................................... 384 (188) (3,308) 2,018 4,685
--------- --------- ----------- --------------- ---------------
Net cash from operating activities.... 4,908 7,000 13,984 2,889 11,777
--------- --------- ----------- --------------- ---------------
Cash flows used in investing activities:
Capital expenditures...................... (5,671) (5,620) (7,178) (1,966) (3,584)
Payments for acquisitions, net of cash
acquired................................. (3,355) (1,925) (490,813) (13,621) (128,104)
Proceeds from sale of property and
equipment................................ 1,003 -- -- --
Payment for consulting agreement.......... -- (1,400) -- --
Other payments............................ (160) (124) 13 (86) --
--------- --------- ----------- --------------- ---------------
Net cash used in investing activities... (8,183) (9,069) (497,978) (15,673) (131,688)
--------- --------- ----------- --------------- ---------------
Cash flows from (used in) financing
activities:
Proceeds from long-term debt offerings.... 25,408 -- 325,255 --
Long-term debt repayments................. (272) (262) (117,815) (33) (497)
Deferred financing costs.................. (1,888) (336) (14,590) (606)
Net borrowings under credit agreements.... 3,040 2,671 486,052 12,809 102,030
Repayment of credit facilities............ -- -- (475,713) --
Proceeds from equity offerings............ -- -- 292,417 --
Payment for redemption of preferred
stock.................................... (23,015) -- -- --
--------- --------- ----------- --------------- ---------------
Net cash from financing activities...... 3,273 2,073 495,606 12,776 100,927
--------- --------- ----------- --------------- ---------------
Net increase (decrease) in cash and
equivalents................................ (2) 4 11,612 (8) (18,984)
Cash and equivalents, at beginning of
period..................................... 17 15 19 19 21,086
--------- --------- ----------- --------------- ---------------
Cash and equivalents, at end of period...... $ 15 $ 19 $ 11,631 $ 11 $ 2,102
--------- --------- ----------- --------------- ---------------
--------- --------- ----------- --------------- ---------------
Supplemental cash flow information:
Interest paid during the period........... $ 7,885 $ 8,196 $ 10,910 $ 401 $ 1,366
--------- --------- ----------- --------------- ---------------
--------- --------- ----------- --------------- ---------------
</TABLE>
See accompanying notes to consolidated financial statements
F-5
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
(DOLLARS AND SHARES IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON
SHARES OF STOCK AND TOTAL
SHARES OF COMMON ADDITIONAL STOCKHOLDERS'
COMMON STOCK B AND PAID-IN ACCUMULATED EQUITY
STOCK C CAPITAL WARRANTS DEFICIT (DEFICIT)
----------- ----------- ----------- --------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993...... 7,000 $ 1,051 $ (33,608) $ (32,557)
Debt proceeds attributable to
warrants issued.................. $2,500 2,500
Reclassification of redeemable
common stock..................... 400 400
Net loss.......................... (5,166) (5,166)
----------- ----------- ----------- --------- ------------- --------------
Balance at December 31, 1994...... 7,000 1,451 2,500 (38,774) (34,823)
Net loss.......................... (3,703) (3,703)
----------- ----------- ----------- --------- ------------- --------------
Balance at December 31, 1995...... 7,000 1,451 2,500 (42,477) (38,526)
Issuance of Class B and C common
shares........................... 6,000 30,000 30,000
Issuance of warrants.............. 9,000 9,000
Conversion of Class B and Class C
common stock shares to common
shares........................... 6,000 (6,000)
Initial stock offering proceeds,
net of costs associated with
issuance of $2,082............... 4,630 60,353 60,353
Exercise of warrants.............. 613 1,533 (1,533)
Secondary stock offering proceeds,
net of costs associated with
issuance of $796................. 5,750 202,064 202,064
Net loss.......................... (35,803) (35,803)
----------- ----------- ----------- --------- ------------- --------------
Balance at December 31, 1996...... 23,993 -- $ 295,401 $9,967 $ (78,280 ) $ 227,088
----------- ----------- ----------- --------- ------------- --------------
----------- ----------- ----------- --------- ------------- --------------
(UNAUDITED)
Issuance of common stock shares... 120 2,906 2,906
Costs associated with 1996
offerings........................ (66) (66 )
Net loss for the three months
ended March 31, 1997............. (2,250 ) (2,250 )
----------- ----------- ----------- --------- ------------- --------------
Balance at March 31, 1997......... 24,113 $ 298,241 $ 9,967 $ (80,530 ) $ 227,678
----------- ----------- ----------- --------- ------------- --------------
----------- ----------- ----------- --------- ------------- --------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
NOTE 1 -- BASIS OF PRESENTATION AND DESCRIPTION OF THE BUSINESS:
Universal Outdoor Holdings, Inc., was incorporated on May 23, 1991 and
through its principal operating subsidiary, Universal Outdoor, Inc.
(collectively, the "Company") is engaged principally in the rental of
advertising space on outdoor advertising structures. The Company operates in
three distinct regions: the Midwest (Chicago, Minneapolis/St. Paul,
Indianapolis, Milwaukee, Des Moines, Evansville, IN and Dallas), the Southeast
(Orlando, Jacksonville, Palm Beach, Ocala and the Atlantic Coast, including
Myrtle Beach and the Gulf Coast areas of Florida, Memphis/Tunica and
Chattanooga), and the East Coast (New York, Washington D.C., Philadelphia,
Northern New Jersey, Wilmington, Salisbury and Hudson Valley, NY).
Historically, manufacturers of tobacco products, principally cigarettes,
have been major users of outdoor advertising displays, including displays
operated by the Company. The following industries generated significant revenues
as a percentage of the Company's net revenues in 1996: tobacco (13.2%);
automotive (10.9%); retail (14.6%); and entertainment (11.2%).
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES:
The summary of significant accounting policies is presented to assist the
reader in understanding and evaluating the Company's consolidated financial
statements. These policies are in conformity with generally accepted accounting
principles consistently applied in all material respects.
BASIS OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its subsidiaries. All material intercompany balances, transactions and
profits have been eliminated.
REVENUE RECOGNITION
The Company's revenues are generated from contracts with advertisers
generally covering periods of one to twelve months. The Company recognizes
revenues monthly over the period in which advertisement displays are posted on
the advertising structures. A full month's revenue is recognized in the first
month of posting. Costs incurred for the production of outdoor advertising
displays are recognized in the initial month of the contract or as incurred
during the contract period. Payments received in advance of billings are
recorded as deferred revenues.
CASH AND EQUIVALENTS
The Company considers all highly-liquid investments with original maturities
of three months or less to be cash equivalents.
Cash held in escrow represents a deposit made by Revere Holding Corp. under
an agreement relating to a contemplated acquisition of property. The property
was subsequently not acquired and therefore the funds were returned to cash and
equivalents.
PREPAID LAND LEASES
Most of the Company's advertising structures are located on leased land.
Land rents are typically paid in advance for periods ranging from one to twelve
months. Prepaid land leases are expensed ratably over the related rental term.
F-7
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Normal maintenance and repair
costs are expensed. Depreciation is computed principally using a straight-line
method over the estimated useful lives of the assets:
<TABLE>
<S> <C>
Buildings........................................................ 39 years
Advertising structures........................................... 15 years
Vehicles and equipment........................................... 5-7 years
</TABLE>
GOODWILL AND INTANGIBLE ASSETS
Non-compete agreements are amortized over their estimated economic lives,
ranging from three to ten years. Goodwill is amortized over fifteen years on a
straight-line basis. The Company reviews the carrying value of intangibles and
other long-lived assets for impairment when events or changes in circumstances
indicate that the carrying amount of the asset may not be recoverable. This
review is performed by comparing estimated undiscounted future cash flows from
the use of the asset to the recorded value of the asset.
OTHER ASSETS
Loan costs incurred in connection with obtaining financing have been
deferred and are being amortized on a straight-line basis over the life of the
loans. Acquisition costs are amortized over five years.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of cash and equivalents, accounts receivable and accounts
payable approximate the carrying value because of the immediate or short-term
maturity of these financial instruments. The fair value of the Company's other
financial instruments approximates the carrying value.
STOCK-BASED COMPENSATION
In 1996, the Company adopted Statement of Financial Accounting Standards
(SFAS) No. 123, "Accounting for Stock-Based Compensation." In accordance with
provisions of SFAS No. 123, the Company applies fair value accounting for its
stock-based compensation.
EARNINGS PER SHARE
Earnings per share is computed by dividing net income by the weighted
average number of common and common equivalent shares outstanding during each
year (7,654,000 shares in 1994, 7,654,000 shares in 1995 and 15,787,000 shares
in 1996). All per share information in these financial statements have been
adjusted to give effect to a 16-for-one stock split in July 1996.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
F-8
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
RECLASSIFICATIONS
Certain amounts in the prior years' consolidated financial statements have
been reclassified to conform with the current year presentation. These
reclassifications had no effect on previously reported net losses.
INTERIM FINANCIAL INFORMATION
The unaudited interim financial information as of March 31, 1997 and 1996
and for the three months then ended has been prepared from the unaudited
financial records of the Company and, in the opinion of management, reflects all
adjustments necessary for a fair presentation of the financial position and
results of operations and of cash flows for the respective interim periods. All
adjustments were of a normal and recurring nature.
NOTE 3 -- EQUITY OFFERINGS AND DEBT REFINANCINGS:
<TABLE>
<S> <C>
Proceeds from equity offerings:
Private investors............................................ $ 30,000
Initial public offering...................................... 60,353
Secondary public offering.................................... 202,064
----------
292,417
----------
Proceeds from long-term debt offerings:
9 3/4% Senior Subordinated Debt.............................. 223,587
9 3/4% Series B Senior Subordinated Debt..................... 101,500
Paramount note............................................... 168
----------
325,255
----------
Proceeds from credit facilities................................ 486,052
----------
Total proceeds from financings............................. 1,103,724
----------
Proceeds from financings used for:
14% Senior Secured Discount Notes repayment.................. 32,718
11% Senior Notes repayment................................... 65,000
Penalty on the early retirement of 11% Senior Notes and 14%
Senior Secured Notes........................................ 18,424
Mortgage and other........................................... 1,673
----------
117,815
Repayment of credit facilities................................. 475,713
Financing costs................................................ 14,590
----------
680,118
----------
Net financing proceeds......................................... $ 495,606
----------
----------
</TABLE>
In April 1996, the Company sold to private investors 2,984,000 shares of
Class B common stock and 3,016,000 shares of Class C common stock for net
proceeds of approximately $30 million. The proceeds were used to assist in
financing the acquisition of NOA Holding Corp.
F-9
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
NOTE 3 -- EQUITY OFFERINGS AND DEBT REFINANCINGS: (CONTINUED)
In July 1996, the Company completed an initial public offering (IPO) of
approximately 4,630,000 shares of its common stock, at a price of $14.50 per
share for net proceeds of $60,353. In conjunction with the IPO, the Company
effected a 16-for-one stock split. In October 1996, a secondary offering of
approximately 5,750,000 shares of the Company's common stock was issued at an
offering price of $37.50 per share for net proceeds of $202,064.
At December 31, 1996 the Company's credit facility provides for a total loan
commitment of $230 million with (i) a revolving line of credit facility
providing for borrowings of up to $12.5 million, (ii) an acquisition credit line
in the amount of $212.5 million which is available under a revolving/term loan
facility and (iii) a swing line in the amount of $5 million. In 1996, proceeds
from credit facilities totaled $486,052, while credit facility repayments
totaled $475,713.
The Company completed a public offering of $225 million 9 3/4% Senior
Subordinated Notes due 2006 for net proceeds of $223,587 in October 1996 and a
private offering of $100 million 9 3/4% Series B Subordinated Notes due 2006 for
net proceeds of $101,500 in December 1996 (collectively, "the Notes Offerings").
The net proceeds of the equity offerings and the Notes Offerings together
with the proceeds under the available credit facilities were used to redeem all
of the outstanding 14% Senior Secured Discount Notes due 2003 at $32,718 and the
11% Senior Notes due 2003 at $65,000, pay the $18,424 related penalty, repay
approximately $285 million of the then outstanding credit facility and pay the
purchase price of $25 million relating to certain acquisitions which occurred in
1996. The redemptions during the year resulted in an extraordinary loss of
$26,574.
NOTE 4 -- ACQUISITIONS:
The Company's wholly owned subsidiary, Universal Outdoor, Inc. ("Universal")
completed the following acquisitions for cash during 1996:
<TABLE>
<CAPTION>
PURCHASE PRICE
------------------------
STOCK ASSET
ACQUIRED ACQUISITION ACQUISITION
------------------- ----------- -----------
<S> <C> <C> <C>
Ad-Sign, Inc. January, 1996 $ 12,500
NOA Holding Corp. April, 1996 $ 83,295
Iowa Outdoor Displays September, 1996 1,794
The Chase Company September, 1996 5,800
Outdoor Advertising Holdings, Inc. October, 1996 239,064
Revere Holding Corp. December, 1996 123,794
</TABLE>
F-10
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
NOTE 4 -- ACQUISITIONS: (CONTINUED)
The purchase price for accounting purposes was allocated as follows to the
assets purchased and the liabilities assumed based upon the estimated fair
values on the dates of acquisition. It is expected that revisions to the assets
purchased and liabilities assumed will be made during 1997; however, it is not
expected that such revisions will have any material effect.
<TABLE>
<CAPTION>
1996
-----------
<S> <C>
Current assets, other than cash.................................................. $ 22,567
Property and equipment........................................................... 323,624
Goodwill......................................................................... 219,406
Other assets..................................................................... 4,847
Current liabilities.............................................................. (32,497)
Net deferred taxes............................................................... (71,700)
-----------
$ 466,247
-----------
-----------
</TABLE>
All acquisitions have been accounted for under the purchase method of
accounting and, accordingly, the operating results of the acquired businesses
are included in the Company's consolidated financial statements from the
respective dates of acquisition. Where required, net deferred taxes were
recorded representing the temporary difference between the tax attributes
assumed and the recorded fair value as of the date of acquisition. Since it is
not deductible for tax purposes, no deferred taxes are required to be recorded
for amounts allocated to goodwill.
In conjunction with the acquisitions, the Company recorded reserves of
approximately $5.0 million to cover anticipated costs of combining its existing
business with the acquired outdoor advertising businesses. The reserves relate
to liabilities incurred for relocation $(1.6 million), severance $(1.4 million),
facility charges $(1.3 million) and other related expenditures $(0.7 million).
Approximately $1.3 million was charged against this reserve during 1996.
The following unaudited pro forma financial information includes the results
of operations of the 1996 and significant 1997 acquisitions as if the
transactions had been consummated as of the beginning of the periods presented
after including the impact of certain adjustments such as depreciation of
advertising structures, amortization of goodwill and other intangibles,
reduction of corporate expenses and interest expense on debt assumed to have
been incurred to complete the transactions.
<TABLE>
<CAPTION>
1995 1996 FOR THE THREE
------------ ------------ MONTHS ENDED
MARCH 31, 1996
(UNAUDITED) (UNAUDITED) ---------------
(UNAUDITED)
<S> <C> <C> <C>
Net revenues.................................... $ 162,758 $ 176,611 $ 40,031
Depreciation and amortization................... 50,818 50,818 12,705
Operating income................................ 24,836 34,957 5,115
Interest expense................................ 40,670 44,235 11,089
Loss before income taxes and extraordinary
loss........................................... (15,962) (20,089) (5,974)
Loss before income taxes........................ $ (15,962) $ (37,663) $ (5,974)
Loss per share.................................. $ (1.01) $ (2.39) $ (0.25)
</TABLE>
F-11
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
NOTE 4 -- ACQUISITIONS: (CONTINUED)
These unaudited pro forma results are not necessarily indicative of what
actually would have occurred if the acquisitions had been in effect for the
entire periods presented and are not intended to project future results.
NOTE 5 -- PROPERTY AND EQUIPMENT:
Property and equipment consist of the following at December 31:
<TABLE>
<CAPTION>
1995 1996
--------- -----------
<S> <C> <C>
Outdoor advertising structures....................................... $ 76,340 $ 390,963
Land and capitalized land lease costs................................ 2,232 12,130
Vehicles and equipment............................................... 4,712 12,744
Building and leasehold improvements.................................. 3,150 11,087
Display faces under construction..................................... 1,344 748
--------- -----------
87,778 427,672
Less accumulated depreciation........................................ 32,432 45,117
--------- -----------
$ 55,346 $ 382,555
--------- -----------
--------- -----------
</TABLE>
NOTE 6 -- GOODWILL AND INTANGIBLE ASSETS:
Goodwill and intangible assets consist of the following at December 31:
<TABLE>
<CAPTION>
1995 1996
--------- -----------
<S> <C> <C>
Non-compete agreements................................................. $ 6,500 $ 6,642
Goodwill............................................................... 930 221,909
--------- -----------
7,430 228,551
Less accumulated amortization.......................................... 4,735 9,542
--------- -----------
$ 2,695 $ 219,009
--------- -----------
--------- -----------
</TABLE>
NOTE 7 -- OTHER ASSETS:
Other assets consist of the following at December 31:
<TABLE>
<CAPTION>
1995 1996
--------- -----------
<S> <C> <C>
Financing costs........................................................ $ 6,284 $ 24,980
Deposits............................................................... 20 5,073
Other.................................................................. 1,211 4,815
--------- -----------
7,515 34,868
Less accumulated amortization.......................................... 1,857 9,754
--------- -----------
$ 5,658 $ 25,114
--------- -----------
--------- -----------
</TABLE>
F-12
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
NOTE 8 -- ACCRUED EXPENSES:
Accrued expenses consist of the following at December 31:
<TABLE>
<CAPTION>
1995 1996
--------- ---------
<S> <C> <C>
Interest payable........................................................ $ 1,054 $ 5,667
Other taxes payable..................................................... -- 4,070
Employee compensation and related taxes................................. 184 2,479
Deferred revenue........................................................ 468 2,114
Accrued leases.......................................................... -- 1,599
Severance and relocation................................................ -- 2,121
Professional services................................................... -- 1,935
Lease and maintenance................................................... -- 2,392
Other................................................................... 225 4,155
--------- ---------
$ 1,931 $ 26,532
--------- ---------
--------- ---------
</TABLE>
NOTE 9 -- LONG-TERM DEBT AND OTHER OBLIGATIONS:
Long-term debt and other obligations consist of the following at December
31:
<TABLE>
<CAPTION>
1995 1996
----------- -----------
<S> <C> <C>
9 3/4% Senior Subordinated Notes due 2006, net of discount of
$1,389............................................................. $ -- $ 223,611
9 3/4% Series B Senior Subordinated Notes due 2006, net of premium
of $1,487.......................................................... -- 101,487
Revolving Credit Loan............................................... 3,286 --
Acquisition Credit Loan............................................. 6,375 --
Acquisition Term Loan -- 20,000
14% Senior Secured Discount Notes, due 2004, net of discount of
$20,918............................................................ 29,083 --
11% Senior Notes due 2003, net of discount of $839.................. 64,161 --
Other obligations................................................... 3,515 4,043
----------- -----------
106,420 349,141
Less current maturities of long-term debt and other obligations..... 58 --
----------- -----------
$ 106,362 $ 349,141
----------- -----------
----------- -----------
</TABLE>
9 3/4% SENIOR SUBORDINATED NOTES
The Senior Notes mature on October 15, 2006 and bear interest at 9 3/4%
payable semiannually on April 15 and October 15, beginning on April 15, 1997.
The Company is required to meet certain financial tests which include those
relating to the maintenance of a minimum fixed charge ratio, minimum adjusted
EBITDA (earnings before interest, taxes, depreciation and amortization) and a
senior leverage ratio.
The Senior Notes are general unsecured obligations of the Company and are
subordinated to all existing and future Senior Debt, including the indebtedness
under the credit facilities. The indenture governing the Senior Notes contains
certain restrictive covenants including, among others, limitations on
F-13
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
NOTE 9 -- LONG-TERM DEBT AND OTHER OBLIGATIONS: (CONTINUED)
additional debt incurrence, restrictions on distributions to shareholders, the
creation of liens, the merger or sale of substantially all of the Company or its
operating subsidiaries assets and engaging in certain transactions with
affiliates.
9 3/4% SERIES B SENIOR SUBORDINATED NOTES
The Series B Senior Notes mature on October 15, 2006 and bear interest at
9 3/4% payable semiannually on April 15 and October 15, beginning on April 15,
1997. The Company is required to meet certain financial tests which include
those relating to the maintenance of a minimum fixed charge ratio and minimum
adjusted EBITDA.
The Series B Senior Notes are general unsecured obligations of the Company
and are subordinated to all existing and future Senior Debt, including
indebtedness under the credit facilities. The indenture governing the Series B
Senior Notes contains certain restrictive covenants including, among others,
limitations on additional debt incurrence, restrictions on distributions to
shareholders, the creation of liens, the merger or sale of substantially all of
the Company's assets and engaging in certain transactions with affiliates.
CREDIT FACILITIES
In October 1996, the Company amended and restated its existing credit
facilities to provide for a total loan commitment of $230 million with (i) a
revolving line of credit facility providing for borrowings of up to $12.5
million, (ii) an acquisition credit line in the amount of $212.5 million which
is available under a revolving/term loan facility and (iii) a swing line in the
amount of $5 million. Upon the failure of certain events to occur prior to
October 1997, a total of $100 million under the $212.5 million revolving/ term
loan facility may be converted to a term facility which may not be reborrowed.
Approximately $212.5 million of the credit facility matures on September 30,
2003 with the remaining amount maturing on September 30, 2004. As of December
31, 1996, the Company had drawn down $20 million under the acquisition credit
facility and had no borrowings under the revolving credit facility or the swing
line of credit.
The loans under the revolving credit facility and acquisition term loan bear
interest at the rate per annum equal to the prime rate or euro dollar rate, plus
an additional 0% to 2.75% depending on the leverage ratio of the Company as
defined in the credit facility agreement. The interest rate in effect during
1996 ranged from 7.875% to 10%. Interest on the credit facility is payable upon
the date of maturity.
Each of the revolving credit facility and the acquisition credit facility
are secured by a first priority lien on the assets of Universal and upon the
existence of certain conditions, a pledge of the common stock of the Company
held by certain management shareholders, as well as the pledge of the Company's
stock. Borrowings under the new credit facility are subject to certain
restrictive covenants including, among others, a minimum fixed charge ratio, a
minimum adjusted EBITDA and maximum senior leverage ratio. The new credit
facility contains certain restrictive covenants including, among others,
limitations on additional debt incurrence, restrictions on distributions to
shareholders, the creation of liens, the merger or sale of substantially all of
the Company's assets and engaging in certain transactions with affiliates.
Commitment fees are 1/2 percent on the unused portion of the acquisition credit
line and the revolving credit facility.
Net debt issuance costs of $14,100 were capitalized in 1996 and are being
amortized on a straight-line basis over the term of the debt.
F-14
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
NOTE 9 -- LONG-TERM DEBT AND OTHER OBLIGATIONS: (CONTINUED)
Future maturities of long-term debt and other obligations as of December 31,
1996 are as follows:
<TABLE>
<S> <C>
1997............................................................. $ --
1998............................................................. 20,352
1999............................................................. 1,991
2000............................................................. --
2001............................................................. 500
2002 and thereafter.............................................. 326,298
---------
Total............................................................ $ 349,141
---------
---------
</TABLE>
NOTE 10 -- LEASE COMMITMENTS:
Rent expense totaled $4,600, $4,600 and $13,002 in 1994, 1995 and 1996,
respectively. Minimum annual rentals under the terms of noncancelable operating
leases with terms in excess of one year in effect at December 31, 1996 are
payable as follows:
<TABLE>
<CAPTION>
YEAR CAPITAL OPERATING
- ------------------------------------------------------------------------ ----------- -----------
<S> <C> <C>
1997.................................................................... $ 275 $ 448
1998.................................................................... 233 277
1999.................................................................... 117 172
2000.................................................................... 26 126
2001.................................................................... -- 18
----- -----------
Total minimum lease payments.......................................... 651 $ 1,041
-----------
-----------
Less: amounts representing interest..................................... (71)
-----
Present value of minimum lease payments................................. 580
Less: current portion................................................... 235
-----
Long-term capitalized lease obligations................................. $ 345
-----
-----
</TABLE>
NOTE 11 -- INCOME TAXES:
The Company incurred a net operating loss in 1994, 1995 and 1996; therefore,
no provision for income taxes was required.
F-15
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
NOTE 11 -- INCOME TAXES: (CONTINUED)
Deferred tax assets (liabilities) consist of the following at December 31:
<TABLE>
<CAPTION>
1995 1996
--------- ----------
<S> <C> <C>
Deferred tax liabilities:
Property and equipment................................................ $ -- $ (99,212)
--------- ----------
Total deferred tax liabilities...................................... -- (99,212)
--------- ----------
Deferred tax assets:
Bad debts............................................................. 42 897
Non-deductible accrued expenses....................................... 53 2,140
Property and equipment................................................ 523 --
Goodwill and intangibles.............................................. -- 6,112
Non-deductible interest............................................... 1,803 --
Warrants.............................................................. -- 3,600
Operating loss and credit carryforwards............................... 6,202 34,628
--------- ----------
Total deferred tax assets........................................... 8,623 47,377
--------- ----------
Valuation allowance................................................... (8,623) (19,865)
--------- ----------
Net deferred tax liabilities........................................ $ -- $ (71,700)
--------- ----------
--------- ----------
</TABLE>
The Company has established a valuation allowance against a portion of its
operating loss and credit carryforwards following an assessment of the
likelihood of realizing such amounts. In arriving at the determination as to the
amount of the valuation allowance required, the Company considered its past
operating history as well as significant acquisitions made in 1996, statutory
restrictions on the use of operating losses from acquisitions acquired during
the year, tax planning strategies and its expectation of the level and timing of
future taxable income.
At December 31, 1996, the Company had net operating loss and credit
carryforwards for federal income tax purposes of approximately $86 million.
Included in total net operating loss carryforwards is approximately $45 million
of operating loss and credit carryforwards generated by certain acquired
companies prior to their acquisition by the Company. Total carryforwards expire
between 2005 and 2011. During the current fiscal year, the Company did not
utilize any net operating loss or credit carryforwards.
The Company experienced an ownership change within the meaning of Section
382 of the Internal Revenue Code. As such, the utilization of net operating loss
carryforwards are subject to an annual limitation based upon the value of the
Company on the change date. The acquisition of Outdoor Advertising Holdings,
Inc. and Revere Holding Corp. resulted in an "ownership change" and a limitation
is imposed on the acquired net operating loss carryforwards in these
acquisitions. Furthermore, the Company's use of the net operating loss
carryforwards are subject to limitations applicable to corporations filing
consolidated federal income tax returns.
F-16
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
NOTE 12 -- WARRANTS:
The following table summarizes the Company's warrant activity:
<TABLE>
<CAPTION>
EXERCISE
1995 1996 PRICE
----------- ----------- ------------
<S> <C> <C> <C>
Number of shares under warrants:
Beginning of year................................... 1,000,000 1,000,000 $ .000625
Granted............................................. -- 2,470,608 $ 5.00
Exercised........................................... -- (612,800)
Canceled/expired.................................... -- --
----------- -----------
Warrants outstanding at end of year................. 1,000,000 2,857,808
----------- -----------
----------- -----------
Warrants exercisable at end of year................. 1,000,000 2,857,808
----------- -----------
----------- -----------
</TABLE>
In 1994, the Company issued 1,000,000 warrants which expire on July 1, 2004.
The warrants were assigned, based on market conditions at the time of grant, a
value of $2,500. Each warrant entitles the holder to purchase one share of
common stock (the "warrant share"). In July 1996, a total of 612,800 warrants
were exercised into warrant shares. A total of 387,200 warrants remain
exercisable into warrant shares.
In April 1996, key executives and employees were granted 2,470,608 warrants
to purchase common shares (the "1996 Warrant Plan"). Each warrant is fully
exercisable into one share of common stock at a warrant exercise price of $5.00
per share. A total of 2,470,608 shares of common stock have been reserved for
issuance pursuant to the warrants issued in 1996. The fair value of each warrant
was estimated on the date of grant using the Black-Scholes option-pricing model
with the following weighted average assumptions used for grants in 1996:
dividend yield of 0%, expected stock price volatility of 39.42%, risk-free
interest rate of 6.28% and expected lives of 7 years. The Company recognized a
one-time non-cash compensation charge of $9 million relating to the issuance of
the warrants under the 1996 Warrant Plan.
NOTE 13 -- CONTINGENCIES:
The Company, as the successor to Outdoor Advertising Holdings, Inc. and POA
Acquisition Company ("POA"), is a defendant in a case pending in the United
States District Court, Middle District of Florida. The plaintiffs alleged that
POA, among others, conspired to restrain trade and to monopolize the market for
leases for land on which outdoor advertising structures can be erected. The case
was set for trial in January 1997 and has been continued pending court
availability. The plaintiffs have alleged that the acts on the defendants
resulted in harm to the plaintiffs and damages of $4 to $12 million, which could
be trebled under the applicable laws. The Company intends to defend the case
vigorously. There can be no assurance as to the ultimate outcome of this
litigation although management does not presently believe it will have a
material adverse effect on its results of operations or financial condition.
The case was settled in March 1997 with no material adverse effect on the
results of operations or financial condition of the Company (Unaudited).
The Company is subject to various other claims and routine litigation
arising in the ordinary course of business. Based on the advice of counsel,
management does not believe that the result of such other claims and litigation,
individually or in the aggregate, will have a material effect on the Company's
business or its results of operations, cash flows or financial position.
F-17
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
NOTE 14 -- QUARTERLY FINANCIAL DATA (UNAUDITED):
Summarized quarterly financial data for 1996 is as follows:
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
--------- --------- --------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
1996
Net revenues.................................. $ 8,427 $ 17,812 $ 18,643 $ 31,256
Operating income.............................. 1,597 (1,638) 5,874 5,903
Income (loss) before extraordinary item....... (2,008) (8,148) 1,991 (1,064)
Net income (loss)............................. (2,008) (8,148) 591 (26,238)
Per Share:
Income (loss) before extraordinary item..... $ (.26) $ (1.06) $ .10 $ (.04)
Net income (loss)............................. $ (.26) $ (1.06) $ .03 $ (1.08)
Weighted average shares outstanding........... 7,654 7,654 19,297 24,343
</TABLE>
In the third quarter of 1996, the Company recorded a non-cash compensation
charge in the amount of $9 million relating to management warrants.
In 1996, the Company recorded an extraordinary loss of $26,574 related to
the early retirement of the 11% Senior Notes and the 14% Senior Secured Notes.
Summarized quarterly financial data for 1995 is as follows:
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
--------- --------- --------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
1995
Net revenues.................................. $ 7,236 $ 9,175 $ 8,940 $ 8,797
Operating income.............................. 1,319 3,055 2,458 2,405
Income (loss) before extraordinary item....... (1,778) (215) (811) (899)
Net loss...................................... (1,778) (215) (811) (899)
Per Share:
Loss before extraordinary item.............. $ (.23) $ (.03) $ (.11) $ (.12)
Net income (loss)........................... $ (.23) $ (.03) $ (.11) $ (.12)
Weighted average shares outstanding........... 7,654 7,654 7,654 7,654
</TABLE>
NOTE 15 -- RELATED-PARTY TRANSACTIONS:
During 1996 the Company paid management fees in the amount of $1,250 to a
private investor, which is included in other expenses on the Consolidated
Statement of Operations.
NOTE 16 -- SUBSEQUENT EVENTS:
In January 1997, the Company acquired a total of approximately 2,018
advertising display faces located in and around Memphis, Tennessee. The purchase
price was approximately $71 million plus 100,000 shares of common stock of the
Company.
In January 1997, the Company acquired a total of approximately 1,035
advertising display faces located in three markets in the east coast of the
United States, including Metro New York, Northern New Jersey and Hudson Valley,
for approximately $40 million in cash.
F-18
<PAGE>
UNIVERSAL OUTDOOR HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
NOTE 16 -- SUBSEQUENT EVENTS: (CONTINUED)
In February 1997, the Company acquired a total of approximately 135
advertising display faces located in and around Evansville, Indiana for
approximately $5.5 million in cash. The Company also acquired 12 existing
advertising display faces and 35 in process display faces in New Jersey for
approximately $5.3 million in cash.
In February 1997, the Company agreed to acquire approximately 1,450
advertising display faces in the Baltimore metropolitan area for $46.5 million
in cash.
(UNAUDITED)
In March 1997, the Company acquired a total of approximately 600 bus
shelters and panels in and around Memphis, Tennessee for approximately $8.5
million in cash.
In April 1997, the Company entered into an agreement to purchase 91
advertising display faces in and around New York, New York for approximately
$51.0 million in cash.
In May 1997, the Company amended its existing credit facilities to provide
for an additional loan commitment of $75 million in the form of a term loan
which was drawn upon in May 1997.
F-19
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
NOA Holding Company
We have audited the accompanying consolidated balance sheets of NOA Holding
Company as of May 31, 1994 and 1995, and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the three years in
the period ended May 31, 1995. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of NOA Holding
Company as of May 31, 1994 and 1995 and the consolidated results of its
operations and cash flows for each of the three years in the period ended May
31, 1995 in conformity with generally accepted accounting principles.
Ernst & Young LLP
Minneapolis, Minnesota
July 21, 1995
F-20
<PAGE>
NOA HOLDING COMPANY
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MAY 31,
--------------------
MARCH 31,
1994 1995 1996
--------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash....................................................... $ 1,619 $ 1,630 $ 906
Accounts receivable, net of allowance for doubtful accounts
of $346,000 in 1994 and $338,000 in 1995.................. 4,384 4,517 3,639
Other receivables.......................................... 256 262 126
Inventories................................................ 267 282 153
Current portion of prepaid leases.......................... 1,183 1,098 1,059
Prepaid expenses........................................... 390 274 191
Other assets............................................... 150 35 210
--------- --------- -----------
Total current assets................................... 8,249 8,098 6,284
--------- --------- -----------
Long-term portion of prepaid leases.......................... 312 509 545
Property and equipment, net (Note 3)......................... 23,562 22,357 14,422
Intangibles, net (Note 4).................................... 17,505 12,374 5,714
--------- --------- -----------
Total assets........................................... $ 49,628 $ 43,338 $ 26,965
--------- --------- -----------
--------- --------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable........................................... $ 605 $ 650 $ 460
Revolving credit........................................... 200 -- --
Accrued interest........................................... 598 191 393
Other accrued expenses..................................... 1,626 1,800 1,705
Deferred revenue........................................... 100 66 137
Current portion of long-term debt.......................... 6,000 608 90
--------- --------- -----------
Total current liabilities.............................. 9,129 3,315 2,785
--------- --------- -----------
Long-term debt (Note 5)...................................... 29,657 30,324 4,552
Other long-term liabilities.................................. 577 480 932
STOCKHOLDERS' EQUITY (NOTES 8 AND 9)
Preferred stock, par value $.10 per share:
Authorized shares -- 1,000
Issued shares -- 1,000..................................... -- -- --
Class A common stock, par value $.01 per share:
Authorized shares -- 200,000
Issued shares -- 81,693.70 in 1994 and 72,919.94 in 1995... 1 1 1
Class B common stock, par value $.01 per share:
Authorized shares -- 25,000
Issued shares -- 13,199.82 in 1994 and 6,172.16 in 1995.... -- -- --
Additional paid-in capital................................... 19,524 18,857 18,857
Retained deficit............................................. (9,260) (9,639) (162)
--------- --------- -----------
Total stockholders' equity............................. 10,265 9,219 18,696
--------- --------- -----------
Total liabilities and stockholders' equity............. $ 49,628 $ 43,338 $ 26,965
--------- --------- -----------
--------- --------- -----------
</TABLE>
See notes to consolidated financial statements.
F-21
<PAGE>
NOA HOLDING COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
TEN MONTHS ENDED
YEAR ENDED MAY 31 MARCH 31,
------------------------------- --------------------
1993 1994 1995 1995 1996
--------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues............................................... $ 33,503 $ 33,784 $ 37,054 $ 30,369 $ 28,964
Less agency commissions and discounts.................. 4,394 4,082 4,553 3,730 3,570
--------- --------- --------- --------- ---------
Net revenue............................................ 29,109 29,702 32,501 26,639 25,394
Operating expenses:
Production........................................... 6,876 6,466 6,472 5,416 4,697
Real estate rental................................... 6,763 7,143 7,556 6,212 6,021
Selling.............................................. 2,364 2,773 2,545 2,108 1,803
General and administrative........................... 4,951 5,294 5,388 4,391 3,509
Depreciation and amortization........................ 6,726 6,816 7,201 6,589 5,073
--------- --------- --------- --------- ---------
27,680 28,492 29,162 24,716 21,103
--------- --------- --------- --------- ---------
Operating profit....................................... 1,429 1,210 3,339 1,923 4,291
Interest............................................... 3,613 3,479 3,062 2,601 1,769
Gain on sale of assets................................. -- -- -- -- (9,983)
--------- --------- --------- --------- ---------
Net income (loss) before income taxes.................. (2,184) (2,269) 277 (678) 12,505
Income taxes........................................... -- -- -- -- 2,441
--------- --------- --------- --------- ---------
Net income (loss)...................................... (2,184) (2,269) 277 (678) 10,064
Dividends on preferred stock........................... (594) -- -- -- (587)
--------- --------- --------- --------- ---------
Net income (loss) applicable to common shares.......... $ (2,778) $ (2,269) $ 277 $ (678) $ 9,477
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
See notes to consolidated financial statements.
F-22
<PAGE>
NOA HOLDING COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PREFERRED STOCK CLASS A COMMON CLASS B COMMON
STOCK STOCK ADDITIONAL
--------------- ---------------- ------------------ PAID-IN RETAINED
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT
------ ------ --------- ----- ---------- ------ --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at May 31, 1992................. 1,000 $-- 81,693.70 $ 1 13,199.82 $-- $19,228 $ (3,612)
Dividends declared.................... -- -- -- -- -- -- -- (594)
Net loss.............................. -- -- -- -- -- -- -- (2,184)
------ ------ --------- ----- ---------- ------ --------- --------
Balance at May 31, 1993................. 1,000 -- 81,693.70 1 13,199.82 -- 19,228 (6,390)
Dividends declared.................... -- -- -- -- -- -- -- (305)
Dividends in-kind..................... -- -- -- -- -- -- 296 (296)
Net loss.............................. -- -- -- -- -- -- -- (2,269)
------ ------ --------- ----- ---------- ------ --------- --------
Balance at May 31, 1994................. 1,000 -- 81,693.70 1 13,199.82 -- 19,524 (9,260)
Dividends in-kind..................... -- -- -- -- -- -- 961 (656)
Proceeds from issuance of stock....... -- -- -- -- 3,852.63 -- -- --
Stock redemptions relative to the sale
of Pony Panels....................... -- -- (7,599.32) -- (9,754.26) -- (1,372) --
Repurchases of stock.................. -- -- (1,174.44) -- (1,126.03) -- (270) --
Compensation expense on stock
issuances............................ -- -- -- -- -- -- 14 --
Net income............................ -- -- -- -- -- -- -- 277
------ ------ --------- ----- ---------- ------ --------- --------
Balance at May 31, 1995................. 1,000 $-- 72,919.94 $ 1 6,172.16 $ -- $18,857 $ (9,639)
Net income (unaudited)................ -- -- -- -- -- -- -- 9,477
------ ------ --------- ----- ---------- ------ --------- --------
Balance at March 31, 1996 (unaudited)... 1,000 $ 72,919.94 $ 1 6,172.16 $-- $18,857 $ (162)
------ ------ --------- ----- ---------- ------ --------- --------
------ ------ --------- ----- ---------- ------ --------- --------
</TABLE>
See notes to consolidated financial statements.
F-23
<PAGE>
NOA HOLDING COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
TEN MONTHS ENDED
YEAR ENDED MAY 31 MARCH 31,
------------------------------- --------------------
1993 1994 1995 1995 1996
--------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)........................................ $ (2,184) $ (2,269) $ 277 $ (678) $ 9,477
Adjustments to reconcile to net cash provided by
operating activities:
Depreciation and amortization.......................... 6,726 6,816 7,201 6,589 5,073
Gain on sale of assets................................. -- -- -- -- (9,983)
Deferred tax provision................................. 550
Barter revenue resulting from purchases of equipment... (108) -- -- -- --
Stock compensation expense............................. -- -- 14 -- --
Changes in operating assets and liabilities:
Accounts receivable.................................. (444) (57) (320) 118 (7)
Other current and noncurrent assets.................. (36) 628 98 66 (123)
Accounts payable..................................... 191 144 45 (108) --
Accrued expenses, deferred revenue and other......... 5 (477) (59) (231) (452)
--------- --------- --------- --------- ---------
Net cash provided by operating activities................ 4,150 4,785 7,256 5,756 4,535
--------- --------- --------- --------- ---------
INVESTING ACTIVITIES
Capital expenditures for signs........................... (928) (1,459) (1,636) (1,146) (1,164)
Proceeds from disposal of signs.......................... 150 301 51 26 106
Other capital expenditures............................... -- (242) (338) (293) (235)
Proceeds from the sale of assets......................... -- -- 542 542 21,784
--------- --------- --------- --------- ---------
Net cash used in investing activities.................... (778) (1,400) (1,381) (871) 20,491
--------- --------- --------- --------- ---------
FINANCING ACTIVITIES
Net borrowings from bank................................. -- 200 -- -- 1,500
Dividends paid........................................... (594) (296) -- -- --
Increase in preferred stock.............................. -- -- -- -- 540
Principal payments of bank debt.......................... (3,100) (3,043) (5,157) (4,357) (27,700)
Payments to revise credit agreement...................... -- -- (669) (668) --
Principal payments on notes payable...................... -- -- (38) -- (90)
--------- --------- --------- --------- ---------
Net cash used in financing activities.................... (3,694) (3,139) (5,864) (5,025) (25,750)
--------- --------- --------- --------- ---------
Net cash provided........................................ (322) 246 11 (140) (724)
Cash at beginning at of period........................... 1,695 1,373 1,619 1,619 1,630
--------- --------- --------- --------- ---------
Cash at end of period.................................... $ 1,373 $ 1,619 $ 1,630 $ 1,479 $ 906
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
Supplemental schedule of noncash operating and investing activities:
The Company sold the net assets of Pony Panels on August 31, 1994 as part
of a stock redemption. The book value of the net assets sold totaled
approximately $1,900,000.
The Company incurred long-term obligations of $270,000 for stock
redemptions made during the year ended May 31, 1995.
Purchases of equipment resulting from barter agreements totaled $108,000
for the year ended May 31, 1993. There were no such purchases in 1994 and
1995.
See notes to consolidated financial statements.
F-24
<PAGE>
NOA HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The accompanying financial statements consolidate the accounts of NOA
Holding Company (formerly McCarty Holding Company, Inc.) and its wholly-owned
subsidiary, Naegele Outdoor Advertising Company. All intercompany transactions
have been eliminated in consolidation.
REVENUE RECOGNITION
Advertising revenue is recognized monthly over the period in which
advertisement displays are posted on the advertising structures. A full month's
revenue is recognized in the first month of posting. The direct costs incurred
to produce the related advertisements are expensed as incurred. Payments
received in advance of billings are recorded as deferred revenue.
PROPERTY AND EQUIPMENT
Property and equipment are carried at cost. Maintenance, repairs and
renewals, which neither materially add to the value of the property, nor
appreciably prolong its life, are charged to expense as incurred.
Depreciation of property and equipment is provided on declining balance and
straight-line methods over useful lives of 3 to 25 years.
INTANGIBLE ASSETS
Intangibles assets are carried and are amortized on the straight-line method
over useful lives of 5 to 40 years. Goodwill represents the cost of acquired
businesses in excess of amounts assigned to tangible and intangible assets at
the date of acquisition.
INVENTORIES
Inventories consist principally of supplies and are stated at lower of cost
or market as determined on a first-in, first-out basis.
INCOME TAXES
Income taxes are computed in accordance with Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes".
BARTER TRANSACTIONS
The Company occasionally enters into agreements to trade advertising space
for goods or services. Prior to December 8, 1992, the Company did not record
such arrangements as revenue unless the items bartered for were capital items.
The impact on revenues and expense of barter transactions not recorded in fiscal
1993 was $164,000.
RECLASSIFICATION
Certain amounts previously reported in 1993 and 1994 have been reclassified
to conform to the 1995 presentation.
INTERIM FINANCIAL INFORMATION
The interim financial information as of March 31, 1996 and 1995 and for the
ten months then ended has been prepared from the unaudited financial records of
the Company and, in the opinion of management, reflects all adjustments
necessary for a fair presentation of the financial position and results of
operations and of cash flows for the respective interim periods. All adjustments
were of a normal and recurring nature.
F-25
<PAGE>
NOA HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 1995
2. ACQUISITIONS
Effective January 19, 1994, the Company purchased Atlantic Outdoor
Advertising, Inc. for $1 million. The acquisition was recorded using the
purchase method of accounting for business combinations.
3. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
ESTIMATED
1994 1995 USEFUL LIFE
--------- --------- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Land............................................................. $ 1,235 $ 1,294 --
Advertising structures........................................... 24,825 25,256 20 years
Buildings........................................................ 491 491 10-25 years
Machinery and equipment.......................................... 1,180 1,201 6 years
Office furniture and equipment................................... 1,896 1,865 5-10 years
Automobiles and trucks........................................... 1,045 1,124 5 years
Other............................................................ 384 370 3-10 years
--------- ---------
31,056 31,601
Less accumulated depreciation.................................... 7,494 9,244
--------- ---------
$ 23,562 $ 22,357
--------- ---------
--------- ---------
</TABLE>
4. INTANGIBLES
The intangibles consisted of the following:
<TABLE>
<CAPTION>
ESTIMATED
1994 1995 USEFUL LIFE
--------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Advertising site leases............................................. $ 22,760 $ 21,762 7 years
Covenant not to compete............................................. 3,118 3,129 5 years
Goodwill............................................................ 2,159 2,030 40 years
Loan costs.......................................................... 2,028 2,697 6 years
Organization costs.................................................. 506 503 5 years
--------- ---------
30,571 30,121
Less accumulated amortization....................................... 13,066 17,747
--------- ---------
$ 17,505 $ 12,374
--------- ---------
--------- ---------
</TABLE>
The advertising site leases and covenant not to compete were recorded as a
result of an acquisition in May 1991. Their cost represents management's best
estimate of the fair value at the date of acquisition. The loan costs represent
fees paid to obtain a bank term loan and line of credit in 1991 and to refinance
the term loan and line of credit in August 1994. In connection with the loan
refinancing, the Company wrote-off approximately $1 million of unamortized loan
costs. The organization costs are management's estimate of the portion of
various fees paid which are allocable to this asset.
F-26
<PAGE>
NOA HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 1995
5. DEBT
Long-term debt consists of the following at May 31:
<TABLE>
<CAPTION>
1994 1995
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Revolving Credit Commitment under the Amended and Restated Credit
Agreement dated August 31, 1994....................................... $ -- $ 30,700
Term loans under the Credit Agreement dated as of May 22, 1991......... 35,657 --
Revolving Credit Loan under the Credit Agreement dated as of May 22,
1991.................................................................. 200 --
Subordinated note payable, annual installments of $52 through July
1997, plus quarterly interest payments at prime....................... -- 157
Subordinated notes payable, annual installments of $38 through March
1997, plus quarterly interest payments at prime....................... -- 75
--------- ---------
35,857 30,932
Less current portion................................................... 6,200 608
--------- ---------
$ 29,657 $ 30,324
--------- ---------
--------- ---------
</TABLE>
The Company amended and restated its bank Credit Agreement on August 31,
1994 and established a Revolving Credit Commitment of up to $38,000,000 and an
Acquisition Loan Commitment of up to $5,000,000. Both commitments decrease
quarterly each fiscal year and terminate on February 28, 2001. The available
Revolving Credit Commitment at May 31, 1995 was $32,800,000. At year end there
were no borrowings against the $5,000,000 Acquisition Loan Commitment. As part
of the Agreement, interest on the first $20,000,000 of debt is payable under an
Interest Rate Protect Plan ("IPP"). The IPP provides for a fixed rate of 6.28%
plus applicable margin (2.5% at May 31, 1995) for a period of three years and
began August 5, 1994. The Amended and Restated Credit Agreement also enables the
Company to borrow the remainder of the debt at a rate equal to either the Loan
Interbank Offered Rate (LIBOR) plus 3.0% or at the Lending Agent's base rate
plus 1.75%. In addition, the Company can realize lower borrowing rates if
certain financial results are achieved. At May 31, 1995, the interest rate in
effect was LIBOR plus 2.5%.
The Company is obligated to pay loan commitment fees to the banks equal to
one-half of 1% of the average daily unused portion of the commitments.
The bank has issued a letter of credit to the Company's insurance carrier
totaling $323,000 at the end of fiscal 1994 and 1995.
All common shares of the Company are pledged as collateral for the Credit
Agreement; accordingly, substantially all of the Company's assets are
effectively pledged as collateral.
The Credit Agreement contains certain restrictive covenants which the
Company must comply with on a continuing basis. The Company is restricted as to
borrowings, dividend payments, acquisitions, stock repurchases, sales of assets
and capital expenditures.
During fiscal 1995, the Company entered into certain stock redemption
agreements to repurchase 1,174.44 shares of Class A Common Stock and 1,126.03
shares of Class B Common Stock. As part of the agreements, the Company issued
subordinated promissory notes totaling approximately $270,000.
Total interest paid on all debt was $3,849,000, $3,528,000 and $3,468,000
for fiscal 1993, 1994 and 1995, respectively.
F-27
<PAGE>
NOA HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 1995
5. DEBT (CONTINUED)
Aggregate annual maturities of long-term debt during the five-year period
ending May 31, 2000 are (in thousands):
<TABLE>
<S> <C>
Year ending May 31:
1996............................................................. $ 608
1997............................................................. 4,365
1998............................................................. 6,227
1999............................................................. 7,600
2000............................................................. 7,600
</TABLE>
6. INCOME TAXES
At May 31, 1995, the Company had net operating loss carryforwards for
federal income tax purposes of approximately $8.0 million. These carryforwards
expire between May 31, 2006 and 2010. During the current fiscal year, the
Company utilized approximately $625,000 of net operating loss carryforwards to
offset current year taxable income.
Components of deferred tax assets and liabilities are (in thousands):
<TABLE>
<CAPTION>
1994 1995
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Loss carryforward...................................................... $ 3,403 $ 3,145
Accrued expenses....................................................... 249 207
Loan cost amortization................................................. -- 343
--------- ---------
3,652 3,695
Deferred tax liabilities:
Depreciation........................................................... 857 1,090
Bad debt allowance..................................................... 33 36
--------- ---------
890 1,126
--------- ---------
Net deferred tax assets before valuation allowance....................... 2,762 2,569
Less valuation allowance................................................. 2,762 2,569
--------- ---------
Net deferred tax assets.................................................. $ -- $ --
--------- ---------
--------- ---------
</TABLE>
7. EMPLOYEE BENEFIT PLAN
The Company has a voluntary defined contribution 401(k) savings and
retirement plan for the benefit of its nonunion employees who may contribute
from 3% to 10% of their compensation. The Company has no obligation to
contribute to the plan and made no contribution for fiscal 1993, 1994 and 1995.
8. REDEEMABLE PREFERRED STOCK
The preferred stock is redeemable, subject to certain restrictions, by the
Company at a price equal to its value as carried on the financial statements.
The Company also has the right to convert the preferred stock to debt at a rate
of $1,000 principal of debt to $1,000 liquidation value of the preferred stock.
The liquidation value of each of share of preferred stock is $7,699 and $8,660
at May 31, 1994 and 1995, respectively. After May 22, 2001, the preferred
shareholders have the right to control the Board of Directors for the purpose of
selling the Company.
F-28
<PAGE>
NOA HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 1995
8. REDEEMABLE PREFERRED STOCK (CONTINUED)
Subject to certain bank restrictions, dividends on the preferred shares are
payable semi-annually at the rate of 8% either in cash or in-kind payments which
increase the liquidation value of the preferred stock. Should operating profits
exceed certain targets, the dividend rate increases to 12%. The minimum targets
for fiscal 1996 are $9,259 for each six month period.
9. COMMON STOCK AND WARRANT
The Class B common stock is entirely owned by key employees and officers.
The ownership vests over a period of five years. In the event of a sale or
liquidation of the Company, the Class A common stock has a 10% return preference
over the Class B common stock.
During fiscal 1995, the Company implemented a stock purchase plan for its
key employees. Under the plan, 4,253 shares of Class B common stock will be
granted to the employees at a purchase price of $.10 per share. The shares will
vest over a five year period. Approximately 3,853 shares had been granted by May
31, 1995.
Additionally, a warrant to purchase 5,000 shares of Class A common stock at
$144.75 per share was outstanding at May 31, 1994 and 1995. The warrant expires
on May 22, 2006 and has no voting rights.
10. SALES OF PONY PANELS
Only July 22, 1994, the Company entered into an agreement with The McCarty
Company ("McCarty") under which McCarty acquired all of the assets of the Pony
Panels division (excluding cash) in exchange for McCarty's assumption of Pony
Panel's liabilities, delivery of 7,599.32 shares of Class A Common Stock and
9,754.26 shares of Class B Common Stock of NOA Holding Company, and cash in the
amount of $542.
11. COMMITMENTS AND CONTINGENCIES
The City of Jacksonville, Florida has enacted a number of ordinances which
would require the removal of outdoor advertising structures which are not
located on federal aid primary and/or interstate highways. Management has
vigorously contested the validity of these ordinances for the last four years.
In March 1995, the Company reached a settlement with the City of Jacksonville
and Capsigns, Inc. and has agreed to remove 711 billboards faces over a period
of 20 years.
The Company is also involved in litigation with various other municipalities
and regulatory agencies as the result of condemnation proceedings and licensing
and permit renewal disputes, which could result in the removal of advertising
structures.
Management believes, based upon the information currently available, that
the settlement with the City of Jacksonville and Capsigns, Inc., along with the
outcomes of the various actions described above, will not have a material
adverse effect on the consolidated financial condition or results of operations
of the Company.
During fiscal 1995, the Company became a party to certain material
litigation. The action alleges that a former billposting employee, while in the
process of posting a billboard, fell to the ground (because the platform on
which he was working gave way) and suffered significant injuries. It is alleged
that these injuries have precluded him from seeking any gainful employment. This
matter involves a significant level issue concerning the exclusive remedy
provision of workers' compensation law in Minnesota. Minnesota law provides that
an employer providing workers' compensation benefits is immune from tort
liability. It is the Company's contention that, because the Company provided
workers' compensation benefits to the former employee, the Company is entitled
to tort immunity.
F-29
<PAGE>
NOA HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 1995
11. COMMITMENTS AND CONTINGENCIES (CONTINUED)
The Plaintiff disputes the Company's interpretation of the law and argues
that the tort suit can go forward. This matter was argued before a trial judge
on February 28, 1995, who ruled in favor of the Plaintiff. An appeal to the
Minnesota Court of Appeals is currently pending.
The Plaintiff has also made a demand of approximately $4.9 million for lost
wages and pain and suffering. An attempt to amend this complaint and state a
claim for punitive damages has also been made. The Court has not yet acted on
the amendment.
At this time it is not possible to estimate the probable outcome of these
actions and, accordingly, the Company has not established a reserve for the
outcome of this litigation.
The Company leases the facility in Minneapolis from the Company's preferred
stockholder with annual rents of $480,000, exclusive of operating costs, which
commenced May of 1993 and continues through May of 2001.
The Company is required to make the following minimum operating lease
payments for equipment and facilities under noncancelable lease agreements (in
thousands):
<TABLE>
<S> <C>
Year ending May 31:
1996............................................................. $ 552
1997............................................................. 552
1998............................................................. 552
1999............................................................. 557
2000............................................................. 557
Thereafter....................................................... 704
---------
$ 3,474
---------
---------
</TABLE>
Rent expense for operating leases for the years ended May 31, 1993, 1994 and
1995 totaled $6,950,000, $6,837,000 and $7,268,000, respectively.
F-30
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Universal Outdoor Holdings, Inc.
We have audited the accompanying statement of revenues and direct expenses
of Ad-Sign for the year ended December 31, 1995. This statement is the
responsibility of the company's management. Our responsibility is to express an
opinion on this statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statement of revenues and direct expenses
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the statement of revenues and
expenses. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the statement of revenues and direct expenses audited by us
presents fairly, in all material respects, the revenues and direct expenses of
Ad-Sign for the year ended December 31, 1995, in conformity with generally
accepted accounting principles.
PRICE WATERHOUSE LLP
June 14, 1996
Chicago, Illinois
F-31
<PAGE>
AD-SIGN
STATEMENT OF REVENUES AND DIRECT EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C>
Gross revenues..................................................... $ 2,804
Less agency commissions............................................ 224
---------
Net revenues..................................................... 2,580
---------
---------
Direct expenses:
Direct advertising expenses...................................... 338
General and administrative expenses.............................. 402
Depreciation and amortization.................................... 454
---------
1,194
---------
Operating income................................................... $ 1,386
---------
---------
</TABLE>
See accompanying notes to the statement of revenues and direct expenses.
F-32
<PAGE>
AD-SIGN
NOTES TO THE STATEMENT OF REVENUES AND DIRECT EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1995
NOTE 1 -- BASIS OF PRESENTATION AND DESCRIPTION OF THE BUSINESS:
The Statement of Revenues and Direct Expenses for the year ended December
31, 1995 presents revenues from contracts for the 160 advertising display faces
acquired from Ad-Sign, Inc. by Universal Outdoor Holdings, Inc. (Universal) in
the first quarter of 1996. This financial statement excludes operating expenses
which are not directly related to the assets acquired by Universal. Although
Universal only acquired certain assets of Ad-Sign, Inc., this acquisition meets
the criteria for a "business acquired" in accordance with Regulation S-X, Rule
3-05 of the Securities Exchange Act of 1934.
Ad-Sign is an outdoor advertising company which owns and operates outdoor
advertising display faces principally in Chicago, Illinois. Ad-Sign sells
outdoor advertising space to national, regional and local advertisers.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES:
The preparation of the statement of revenues and direct expenses in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of revenues and
expenses during the reported period. Actual results could differ from those
estimates. The significant accounting policies used in the preparation of these
financial statements are as follows.
REVENUES AND DIRECT EXPENSES
Advertising revenues are generated from contracts with advertisers generally
covering periods of one to twelve months. Ad-Sign recognizes revenues ratably
over the contract term and defers customer prepayment of advertising fees. Costs
incurred for the production of outdoor advertising displays are recognized in
the initial month of the contract or as incurred during the contract period.
PREPAID LAND RENTS
Most of Ad-Sign's outdoor advertising structures are located on leased land.
Land rents are typically paid in advance for periods ranging from one to twelve
months. Prepaid land rents are expenses ratably over the related rental term.
NOTE 3 -- SUBSEQUENT EVENT:
In the first quarter of 1996, Ad-Sign, Inc. entered into an asset purchase
agreement with Universal Outdoor Holdings, Inc. Under this agreement, Universal
purchased 160 advertising display faces in the Chicago market for $12.5 million.
F-33
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
POA Acquisition Corporation
In our opinion, the accompanying balance sheets and the related statements
of operations, of changes in shareholders' equity and of cash flows present
fairly, in all material respects, the financial position of POA Acquisition
Corporation at September 30, 1996 and December 31, 1995 and 1994, and the
results of their operations and their cash flows for the nine month period ended
September 30, 1996 and for each of the two years in the period ended December
31, 1995 in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
Chicago, Illinois
February 28, 1997
F-34
<PAGE>
POA ACQUISITION CORPORATION
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
-------------- ------------------------------
1996 1995 1994
-------------- -------------- --------------
<S> <C> <C> <C>
Current assets:
Cash.......................................................... $ 3,534,128 $ 811,352 $ 727,690
Accounts receivable........................................... 6,746,361 5,631,320 4,482,520
Prepaid expenses.............................................. 2,576,998 1,822,964 1,698,539
Prepaid income taxes.......................................... 43,875 43,875 51,629
Deferred income taxes......................................... 3,314,000 3,213,848 2,596,951
-------------- -------------- --------------
Total current assets........................................ 16,215,362 11,523,359 9,557,329
Deferred income taxes........................................... 10,040,258 11,835,410 14,269,374
Property, plant and equipment, net.............................. 32,821,811 23,005,058 20,112,931
Other assets.................................................... 38,741,579 41,854,491 46,266,092
-------------- -------------- --------------
$ 97,819,010 $ 88,218,318 $ 90,205,726
-------------- -------------- --------------
-------------- -------------- --------------
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Accounts payable and accrued expenses......................... $ 4,289,460 $ 2,992,112 $ 3,432,619
Current portion of long-term debt............................. 9,109,419 9,109,419 8,061,214
Notes payable................................................. 416,000 -- --
-------------- -------------- --------------
Total current liabilities................................... 13,814,879 12,101,531 11,493,833
Long-term debt, less current portion............................ 71,682,647 65,603,203 70,210,555
Shareholder's equity
Common stock, $.01 par value:
Authorized shares -- 2,000,000
Issued and outstanding shares -- 100 for all periods
presented.................................................. 1 1 1
Additional paid-in capital.................................... 45,419,909 45,419,909 45,419,909
Accumulated deficit........................................... (33,098,426) (34,906,326) (36,918,572)
-------------- -------------- --------------
Total shareholder's equity.................................. 12,321,484 10,513,584 8,501,338
-------------- -------------- --------------
$ 97,819,010 $ 88,218,318 $ 90,205,726
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
See accompanying notes to financial statements.
F-35
<PAGE>
POA ACQUISITION CORPORATION
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE NINE
MONTHS ENDED FOR THE YEARS ENDED DECEMBER
SEPTEMBER 30, 31,
-------------- ------------------------------
1996 1995 1994
-------------- -------------- --------------
<S> <C> <C> <C>
Advertising revenues............................................ $ 38,380,932 $ 45,830,359 $ 41,737,266
Less commissions and discounts.................................. (3,520,734) (4,393,319) (3,865,492)
-------------- -------------- --------------
34,860,198 41,437,040 37,871,774
-------------- -------------- --------------
Expenses:
Operating..................................................... 10,077,666 11,775,891 11,151,065
Selling, general and administrative........................... 9,307,799 10,698,212 10,283,413
Amortization.................................................. 3,811,034 5,061,849 5,208,589
Depreciation.................................................. 2,547,946 2,545,182 2,878,346
-------------- -------------- --------------
25,744,445 30,081,134 29,521,413
-------------- -------------- --------------
Income from operations.......................................... 9,115,753 11,355,906 8,350,361
-------------- -------------- --------------
Other income (expense):
Interest expense.............................................. (5,548,379) (7,346,241) (7,012,646)
Loss on sale of a division.................................... -- -- (494,824)
Loss on disposal of property and equipment, net............... (346,974) (64,332) (329,056)
Interest and other income..................................... 367,500 42,244 24,412
-------------- -------------- --------------
(5,527,853) (7,368,329) (7,812,114)
-------------- -------------- --------------
Income before income taxes and extraordinary item............... 3,587,900 3,987,577 538,247
-------------- -------------- --------------
Provision for income taxes:
Current....................................................... 150,000 158,264 37,572
Deferred...................................................... 1,630,000 1,817,067 1,256,910
-------------- -------------- --------------
1,780,000 1,975,331 1,294,482
-------------- -------------- --------------
Income (loss) before extraordinary item......................... 1,807,900 2,012,246 (756,235)
Extraordinary item:
Loss on early extinguishment of debt, net of income tax
expense of ($147,350)........................................ -- -- (244,552)
-------------- -------------- --------------
Net income (loss)............................................... $ 1,807,900 $ 2,012,246 $ (1,000,787)
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
See accompanying notes to financial statements.
F-36
<PAGE>
POA ACQUISITION CORPORATION
STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
TOTAL
COMMON PREFERRED ADDITIONAL ACCUMULATED SHAREHOLDER'S
STOCK STOCK PAID-IN CAPITAL DEFICIT EQUITY
--------- ------------ --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1993.......... $ 1 $ 12,237 $ 57,644,726 $ (28,262,869) $ 29,394,095
Net loss for 1993................. -- -- -- (262,576) (262,576)
--------- ------------ --------------- --------------- ---------------
Balances at December 31, 1993....... 1 12,237 57,644,726 (28,525,445) 29,131,519
Net loss for 1994................. -- -- -- (1,000,787) (1,000,787)
Issuance of preferred stock....... -- 550,000 4,950,000 -- 5,500,000
Redemption of preferred stock..... -- (562,237) (17,174,817) -- (17,737,054)
Cumulative preferred stock
dividends........................ -- -- -- (7,392,340) (7,392,340)
--------- ------------ --------------- --------------- ---------------
Balance at December 31, 1994........ 1 -- 45,419,909 (36,918,572) 8,501,338
Net income for 1995............... -- -- -- 2,012,246 2,012,246
--------- ------------ --------------- --------------- ---------------
Balance at December 31, 1995........ 1 -- 45,419,909 (34,906,326) 10,513,584
Net income for the nine months ended
September 30, 1996................. -- -- -- 1,807,900 1,807,900
--------- ------------ --------------- --------------- ---------------
Balance at September 30, 1996 $ 1 $ -- $ 45,419,909 $ (33,098,426) $ 12,321,484
--------- ------------ --------------- --------------- ---------------
--------- ------------ --------------- --------------- ---------------
</TABLE>
See accompanying notes to financial statements.
F-37
<PAGE>
POA ACQUISITION CORPORATION
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE NINE
MONTHS ENDED FOR THE YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
-------------- ---------------------------
1996 1995 1994
-------------- ------------- ------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)..................................................... $ 1,807,900 $ 2,012,246 $ (1,000,787)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Amortization........................................................ 3,811,034 5,061,849 5,208,589
Depreciation........................................................ 2,547,946 2,545,182 2,878,346
Deferred income taxes............................................... 1,695,000 1,817,067 1,123,867
Loss on sale of division............................................ -- -- 494,824
Loss on disposal of property and equipment, net..................... 346,977 64,332 329,056
Provision for bad debts............................................. 176,000 64,285 375,190
Changes in operating assets and liabilities:
Increase in accounts receivable................................... (957,596) (1,213,085) (523,087)
Increase in prepaid expenses...................................... (574,486) (124,425) (253,802)
Decrease (increase) in prepaid income taxes....................... -- 7,754 (27,786)
Decrease (increase) in other assets............................... (126,183) (500,248) (2,511,167)
(Increase) decrease in accounts payable and accrued expenses...... 1,253,284 (440,507) 772,507
-------------- ------------- ------------
Net cash provided by operating activities............................. 9,979,876 9,294,450 6,865,750
-------------- ------------- ------------
INVESTING ACTIVITIES
Proceeds from sale of division........................................ -- -- 2,000,000
Proceeds from disposal of property and equipment...................... 367,500 227,854 101,463
Payments for acquisitions net of cash acquired........................ (9,898,338) -- --
Purchases of property, plant and equipment............................ (3,805,706) (5,729,495) (1,787,528)
Purchases of intangibles.............................................. -- (150,000) --
-------------- ------------- ------------
Net cash provided by (used in) investing activities................... (13,336,544) (5,651,641) 313,935
-------------- ------------- ------------
FINANCING ACTIVITIES
Proceeds from long-term borrowings.................................... 13,147,633 4,500,000 83,023,442
Payments of long-term debt............................................ (7,068,189) (8,059,147) (70,696,101)
Proceeds from issuance of preferred stock............................. -- -- 5,500,000
Redemption of preferred stock......................................... -- -- (17,737,054)
Dividends paid........................................................ -- -- (7,392,340)
-------------- ------------- ------------
Net cash (used in) provided by financing activities................... 6,079,444 (3,559,147) (7,302,053)
-------------- ------------- ------------
Net increase (decrease) in cash....................................... 2,722,776 83,662 (122,368)
Cash at beginning of year............................................. 811,352 727,690 850,058
-------------- ------------- ------------
Cash at end of year................................................... 3,534,128 $ 811,352 $ 727,690
-------------- ------------- ------------
-------------- ------------- ------------
</TABLE>
See accompanying notes to financial statements.
F-38
<PAGE>
POA ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 1 -- ORGANIZATION
On January 31, 1989, Outdoor Advertising Holdings, Inc. (Holdings)
contributed its shares of POA Acquisition Corporation (Company) common stock,
along with cash, to Peterson Acquisition, Inc. (Acquisition), a wholly-owned
subsidiary of Holdings. Acquisition immediately purchased the Company's
outstanding common shares under the terms of an Agreement and Plan of Merger
dated December 21,1988. Acquisition was subsequently merged into the Company and
its outstanding shares were converted into one hundred shares of the Company's
common stock.
The merger was accounted for as a purchase with a purchase price of
$33,279,550 (including acquisition costs of $4,448,023). Certain individuals,
who were former shareholders of the Company, own shares of Holdings and are
included in the management of Holdings and the Company. The Company allocated
the purchase price among the assets acquired and liabilities assumed, based upon
the respective fair values of the assets and liabilities, with the excess
purchase price recorded as goodwill.
The Company provides outdoor advertising services in the states of Florida,
South Carolina and Tennessee. Approximately 70% of the business is in the State
of Florida.
NOTE 2 -- ACCOUNTING POLICIES
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost. Depreciation for financial
reporting purposes is computed by the straight-line method over the estimated
useful lives of the various classes of assets as follows:
<TABLE>
<S> <C>
Buildings...................................................... 28-30 years
Advertising structures......................................... 12 years
Equipment...................................................... 2-7 years
</TABLE>
The Company uses the accelerated Cost Recovery System and the Modified
Accelerated Cost Recovery System for income tax reporting purposes.
OTHER ASSETS
Loan costs incurred in connection with obtaining financing have been
deferred and are being amortized over the life of the loans. Goodwill represents
the excess of the cost of acquired businesses over the fair market value at
acquisition of the specifically identified assets.
Intangible assets are being amortized over the following periods:
<TABLE>
<S> <C>
Advertising structure leases.................................... 8-10 years
Goodwill........................................................ 40 years
Deferred loan costs............................................. 1-6 years
</TABLE>
INCOME TAXES
The Company follows the liability method of accounting for income taxes.
Deferred income taxes relate to the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.
ADVERTISING REVENUE
Advertising revenue is recognized ratably on a monthly basis over the period
in which advertisement displays are posted on the advertising structures.
ADVERTISING STRUCTURE RENTALS
Advertising structure lease rentals are generally paid in advance and
charged to expense over the life of the lease.
F-39
<PAGE>
POA ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 -- ACCOUNTING POLICIES (CONTINUED)
INTEREST RATE SWAP AND INTEREST CAP AGREEMENTS
The Company has entered into interest rate swap and interest rate cap
agreements to effectively convert a portion of its variable-rate borrowings into
fixed-rate obligations. The amount to be received or paid related to these
agreements is recognized over the lives of the agreements as an adjustment to
interest expense.
BARTER TRANSACTIONS
The Company enters into agreements to provide outdoor advertising services
in exchange for various goods and services of their customers. Revenue
recognized from these transactions approximated $1,183,354, $1,497,000 and
$830,000 for the nine month period ended September 30, 1996 and for the years
ended December 31, 1995 and 1994, respectively.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
FINANCIAL INSTRUMENTS
The carrying amounts of cash, accounts receivable, accounts payable and
long-term debt at September 30, 1996 approximate fair value.
ACCOUNTING STANDARD
In March 1995, the FASB issued Statement No. 121 ("SFAS No. 121"),
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," which requires impairment losses to be recorded on long-lived
assets used in operations when indicators of impairment are present and the
undiscounted cash flows estimated to be generated by those assets are less than
the assets' carrying amount. Statement 121 also addresses the accounting for
long-lived assets that are expected to be disposed of. As of September 30, 1996
there were no indications of impairment that would effect the carrying value of
assets.
NOTE 3 -- ACCOUNTS RECEIVABLE
Accounts receivable consist of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
-------------- ----------------------------
1996 1995 1994
-------------- ------------- -------------
<S> <C> <C> <C>
Trade.................................................... $ 7,308,087 $ 5,701,472 $ 4,493,568
Employee notes and other................................. 293,356 463,300 458,119
-------------- ------------- -------------
7,601,443 6,164,772 4,951,687
Less allowance for uncollectible accounts................ (855,082) (533,452) (469,167)
-------------- ------------- -------------
$ 6,746,361 $ 5,631,320 $ 4,482,520
-------------- ------------- -------------
-------------- ------------- -------------
</TABLE>
Included in employee notes and other are notes and accrued interest
aggregating $109,176 as of September 30, 1996 and $279,473 and $299,269 as of
December 31, 1995 and 1994, respectively, from common shareholders.
F-40
<PAGE>
POA ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 4 -- PREPAID EXPENSES
Prepaid expenses consist of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
-------------- ----------------------------
1996 1995 1994
-------------- ------------- -------------
<S> <C> <C> <C>
Lease rental payments.................................... $ 1,476,562 $ 1,261,795 $ 1,065,874
Maintenance supplies..................................... 518,009 94,581 133,268
Other.................................................... 582,427 466,588 499,397
-------------- ------------- -------------
$ 2,576,998 $ 1,822,964 $ 1,698,539
-------------- ------------- -------------
-------------- ------------- -------------
</TABLE>
NOTE 5 -- PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost and consist of the
following:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
--------------- --------------------------------
1996 1995 1994
--------------- --------------- ---------------
<S> <C> <C> <C>
Land................................................ $ 2,466,681 $ 2,466,681 $ 2,466,681
Buildings........................................... 2,077,423 2,074,084 2,011,256
Advertising structures.............................. 42,876,007 31,857,123 27,446,874
Equipment........................................... 4,612,869 3,602,942 2,978,167
--------------- --------------- ---------------
52,032,980 40,000,830 34,902,978
Less accumulated depreciation....................... (19,211,169) (16,995,772) (14,790,047)
--------------- --------------- ---------------
$ 32,821,811 $ 23,005,058 $ 20,112,931
--------------- --------------- ---------------
--------------- --------------- ---------------
</TABLE>
NOTE 6 -- OTHER ASSETS
Other assets consist of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
--------------- --------------------------------
1996 1995 1994
--------------- --------------- ---------------
<S> <C> <C> <C>
Goodwill............................................ $ 45,811,889 $ 45,239,949 $ 45,239,949
Advertising structure leases, at cost............... 26,204,360 26,096,863 26,021,863
Non-compete and other, at cost...................... 6,514,322 6,495,641 6,420,390
Deferred loan costs................................. 3,403,069 3,403,065 2,903,068
--------------- --------------- ---------------
81,933,640 81,235,518 80,585,270
Less accumulated amortization....................... (43,192,061) (39,381,027) (34,319,178)
--------------- --------------- ---------------
$ 38,741,579 $ 41,854,491 $ 46,266,092
--------------- --------------- ---------------
--------------- --------------- ---------------
</TABLE>
NOTE 7 -- ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
-------------- ----------------------------
1996 1995 1994
-------------- ------------- -------------
<S> <C> <C> <C>
Trade accounts payable................................... $ 295,576 $ 1,285,008 $ 1,794,814
Accrued compensation and other........................... 3,964,353 1,677,573 1,623,766
Accrued interest......................................... 29,531 29,531 14,039
-------------- ------------- -------------
$ 4,289,460 $ 2,992,112 $ 3,432,619
-------------- ------------- -------------
-------------- ------------- -------------
</TABLE>
F-41
<PAGE>
POA ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 8 -- LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
-------------- ------------------------------
1996 1995 1994
-------------- -------------- --------------
<S> <C> <C> <C>
Notes payable to banks................................ $ 80,650,000 $ 74,500,000 $ 78,000,000
Other long-term debt.................................. 142,066 212,622 271,769
-------------- -------------- --------------
80,792,066 74,712,622 78,271,769
Less amounts due within one year...................... (9,109,419) (9,109,419) (8,061,214)
-------------- -------------- --------------
$ 71,682,647 $ 65,603,203 $ 70,210,555
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
In January 1994, the Company refinanced its notes payable to banks, paid off
the unsecured subordinated notes payable to investment banking firms and
redeemed the 14% Series A senior redeemable cumulative preferred stock with term
notes and revolving credit notes totaling $83,000,000 and $7,000,000,
respectively. Notes payable to banks are term notes and revolving credit notes
are secured by all assets and common stock of the Company. Interest is charged
on borrowings under the term notes and revolving credit notes at the Company's
discretion at either a Eurodollar base rate or an ABR rate determined in
accordance with the terms of the Credit Agreement. Interest on the term notes is
currently charged at a Eurodollar base rate determined at each interest renewal
period. The December 31, 1995 term notes consist of a $54,500,000 borrowing at
8.19% and a $20,000,000 borrowing at 10.94%. On December 29, 1995, the Company
amended its Credit Agreement to allow for an additional $50,000,000 line of
credit available for acquisitions. No borrowings under this amendment have
occurred. Long-term debt maturities over the next five years are approximately
as follows: 1996 -- $9,109,419: 1997 -- $11,051,000: 1998 -- $13,048,000: 1999
- -- $21,505,000: 2000 -- $20,000,000 and $0 thereafter.
The refinancing of the notes payable in 1994 resulted in an extraordinary
loss of $391,902 as a result of writing-off the unamortized portion of deferred
loan costs related to those borrowings.
The Company entered into interest rate swap and interest rate cap agreements
that expire in 1997 with a notional amount of $40,000,000 at December 31, 1995
to reduce the impact of changes in interest rates on its variable rate long-term
debt.
The counterpart to the agreements is a major financial institution. In the
event a counterparty fails to meet the terms of an interest rate swap or
interest rate cap agreement, the Company's exposure is limited to the interest
rate differential. Credit loss from counterparty nonperformance is not
anticipated.
The Company paid approximately $5,577,909, $7,331,000 and $7,570,000 in cash
for interest during the nine month period ended September 30, 1996 and during
the years ended December 31, 1995 and 1994, respectively.
NOTE 9 -- EMPLOYEE BENEFITS PLANS
The Company has a discretionary defined contribution plan which provides
retirement benefits to substantially all employees. The contributions made to
this plan were approximately $75,000 for the nine month period ended September
30, 1996 and $100,000 in 1995 and 1994.
NOTE 10 -- INCOME TAXES
At September 30, 1996, the Company had federal and state net operating loss
carryforwards for income tax purposes available to offset future taxable income
through 2006 to 2009. The Company was subject to alternative minimum tax which
is imposed at a 20% rate on the corporation's alternative minimum taxable income
in 1995. The alternative minimum tax expense for 1995 was $132,800. The tax paid
will be allowed as a credit carryover against regular tax in future periods. For
financial reporting
F-42
<PAGE>
POA ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 10 -- INCOME TAXES (CONTINUED)
purposes, no valuation allowance has been recognized to offset the deferred tax
assets related to these carryforwards. The tax benefit of any net operating
losses which are not utilized will be recognized as a current year expense in
the year of expiration.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets as of September 30, 1996, are attributable to
the bad debt allowance, depreciation and amortization differences, alternative
minimum tax, and net operating loss carryforwards.
Components of the provision for income taxes for each period are as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
SEPTEMBER 30, ----------------------------
1996 1995 1994
-------------- ------------- -------------
<S> <C> <C> <C>
Current
Federal................................................ $ 125,000 $ 132,754 $ 11,522
State.................................................. 25,000 25,510 26,050
-------------- ------------- -------------
Total current............................................ $ 150,000 $ 158,264 $ 37,572
-------------- ------------- -------------
-------------- ------------- -------------
Deferred:
Federal................................................ $ 1,375,000 $ 1,532,587 $ 1,073,054
State.................................................. 255,000 284,480 183,856
-------------- ------------- -------------
Total deferred........................................... $ 1,630,000 $ 1,817,067 $ 1,256,910
-------------- ------------- -------------
-------------- ------------- -------------
</TABLE>
The reconciliation of the statutory federal income tax rate to the Company's
effective rate is as follows:
<TABLE>
<CAPTION>
NINE-MONTH YEAR ENDED
PERIOD ENDED DECEMBER 31,
SEPTEMBER 30, --------------------
1996 1995 1994
-------------- --------- ---------
<S> <C> <C> <C>
Income tax expense at the statutory rate......................... 34.0% 34.0% 34.0%
Goodwill......................................................... 9.8% 9.7% 175.1%
State taxes, net of federal benefit.............................. 5.2% 5.1% 25.7%
Other............................................................ 0.6% 0.7% 5.7%
------- --------- ---------
49.6% 49.5% 240.5%
------- --------- ---------
------- --------- ---------
</TABLE>
Components of deferred tax assets for each year are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
SEPTEMBER 30, ------------------------------
1996 1995 1994
-------------- -------------- --------------
<S> <C> <C> <C>
Deferred tax assets:
Net operating loss carryforward..................... $ 3,000,000 $ 3,000,000 $ 2,444,000
Charitable contribution carryforward................ -- 2,050 --
Bad debt allowance.................................. 344,000 254,347 176,407
Accrued liabilities................................. 50,000 39,782 90,728
Property and equipment.............................. 11,000 141,450 87,150
Alternative minimum tax credit...................... 372,000 276,112 148,370
Net operating loss carryforward..................... 11,434,258 13,391,143 16,269,565
-------------- -------------- --------------
Total deferred tax assets............................. $ 15,211,258 $ 17,104,884 $ 19,216,220
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
The Company paid income taxes of $149,000 and $148,000 in 1995 and 1994,
respectively.
F-43
<PAGE>
POA ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 11 -- COMMITMENTS AND CONTINGENCIES
LEASES
The Company leases office space under various non-cancelable operating
leases. Minimum lease payments under these leases are approximately as follows:
1996 -- $28,750; 1997 -- $136,000 and $0 thereafter. The Company also leases
land for advertising structures under operating leases which are cancelable or
which have terms of less than one year.
Rent expense charged to operations amounted to approximately $6,548,000 for
the nine months ended September 30, 1996 and $7,461,000 and $6,947,000 in 1995
and 1994, respectively.
NOTE 12 -- ACQUISITIONS
During the year ended December 31, 1995, the Company acquired the assets of
three separate advertising entities. Under the terms of the transactions, the
Company acquired certain fixed assets, customer lists and advertising leases of
these entities for a combined total of $3,710,000. In connection with the
acquisition of the customer lists and advertising leases, intangible assets were
recorded at a total of $150,000. The customer lists and advertising leases were
assigned useful lives of three and ten years, respectively.
During the nine months ended September 30, 1996, the Company acquired
certain fixed assets, customer lists and advertising leases for a combined total
of $10.0 million. In connection with the acquisition, intangible assets of
approximately $572,000 were recorded. The customer lists and advertising leases
were assigned useful lives of three and ten years, respectively. Goodwill is
amortized over 40 years.
NOTE 13 -- SALE OF THE COMPANY
On October 8, 1996, the Company's parent, Holdings, sold the outstanding
capital stock of Holdings for approximately $240,000,000 in cash.
F-44
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of
Revere Holding Corp. and Subsidiaries:
We have audited the accompanying consolidated balance sheet of Revere
Holding Corp. (a Maryland corporation) and subsidiaries as of December 31, 1995,
and the related consolidated statements of operations, stockholders' equity and
cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Revere Holding Corp. and
Subsidiaries, as of December 31, 1995, and the results of their operations and
their cash flows for the year then ended, in conformity with generally accepted
accounting principles.
Arthur Andersen LLP
Baltimore, Maryland,
March 8, 1996
F-45
<PAGE>
REVERE HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF AS OF
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ ---------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents (Note 2)........................ $ 1,140,569 $ 511,605
Cash held in escrow (Note 17)............................. 400,000 20,447,420
Accounts receivable -- trade, net of allowance for
doubtful accounts of $316,000 and $445,000,
respectively............................................. 5,349,808 5,336,129
Accounts receivable -- barter, net of allowance for
doubtful accounts of $11,000 and $9,000, respectively
(Note 2)................................................. 207,728 318,577
Accounts receivable -- other.............................. 99,287 105,831
Inventories (Note 2)...................................... 259,522 318,193
Prepaid expenses --
Sign site leases (Note 12).............................. 1,958,745 1,622,871
Other................................................... 689,174 395,757
Deferred income taxes..................................... 687,000 627,000
------------ ---------------
Total current assets.................................. 10,791,833 29,683,383
PROPERTY AND EQUIPMENT, net (Notes 2 and 4)................. 38,899,139 28,046,022
GOODWILL, net of accumulated amortization of $570,000 and
$984,000, respectively (Note 3)........................... 22,668,371 21,809,424
OTHER ASSETS, net (Notes 2 and 5)........................... 16,383,846 13,829,535
------------ ---------------
Total assets.......................................... $88,743,189 $ 93,368,364
------------ ---------------
------------ ---------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable -- trade................................. $ 605,780 $ 319,133
Accounts payable -- barter (Note 2)....................... 258,698 371,589
Income taxes payable...................................... 21,000 2,738,000
Accrued interest expense.................................. 31,025 382,026
Deferred revenue.......................................... 611,134 717,095
Accrued bonuses........................................... 547,216 178,058
Accrued health benefits................................... 434,463 330,284
Accrued liabilities (Note 2).............................. 2,701,525 1,750,886
Current portion of long-term debt (Note 6)................ 2,851,765 3,305,379
Current portion of capital lease obligations (Note 12).... 234,016 220,392
------------ ---------------
Total current liabilities............................. 8,296,622 10,312,842
LONG-TERM DEBT, less current portion (Note 6)............... 38,094,955 38,280,668
CAPITAL LEASE OBLIGATIONS, less current portion (Note 12)... 470,637 382,286
DEFERRED TAX LIABILITY (Notes 2 and 7)...................... 5,520,000 5,502,202
------------ ---------------
Total liabilities..................................... 52,382,214 54,477,998
------------ ---------------
MINORITY INTEREST........................................... 140,000 140,000
------------ ---------------
STOCKHOLDERS' EQUITY:
Common stock, par value $.01, 5,000,000 shares authorized;
3,823,458 shares issued and outstanding at December 31,
1995 and September 30, 1996 (unaudited).................. 38,235 38,235
Paid-in capital in excess of par.......................... 38,196,347 38,196,347
Retained earnings (accumulated deficit)................... (1,125,107) 3,053,521
Treasury stock, at cost, -0- shares at December 31, 1995
and 150,751 shares at September 30, 1996 (unaudited)
(Note 11)................................................ -- (1,653,737)
Notes receivable from management stockholders............... (888,500) (884,000)
------------ ---------------
Total stockholders' equity............................ 36,220,975 38,750,366
------------ ---------------
Total liabilities and stockholders' equity............ $88,743,189 $ 93,368,364
------------ ---------------
------------ ---------------
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-46
<PAGE>
REVERE HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE FOR THE NINE MONTHS ENDED
YEAR ENDED SEPTEMBER 30,
DECEMBER 31, ----------------------------
1995 1995 1996
-------------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C>
REVENUES:
Gross revenues.................................................. $ 44,075,763 $ 32,703,421 $ 32,529,347
Less: Agency commissions........................................ (4,714,467) (3,522,060) (3,482,596)
-------------- ------------- -------------
Net revenues................................................ 39,361,296 29,181,361 29,046,751
-------------- ------------- -------------
OPERATING EXPENSES:
Operations...................................................... 8,569,222 6,313,353 6,469,145
Real estate..................................................... 8,807,786 6,420,824 7,146,224
Sales........................................................... 4,924,970 3,518,556 3,718,209
General and administrative...................................... 5,611,970 4,240,221 4,117,587
Depreciation and amortization................................... 6,898,155 5,164,942 5,541,859
-------------- ------------- -------------
Total operating expenses.................................... 34,812,103 25,657,896 26,993,024
-------------- ------------- -------------
Operating Income............................................ 4,549,193 3,523,465 2,053,727
-------------- ------------- -------------
OTHER INCOME (EXPENSE):
Interest expense (Notes 5,6 and 12)............................. (4,584,699) (3,501,551) (3,391,499)
Gain on sale of assets.......................................... -- -- 8,623,905
Other (expenses) income......................................... (333,834) 57,964 (214,151)
-------------- ------------- -------------
Total other income (expenses)............................... (4,918,533) (3,443,587) 5,018,255
-------------- ------------- -------------
Income (loss) before income taxes........................... (369,340) 79,878 7,071,982
(PROVISION) BENEFIT FOR INCOME TAXES
(Notes 2 and 7)................................................. (578,360) (271,719) (2,893,354)
-------------- ------------- -------------
Net income (loss)........................................... $ (947,700) $ (191,841) $ 4,178,628
-------------- ------------- -------------
-------------- ------------- -------------
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-47
<PAGE>
REVERE HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
NOTES
RETAINED RECEIVABLE
PAID-IN EARNINGS TREASURY FROM TOTAL
COMMON IN EXCESS (ACCUMULATED STOCK, MANAGEMENT STOCKHOLDERS'
STOCK OF PAR DEFICIT) AT COST STOCKHOLDERS EQUITY
------- ----------- ------------ ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE,
December 31, 1994........... $38,235 $38,196,347 $ (177,407) $ -- $(888,500) $37,168,675
Net loss.................... -- -- (947,700) -- -- (947,700)
------- ----------- ------------ ----------- ------------- -------------
BALANCE,
December 31, 1995........... 38,235 38,196,347 (1,125,107) -- (888,500) 36,220,975
Payment on note receivable
from management
stockholders (unaudited)... -- -- -- -- 4,500 4,500
Treasury stock acquired, at
cost (unaudited)........... -- -- -- (1,653,737) -- (1,653,737)
Net income (unaudited)...... -- -- 4,178,628 -- -- 4,178,628
------- ----------- ------------ ----------- ------------- -------------
BALANCE,
September 30, 1996
(Unaudited)................ $38,235 $38,196,347 $3,053,521 $(1,653,737) $(884,000) $38,750,366
------- ----------- ------------ ----------- ------------- -------------
------- ----------- ------------ ----------- ------------- -------------
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-48
<PAGE>
REVERE HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE NINE MONTHS
ENDED DECEMBER ENDED SEPTEMBER 30,
31, ----------------------------
1995 1995 1996
-------------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)............................................... $ (947,700) $ (191,841) $ 4,178,628
Adjustments to reconcile net loss to net cash provided by
operating activities --
Depreciation and amortization................................. 7,552,486 5,655,691 6,034,913
(Gain) Loss on disposals of property and equipment............ 418,222 114,319 (8,623,905)
Deferred income tax provision................................. 354,273 103,654 41,665
Changes in assets and liabilities --
Increase in accounts receivable, net........................ (219,824) (187,242) (103,714)
Decrease (increase) in inventories.......................... 32,807 (22,493) (58,671)
(Increase) decrease in prepaid expenses and other........... (204,546) (399,644) 629,291
(Decrease) increase in accounts payable and accrued
expenses................................................... (1,795,535) (1,747,672) 1,976,230
-------------- ------------- -------------
Net cash flows provided by operating activities........... 5,190,183 3,324,772 4,074,437
-------------- ------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment............................. (3,583,772) (1,951,075) (1,588,848)
Proceeds from sale of property and equipment.................... 123,551 45,926 21,514,834
Funds transferred to escrow..................................... -- -- (20,447,420)
Increase in interest receivable................................. (53,330) (58,290) (51,035)
Increase in other assets........................................ (1,974,930) (1,873,220) (952,589)
Cash paid for acquisitions...................................... (3,080,631) (3,080,631) (2,075,000)
(Increase) decrease in goodwill, net of noncash items........... (39,140) -- 13,042
Cash paid for treasury stock.................................... -- -- (8,237)
-------------- ------------- -------------
Net cash flows used in investing activities............... (8,608,252) (6,917,290) (3,595,253)
-------------- ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Reduction of long-term debt..................................... (3,501,044) (2,181,869) (2,435,099)
Payment of liability for Mall Media purchase.................... (4,000,000) (4,000,000) --
Proceeds from long-term debt.................................... 4,166,227 3,000,000 1,326,951
-------------- ------------- -------------
Net cash used in financing activities..................... (3,334,817) (3,181,869) (1,108,148)
-------------- ------------- -------------
NET DECREASE IN CASH AND CASH EQUIVALENTS......................... (6,752,886) (6,774,387) (628,964)
CASH AND CASH EQUIVALENTS, beginning of period.................... 7,893,455 7,893,455 1,140,569
-------------- ------------- -------------
CASH AND CASH EQUIVALENTS, end of period.......................... $ 1,140,569 $ 1,119,068 $ 511,605
-------------- ------------- -------------
-------------- ------------- -------------
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-49
<PAGE>
REVERE HOLDING CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION:
The financial statements of Revere Holding Corp. and Subsidiaries (the
Company) include the accounts of Revere Holding Corp. (Holding) and its
wholly-owned subsidiary, Revere Acquisition Corp. (Acquisition) and
Acquisition's wholly-owned subsidiaries, Revere National Corporation and
subsidiaries (National), Revere Billboard, Inc. (Billboard), Stait Outdoor
Advertising Co. (Stait) and Mall Media Acquisition Corp. (Mall Media). National
provides outdoor advertising services through its network of sign structures in
the Mid-Atlantic region and Texas (see Note 17). Mall Media owns and maintains a
network of kiosks located in shopping malls nationwide and sells advertising
space on the kiosks. Stait provides outdoor advertising services through its
sign structures primarily located in New Jersey and Pennsylvania. All
significant intercompany accounts and transactions have been eliminated in
consolidation.
On December 20, 1994, Acquisition acquired the entities described below,
which were accounted for by the purchase method of accounting. The results of
operations of the acquired companies are included in Holding's statements of
operations for the period in which they were owned by Holding.
On December 20, 1994, Holding was capitalized with $35.0 million in cash
from Merrill Lynch Capital Partners and $375,000 in cash from certain members of
the Board of Directors. The cash was used to capitalize Acquisition, and through
a secured bank credit agreement, Acquisition received funding of an additional
$40.0 million.
Through a series of transactions, Acquisition acquired the assets of
Billboard and Mall Media for $26.5 million and the outstanding stock of National
and Stait for $26.6 million. Additional existing secured debt of National
totaling $20.3 million was repaid by Acquisition, and the remaining funds were
used for financing and acquisition costs.
Additionally, Holding issued and transferred shares of common stock to
certain members of management and the Board of Directors of the Company with a
value of $1,359,582. The consideration for the shares issued was notes
receivable of $888,500 and common stock of National with a value of $471,082.
As provided in the asset purchase agreement, Mall Media purchased certain
assets of the kiosk business, described above, on December 20, 1994. Of the $5.5
million purchase price, $4.0 million was not paid until January 1995. As part of
the purchase price, Holding issued $1.5 million in common stock to the former
owner.
On January 2, 1996, the Company effected a reorganization of its legal
entities. Revere National Corporation of San Antonio, Revere National
Corporation of Victoria, Revere National Corporation of Corpus Christi, Revere
National Corporation of Laredo ("Texas Subs") and Revere National Corporation of
Delmarva ("Delmarva") effected a statutory merger with and into Revere National
Corporation of Philadelphia ("D.C."), with D.C. being the surviving entity.
Further, through a series of transactions, Stait was merged into Revere National
Corporation of Pennsylvania ("PA") effective January 2, 1996.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
REVENUE RECOGNITION
Advertising revenues from the sale of advertising space are recognized on a
straight-line basis over the terms of the individual contracts.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash and short-term highly liquid
investments with a maturity of three months or less.
F-50
<PAGE>
REVERE HOLDING CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
INVENTORIES
Inventories, consisting primarily of sign structure parts, are stated at the
lower of cost (computed on a first-in, first-out basis) or market.
PROPERTY AND EQUIPMENT
Property and equipment is recorded at cost with the exception of those
assets which have been recorded at estimated fair value in conjunction with the
purchase transactions discussed in Note 3. The cost of sign structures includes
materials and supplies, labor directly involved in construction of the sign
structures and an allocation of direct overhead expenses. Depreciation and
amortization are computed using the straight-line method over the estimated
useful lives of the related assets. The ranges of estimated useful lives are as
follows:
<TABLE>
<CAPTION>
USEFUL LIVES
-------------
<S> <C>
Sign structures and kiosks..................................................... 7-15 years
Buildings...................................................................... 31.5 years
Machinery and equipment........................................................ 5-7 years
Vehicles....................................................................... 5 years
Leasehold improvements......................................................... Lease Term
</TABLE>
Tear down expense or other disposals of sign structures are recorded net of
the estimated realizable value of salvaged materials. The estimated realizable
value of salvaged materials from torn down structures remains recorded as
property and equipment and is depreciated over its remaining useful life. These
materials are used in construction of new structures or refurbishment of
existing structures.
LEASE ACQUISITION COSTS
The direct costs of acquiring and renewing land leases for sites on which
sign structures are erected are capitalized in other assets and amortized using
the straight-line method over five years, which is the estimated average lives
of the leases.
BARTER ARRANGEMENTS
The Company enters into nonmonetary barter transactions with customers
wherein certain goods and services are used by the Company in exchange for
advertising services. Such transactions are recorded in the accompanying
consolidated financial statements at the estimated fair market value of the
goods and services received. Included in revenues and expenses are nonmonetary
transactions of approximately $631,000 and $601,000, respectively, for the year
ended December 31, 1995 and approximately $450,000 and $439,000, and $511,000
and $379,000, respectively, for the nine months ended Setember 30, 1995 and 1996
(unaudited). Included in property and equipment are nonmonetary transactions of
approximately $97,000 for the year ended December 31, 1995, and $18,000 and
$43,000, respectively, for the nine months ended September 30, 1995 and 1996
(unaudited).
The gross amount of barter receivables and barter payables is recorded at
the estimated fair value of services to be received and provided, respectively.
FINANCIAL INSTRUMENTS
The Company values its financial instruments as required by Statement of
Financial Accounting Standards No. 107, "Disclosures About Fair Values of
Financial Instruments." Management believes the carrying amounts of cash and
cash equivalents, accounts receivable, accounts payable and long-term debt
approximate fair value.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions. These estimates and assumptions affect the
F-51
<PAGE>
REVERE HOLDING CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
reported amounts of assets and liabilities and disclosures of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues, expenses, gains and losses during the reporting periods. Actual
results could differ from these estimates.
INCOME TAXES
Provision has been made, using Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes", for deferred Federal and state income
taxes which arise from differences between the basis of certain assets and
liabilities, for income tax and financial statement reporting purposes, and
differences between reporting methods for income tax and financial statement
reporting purposes. The differences relate principally to property, deferred
costs and accruals. The Company and its subsidiaries file consolidated Federal
income tax returns.
RECLASSIFICATIONS.
Certain financial information in the prior years have been reclassified to
conform to the current year presentation.
ACCOUNTING STANDARD
In March 1995, the FASB issued Statement No. 121 (SFAS 121), "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
of," which requires impairment losses to be recorded on long-lived assets used
in operations when indicators of impairment are present and the undiscounted
cash flows estimated to be generated by those assets are less than the assets'
carrying amount. SFAS 121 also addresses the accounting for long-lived assets
that are expected to be disposed of. As of September 30, 1996 (unaudited),
management believes there were no indications of impairment that would effect
the carrying values of assets.
NON-CASH TRANSACTIONS
In addition to the previously described barter transactions, the Company
entered into the following non-cash transactions for the year ended December 31,
1995, and the nine months ended September 30, 1995 and 1996:
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
FOR THE YEAR ENDED SEPTEMBER 30,
ENDED DECEMBER ------------------------
31, 1995 1995 1996
-------------- --------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Property and equipment under capital leases........ $ 336,277 $ 19,600 $ 273,063
-------------- --------- -------------
-------------- --------- -------------
Treasury stock purchased in exchange for note
payable.......................................... $ -- $ -- $ 1,645,500
-------------- --------- -------------
-------------- --------- -------------
</TABLE>
INTERIM FINANCIAL INFORMATION
The interim financial information as of September 30, 1996 and for the nine
months ended September 30, 1995 and 1996 has been prepared from the unaudited
financial records of the Company and, in the opinion of management, reflects all
adjustments necessary for a fair presentation of the financial position and
results of operations and of cash flows for the respective interim periods. All
adjustments were of a normal and recurring nature.
3. GOODWILL:
The Company utilized the purchase method of accounting for the acquisitions
of the common stock of National and Stait and the purchase of the assets of
Billboard and Mall Media. The total purchase price of $73.5 million was
originally allocated approximately $37.7 million to property and equipment, $4.6
million to an acquired deferred tax liability and $18.3 million to other net
assets and liabilities, resulting
F-52
<PAGE>
REVERE HOLDING CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. GOODWILL: (CONTINUED)
in goodwill of approximately $22.1 million. During 1995, the Company adjusted
the purchase price allocation to reflect an income tax liability of
approximately $310,000 which existed at the acquisition date, resulting in an
increase to goodwill for the same amount. Goodwill is being amortized over a
period of 40 years.
During 1995, the Company executed several acquisitions which had an
aggregate purchase price of approximately $2.8 million. These acquisitions were
accounted for in accordance with the purchase method, whereby the purchase price
is allocated to assets acquired and liabilities assumed based upon estimated
fair value. As a result of these acquisitions, the Company recorded additional
goodwill of approximately $654,000. In addition, goodwill in the amount of
$140,000 has been recorded at December 31, 1995, relating to another acquisition
of the Company in 1995.
4. PROPERTY AND EQUIPMENT:
Property and equipment consisted of the following as of December 31, 1995
and September 30, 1996:
<TABLE>
<CAPTION>
AS OF AS OF
DECEMBER 31, SEPTEMBER 30,
1995 1996
-------------- --------------
(UNAUDITED)
<S> <C> <C>
Sign structures and kiosks.................................. $ 32,770,314 $24,205,343
Land and buildings.......................................... 6,311,519 4,694,414
Machinery and equipment..................................... 1,638,450 1,846,847
Vehicles.................................................... 740,388 195,419
Leasehold improvements...................................... 196,519 224,865
-------------- --------------
41,657,190 31,166,888
Less -- Accumulated depreciation and amortization........... (2,758,051) (3,120,866)
-------------- --------------
Property and equipment, net................................. $ 38,899,139 $28,046,022
-------------- --------------
-------------- --------------
</TABLE>
Depreciation expense for the year ended December 31, 1995, and the nine
months ended September 30, 1995 and 1996 (unaudited) was $2,782,706, and
$2,111,160 and $2,222,964, respectively.
5. OTHER ASSETS:
Other assets consisted of the following as of December 31, 1995 and
September 30, 1996:
<TABLE>
<CAPTION>
AS OF AS OF
DECEMBER 31, SEPTEMBER 30,
1995 1996
-------------- ---------------
(UNAUDITED)
<S> <C> <C>
Intangible lease assets..................................... $ 9,352,833 $ 7,183,851
Financing and acquisition costs............................. 6,627,239 6,655,367
Lease acquisition costs..................................... 3,952,191 3,789,525
MTC contract for advertising privileges..................... -- 1,935,000
Covenants not to compete.................................... 570,000 350,000
Deposits.................................................... 82,450 76,025
Other....................................................... 151,092 108,697
-------------- ---------------
20,735,805 20,098,465
Less -- Accumulated amortization............................ (4,351,959) (6,268,930)
-------------- ---------------
Other assets, net........................................... $ 16,383,846 $ 13,829,535
-------------- ---------------
-------------- ---------------
</TABLE>
F-53
<PAGE>
REVERE HOLDING CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. OTHER ASSETS: (CONTINUED)
Amortization for the year ended December 31, 1995, and the nine months ended
September 30, 1995 and 1996 (unaudited) was $4,769,780, and $3,544,531 and
$3,811,949, respectively, including amortization of deferred financing costs of
$654,331, and $490,749 and $493,054, which was classified as interest expense.
Intangible lease assets represent site leases with rents below market rates
which were purchased with the acquisition of Billboard. The intangible lease
assets have been recorded at the present value of the excess of the fair market
rents of the lease over the actual rents. This amount is being amortized over
the life of the leases.
Financing and acquisition costs consisting of bank, legal and other
professional fees and other costs of approximately $6.0 million were incurred
and capitalized in connection with the acquisitions described in Note 1 and the
related financing described in Note 6. These costs are being amortized over the
period of the related debt agreements.
Covenants not to compete were entered into with the former owners of the
assets of certain purchase transactions at the time of the respective purchase
and are being amortized over terms ranging from five to ten years.
6. LONG-TERM DEBT:
In connection with the acquisitions described in Note 1, Acquisition and
Holding entered into a Credit Agreement consisting of a Revolving Credit Loan, a
Term A Loan and a Term B Loan.
The Revolving Credit Loan consists of a reducing revolving credit facility
with a principal amount not to exceed $17 million. As of December 31, 1995 and
September 30, 1996 (unaudited), outstanding borrowings against the facility were
$3,500,000 and $5,000,000, respectively. The commitment under the revolving
credit facility will decrease by $1.0 million annually on December 31, 1995
through 1998. The remaining available $13.0 million will expire on June 30,
2001.
The Term A Loan in the amount of $24.5 million is scheduled to be amortized
annually in three equal installments in June, September and December of each
year. The annual amortization amounts are $2,750,000 in 1996, $3,570,000 in 1997
and 1998; and $4,500,000, $6,125,000 and $3,735,000 in 1999, 2000 and 2001,
respectively.
The Term B Loan in the amount of $13.0 million is scheduled to be paid in a
single installment on June 30, 2002.
In addition to the debt repayments discussed above, the Company is required
to make prepayments of 50% of Excess Cash Flow as defined in the Credit
Agreement. No such prepayments were required for the periods ending December 31,
1995 and September 30, 1996 (unaudited).
Interest on borrowings under this agreement are at varying rates based, at
the Company's option, on the federal funds rate, the bank's prime rate, a three
month average certificate of deposit rate or the London Interbank Offering Rate
(LIBOR), plus a fixed percent and are adjusted based upon the ratio of total
debt to operating cash flow. Additionally, commitment fees of 1/2% on available
but undrawn revolving credit funds are payable quarterly in advance. The
weighted average interest rates for the year ended December 31, 1995 and for the
nine months ended September 30, 1995 and 1996 (unaudited) were 8.3%, and 8.8%
and 8.4%, respectively. Interest expense relating to the Credit Agreement for
the year ended December 31, 1995, and for the nine months ended September 30,
1995 and 1996 (unaudited), were approximately $3,852,000 and $2,951,555 and
$2,782,050, respectively.
F-54
<PAGE>
REVERE HOLDING CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. LONG-TERM DEBT: (CONTINUED)
Under the covenants of the Credit Agreement, the Company is required to
maintain certain financial ratios, including an interest coverage ratio, a
leverage ratio and a fixed charges ratio. Substantially all of the Companies'
assets have been pledged as security under the Credit Agreement.
Long-term debt at September 30, 1996 (unaudited), includes a subordinated
promissory note in the amount of $1,645,500 to a former stockholder and employee
of the Company as a result of the repurchase by the Company of all of his shares
of outstanding common stock (see Note 11). The note matures on March 27, 1999,
and interest is payable annually at the lowest rate of interest applicable to
borrowings under the Credit Agreement.
A summary of long-term debt as of December 31, 1995 and September 30, 1996
(unaudited), is as follows:
<TABLE>
<CAPTION>
AS OF AS OF
DECEMBER 31, SEPTEMBER 30,
1995 1996
-------------- ---------------
(UNAUDITED)
<S> <C> <C>
Credit Agreement Term A Note................................ $ 24,250,000 $ 21,916,666
Credit Agreement Term B Note................................ 13,000,000 13,000,000
Revolving Credit Note....................................... 3,500,000 5,000,000
Other notes payable with varying maturity dates............. 196,720 1,669,381
-------------- ---------------
Total long-term debt...................................... 40,946,720 41,586,047
Less -- Current portion of long-term debt................... (2,851,765) (3,305,379)
-------------- ---------------
Long-term debt less current portion....................... $ 38,094,955 $ 38,280,668
-------------- ---------------
-------------- ---------------
</TABLE>
Future maturities of long-term debt as of December 31, 1995 and September
30, 1996, are as follows:
<TABLE>
<CAPTION>
AS OF AS OF
DECEMBER 31, SEPTEMBER 30,
1995 1996
-------------- ---------------
(UNAUDITED)
<S> <C> <C>
1996........................................................ $ 2,851,765 $ 3,305,379
1997........................................................ 3,632,255 3,573,693
1998........................................................ 3,602,700 3,574,080
1999........................................................ 4,500,000 6,150,007
2000........................................................ 6,125,000 6,127,427
2001 and thereafter......................................... 20,235,000 18,855,461
-------------- ---------------
Total..................................................... $ 40,946,720 $ 41,586,047
-------------- ---------------
-------------- ---------------
</TABLE>
Interest payments for the year ended December 31, 1995 and for the nine
months ended September 30, 1995 and 1996 (unaudited), were approximately
$3,901,000, and $2,911,780 and $2,387,456, respectively.
F-55
<PAGE>
REVERE HOLDING CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. INCOME TAXES:
The (provision) benefit for income taxes for the year ended December 31,
1995, and the nine months ended September 30, 1995 and 1996 (unaudited),
consists of the following:
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
FOR THE YEAR SEPTEMBER 30,
ENDED DECEMBER ----------------------------
31, 1995 1995 1996
-------------- ------------ --------------
(UNAUDITED)
<S> <C> <C> <C>
Current
Federal....................................... $ (72,187) $ (54,140) $ (2,087,942)
State......................................... (151,900) (113,925) (763,747)
-------------- ------------ --------------
(224,087) (168,065) (2,851,689)
-------------- ------------ --------------
Deferred
Federal....................................... (267,373) (38,479) (34,541)
State......................................... (86,900) (65,175) (7,124)
-------------- ------------ --------------
(354,273) (103,654) (41,665)
-------------- ------------ --------------
Total....................................... $ (578,360) $ (271,719) $ (2,893,354)
-------------- ------------ --------------
-------------- ------------ --------------
</TABLE>
Income tax payments made for the year ended December 31, 1995, and for the
nine months ended September 30, 1995 and 1996 (unaudited), were $584,674 and
$237,650 and $50,100, respectively.
The following is a reconciliation of the statutory federal income tax
benefit to the recorded effective tax (provision) benefit for year ended
December 31, 1995, and the nine months ended September 30, 1995 and 1996
(unaudited):
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
FOR THE YEAR SEPTEMBER 30,
ENDED DECEMBER ----------------------------
31, 1995 1995 1996
-------------- ------------ --------------
(UNAUDITED)
<S> <C> <C> <C>
Statutory federal taxes, at 34% of pretax....... $ 125,576 $ 94,182 $ (2,404,474)
State provision................................. (238,800) (179,100) (504,073)
Non-deductible depreciation and amortization.... (549,748) (412,311) (203,097)
Other........................................... 84,612 225,510 218,290
-------------- ------------ --------------
Effective tax benefit (provision)............. $ (578,360) $ (271,719) $ (2,893,354)
-------------- ------------ --------------
-------------- ------------ --------------
</TABLE>
The Company has incurred net operating losses which are available as
carryforwards to offset future taxable income. At December 31, 1995 and
September 30, 1996 (unaudited) net operating losses for income tax reporting
purposes are approximately $5.2 million and $3.9 million, respectively, and
expire between 2008 and 2010. For losses incurred prior to December 20, 1994,
utilization is limited to taxable gains recognized through 1998 on the sale of
assets which had "built-in gains" in 1994. A full valuation allowance on all
losses has been reflected in the accompanying balance sheet due to uncertainties
relating to the utilization of these net operating losses.
F-56
<PAGE>
REVERE HOLDING CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. INCOME TAXES: (CONTINUED)
Total deferred tax assets and liabilities and the sources of the differences
between financial accounting and tax bases of the Company's assets and
liabilities which give rise to the deferred tax assets and liabilities are as
follows as of December 31, 1995 and September 30, 1996 (unaudited):
<TABLE>
<CAPTION>
AS OF AS OF
DECEMBER 31, SEPTEMBER 30,
1995 1996
-------------- ---------------
(UNAUDITED)
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforward........................... $ 2,128,403 $ 1,612,389
Accrued liabilities....................................... 560,942 560,483
Accrued environmental remediation......................... 147,814 68,141
Bad debt reserves......................................... 134,517 187,101
Valuation allowance....................................... (2,128,403) (1,612,389)
-------------- ---------------
843,273 815,725
-------------- ---------------
Deferred tax liabilities:
Property and equipment.................................... 5,487,547 5,501,664
Prepaid expenses.......................................... 8,464 8,464
Officer bonuses........................................... -- --
Other..................................................... 180,262 180,799
-------------- ---------------
5,676,273 5,690,927
-------------- ---------------
Net deferred tax liability.............................. $ 4,833,000 $ 4,875,202
-------------- ---------------
-------------- ---------------
</TABLE>
8. MANAGEMENT STOCK OPTION PLAN:
On December 20, 1994, Holding instituted a Management Stock Option Plan
("the Stock Option Plan") under which nonqualified incentive and performance
stock options were granted to certain consultants, directors and employees of
the Company. Each option entitles the grantee to purchase one share of common
stock at a certain price per share, based on the estimated fair value of the
shares at the date of grant. The maximum authorized number of shares of common
stock which may be issued under the Stock Option Plan is 360,000. All options
expire ten years after the date of grant or at the time the grantee ceases to be
a full-time employee, director or consultant.
Options are only exercisable when vested. Incentive options vest 20% every
year. Performance options vest over a five year period based on the Company
achieving certain defined levels of earnings performance or upon approval of the
Board of Directors.
F-57
<PAGE>
REVERE HOLDING CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. MANAGEMENT STOCK OPTION PLAN: (CONTINUED)
The following options were outstanding and exercisable:
<TABLE>
<CAPTION>
OPTION
PRICE/SHARE INCENTIVE PERFORMANCE TOTAL
----------- --------- ------------- ---------
<S> <C> <C> <C> <C>
Total outstanding at December 31, 1994........................ $ 10.00 170,660 170,660 341,320
Granted in 1995............................................... $ 10.00 6,840 6,840 13,680
--------- ------------- ---------
Total outstanding at December 31, 1995........................ 177,500 177,500 355,000
--------- ------------- ---------
--------- ------------- ---------
Exercisable at December 31, 1995.............................. 35,500 35,500 71,000
--------- ------------- ---------
--------- ------------- ---------
Granted, January 1, 1996 to September 30, 1996 (unaudited).... $ 12.50 25,000 25,000 50,000
--------- ------------- ---------
Exercised, March 27, 1996 (unaudited)......................... $ 10.00 (7,700) (7,700) (15,400)
--------- ------------- ---------
Expired, January 1, 1996 to September 30, 1996 (unaudited).... $ 10.00 (32,266) (32,266) (64,532)
--------- ------------- ---------
Total outstanding at September 30, 1996 (unaudited)........... 162,534 162,534 325,068
--------- ------------- ---------
--------- ------------- ---------
Exercisable at September 30, 1996 (unaudited)................. 32,507 32,507 65,014
--------- ------------- ---------
--------- ------------- ---------
</TABLE>
9. PROFIT SHARING PLAN:
The Revere National Corporation 401(k) profit sharing plan and trust (the
Plan) covers eligible employees of the Company. Contributions made to the Plan
include an employee elected salary deduction amount and Company matching
contributions. The Company's 401(k) expense for the periods ended December 31,
1995 and September 30, 1995 and 1996 (unaudited), was $133,176, and $100,201 and
$113,984, respectively.
10. NOTES RECEIVABLE:
Notes receivable from management stockholders represent notes due in
connection with the issuance of Holding stock as discussed in Note 1. The notes
bear interest at the same rate as the Term A Note discussed in Note 6 and are
due on December 20, 2004.
11. TREASURY STOCK (UNAUDITED):
In connection with the termination of two employees, one of which was an
officer and director of the Company, the Company purchased 150,751 shares of its
common stock at a cost of $1,653,737 during the nine months ended September 30,
1996 (unaudited). These transactions were completed primarily in exchange for a
note payable, as described in Note 6.
12. COMMITMENTS:
The Company leases office space and equipment under the terms of operating
leases agreements. Lease expense of approximately $236,300, $167,600 and
$230,900 was recorded for the periods ended December 31, 1995, and September 30,
1995 and 1996 (unaudited), respectively.
F-58
<PAGE>
REVERE HOLDING CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
12. COMMITMENTS: (CONTINUED)
Future minimum lease payments under capital and operating leases and the
present value of the net minimum lease payments as of December 31, 1995 and
September 30, 1996 (unaudited), are as follows:
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1995 AS OF SEPTEMBER 30, 1996
------------------------- ------------------------
CAPITAL OPERATING CAPITAL OPERATING
YEAR ENDING DECEMBER 31, LEASES LEASES LEASES LEASES
- ---------------------------------------------------------- ------------ ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
1996...................................................... $ 288,394 $ 227,776 $ 52,221 $ 71,177
1997...................................................... 235,066 222,770 269,064 246,528
1998...................................................... 186,610 219,778 227,160 210,930
1999...................................................... 98,724 128,224 111,323 124,575
2000...................................................... 9,274 88,164 21,484 86,164
2001 and thereafter....................................... -- -- -- 18,420
------------ ----------- ----------- -----------
Minimum lease payments.................................... $ 818,068 $ 886,712 $ 681,252 $ 757,794
----------- -----------
----------- -----------
Less -- Amount representing interest and executory
costs................................................... (113,415) (78,574)
------------ -----------
Present value of minimum lease payments................... $ 704,653 $ 602,678
------------ -----------
------------ -----------
</TABLE>
Additionally, substantially all of the Company's sign structures are located
on land which is leased from unrelated parties for periods ranging from one to
ten years. Generally, these sign site lease agreements permit the Company to
cancel an agreement upon 30 days written notice.
13. MINORITY INTEREST:
In August 1995, Mall Media entered into a 15 year operating agreement with
Vision Digital Communications, LLC ("VDC"), a California limited liability
corporation in which Mall Media holds an 80% investment, to conduct an
interactive kiosk business. Pursuant to this agreement, the initial capital
contributions of two of the minority investors of VDC were $140,000, which
reflected the estimated fair value of assets and properties these two members
contributed to VDC. This amount has been reflected in the consolidated financial
statements as Minority Interest at December 31, 1995. In accordance with the
operating agreement, 100% of the loss during 1995 was allocated to Mall Media.
14. LITIGATION:
The Company is involved in various legal and administrative actions evolving
from its conduct of routine operations. These actions include resolutions of
disputes with land owners, regulatory compliance issues and personal property
tax assessment issues, the outcome of which cannot currently be determined.
Management does not believe that the outcome of these actions will have a
material adverse effect on the Company.
15. UNAUDITED PRO FORMA SUMMARY RESULTS OF OPERATIONS:
The unaudited pro forma summary consolidated results of operations for the
year ended December 31, 1995 and the nine months ended September 30, 1996
(unaudited), assuming the acquisitions
F-59
<PAGE>
REVERE HOLDING CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
15. UNAUDITED PRO FORMA SUMMARY RESULTS OF OPERATIONS: (CONTINUED)
executed during 1995 and 1996 (as described in Notes 3 and 16) and the sale of
the Company's operations in Texas (as described in Note 17) had been consummated
on January 1, 1995, are as follows (dollars in thousands):
<TABLE>
<CAPTION>
FOR THE NINE
FOR THE YEAR MONTHS ENDED
ENDED DECEMBER SEPTEMBER 30,
31, 1995 1996
-------------- --------------
(UNAUDITED)
<S> <C> <C>
Net revenues................................................. $ 34,688 $ 25,400
-------------- --------------
-------------- --------------
Net loss..................................................... $ (287) $ (1,395)
-------------- --------------
-------------- --------------
</TABLE>
16. SUBSEQUENT EVENTS:
On February 2, 1996, the Company acquired certain assets of Mass Transit
Communications ("MTC") and Mass Transit Communications -- Wallscapes ("MTC-W")
for $2,075,000. This purchase, which is effective February 1, 1996, allows the
Company to exclusively sell and service advertising space in and on municipal
transit systems of the cities of Baltimore and Annapolis, Maryland.
In March 1996, the Board of Directors approved a restructuring of the
Company's operations at Mall Media. The ultimate impact of the restructuring has
not yet been determined; however, management does not believe the restructuring
will have a material impact on the Company's financial position or results of
operations in 1996.
17. EVENTS SUBSEQUENT TO THE DATE OF THE AUDITORS' REPORT (UNAUDITED):
On July 1, 1996, the Company sold substantially all of its assets associated
with the Company's operations in San Antonio, Texas, through a third-party
intermediary with the intention of completing a like-kind exchange of assets by
December 28, 1996. Associated with this sale was the establishment of an escrow
account whereby the proceeds of the sale ($11,000,000) were deposited and can
only be withdrawn for the purchase of like-kind property or to pay down existing
senior debt. If the purchase of like-kind property is successfully completed
within 180 days of the sale, the Company may defer the gain, for income tax
purposes, on the property sold. The gain is estimated to be approximately
$5,000,000.
On August 30, 1996, the Company sold substantially all of its assets
associated with operations in Corpus Christi and Laredo, Texas, in a like-kind
exchange transaction, similar to that discussed above, with the intentions of
completing a like-kind exchange of property by February 28, 1997. The proceeds
from the sale also were deposited with a third-party intermediary totaling
$9,300,000. The gain, for income tax purposes, if the purchase of like-kind
property is not successfully completed within 180 days of the sale, is estimated
to be approximately $4,000,000.
F-60
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER
TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
--------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Prospectus Summary............................. 3
Risk Factors................................... 11
Use of Proceeds................................ 17
Dividend Policy................................ 17
Price Range of Common Stock.................... 17
Capitalization................................. 18
Pro Forma Financial Information................ 19
Selected Consolidated Financial and Operating
Data.......................................... 24
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 26
Business....................................... 35
Management..................................... 45
Certain Transactions........................... 50
Principal Stockholders......................... 51
Description of Noteholder Warrants............. 53
Description of Capital Stock................... 56
Shares Eligible for Future Sale................ 59
Description of Indebtedness and Other
Commitments................................... 60
Certain Federal Income Tax Consequences........ 63
Selling Securityholders and Plan of
Distribution.................................. 65
Legal Matters.................................. 66
Experts........................................ 66
Available Information.......................... 67
Index to Consolidated Financial Statements..... F-1
</TABLE>
24,200
WARRANTS TO PURCHASE
COMMON STOCK
387,200 SHARES
OF COMMON STOCK
[LOGO]
UNIVERSAL OUTDOOR
HOLDINGS, INC.
------------
PROSPECTUS
------------
June , 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses in connection with the
offering described in this Registration Statement. All amounts shown are
estimates, except the SEC registration fee.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee............... $ 790
Printing and Engraving Expenses................................... 10,000
Legal Fees and Expenses........................................... 30,000
Accounting Fees and Expenses...................................... 20,000
Blue Sky Fees and Expenses........................................ 5,000
Exchange Agent Fees and Expenses.................................. 10,000
Miscellaneous..................................................... 15,000
---------
Total........................................................... $ 90,790
---------
---------
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law ("Delaware Law") and
Article XI of the Registrant's Bylaws provide for indemnification of the
Registrant's directors and officers to the maximum extent provided by Delaware
Law, which may include liabilities under the Securities Act.
As permitted by Section 102(b) of the Delaware Law, the Certificate of
Incorporation provides that directors of the Company shall have no personal
liability to the Company or its stockholders for monetary damages for breach of
fiduciary duty as a director, except (i) for any breach of a director's duty of
loyalty to the Company or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or knowing violations of law,
(iii) under Section 174 of the Delaware Law, or (iv) for any transaction from
which a director derived an improper personal benefit.
The Company does not maintain directors' and officers' liability insurance.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Since January 1, 1993, the Company has issued the following securities which
were not registered under the Securities Act:
The 1996 Warrant Plan was adopted by the Board of Directors of the Company
in April 1996 in order to advance the interests of the Company by affording
certain key executives and employees an opportunity to acquire a proprietary
interest in the Company and thus to stimulate increased personal interest in
such persons in the success and future growth of the Company. The 1996 Warrant
Plan is administered by the Compensation Committee of the Company. Pursuant to
the 1996 Warrant Plan, Daniel L. Simon and Brian T. Clingen were awarded
warrants in April 1996 which have been divided into three series: the Series I
Warrants, the Series II Warrants and the Series III Warrants. In July 1996, the
1996 Warrant Plan was amended to, among other things (i) adjust the warrant
exercise price for the Series II Warrants and the Series III Warrants from $5.00
per share (as adjusted to reflect the 16 for 1 stock split) to (X) in the case
of the Series II Warrants, the Closing Price for the day immediately preceding
any such exercise minus $.01, PROVIDED, HOWEVER, that if at any time the average
of the Closing Price for any 30 consecutive trading days is equal to or greater
than $16.25 AND the Closing Price for the last day of such thirty day trading
period is equal to or greater than $16.25, then the warrant exercise price shall
thereafter be $5.00, and (Y) in the case of Series III Warrants, the Closing
Price for the day immediately preceding any such exercise minus $.01, PROVIDED,
HOWEVER, that if at any time the average of the Closing Price for any 30
consecutive trading days is equal to or greater than $20.00 AND the Closing
Price for the last day of such thirty day trading period is equal to or greater
than $20.00, then the warrant exercise price shall thereafter be $5.00; and (ii)
making each class of Warrants fully exercisable. The Warrants issued under the
1996 Warrant Plan are fully exercisable at a warrant exercise price of $5.00 per
share. The Warrants may not be sold, assigned, transferred, exchanged or
otherwise disposed of except to spouses and
II-1
<PAGE>
beneficiaries of the holders of such Warrants. The Company consented to an
assignment by Daniel L. Simon and Brian T. Clingen to Paul G. Simon of 123,530
Series I Warrants. A total of 2,470,608 shares of Common Stock have been
reserved for issuance pursuant to the Warrants issued under the 1996 Warrant
Plan. Daniel L. Simon holds 595,000 Series I Warrants, 700,000 Series II
Warrants and 700,000 Series III Warrants; Brian L. Clingen holds 105,006 Series
I Warrants, 123,536 Series II Warrants and 123,536 Series III Warrants; and Paul
G. Simon holds 123,530 Series I Warrants. The Company recognized a one-time
non-cash compensation charge of approximately $9 million in the quarter ended
June 30, 1996 relating to the issuance of the Warrants under the 1996 Warrant
Plan. See "Management -- The 1996 Warrant Plan and "Executive Compensation."
On April 5, 1996, the Company issued to KIA V and KEP V and certain
individuals designated by KIA V and KEP V 186,500 shares of Class B Common Stock
and 188,500 shares of Class C Common Stock in exchange for $30 million. Such
Class B Common Stock and Class C Common Stock was reclassified into 6,000,000
shares of Common Stock and 2,500,000 shares were sold in the Offering.
On June 30, 1994, the Company issued and sold to Bear, Stearns & Co. Inc. as
the Initial Purchaser (the "Initial Purchaser") 50,000 Units consisting of
$50,000,000 principal amount at maturity of 14% Series A Senior Secured Discount
Notes due 2004 (the "Old Notes") and 50,000 Noteholder Warrants (sold with a 4%
discount to the Initial Purchaser, along with compensation to Bear, Stearns &
Co. Inc., in its individual capacity and not as Initial Purchaser, of 12,500
Noteholder Warrants) for an aggregate offering price of approximately $25.4
million. Each Unit consisted of $1,000 principal amount at maturity of the Old
Notes and one Noteholder Warrant, and the Old Notes and Noteholder Warrants were
immediately detachable and separately transferable, subject to compliance with
applicable federal and state securities laws. This sale to the Initial Purchaser
was exempt from registration as an exempt private placement under Section 4(2)
of the Securities Act. On December 9, 1994, in a transaction registered under
the Securities Act, the Registrant issued $50,000,000 principal amount at
maturity of its 14% Senior Secured Discount Notes due 2004 in exchange for all
of the issued and outstanding Old Notes.
On November 18, 1993, pursuant to a Contribution Agreement between the
Company and all of the then shareholders of UOI, (i) the holders of all of the
common shares of UOI exchanged such shares on a one-for-one basis for shares of
Common Stock of the Company and (ii) the holders of all of the Class B common
shares of UOI exchanged such shares for an aggregate of 48,000 shares of Series
B Preferred Stock, no par value, of the Company. These exchanges were exempt
from registration as either not involving any "sale" or as exempt private
placements under Section 4(2) of the Securities Act.
On November 18, 1993, the Company entered into the Option Exchange Agreement
with UOI and William H. Smith ("WHS"), pursuant to which the Company granted to
WHS an option to purchase 0.52% of the issued and outstanding capital stock of
the Company at a purchase price of $130,000. The option was exercisable by WHS
upon the Company entering into a definitive agreement to issue shares of capital
stock through an underwritten public offering. WHS exercised his option in full
and received 67,600 shares of Common Stock of the Company in connection with the
Offering.
On November 18, 1993, the Company entered into the Capital Appreciation
Right Agreement with Connecticut General Life Insurance Company, Cigna Property
and Casualty Insurance Company, Life Insurance Company of North America and
Aetna Life Insurance Company, pursuant to which the Company granted such parties
limited capital appreciation rights in the capital stock of the Company in
exchange for a waiver of the prepayment penalty in connection with the 1993
refinancing. Such capital appreciation rights are triggered by the occurrence of
any of the following: (i) liquidation or dissolution of the Company or UOI, (ii)
sale of all or substantially all of the issued and outstanding shares of common
stock or assets of the Company, or (iii) the merger or consolidation of the
Company or UOI, subject to certain exceptions. The maximum amount payable
pursuant to the agreement is $3.8 million and is required to be paid no later
than one year following the triggering event. The agreement expires June 30,
1998.
In each case, exemption from registration was claimed on the grounds that
the issuance of such securities did not involve any public offering within the
meaning of Section 4(2) of the Securities Act.
II-2
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits.
<TABLE>
<C> <S>
2.1 Plan and Agreement of Merger, dated November 18, 1993, between the Company and
Universal Outdoor II, Inc. (filed as Exhibit 2 to UOI's Registration
Statement on Form S-1 (Commission File No. 33-72710) and incorporated herein
by reference)
2.2 Stock Purchase Agreement (Stock Purchase Agreement) between Wind Point
Partners II, L.P., Marquette Venture Partners, L.P., Chemical Equity
Associates, a California Limited Partnership, Banc One Venture Corporation
and Management Shareholders and UOI relating to the capital stock of NOA
Holding Company dated February 27, 1996 (filed as Exhibit 2.1 to the
Company's Current Report on Form 8-K dated April 5, 1996 (File No. 33-82582)
(the "Company 8-K") and incorporated herein by reference)
2.3 Amendment No. 1 to Stock Purchase Agreement (filed as Exhibit 2.2 to the
Company 8-K and incorporated herein by reference)
2.4 Agreement and Plan of Recapitalization between the Company, KIA V, KEP V and
certain stockholders of the Company (filed as Exhibit 2.4 to Amendment No. 2
to the Company's Registration Statement (File No. 333-12457) on Form S-1 (the
"Registration Statement") and incorporated herein by reference)
2.5 Agreement and Plan of Merger between UOI, Universal Acquisition Corp. and
Outdoor Advertising Holdings, Inc. dated August 27, 1996 (filed as Exhibit
2.5 to the Registration Statement and incorporated herein by reference)
2.6 Option and Asset Purchase Agreement between UOI and the Memphis/Tunica Sellers
dated September 12, 1996 (filed as Exhibit 2.6 to the Registration Statement
and incorporated herein by reference)
2.7 Asset Purchase Agreement among Mountain Media, Inc., d/b/a Iowa Outdoor
Displays, Robert H. Lambert and UOI dated September 12, 1996 (filed as
Exhibit 2.4 to UOI's Registration Statement on Form S-1, dated February 13,
1997 (File No. 333-21717) (the "UOI Registration Statement") and incorporated
herein by reference)
2.8 Asset Purchase Agreement between UOI and The Chase Company dated September 11,
1996 (filed as Exhibit 2.8 to the Registration Statement and incorporated
herein by reference)
2.9 Stock Purchase Agreement, dated as of November 22, 1996, among Revere, UOI and
the stockholders of Revere (filed as Exhibit 2.6 to the UOI Registration
Statement and incorporated herein by reference)
2.10 Asset Purchase Agreement, dated as of December 10, 1996, among Matthew,
Matthew Acquisition Corp. and UOI (filed as Exhibit 2.7 to the UOI
Registration Statement and incorporated herein by reference)
3.1 Third Amended and Restated Certificate of Incorporation (filed as Exhibit 3.1
to the Registration Statement and incorporated herein by reference)
3.2 Second Amended and Restated Bylaws (filed as Exhibit 3.2 to the Registration
Statement and incorporated herein by reference)
4.1 Specimen Common Stock Certificate of the Company (filed as Exhibit 4.1 to the
Company's Registration Statement (File No. 333-5351) on Form S-1 and
incorporated herein by reference)
</TABLE>
II-3
<PAGE>
<TABLE>
<C> <S>
4.2 Indenture of Trust between United States Trust Company of New York as trustee,
and UOI, dated as of October 16, 1996, relating to the October Notes (filed
as Exhibit 10.3 to the UOI Registration Statement and incorporated herein by
reference)
4.3 Indenture of Trust between United States Trust Company of New York, as
trustee, and UOI dated as of December 16, 1996, relating to the December
Notes (filed as Exhibit 4.1 to the UOI Registration Statement and
incorporated herein by reference)
4.4 Warrant Agreement between the Registrant and United States Trust Company of
New York, as warrant agent, dated June 30, 1994 relating to the Noteholder
Warrants (filed as Exhibit 4(i) to Amendment No. 1 to the Company's
Registration Statement on Form S-1 (File No. 33-93852) and incorporated
herein by reference)
4.5 Purchase Agreement, dated as of June 23, 1994, between the Company and Bear,
Stearns & Co. Inc. (the "Initial Purchaser") relating to the Company's 14%
Series A Senior Secured Discount Notes due 2004 (the "Old Notes") and
Noteholder Warrants to purchase Common Stock (filed as Exhibit 4(a) to the
Company's Registration Statement on Form S-1 (File No. 33-82582) and
incorporated herein by reference)
4.6 Exchange and Registration Rights Agreement, dated as of June 23, 1994, between
the Company and the Initial Purchaser (filed as Exhibit 4(d) to the Company's
Registration Statement on Form S-1 (File No. 33-82582) and incorporated
herein by reference)
5.1* Opinion of Sidley & Austin
9.1 Voting Trust Agreement dated December 20, 1995 among the Company, Daniel L.
Simon and Brian T. Clingen (filed as Exhibit 9.1 to the Company's
Registration Statement (File No. 333-5351) on Form S-1 and incorporated
herein by reference)
9.2 Voting Trust Agreement among the Company, Daniel L. Simon and Paul G. Simon
(filed as Exhibit 9.2 to the Registration Statement and incorporated herein
by reference)
10.1 Consolidated Credit Agreement dated October 31, 1996, among UOI, the various
lending institutions from time to time parties thereto, LaSalle National
Bank, as Co-Agent and Bankers Trust Company, as Agent (filed as Exhibit 10.1
to the UOI Registration Statement and incorporated herein by reference)
10.2 Amended and Restated 1996 Warrant Plan of the Company (filed as Exhibit 10.3
to Amendment No. 2 to the Company's Registration Statement (File No.
333-5351) on Form S-1 and incorporated herein by reference)
10.3 Agreement Regarding Tax Liabilities and Payments dated as of November 18, 1993
by and between UOI and the Company (filed as Exhibit 10(f) to UOI's Form S-1
Registration Statement (File No. 33-72710) and incorporated herein by
reference)
10.4 Capital Appreciation Right Agreement among the Company, Connecticut General
Life Insurance Company, Cigna Property and Casualty Insurance Company, Life
Insurance Company of North America and Aetna Life Insurance Company dated
November 18, 1993 (filed as Exhibit 10.6 to Amendment No. 2 to the Company's
Registration Statement (File No. 333-5351) on Form S-1 and incorporated
herein by reference)
10.5 Fee Letter between the Company and Kelso & Company, L.P. (filed as Exhibit
10.9 to Amendment No. 2 to the Company's Registration Statement on Form S-1
(File No. 333-12457) and incorporated herein by reference)
</TABLE>
II-4
<PAGE>
<TABLE>
<C> <S>
10.6 Registration Rights Agreement among the Company, KIA V, KEP V, Daniel L.
Simon, Brian T. Clingen and Paul G. Simon (filed as Exhibit 10.10 to
Amendment No. 2 to the Company's Registration Statement on Form S-1 (File No.
333-12457) and incorporated herein by reference)
10.7 Term Loan Agreement among UOI, various lending institutions, LaSalle National
Bank as Co-Agent and Bankers Trust Company as Agent dated as of May 21, 1997
10.8 Amended and Restated Credit Agreement among UOI, various lending institutions,
LaSalle National Bank as Co-Agent and Bankers Trust Company as Agent dated as
of May 21, 1997
11.1 Statement regarding computation of per share earnings
21.1 Subsidiaries of the Registrant (filed as Exhibit 21.1 to the Company's Annual
Report on Form 10-K dated December 31, 1996 (File No. 000-20823) and
incorporated herein by reference)
23.1 Consent of Price Waterhouse LLP
23.2 Consent of Ernst & Young LLP
23.3 Consent of Arthur Anderson LLP
23.4* Consent of Sidley & Austin (contained in Exhibit 5.1)
24.1* Powers of Attorney
</TABLE>
- ------------------------
* Previously filed.
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes that:
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to Item 14 above, or otherwise, the Company has been
advised that, in the opinion of the Commission, such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or
paid by a director, officer or controlling person of the Company in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Company will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
(b) The undersigned Registrant hereby undertakes:
(1) To file during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the
II-5
<PAGE>
changes in volume and price represent no more than a 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
PROVIDED, HOWEVER, that paragraphs (1)(i) and (1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form P-3 and the information
required to be included in a post-effective amendment by these paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1933 that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Chicago, State of
Illinois, on the 25th day of June, 1997.
UNIVERSAL OUTDOOR HOLDINGS, INC.
By: /s/ PAUL G. SIMON
-----------------------------------
Paul G. Simon*
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------- ------------------------------------ ----------------
<C> <S> <C> <C>
** President and Chief Executive
--------------------- Officer (Principal Executive June 25, 1997
Daniel L. Simon Officer) and Director
** Vice President and Chief Financial
--------------------- Officer (Principal Financial and June 25, 1997
Brian T. Clingen Accounting Officer) and Director
/s/ PAUL G. SIMON
---------------------
Paul G. Simon*
**
--------------------- Director June 25, 1997
Michael J. Roche
**
--------------------- Director June 25, 1997
Michael B. Goldberg
--------------------- Director
Frank K. Bynum
</TABLE>
* Paul Simon was appointed Attorney-in-Fact pursuant to a Power of Attorney
filed with the Commission with this Registration Statement.
** /s/ Paul G. Simon, Attorney-in-Fact
II-7
<PAGE>
LIST OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- --------- ------------------------------------------------------------------------------------------ ---------
<C> <S> <C>
2.1 Plan and Agreement of Merger, dated November 18, 1993, between the Company and Universal
Outdoor II, Inc. (filed as Exhibit 2 to UOI's Registration Statement on Form S-1
(Commission File No. 33-72710) and incorporated herein by reference)
2.2 Stock Purchase Agreement (Stock Purchase Agreement) between Wind Point Partners II, L.P.,
Marquette Venture Partners, L.P., Chemical Equity Associates, a California Limited
Partnership, Banc One Venture Corporation and Management Shareholders and UOI relating to
the capital stock of NOA Holding Company dated February 27, 1996 (filed as Exhibit 2.1 to
the Company's Current Report on Form 8-K dated April 5, 1996 (File No. 33-82582) (the
"Company 8-K") and incorporated herein by reference)
2.3 Amendment No. 1 to Stock Purchase Agreement (filed as Exhibit 2.2 to the Company 8-K and
incorporated herein by reference)
2.4 Agreement and Plan of Recapitalization between the Company, KIA V, KEP V and certain
stockholders of the Company (filed as Exhibit 2.4 to Amendment No. 2 to the Company's
Registration Statement (File No. 333-12457) on Form S-1 (the "Registration Statement")
and incorporated herein by reference)
2.5 Agreement and Plan of Merger between UOI, Universal Acquisition Corp. and Outdoor
Advertising Holdings, Inc. dated August 27, 1996 (filed as Exhibit 2.5 to the
Registration Statement and incorporated herein by reference)
2.6 Option and Asset Purchase Agreement between UOI and the Memphis/Tunica Sellers dated
September 12, 1996 (filed as Exhibit 2.6 to the Registration Statement and incorporated
herein by reference)
2.7 Asset Purchase Agreement among Mountain Media, Inc., d/b/a Iowa Outdoor Displays, Robert
H. Lambert and UOI dated September 12, 1996 (filed as Exhibit 2.4 to UOI's Registration
Statement on Form S-1, dated February 13, 1997 (File No. 333-21717) (the "UOI
Registration Statement") and incorporated herein by reference)
2.8 Asset Purchase Agreement between UOI and The Chase Company dated September 11, 1996 (filed
as Exhibit 2.8 to the Registration Statement and incorporated herein by reference)
2.9 Stock Purchase Agreement, dated as of November 22, 1996, among Revere, UOI and the
stockholders of Revere (filed as Exhibit 2.6 to the UOI Registration Statement and
incorporated herein by reference)
2.10 Asset Purchase Agreement, dated as of December 10, 1996, among Matthew, Matthew
Acquisition Corp. and UOI (filed as Exhibit 2.7 to the UOI Registration Statement and
incorporated herein by reference)
3.1 Third Amended and Restated Certificate of Incorporation (filed as Exhibit 3.1 to the
Registration Statement and incorporated herein by reference)
3.2 Second Amended and Restated Bylaws (filed as Exhibit 3.2 to the Registration Statement and
incorporated herein by reference)
4.1 Specimen Common Stock Certificate of the Company (filed as Exhibit 4.1 to the Company's
Registration Statement (File No. 333-5351) on Form S-1 and incorporated herein by
reference)
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
4.2 Indenture of Trust between United States Trust Company of New York as trustee, and UOI,
dated as of October 16, 1996, relating to the October Notes (filed as Exhibit 10.3 to the
UOI Registration Statement and incorporated herein by reference)
4.3 Indenture of Trust between United States Trust Company of New York, as trustee, and UOI
dated as of December 16, 1996, relating to the December Notes (filed as Exhibit 4.1 to
the UOI Registration Statement and incorporated herein by reference)
4.4 Warrant Agreement between the Registrant and United States Trust Company of New York, as
warrant agent, dated June 30, 1994 relating to the Noteholder Warrants (filed as Exhibit
4(i) to Amendment No. 1 to the Company's Registration Statement on Form S-1 (File No.
33-93852) and incorporated herein by reference)
4.5 Purchase Agreement, dated as of June 23, 1994, between the Company and Bear, Stearns & Co.
Inc. (the "Initial Purchaser") relating to the Company's 14% Series A Senior Secured
Discount Notes due 2004 (the "Old Notes") and Noteholder Warrants to purchase Common
Stock (filed as Exhibit 4(a) to the Company's Registration Statement on Form S-1 (File
No. 33-82582) and incorporated herein by reference)
4.6 Exchange and Registration Rights Agreement, dated as of June 23, 1994, between the Company
and the Initial Purchaser (filed as Exhibit 4(d) to the Company's Registration Statement
on Form S-1 (File No. 33-82582) and incorporated herein by reference)
5.1* Opinion of Sidley & Austin
9.1 Voting Trust Agreement dated December 20, 1995 among the Company, Daniel L. Simon and
Brian T. Clingen (filed as Exhibit 9.1 to the Company's Registration Statement (File No.
333-5351) on Form S-1 and incorporated herein by reference)
9.2 Voting Trust Agreement among the Company, Daniel L. Simon and Paul G. Simon (filed as
Exhibit 9.2 to the Registration Statement and incorporated herein by reference)
10.1 Consolidated Credit Agreement dated October 31, 1996, among UOI, the various lending
institutions from time to time parties thereto, LaSalle National Bank, as Co-Agent and
Bankers Trust Company, as Agent (filed as Exhibit 10.1 to the UOI Registration Statement
and incorporated herein by reference)
10.2 Amended and Restated 1996 Warrant Plan of the Company (filed as Exhibit 10.3 to Amendment
No. 2 to the Company's Registration Statement (File No. 333-5351) on Form S-1 and
incorporated herein by reference)
10.3 Agreement Regarding Tax Liabilities and Payments dated as of November 18, 1993 by and
between UOI and the Company (filed as Exhibit 10(f) to UOI's Form S-1 Registration
Statement (File No. 33-72710) and incorporated herein by reference)
10.4 Capital Appreciation Right Agreement among the Company, Connecticut General Life Insurance
Company, Cigna Property and Casualty Insurance Company, Life Insurance Company of North
America and Aetna Life Insurance Company dated November 18, 1993 (filed as Exhibit 10.6
to Amendment No. 2 to the Company's Registration Statement (File No. 333-5351) on Form
S-1 and incorporated herein by reference)
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
10.5 Fee Letter between the Company and Kelso & Company, L.P. (filed as Exhibit 10.9 to
Amendment No. 2 to the Company's Registration Statement on Form S-1 (File No. 333-12457)
and incorporated herein by reference)
10.6 Registration Rights Agreement among the Company, KIA V, KEP V, Daniel L. Simon, Brian T.
Clingen and Paul G. Simon (filed as Exhibit 10.10 to Amendment No. 2 to the Company's
Registration Statement on Form S-1 (File No. 333-12457) and incorporated herein by
reference)
10.7 Term Loan Agreement among UOI, various lending institutions, LaSalle National Bank as
Co-Agent and Bankers Trust Company as Agent dated as of May 21, 1997
10.8 Amended and Restated Credit Agreement among UOI, various lending institutions, LaSalle
National Bank as Co-Agent and Bankers Trust Company as Agent dated as of May 21, 1997
11.1 Statement regarding computation of per share earnings
21.1 Subsidiaries of the Registrant (filed as Exhibit 12.1 to the Company's Annual Report on
Form 10-K dated December 31, 1996 (File No. 000-20823) and incorporated herein by
reference)
23.1 Consent of Price Waterhouse LLP
23.2 Consent of Ernst & Young LLP
23.3 Consent of Arthur Anderson LLP
23.4* Consent of Sidley & Austin (contained in Exhibit 5.1)
24.1* Powers of Attorney
</TABLE>
- ------------------------
* Previously filed.
<PAGE>
- ------------------------------------------------------------------
- ------------------------------------------------------------------
TERM LOAN AGREEMENT
among
UNIVERSAL OUTDOOR, INC.
VARIOUS LENDING INSTITUTIONS,
LA SALLE NATIONAL BANK,
AS CO-AGENT
and
BANKERS TRUST COMPANY,
AS AGENT
------------------------------------
Dated as of May 21, 1997
------------------------------------
$75,000,000
- ------------------------------------------------------------------
- ------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
----
SECTION 1. Amount and Terms of Credit....................................... 1
1.01 Commitment........................................................ 1
1.02 Minimum Borrowing Amounts, etc.................................... 1
1.03 Notice of Borrowing, etc.......................................... 1
1.04 Disbursement of Funds............................................. 2
1.05 Notes............................................................. 2
1.06 Conversions....................................................... 3
1.07 Pro Rata Borrowings............................................... 3
1.08 Interest.......................................................... 4
1.09 Interest Periods.................................................. 4
1.10 Increased Costs, Illegality, etc.................................. 5
1.11 Compensation...................................................... 7
1.12 Change of Lending Office.......................................... 8
1.13 Replacement of Banks.............................................. 8
SECTION 2. Fees; Commitments................................................ 9
2.01 Fees.............................................................. 9
2.02 Mandatory Termination of Commitments, etc......................... 9
SECTION 3. Payments......................................................... 9
3.01 Voluntary Prepayments............................................. 9
3.02 Mandatory Prepayments............................................. 10
3.03 Method and Place of Payment....................................... 11
3.04 Net Payments...................................................... 12
SECTION 4. Conditions Precedent............................................. 13
4.01 Conditions Precedent to Loans..................................... 13
SECTION 5. Representations, Warranties and Agreements....................... 17
5.01 Corporate Status.................................................. 17
5.02 Corporate Power and Authority..................................... 17
(i)
<PAGE>
PAGE
----
5.03 No Violation...................................................... 17
5.04 Litigation........................................................ 18
5.05 Use of Proceeds; Margin Regulations............................... 18
5.06 Governmental Approvals............................................ 18
5.07 Investment Company Act............................................ 18
5.08 Public Utility Holding Company Act................................ 18
5.09 True and Complete Disclosure...................................... 18
5.10 Financial Condition; Financial Statements......................... 19
5.11 Security Interests................................................ 20
5.12 Tax Returns and Payments.......................................... 20
5.13 Compliance with ERISA............................................. 20
5.14 Subsidiaries...................................................... 21
5.15 Patents, etc...................................................... 21
5.16 Pollution and Other Regulations................................... 22
5.17 Properties........................................................ 23
5.18 Labor Relations................................................... 23
5.19 Existing Indebtedness............................................. 23
SECTION 6. Affirmative Covenants............................................ 23
6.01 Information Covenants............................................. 23
6.02 Books, Records and Inspections.................................... 26
6.03 Insurance......................................................... 26
6.04 Payment of Taxes.................................................. 27
6.05 Consolidated Corporate Franchises................................. 27
6.06 Compliance with Statutes, etc..................................... 27
6.07 ERISA............................................................. 27
6.08 Good Repair....................................................... 28
6.09 End of Fiscal Years; Fiscal Quarters.............................. 28
6.10 Additional Security; Further Assurances........................... 28
6.11 Corporate Separateness............................................ 30
6.12 Compliance with Environmental s................................... 30
SECTION 7. Negative Covenants............................................... 31
7.01 Changes in Business............................................... 31
7.02 Consolidation, Merger, Sale or Purchase of Assets, etc............ 31
7.03 Liens............................................................. 33
7.04 Indebtedness...................................................... 35
7.05 Capital Expenditures.............................................. 36
7.06 Investments and Loans............................................. 36
7.07 Subsidiaries; etc................................................. 37
(ii)
<PAGE>
PAGE
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7.08 Prepayments of Indebtedness, etc.................................. 37
7.09 Dividends, etc.................................................... 38
7.10 Transactions with Affiliates...................................... 39
7.11 Fixed Charge Coverage Ratio....................................... 39
7.12 Minimum Modified Adjusted EBITDA.................................. 40
7.13 Senior Leverage Ratio............................................. 40
SECTION 8. Events of Default................................................ 40
8.01 Payments.......................................................... 40
8.02 Representations, etc.............................................. 41
8.03 Covenants......................................................... 41
8.04 Default Under Other Agreements.................................... 41
8.05 Bankruptcy, etc................................................... 41
8.06 ERISA............................................................. 42
8.07 Credit Documents.................................................. 42
8.08 Holdings.......................................................... 42
8.09 Judgments......................................................... 44
SECTION 9. Definitions...................................................... 44
SECTION 10. The Agent....................................................... 68
10.01 Appointment...................................................... 68
10.02 Nature of Duties................................................. 68
10.03 Lack of Reliance on the Agent.................................... 68
10.04 Certain Rights of the Agent...................................... 69
10.05 Reliance......................................................... 69
10.06 Indemnification.................................................. 69
10.07 The Agent in Its Individual Capacity............................. 69
10.08 Holders.......................................................... 70
10.09 Resignation by the Agent......................................... 70
SECTION 11. Miscellaneous................................................... 71
11.01 Payment of Expenses, etc......................................... 71
11.02 Right of Setoff.................................................. 71
11.03 Notices.......................................................... 72
11.04 Benefit of Agreement............................................. 72
11.05 No Waiver; Remedies Cumulative................................... 74
11.06 Payments Pro Rata................................................ 74
11.07 Calculations; Computations....................................... 75
(iii)
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PAGE
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11.08 Governing Law; Submission to Jurisdiction; Venue; Waiver of
Jury Trial..................................................... 75
11.09 Counterparts..................................................... 76
11.10 Execution........................................................ 76
11.11 Headings Descriptive............................................. 76
11.12 Amendment or Waiver.............................................. 76
11.13 Survival......................................................... 77
11.14 Domicile of Loans................................................ 77
11.15 Confidentiality.................................................. 77
11.16 Lender Register.................................................. 77
ANNEX I -- Commitments
ANNEX II -- Bank Addresses
ANNEX III -- Government Approvals
ANNEX IV -- Subsidiaries
ANNEX V -- Properties
ANNEX VI -- Existing Indebtedness
ANNEX VII -- Insurance Policies
ANNEX VIII -- Existing Liens
ANNEX IX -- Management Fees
EXHIBIT A -- Form of Notice of Borrowing
EXHIBIT B -- Form of Note
EXHIBIT C-1 -- Form of Winston & Strawn Opinion
EXHIBIT C-2 -- Form of White & Case Opinion
EXHIBIT D -- Form of Officers Certificate
EXHIBIT E -- Form of Holdings TL Guaranty
EXHIBIT F -- Form of Amendment To Borrower Pledge Agreement
EXHIBIT G -- Form of Amendment to Security Agreement
EXHIBIT H -- Form of Amendment to Holdings Pledge Agreement
EXHIBIT I -- Solvency Letter
EXHIBIT J -- Adjusted EBITDA
EXHIBIT K -- Assignment Agreement
(iv)
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TERM LOAN AGREEMENT dated as of May 21, 1997, among UNIVERSAL OUTDOOR,
INC., an Illinois corporation, the lending institutions listed from time to time
on Annex I hereto (each a "Bank" and, collectively, the "Banks"), LA SALLE
NATIONAL BANK, as Co-Agent and BANKERS TRUST COMPANY, as agent (the "Agent").
Unless otherwise defined herein, all capitalized terms used herein and defined
in Section 9 are used herein as so defined.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, subject to and upon the terms and conditions set forth
herein, the Banks are willing to make available to the Borrower the credit
facility provided for herein;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. AMOUNT AND TERMS OF CREDIT.
1.011 COMMITMENT. (A) Subject to and upon the terms and conditions
herein set forth, each Bank severally agrees to make a loan (each a "Loan" and,
collectively, the "Loans") to the Borrower, which Loans shall (i) be made
pursuant to a single drawing on the Closing Date, (ii) be made and initially
maintained as a single Borrowing of Base Rate Loans (subject to the option to
convert Loans pursuant to Section 1.06) and (iii) not exceed in principal amount
for any Bank at the time of the incurrence thereof the Commitment of such Bank.
Once repaid, Loans may not be reborrowed.
1.012 MINIMUM BORROWING AMOUNTS, ETC. The aggregate principal amount
of each Borrowing shall not be less than the Minimum Borrowing Amount. More
than one Borrowing may be incurred on any day, provided that at no time shall
there be outstanding more than five Borrowings of Eurodollar Loans hereunder.
1.013 NOTICE OF BORROWING, ETC. (a) The Borrower shall give the
Agent at its Notice Office, prior to 11:00 A.M. (New York time), at least two
Business Days' prior written notice (or telephonic notice promptly confirmed in
writing) of its request to incur Loans hereunder. Such notice (a "Notice of
Borrowing") shall be in the form of Exhibit A and shall be irrevocable and shall
specify (i) the aggregate principal amount of the Loans to be incurred and (ii)
the date of incurrence (which shall be a Business Day). The Agent shall
promptly give each Bank written notice (or telephonic notice promptly confirmed
in writing)
<PAGE>
of the proposed incurrence of such Bank's proportionate share thereof and of
the other matters covered by the Notice of Borrowing.
(b) Without in any way limiting the obligation of the Borrower to
confirm in writing any telephonic notice permitted to be given hereunder, the
Agent may prior to receipt of written confirmation act without liability upon
the basis of such telephonic notice, believed by the Agent in good faith to be
from an Authorized Officer of the Borrower. In each such case, the Borrower
hereby waives the right to dispute the Agent's record of the terms of such
telephonic notice.
1.014 DISBURSEMENT OF FUNDS. (a) No later than 1:00 P.M. (New York
time) on the Closing Date, each Bank will make available its PRO RATA share of
the Loans requested to be made on such date in the manner provided below. All
such amounts shall be made available to the Agent in U.S. dollars and
immediately available funds at the Payment Office and the Agent promptly will
make available to the Borrower by depositing to its account at the Payment
Office the aggregate of the amounts so made available in the type of funds
received. Unless the Agent shall have been notified by any Bank prior to the
Closing Date that such Bank does not intend to make available to the Agent its
portion of the Loans to be made on such date, the Agent may assume that such
Bank has made such amount available to the Agent on such date, and the Agent, in
reliance upon such assumption, may (in its sole discretion and without any
obligation to do so) make available to the Borrower a corresponding amount. If
such corresponding amount is not in fact made available to the Agent by such
Bank and the Agent has made available same to the Borrower, the Agent shall be
entitled to recover such corresponding amount from such Bank. If such Bank does
not pay such corresponding amount forthwith upon the Agent's demand therefor,
the Agent shall promptly notify the Borrower, and the Borrower shall immediately
pay such corresponding amount to the Agent. The Agent shall also be entitled to
recover on demand from such Bank or the Borrower, as the case may be, interest
on such corresponding amount in respect of each day from the date such
corresponding amount was made available by the Agent to the Borrower to the date
such corresponding amount is recovered by the Agent, at a rate per annum equal
to (x) if paid by such Bank, the overnight Federal Funds Effective Rate or (y)
if paid by the Borrower, the then applicable rate of interest, calculated in
accordance with Section 1.08, for the respective Loans.
(b) Nothing herein shall be deemed to relieve any Bank from its
obligation to fulfill its commitments hereunder or to prejudice any rights which
the Borrower may have against any Bank as a result of any default by such Bank
hereunder.
1.015 NOTES. (a) The Borrower's obligation to pay the principal of,
and interest on, the Loans made to it by each Bank shall be evidenced by a
promissory note substantially in the form of Exhibit B with blanks appropriately
completed in conformity herewith (each a "Note" and, collectively, the "Notes").
The Note issued to each Bank shall
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(i) be executed by the Borrower, (ii) be payable to the order of such Bank and
be dated the Closing Date, (iii) be in a stated principal amount equal to the
Loan made by such Bank (or in the case of a Note issued pursuant to Section
11.04, the Loans purchased by such Bank) and be payable in the principal amount
of the Loans evidenced thereby, (iv) mature on the Maturity Date, (v) bear
interest as provided in the appropriate clause of Section 1.08 in respect of the
Base Rate Loans and Eurodollar Loans, as the case may be, evidenced thereby,
(vi) be subject to mandatory repayment as provided in Section 3.02 and (vii) be
entitled to the benefits of this Agreement and the other Credit Documents.
(b) Each Bank will note on its internal records the amount of each
Loan made by it and each payment in respect thereof and will, prior to any
transfer of its Note, endorse on the reverse side thereof the outstanding
principal amount of Loans evidenced thereby. Failure to make any such notation
shall not affect the Borrower's obligations in respect of such Loans.
1.016 CONVERSIONS. The Borrower shall have the option to convert on
any Business Day all or a portion at least equal to the applicable Minimum
Borrowing Amount of the outstanding principal amount of the Loans into a
Borrowing or Borrowings of another Type of Loan, provided that (i) except as
otherwise provided in Section 1.10(b), Eurodollar Loans may be converted into
Base Rate Loans only on the last day of an Interest Period applicable thereto
and no partial conversion of a Borrowing of Eurodollar Loans shall reduce the
outstanding principal amount of the Eurodollar Loans made pursuant to such
Borrowing to less than the Minimum Borrowing Amount applicable thereto,
(ii) Base Rate Loans may not be converted into Eurodollar Loans if any violation
of Section 8.01 or any Event of Default is then in existence to the extent that
the Agent or the Required Banks have determined that any such conversion at such
time would be disadvantageous to the Banks and (iii) Borrowings of Eurodollar
Loans resulting from this Section 1.06 shall be limited in number as provided in
Section 1.02. Each such conversion shall be effected by the Borrower giving the
Agent at its Notice Office, prior to 11:00 A.M. (New York time), at least three
Business Days' (or two Business Days', in the case of a conversion into Base
Rate Loans) prior written notice (or telephonic notice promptly confirmed in
writing) (each a "Notice of Conversion") specifying the Loans to be so
converted, the Type of Loans to be converted into and, if to be converted into a
Borrowing of Eurodollar Loans, the Interest Period to be initially applicable
thereto. The Agent shall give each Bank prompt notice of any such proposed
conversion affecting any of its Loans.
1.017 PRO RATA BORROWINGS. All Loans shall be made by the Banks PRO
RATA on the basis of their respective Commitments. It is understood that no Bank
shall be responsible for any default by any other Bank in its obligation to make
Loans hereunder and that each Bank shall be obligated to make the Loans provided
to be made by it hereunder, regardless of the failure of any other Bank to
fulfill its commitments hereunder.
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<PAGE>
1.018 INTEREST. (a) The unpaid principal amount of each Base Rate
Loan shall bear interest from the date of the Borrowing thereof until maturity
(whether by acceleration or otherwise) at a rate per annum which shall at all
times be the Applicable Base Rate Margin plus the Base Rate in effect from time
to time.
(b) The unpaid principal amount of each Eurodollar Loan shall bear
interest from the date of the Borrowing thereof until maturity (whether by
acceleration or otherwise) at a rate per annum which shall at all times be the
Applicable Eurodollar Margin plus the relevant Eurodollar Rate.
(c) All overdue principal and, to the extent permitted by law,
overdue interest in respect of each Loan and any other overdue amount payable
hereunder shall bear interest at a rate per annum equal to the Base Rate in
effect from time to time plus the sum of (i) 2% and (ii) the Applicable Base
Rate Margin, provided that no Loan shall bear interest after maturity (whether
by acceleration or otherwise) at a rate per annum less than 2% plus the rate of
interest applicable thereto at maturity.
(d) Interest shall accrue from and including the date of any
Borrowing to but excluding the date of any repayment thereof and shall be
payable (i) in respect of each Base Rate Loan, quarterly in arrears on the last
Business Day of each February, May, August and November, (ii) in respect of each
Eurodollar Loan, on the last day of each Interest Period applicable thereto and,
in the case of an Interest Period of six months, on the date occurring three
months after the first day of such Interest Period and (iii) in respect of each
Loan, on any prepayment or conversion (other than the prepayment and conversion
of Loans that are Base Rate Loans) (on the amount prepaid or converted), at
maturity (whether by acceleration or otherwise) and, after such maturity, on
demand.
(e) All computations of interest hereunder shall be made in
accordance with Section 11.07(b).
(f) The Agent, upon determining the interest rate for any Borrowing
of Eurodollar Loans for any Interest Period, shall promptly notify the Borrower
and the Banks thereof.
1.019 INTEREST PERIODS. (a) At the time the Borrower gives a Notice
of Borrowing or Notice of Conversion in respect of the making of, or conversion
into, a Borrowing of Eurodollar Loans (in the case of the initial Interest
Period applicable thereto) or prior to 10:00 A.M. (New York time) on the third
Business Day prior to the expiration of an Interest Period applicable to a
Borrowing of Eurodollar Loans, it shall have the right to elect by giving the
Agent written notice (or telephonic notice promptly confirmed in writing) of the
Interest Period applicable to such Borrowing, which Interest Period shall, at
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the option of the Borrower, be a one, two, three or six month period.
Notwithstanding anything to the contrary contained above:
(i) the initial Interest Period for any Borrowing of Eurodollar
Loansw shall commence on the date of such Borrowing (including the date
of any conversion from a Borrowing of Base Rate Loans) and each Interest
Period occurring thereafter in respect of such Borrowing shall commence
on the day on which the next preceding Interest Period expires;
(ii) if any Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period, such Interest Period shall end on the last Business Day of
such calendar month;
(iii) if any Interest Period would otherwise expire on a day which
is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day, provided that if any Interest Period would
otherwise expire on a day which is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iv) no Interest Period shall extend beyond the Maturity Date;
(v) no Interest Period may be elected that would extend beyond any
date upon which a Scheduled Repayment is required to be made if, after
giving effect to the selection of such Interest Period, the aggregate
principal amount of Loans maintained as Eurodollar Loans with Interest
Periods ending after such date would exceed the aggregate principal amount
of Loans permitted to be outstanding after such Scheduled Repayment; and
(vi) no Interest Period may be elected at any time when a violation of
Section 8.01 or an Event of Default is then in existence if the Agent or
the Required Banks have determined that such an election at such time would
be disadvantageous to the Banks.
(b) If upon the expiration of any Interest Period, the Borrower has
failed to (or may not) elect a new Interest Period to be applicable to the
respective Borrowing of Eurodollar Loans as provided above, the Borrower shall
be deemed to have elected to convert such Borrowing into a Borrowing of Base
Rate Loans effective as of the expiration date of such current Interest Period.
1.10 INCREASED COSTS, ILLEGALITY, ETC. (a) In the event that (x) in
the case of clause (i) below, the Agent or (y) in the case of clauses (ii) and
(iii) below, any Bank shall
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<PAGE>
have determined (which determination shall, absent manifest error, be final and
conclusive and binding upon all parties hereto):
(i) on any date for determining the Eurodollar Rate for any Interest
Period that, by reason of any changes arising after the Closing Date
affecting the interbank Eurodollar market, adequate and fair means do not
exist for ascertaining the applicable interest rate on the basis provided
for in the definition of Eurodollar Rate; or
(ii) at any time, that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect to
any Eurodollar Loans (other than any increased cost or reduction in the
amount received or receivable resulting from the imposition of or a change
in the rate of taxes or similar charges) because of (x) any change since
the Closing Date in any applicable law, governmental rule, regulation,
guideline or order (or in the interpretation or administration thereof and
including the introduction of any new law or governmental rule, regulation,
guideline or order) (such as, for example, but not limited to, a change in
official reserve requirements, but, in all events, excluding reserves
required under Regulation D to the extent included in the computation of
the Eurodollar Rate) and/or (y) other circumstances affecting such Bank,
the interbank Eurodollar market or the position of such Bank in such
market; or
(iii) at any time, that the making or continuance of any
Eurodollar Loan has become unlawful by compliance by such Bank in good
faith with any law, governmental rule, regulation, guideline (or would
conflict with any such governmental rule, regulation, guideline or order
not having the force of law but with which such Bank customarily complies
even though the failure to comply therewith would not be unlawful), or has
become impracticable as a result of a contingency occurring after the
Closing Date which materially and adversely affects the interbank
Eurodollar market;
then, and in any such event, such Bank (or the Agent in the case of clause (i)
above) shall (x) on such date and (y) within ten Business Days of the date on
which such event no longer exists give notice (by telephone confirmed in
writing) to the Borrower and to the Agent of such determination (which notice
the Agent shall promptly transmit to each of the other Banks). Thereafter (x)
in the case of clause (i) above, Eurodollar Loans shall no longer be available
until such time as the Agent notifies the Borrower and the Banks that the
circumstances giving rise to such notice by the Agent no longer exist, and any
Notice of Conversion given by the Borrower with respect to Eurodollar Loans
which have not yet been incurred shall be deemed rescinded by the Borrower, (y)
in the case of clause (ii) above, the Borrower shall pay to such Bank, upon
written demand therefor, such additional amounts (in the form of an increased
rate of, or a different method of calculating, interest or otherwise
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as such Bank in its sole discretion shall determine) as shall be required to
compensate such Bank for such increased costs or reductions in amounts
receivable hereunder (a written notice as to the additional amounts owed to such
Bank, showing the basis for the calculation thereof, submitted to the Borrower
by such Bank shall, absent manifest error, be final and conclusive and binding
upon all parties hereto) and (z) in the case of clause (iii) above, the Borrower
shall take one of the actions specified in Section 1.10(b) as promptly as
possible and, in any event, within the time period required by law.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the Borrower may (and
in the case of a Eurodollar Loan affected pursuant to Section 1.10(a)(iii) the
Borrower shall) either (i) if the affected Eurodollar Loan is then being made
pursuant to a Borrowing, cancel said Borrowing by giving the Agent telephonic
notice (confirmed promptly in writing) thereof on the same date that the
Borrower was notified by a Bank pursuant to Section 1.10(a)(ii) or (iii), or
(ii) if the affected Eurodollar Loan is then outstanding, upon at least three
Business Days' notice to the Agent, require the affected Bank to convert each
such Eurodollar Loan into a Base Rate Loan, provided that if more than one Bank
is affected at any time, then all affected Banks must be treated the same
pursuant to this Section 1.10(b).
1.11 COMPENSATION. (a) The Borrower shall compensate each Bank,
upon its written request (which request shall set forth the basis for requesting
such compensation), for all reasonable losses, expenses and liabilities
(including, without limitation, any loss, expense or liability incurred by
reason of the liquidation or reemployment of deposits or other funds required by
such Bank to fund its Eurodollar Loans but excluding in any event the loss of
anticipated profits) which such Bank may sustain: (i) if for any reason (other
than a default by such Bank or the Agent) a Borrowing of Eurodollar Loans does
not occur on a date specified therefor in a Notice of Conversion (whether or not
withdrawn by the Borrower or deemed withdrawn pursuant to Section 1.10(a)); (ii)
if any prepayment, repayment or conversion of any of its Eurodollar Loans occurs
on a date which is not the last day of an Interest Period applicable thereto;
(iii) if any prepayment of any of its Eurodollar Loans is not made on any date
specified in a notice of prepayment given by the Borrower; or (iv) as a
consequence of (x) any other default by the Borrower to repay its Eurodollar
Loans when required by the terms of this Agreement or (y) an election made
pursuant to Sections 1.10(b) and 1.13.
(b) Notwithstanding anything in this Agreement to the contrary, to
the extent any notice required by Section 1.10 or 3.04 is given by any Bank more
than 180 days after such Bank obtained, or reasonably should have obtained,
knowledge of the occurrence of the event giving rise to the additional costs of
the type described in such Section, such Bank shall not be entitled to
compensation under Section 1.10 or 3.04 for any amounts incurred or accruing
prior to the giving of such notice to the Borrower.
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1.12 CHANGE OF LENDING OFFICE. Each Bank agrees that, upon the
occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or
(iii) or 3.04 with respect to such Bank, it will, if requested by the Borrower,
use reasonable efforts (subject to overall policy considerations of such Bank)
to designate another lending office for any Loans affected by such event,
provided that such designation is made on such terms that such Bank and its
lending office suffer no economic, legal or regulatory disadvantage, with the
object of avoiding the consequence of the event giving rise to the operation of
any such Section. Nothing in this Section 1.12 shall affect or postpone any of
the obligations of the Borrower or the right of any Bank provided in Section
1.10 or 3.04.
1.13 REPLACEMENT OF BANKS. (x) Upon the occurrence of any event
giving rise to the operation of Section 1.10(a)(ii) or (iii) or Section 3.04
with respect to any Bank which results in such Bank charging to the Borrower
increased costs in excess of those being generally charged by the other Banks,
and/or (y) in the case of a refusal by a Bank to consent to a proposed change,
waiver, discharge or termination with respect to this Agreement which has been
approved by the Required Banks or Super Majority Banks, as the case may be, as
provided in Section 11.12, the Borrower shall have the right, if no Default or
Event of Default then exists, to replace such Bank (the "Replaced Bank") with
one or more other transferee or transferees who shall be acceptable to the Agent
(collectively, the "Replacement Bank") reasonably acceptable to the Agent,
provided that (i) at the time of any replacement pursuant to this Section 1.13,
the Replacement Bank shall enter into one or more Assignment Agreements pursuant
to Section 11.04(b) (and with all fees payable pursuant to said Section 11.04(b)
to be paid by the Replacement Bank) pursuant to which the Replacement Bank shall
acquire all of the outstanding Loans of the Replaced Bank and, in connection
therewith, shall pay to the Replaced Bank in respect thereof an amount equal to
the sum of (A) an amount equal to the principal of, and all accrued interest on,
all outstanding Loans of the Replaced Bank and (B) an amount equal to all
accrued, but theretofore unpaid, Fees owing to the Replaced Bank pursuant to
Section 2.01 and (ii) all obligations of the Borrower owing to the Replaced Bank
(other than those specifically described in clause (i) above in respect of which
the assignment purchase price has been, or is concurrently being, paid) shall be
paid in full to such Replaced Bank concurrently with such replacement. Upon the
execution of the respective Assignment Agreement, the payment of amounts
referred to in clauses (i) and (ii) above and, if so requested by the
Replacement Bank, delivery to the Replacement Bank of the appropriate Note
executed by the Borrower, the Replacement Bank shall become a Bank hereunder and
the Replaced Bank shall cease to constitute a Bank hereunder, except with
respect to indemnification provisions applicable to the Replaced Bank under this
Agreement, which shall survive as to such Replaced Bank.
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SECTION 2. FEES; COMMITMENTS.
1.021 FEES. (a) The Borrower agrees to pay to the Agent on the
Closing Date a facility fee for the account of each Bank equal to 1/4 of 1% of
such Bank's Commitment as in effect immediately prior to the making of the Loans
on such date.
(b) The Borrower shall pay to the Agent for its own account such
other fees as agreed to between the Borrower and the Agent, when and as due.
1.022 MANDATORY TERMINATION OF COMMITMENTS, ETC. (a) The Total
Commitment shall terminate in its entirety on May 22, 1997 if the Loans have not
yet been made.
(b) The Total Commitment shall terminate on the Closing Date after
giving effect to the making of the Loans.
SECTION 3. PAYMENTS.
1.031 VOLUNTARY PREPAYMENTS. The Borrower shall have the right to
prepay Loans in whole or in part, without premium or penalty, from time to time
on the following terms and conditions: (i) the Borrower shall give the Agent at
the Payment Office written notice (or telephonic notice promptly confirmed in
writing) of its intent to prepay the Loans, the amount of such prepayment and
(in the case of Eurodollar Loans) the specific Borrowing(s) pursuant to which
made, which notice shall be given by the Borrower at least one Business Day
prior to the date of such prepayment with respect to Base Rate Loans and two
Business Days prior to the date of such prepayment with respect to Eurodollar
Loans, which notice shall promptly be transmitted by the Agent to each of the
Banks; (ii) each partial prepayment of any Borrowing shall be in an aggregate
principal amount of at least $1,000,000 and, if greater, in an integral multiple
of $500,000, provided that no partial prepayment of Eurodollar Loans made
pursuant to a Borrowing shall reduce the aggregate principal amount of the
Eurodollar Loans outstanding pursuant to such Borrowing to an amount less than
the Minimum Borrowing Amount applicable thereto; (iii) at the time of any
prepayment of Eurodollar Loans pursuant to this Section 3.01 on any date other
than the last day of the Interest Period applicable thereto, the Borrower shall
pay the amounts required pursuant to Section 1.11; (iv) each prepayment in
respect of any Loans made pursuant to a Borrowing shall be applied PRO RATA
among such Loans; and (v) each prepayment pursuant to this Section 3.01 shall
reduce the remaining Scheduled Repayments on a PRO RATA basis (based upon the
then remaining principal amount of each such Scheduled Repayment); and (vi) any
prepayment made after the AR Termination Date shall be accompanied by a
prepayment of AR Loans in a principal amount equal to the AR Percentage times
the principal amount of the Loans being prepaid.
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1.032 MANDATORY PREPAYMENTS.
(A) REQUIREMENTS:
(a) On the last day of each calendar quarter, commencing September
30, 1997, the Borrower shall be required to repay $3,000,000 of the principal
amount of Loans (each such repayment, a "Scheduled Repayment").
(b) On the Business Day following the date of receipt thereof by
Holdings, the Borrower and/or any of its Subsidiaries of the Cash Proceeds from
any Asset Sale, an amount equal to the TL Percentage of the Net Cash Proceeds
from such Asset Sale shall be applied as a mandatory repayment of the principal
of the then outstanding Loans, provided that such Net Cash Proceeds from
Permitted Asset Sales shall not be required to be used to so repay Loans to the
extent the Borrower elects, as hereinafter provided, to cause such Net Cash
Proceeds to be reinvested in Reinvestment Assets (a "Reinvestment Election").
The Borrower may exercise its Reinvestment Election (within the parameters
specified in the preceding sentence) with respect to an Asset Sale if (x) no
Default or Event of Default exists and (y) the Borrower delivers a Reinvestment
Notice to the Agent on the Business Day following the date of the consummation
of the respective Asset Sale, with such Reinvestment Election being effective
with respect to the Net Cash Proceeds of such Asset Sale equal to the
Anticipated Reinvestment Amount specified in such Reinvestment Notice.
(c) On the date of the receipt thereof by Holdings or the Borrower,
as the case may be, an amount equal to 75% of the TL Percentage of the cash
proceeds (net of underwriting discounts and commissions and other reasonable
costs associated therewith) of any sale or issuance of equity by Holdings or the
Borrower, respectively (other than equity issued to management and other
employees of Holdings, the Borrower or its Subsidiaries, the exercise of any
warrants outstanding on the Restatement Effective Date and/or any amount of cash
received by Holdings or the Borrower in connection with any capital
contributions made by any of the Designated UOH Stockholders or, in the case of
the Borrower, by Holdings) shall be applied as a mandatory repayment of the
principal of the then outstanding Loans provided that the first $5,000,000 of
such proceeds in the aggregate do not have to be so applied to repay Loans or AR
Loans.
(d) On each date which is 90 days after the last day of each fiscal
year of the Borrower (commencing with the fiscal year ending on December 31,
1999), 50% of the TL Percentage of Excess Cash Flow for the fiscal year then
last ended shall be applied as a mandatory repayment of the principal of the
then outstanding Loans.
(e) On the Reinvestment Prepayment Date with respect to a
Reinvestment Election, an amount equal to the TL Percentage of the Reinvestment
Prepayment Amount,
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if any, for such Reinvestment Election shall be applied as a repayment of the
principal of the then outstanding Loans.
(f) On the date on which any Change of Control occurs, the
outstanding principal amount of all Loans shall become due and payable in full.
(B) APPLICATION:
(a) Each mandatory repayment of Loans pursuant to Section 3.02(A)
(other than pursuant to clause (a) thereof) shall be applied to reduce the
Scheduled Repayments on a PRO RATA basis (based upon the then remaining
outstanding principal amount of each such Scheduled Repayment).
(b) With respect to each prepayment of Loans required by Section
3.02, the Borrower may designate the Types of Loans which are to be prepaid and
the specific Borrowing(s) pursuant to which made, provided that (i) Eurodollar
Loans may so be designated for prepayment pursuant to this Section 3.02 only on
the last day of an Interest Period applicable thereto unless all Eurodollar
Loans made pursuant to such Facility with Interest Periods ending on such date
of required prepayment and all Base Rate Loans made pursuant to such Facility
have been paid in full; (ii) if any prepayment of Eurodollar Loans made pursuant
to a single Borrowing shall reduce the outstanding Loans made pursuant to such
Borrowing to an amount less than the Minimum Borrowing Amount for such
Borrowing, such Borrowing shall be immediately converted into Base Rate Loans;
and (iii) each prepayment of any Loans made pursuant to a Borrowing shall be
applied PRO RATA among such Loans. In the absence of a designation by the
Borrower as described in the preceding sentence, the Agent shall, subject to the
above, make such designation in its sole discretion with a view, but no
obligation, to minimize breakage costs owing under Section 1.11.
1.033 METHOD AND PLACE OF PAYMENT. Except as otherwise specifically
provided herein, all payments under this Agreement shall be made to the Agent
for the ratable (based on its PRO RATA share) account of the Banks entitled
thereto, not later than 1:00 P.M. (New York time) on the date when due and shall
be made in immediately available funds and in lawful money of the United States
of America at the Payment Office, it being understood that written notice by the
Borrower to the Agent to make a payment from the funds in the Borrower's account
at the Payment Office shall constitute the making of such payment to the extent
of such funds held in such account. Any payments under this Agreement which are
made later than 1:00 P.M. (New York time) shall be deemed to have been made on
the next succeeding Business Day. Whenever any payment to be made hereunder
shall be stated to be due on a day which is not a Business Day, the due date
thereof shall be extended to the next succeeding Business Day and, with respect
to payments of principal, interest shall be payable during such extension at the
applicable rate in effect immediately prior to such extension.
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1.034 NET PAYMENTS. (a) All payments made by the Borrower
hereunder, under any Note or any other Credit Document, will be made without
setoff, counterclaim or other defense. Except as provided for in Section
3.04(b), all such payments will be made free and clear of, and without deduction
or withholding for, any present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by any
jurisdiction or by any political subdivision or taxing authority thereof or
therein (but excluding, except as provided in the second succeeding sentence,
any tax imposed on or measured by the net income (or any franchise tax) of a
Bank pursuant to the laws of the jurisdiction in which the principal office or
applicable lending office of such Bank is located or under the laws of any
political subdivision or taxing authority of any such jurisdiction in which the
principal office or applicable lending office of such Bank is located) and all
interest, penalties or similar liabilities with respect thereto (collectively,
"Taxes"). If any Taxes are so levied or imposed, the Borrower agrees to pay the
full amount of such Taxes and such additional amounts as may be necessary so
that every payment of all amounts due hereunder, under any Note or under any
other Credit Document, after withholding or deduction for or on account of any
Taxes, will not be less than the amount provided for herein or in such Note or
in such other Credit Document. If any amounts are payable in respect of Taxes
pursuant to the preceding sentence, then the Borrower shall also reimburse each
Bank, upon the written request of such Bank, for taxes imposed on or measured by
the net income of such Bank pursuant to the laws of the jurisdiction in which
the principal office or applicable lending office of such Bank is located or of
any political subdivision or taxing authority of any such jurisdiction and for
any withholding of income or similar taxes imposed by the United States of
America as such Bank shall determine are payable by, or withheld from, such Bank
in respect of Taxes paid to or on behalf of such Bank pursuant to this or the
preceding sentence. The Borrower will furnish to the Agent within 45 days after
the date the payment of any Taxes, or any withholding or deduction on account
thereof, is due pursuant to applicable law certified copies of tax receipts
evidencing such payment by the Borrower. The Borrower will indemnify and hold
harmless the Agent and each Bank, and reimburse the Agent or such Bank upon its
written request, for the amount of any Taxes so levied or imposed and paid or
withheld by such Bank.
(b) Each Bank which is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) for Federal income tax purposes
agrees (i) to provide to the Borrower on or prior to the Closing Date two
original signed copies of Internal Revenue Service Form 4224 or Form 1001
certifying to such Bank's entitlement to a complete exemption from United States
withholding tax with respect to payments to be made under this Agreement, under
any Note and under any other Credit Document and (ii) that, (x) to the extent
legally entitled to do so, with respect to a Bank that is an assignee or
transferee of an interest under this Agreement pursuant to Section 11.04 hereof
(unless the respective Bank was already a Bank hereunder immediately prior to
such assignment or transfer), upon the date of such assignment or transfer to
such Bank, and (y) with respect to any Bank which is not a United States person
(as such term is defined in Section 7701(a)(30) of the Code) for
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U.S. Federal income tax purposes (including, without limitation, any assignee or
transferee), from time to time, upon the reasonable request by the Borrower or
the Agent after the Restatement Effective Date, such Bank will provide to each
of the Borrower and the Agent two original signed copies of Internal Revenue
Service Form 4224 or Form 1001 (or any successor forms) certifying to such
Bank's entitlement to a complete exemption from, or reduction in, United States
withholding tax with respect to payments to be made under this Agreement, under
any Note and under any other Credit Document. Notwithstanding anything to the
contrary contained in Section 3.04(a), the Borrower shall be entitled, to the
extent it is required to do so by law, to deduct or withhold income or other
similar taxes imposed by the United States (or any political subdivision or
taxing authority thereof or therein) from interest, fees or other amounts
payable hereunder (without any obligation under Section 3.04(a) to pay the
respective Bank such taxes or any additional amounts with respect thereto) for
the account of any Bank which is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) for United States federal income tax
purposes and which has not provided to the Borrower such forms required to be
provided to the Borrower by a Bank pursuant to the first sentence of this
Section 3.04(b), provided that if the Borrower shall so deduct or withhold any
such taxes, it shall provide a statement to the Agent and such Bank, setting
forth the amount of such taxes so deducted or withheld, the applicable rate and
any other information or documentation which such Bank may reasonably request
for assisting such Bank in obtaining any allowable credits or deductions for the
taxes so deducted or withheld in the jurisdiction or jurisdictions in which such
Bank is subject to tax. Notwithstanding anything to the contrary contained in
the preceding sentence, the Borrower agrees to indemnify each Bank in the manner
set forth in Section 3.04(a) in respect of any amounts deducted or withheld by
it as described in the previous sentence as a result of any changes after the
Closing Date in any applicable law, treaty, governmental rule, regulation,
guideline or order, or in the interpretation thereof, relating to the deducting
or withholding of income or similar Taxes.
SECTION 4. CONDITIONS PRECEDENT.
1.041 CONDITIONS PRECEDENT TO LOANS. The obligation of each Bank to
make its Loan on the Closing Date is subject, at the time thereof, to the
satisfaction of the following conditions:
(a)EFFECTIVENESS; NOTES. On or prior to the Closing Date,
(i) this Agreement shall have been executed as provided in Section 11.10
and (ii) there shall have been delivered to the Agent for the account of
each Bank a Note executed by the Borrower in the amount, maturity and as
otherwise provided herein.
(b) OFFICER'S CERTIFICATE. On the Closing Date, the Agent shall
have received a certificate dated such date signed by the President or any
Vice President
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of the Borrower stating that all of the applicable conditions set forth in
Sections 4.01(l) and (m) exist as of such date.
(c) OPINIONS OF COUNSEL. On the Closing Date, the Agent shall
have received opinions, addressed to the Agent, and each of the Banks and
dated the Closing Date, from (i) Winston & Strawn, counsel to the Borrower,
which opinion shall cover the matters contained in Exhibit C-1 hereto, (ii)
White & Case, special counsel to the Agent, which opinion shall cover the
matters contained in Exhibit C-2 hereto and (iii) such local counsel, if
any, satisfactory to the Agent as the Agent may request, which opinions
shall cover the perfection of the security interests granted pursuant to
the Security Documents and such other matters incident to the transactions
contemplated herein as the Agent may reasonably request and shall be in
form and substance satisfactory to the Agent.
(d) CORPORATE PROCEEDINGS. (I) On the Closing Date, the Agent
shall have received from the Borrower a certificate, dated the Closing
Date, signed by the President or any Vice-President of the Borrower in the
form of Exhibit D with appropriate insertions and deletions, together with
copies of the certificate of formation, the by-laws, or other
organizational documents of the Borrower and Holdings and the resolutions,
or such other administrative approval, of the Borrower and Holdings
referred to in such certificate and all of the foregoing (including each
such certificate of formation, certificate of incorporation and by-laws)
shall be satisfactory to the Agent.
(II) On the Closing Date, all corporate and legal proceedings
and all instruments and agreements in connection with the transactions
contemplated by this Agreement and the other Credit Documents shall be
satisfactory in form and substance to the Agent, and the Agent shall have
received all information and copies of all certificates, documents and
papers, including good standing certificates and any other records of
corporate proceedings and governmental approvals, if any, which the Agent
may have requested in connection therewith, such documents and papers,
where appropriate, to be certified by proper corporate or governmental
authorities.
(e) ADVERSE CHANGE, ETC. From December 31, 1996 to the Closing
Date, nothing shall have occurred (and neither the Banks nor the Agent
shall have become aware of any facts or conditions not previously known)
which the Agent or the Required Banks shall determine (a) has, or is
reasonably likely to have, a material adverse effect on the rights or
remedies of the Banks or the Agent, or on the ability of the Borrower to
perform its obligations to them, or (b) has, or is reasonably likely to
have, a Material Adverse Effect.
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(f) LITIGATION. On the Closing Date, there shall be no actions,
suits or proceedings pending or threatened (a) with respect to this
Agreement or any other Credit Document or the transactions contemplated
hereby or thereby or (b) which the Agent or the Required Banks shall
determine has, or is reasonably likely to have (i) a Material Adverse
Effect or (ii) a material adverse effect on the rights or remedies of the
Banks hereunder or under any other Credit Document or on the ability of the
Borrower to perform its obligations to the Banks hereunder or under any
other Credit Document.
(g) HOLDINGS TL GUARANTY. On the Closing Date, Holdings shall
have duly authorized, executed and delivered a guaranty substantially in
the form of Exhibit E (as modified, amended or supplemented from time to
time, the "Holdings TL Guaranty"), which guaranty shall be in full force
and effect.
(h) SECURITY DOCUMENTS. (I) On the Closing Date, the Borrower
shall have duly authorized, executed and delivered an Amendment to Pledge
Agreement in the form of Exhibit F (the Existing Borrower Pledge Agreement
as so amended and as subsequently modified, amended or supplemented from
time to time in accordance with the terms thereof and hereof, the "Borrower
Pledge Agreement"), and the Collateral Agent, as pledgee thereunder, shall
hold all of the certificates representing the Pledged Securities referred
to therein, accompanied by executed and undated stock powers, and the
Borrower's Pledge Agreement shall be in full force and effect.
(II) On the Closing Date, the Borrower shall have duly
authorized, executed and delivered an Amendment to Security Agreement
substantially in the form of Exhibit G (the Existing Security Agreement as
so amended and as subsequently modified, supplemented or amended from time
to time in accordance with the terms thereof and hereof, the "Security
Agreement") covering all of the Borrower's present and future Security
Agreement Collateral.
(III) On the Closing Date, Holdings shall have each duly
authorized, executed and delivered an Amendment to Pledge Agreement in the
form of Exhibit H (the Existing Holdings Pledge Agreement as so amended and
as subsequently modified, amended or supplemented from time to time in
accordance with the terms thereof and hereof, the "Holdings Pledge
Agreement") and the Collateral Agent, as pledgee thereunder, shall hold all
of the certificates representing the Pledged Securities referred to
therein, accompanied by executed and undated stock powers, and the Holdings
Pledge Agreement shall be in full force and effect.
(IV) On the Closing Date, the Agent shall have received (x)
such executed amendments (in form and substance reasonably satisfactory to
the Agent)
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to the Existing Mortgages (the Existing Mortgages as so amended, if at all,
each a "Mortgage" and collectively the "Mortgages") covering all the
Mortgaged Properties as the Agent deems necessary or appropriate to give
effect to the transactions contemplated by this Agreement and arrangements
reasonably satisfactory to the Collateral Agent shall be in place to
provide that counterparts of such amendments shall be recorded on the
Closing Date or within one Business Day thereafter in all places where the
original Existing Mortgages were filed and (y) such endorsements, if any,
to the Existing Mortgage Policies as the Agent deems appropriate.
(i) SOLVENCY. On the Closing Date, the Borrower shall have
delivered, or shall cause to be delivered, to the Agent a solvency letter
in the form of Exhibit I hereto from the Chief Financial Officer of the
Borrower and acceptable in form and substance to the Agent.
(j) FEES. On the Closing Date, the Borrower shall have paid to
the Agent and the Banks all Fees and expenses agreed upon by such parties
to be paid on or prior to such date.
(k) NOTICE OF BORROWING. The Agent shall have received the
Notice of Borrowing meeting the requirements of Section 1.02.
(l) NO DEFAULT; REPRESENTATIONS AND WARRANTIES. At the time of
the making of the Loans and also after giving effect thereto, (i) there
shall exist no Default or Event of Default and (ii) all representations and
warranties contained herein or in the other Credit Documents shall be true
and correct in all material respects with the same effect as though such
representations and warranties had been made on and as of the Closing Date,
except to the extent that such representations and warranties expressly
relate to an earlier date.
(m) PRO FORMA COMPLIANCE. At the time of the making of the
Loans, each of the covenants set forth in Sections 7.11 through 7.13 shall
have been satisfied as of, and no Event of Default under Section 8.08(B) or
(C) shall exist as of, the TL Measurement Date determined on a PRO FORMA
basis as if the Loans were incurred on the TL Measurement Date.
(n) EXISTING CREDIT AGREEMENT. Concurrently with the
effectiveness of this Agreement, the Existing Credit Agreement shall have
become effective in accordance with its terms.
The acceptance of the benefits of the Loans shall constitute a
representation and warranty by the Borrower to the Agent and each of the Banks
that all of the applicable conditions specified above exist as of that time.
All of the certificates, legal opinions and
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other documents and papers referred to in Section 4.01, unless otherwise
specified, shall be delivered to the Agent at its Notice Office for the account
of each of the Banks and, except for the Notes, in sufficient counterparts for
each of the Banks and shall be satisfactory in form and substance to the Agent.
SECTION 5. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. In order to
induce the Banks to enter into this Agreement and to make the Loans, the
Borrower makes the following representations and warranties to, and agreements
with, the Banks, all of which shall survive the execution and delivery of this
Agreement and the making of the Loans.
1.051 CORPORATE STATUS. Each of Holdings, the Borrower and its
Subsidiaries (i) is a duly organized and validly existing corporation in good
standing under the laws of the jurisdiction of its organization and has the
corporate power and authority to own its property and assets and to transact the
business in which it is engaged and presently proposes to engage and (ii) has
duly qualified and is authorized to do business and is in good standing in all
jurisdictions where it is required to be so qualified and where the failure to
be so qualified would have a Material Adverse Effect.
1.052 CORPORATE POWER AND AUTHORITY. Each Credit Party has the
corporate power and authority to execute, deliver and carry out the terms and
provisions of the Transaction Documents to which it is a party and has taken all
necessary corporate action to authorize the execution, delivery and performance
of the Credit Documents to which it is a party. Each Credit Party has duly
executed and delivered each Transaction Document to which it is a party and each
such Credit Document constitutes the legal, valid and binding obligation of such
Credit Party enforceable in accordance with its terms.
1.053 NO VIOLATION. Neither the execution, delivery and performance
by any Credit Party of the Credit Documents to which it is a party nor
compliance with the terms and provisions thereof, nor the consummation of the
transactions contemplated therein (i) will contravene any applicable provision
of any law, statute, rule, regulation, order, writ, injunction or decree of any
court or governmental instrumentality, (ii) will conflict or be inconsistent
with or result in any breach of, any of the terms, covenants, conditions or
provisions of, or constitute a default under, or (other than pursuant to the
Security Documents) result in the creation or imposition of (or the obligation
to create or impose) any Lien upon any of the property or assets of any Credit
Party or any of its Subsidiaries pursuant to the terms of any indenture,
mortgage, deed of trust, agreement or other instrument to which Holdings, the
Borrower or any of its Subsidiaries is a party or by which it or any of its
property or assets are bound or to which it may be subject or (iii) will violate
any provision of the Charter or By-Laws of any Credit Party or any of its
Subsidiaries.
1.054 LITIGATION. There are no actions, suits or proceedings pending
or, to the Borrower's knowledge, threatened with respect to Holdings, the
Borrower or any of its
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Subsidiaries (i) that are likely to have a Material Adverse Effect or (ii) that
could reasonably be expected to have a material adverse effect on the rights or
remedies of the Banks or on the ability of the Credit Parties to perform their
obligations to them under the Credit Documents.
1.055 USE OF PROCEEDS; MARGIN REGULATIONS. (a) The proceeds of the
Loans will be used to repay AR Loans.
(b) Neither the making or continuance of any Loan hereunder, nor the
use of the proceeds thereof, will violate or be inconsistent with the provisions
of Regulation G, T, U or X of the Board of Governors of the Federal Reserve
System and no part of the proceeds of any Loan will be used to purchase or carry
any Margin Stock in violation of Regulation U or to extend credit for the
purpose of purchasing or carrying any Margin Stock.
1.056 GOVERNMENTAL APPROVALS. Except for filings and recordings in
connection with the Security Documents, and those items listed on Annex III, no
order, consent, approval, license, authorization, or validation of, or filing,
recording or registration with, or exemption by, any foreign or domestic
governmental or public body or authority, or any subdivision thereof, that has
not been obtained or made is required to authorize or is required in connection
with (i) the execution, delivery and performance of any Credit Document or (ii)
the legality, validity, binding effect or enforceability of any Credit Document.
1.057 INVESTMENT COMPANY ACT. None of Holdings, the Borrower nor any
of its Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
1.058 PUBLIC UTILITY HOLDING COMPANY ACT. None of Holdings, the
Borrower or any of its Subsidiaries is a "holding company," or a "subsidiary
company" of a "holding company," or an "affiliate" of a "holding company," or of
a "subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
1.059 TRUE AND COMPLETE DISCLOSURE. All factual information (taken
as a whole) heretofore or contemporaneously furnished by or on behalf of
Holdings, the Borrower or any of its Subsidiaries in writing to the Agent or any
Bank for purposes of or in connection with this Agreement or any transaction
contemplated herein is, and all other such factual information (taken as a
whole) hereafter furnished by or on behalf of any such Person in writing to any
Bank will be, true and accurate in all material respects on the date as of which
such information is dated or certified and not incomplete by omitting to state
any material fact necessary to make such information (taken as a whole) not
misleading at such time in light of the circumstances under which such
information was provided. The projections and PRO FORMA financial information
contained in such materials are based on good faith
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estimates and assumptions believed by such Persons to be reasonable at the time
made, it being recognized by the Banks that such projections as to future events
are not to be viewed as facts and that actual results during the period or
periods covered by any such projections may differ from the projected results.
There is no fact known to the Borrower which would have a Material Adverse
Effect, which has not been disclosed herein or in such other documents,
certificates and statements furnished to the Banks for use in connection with
the transactions contemplated hereby.
5.10 FINANCIAL CONDITION; FINANCIAL STATEMENTS. (a) On and as of the
Closing Date, on a PRO FORMA basis after giving effect to all Indebtedness
incurred, and to be incurred, and Liens created, and to be created, in
connection therewith, (x) the sum of the assets, at a fair valuation, of the
Borrower and its Subsidiaries, and of Holdings and is Subsidiaries, taken as a
whole will exceed their debts, (y) the Borrower and its Subsidiaries, and
Holdings and its Subsidiaries, taken as a whole will not have incurred or
intended to, or believe that they will, incur debts beyond their ability to pay
such debts as such debts mature and (z) the Borrower and its Subsidiaries, and
Holdings and its Subsidiaries, taken as a whole will not have unreasonably small
capital with which to conduct their business. For purposes of this Section
5.10, "debt" means any liability on a claim, and "claim" means (i) right to
payment whether or not such a right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured; or (ii) right to an equitable remedy for
breach of performance if such breach gives rise to a payment, whether or not
such right to an equitable remedy is reduced to judgment, fixed, contingent,
matured, unmatured, disputed, undisputed, secured or unsecured.
(b) The consolidated balance sheet of Holdings and of the Borrower at
December 31, 1995 and December 31, 1996 and the related consolidated statements
of operations and cash flows of Holdings and of the Borrower for the fiscal
years ended as of said dates, which have been examined by Price Waterhouse LLP,
independent certified public accountants, who delivered an unqualified opinion
in respect therewith, copies of which have heretofore been furnished to each
Bank, present fairly the financial position of such entities at the dates of
said statements and the results for the periods covered thereby in accordance
with GAAP, except to the extent provided in the notes to said financial
statements. All such financial statements have been prepared in accordance with
generally accepted accounting principles and practices consistently applied
except to the extent provided in the notes to said financial statements.
Nothing has occurred since December 31, 1996 that has had or could reasonably be
expected to have a Material Adverse Effect.
(c) Except as reflected in the financial statements and the notes
thereto described in Section 5.10(b), there were as of the Closing Date no
liabilities or obligations with respect to Holdings, the Borrower or any of its
Subsidiaries of a nature (whether absolute, accrued, contingent or otherwise and
whether or not due) which, either individually or in aggregate, would be
material to the Borrower and its Subsidiaries, and to Holdings and
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its Subsidiaries, taken as a whole, except as incurred in the ordinary course of
business consistent with past practices subsequent to December 31, 1996.
5.11 SECURITY INTERESTS. On and after the Closing Date (or the date
of the execution and delivery thereof, in the case of all Security Documents
first executed after such date), each of the Security Documents create, as
security for the Obligations purported to be secured thereby, a valid and
enforceable perfected security interest in and Lien on all of the Collateral
subject thereto, superior to and prior to the rights of all third Persons and
subject to no other Liens (except (x) that the Security Agreement Collateral may
be subject to the security interests evidenced by Permitted Liens relating
thereto and (y) the Mortgaged Properties may be subject to Permitted
Encumbrances relating thereto), in favor of the Collateral Agent for the benefit
of the Banks. No filings or recordings are required in order to perfect the
security interests created under any Security Document except for filings or
recordings required in connection with any such Security Document (other than
the Pledge Agreements) which shall have been made upon or prior to (or are the
subject of arrangements, satisfactory to the Agent, for filing on or promptly
after the date of) the execution and delivery thereof.
5.12 TAX RETURNS AND PAYMENTS. Each of Holdings, the Borrower and
its Subsidiaries has filed all federal income tax returns and all other material
tax returns, domestic and foreign, required to be filed by it and has paid all
material taxes and assessments payable by it which have become due, other than
those not yet delinquent and except for those contested in good faith.
Holdings, the Borrower and its Subsidiaries have paid, or have provided adequate
reserves (in the good faith judgment of the management of the Borrower) for the
payment of, all federal, state and foreign income taxes applicable for all prior
fiscal years and for the current fiscal year to the date hereof.
5.13 COMPLIANCE WITH ERISA. Each Plan is in substantial compliance
with ERISA and the Code; no Reportable Event has occurred with respect to a
Plan; no Plan is insolvent or in reorganization; no Plan has an Unfunded Current
Liability; no Plan has an accumulated or waived funding deficiency, has
permitted decreases in its funding standard account or has applied for an
extension of any amortization period within the meaning of Section 412 of the
Code; neither the Borrower, nor any Subsidiary nor any ERISA Affiliate has
incurred any material liability to or on account of a Plan pursuant to Section
409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or
Section 401(a)(29), 4971, 4975 or 4980 of the Code or expects to incur any
liability (including any indirect, contingent or secondary liability) under any
of the foregoing Sections with respect to any Plan; no proceedings have been
instituted to terminate or appoint a trustee to administer any Plan; no
condition exists which presents a material risk to the Borrower or any
Subsidiary or any ERISA Affiliate of incurring a liability to or on account of a
Plan pursuant to the foregoing provisions of ERISA and the Code; using actuarial
assumptions and computation methods consistent with Part 1 of subtitle E of
Title IV of ERISA, the aggregate liabilities
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of the Borrower and its Subsidiaries and its ERISA Affiliates to all Plans which
are multiemployer plans (as defined in Section 4001(a)(3) of ERISA) in the event
of a complete withdrawal therefrom, as of the close of the most recent fiscal
year of each such Plan ended prior to the date of the most recent Credit Event,
would not exceed $150,000; no lien imposed under the Code or ERISA on the assets
of the Borrower or any Subsidiary or any ERISA Affiliate exists or is likely to
arise on account of any Plan; and Holdings, the Borrower and its Subsidiaries do
not maintain or contribute to any employee welfare benefit plan (as defined in
Section 3(1) of ERISA) which provides benefits to retired employees (other than
as required by Section 601 of ERISA) or any employee pension benefit plan (as
defined in Section 3(2) of ERISA), except to the extent that all events
described in the preceding clauses of this Section 5.13 and then in existence
would not, in the aggregate, have or be likely to have a Material Adverse
Effect. With respect to Plans that are multiemployer plans (within the meaning
of Section 4001(a)(3) of ERISA) the representations and warranties in this
Section 5.13 are made to the best knowledge of the Borrower.
5.14 SUBSIDIARIES. (a) Annex IV hereto lists each Subsidiary of the
Borrower existing on the Closing Date. Except as set forth in such Annex, the
Borrower owns 100% of the outstanding capital stock of each such Subsidiary.
(b) There are no restrictions on the Borrower or any of its
Subsidiaries which prohibit or otherwise restrict the transfer of cash or other
assets from any Subsidiary of the Borrower to the Borrower, other than
prohibitions or restrictions existing under or by reason of (i) this Agreement,
the other Credit Documents, the Existing Credit Agreement Documents or any
Subordinated Debt Indenture, (ii) applicable law, (iii) customary non-assignment
provisions entered into in the ordinary course of business and consistent with
past practices, (iv) any restriction or encumbrance with respect to a Subsidiary
of the Borrower imposed pursuant to an agreement which has been entered into for
the sale or disposition of all or substantially all of the capital stock or
assets of such Subsidiary, so long as such sale or disposition is permitted
under this Agreement, and (v) any documents or instruments governing the terms
of any Indebtedness or other obligations secured by Liens permitted by Section
8.03, provided that such prohibitions or restrictions apply only to the assets
subject to such Liens.
5.15 PATENTS, ETC. The Borrower and each of its Subsidiaries have
obtained all material patents, trademarks, service marks, trade names,
copyrights, licenses and other rights, free from burdensome restrictions, that
are necessary for the operation of their businesses taken as a whole as
presently conducted and as proposed to be conducted.
5.16 POLLUTION AND OTHER REGULATIONS. (a) Each of Holdings, the
Borrower and its Subsidiaries is in compliance with all Environmental Laws
governing its business for which failure to comply is reasonably likely to have
a Material Adverse Effect, and neither Holdings, the Borrower nor any of its
Subsidiaries is liable for any material penalties, fines
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or forfeitures for failure to comply with any of the foregoing in the manner set
forth above. All licenses, permits, registrations or approvals required for the
business of the Borrower and each of its Subsidiaries, as conducted as of the
Restatement Effective Date, under any Environmental Law have been secured and
the Borrower and each of its Subsidiaries is in substantial compliance
therewith, except such licenses, permits, registrations or approvals the failure
to secure or to comply therewith is not likely to have a Material Adverse
Effect. Neither Holdings, the Borrower nor any of its Subsidiaries is in
noncompliance with, breach of or default under any applicable writ, order,
judgment, injunction, or decree to which Holdings, the Borrower or such
Subsidiary is a party or which would affect the ability of the Borrower or such
Subsidiary to operate any real property and no event has occurred and is
continuing which, with the passage of time or the giving of notice or both,
would constitute noncompliance, breach of or default thereunder, except in each
such case, such noncompliance, breaches or defaults as are not likely to, in the
aggregate, have a Material Adverse Effect. There are as of the Restatement
Effective Date no Environmental Claims pending or, to the best knowledge of the
Borrower, threatened, which (a) challenge the validity, term or entitlement of
the Borrower or any of its Subsidiaries for any permit, license, order or
registration required for the operation of any facility under the Environmental
Laws which the Borrower or any of its Subsidiaries operates and (b) wherein an
unfavorable decision, ruling or finding would be reasonably likely to have a
Material Adverse Effect. There are no facts, circumstances, conditions or
occurrences concerning Holdings, the Borrower or any of its Subsidiaries, any of
their operations or on any Real Property or, to the knowledge of the Borrower,
on any property adjacent to any such Real Property that could reasonably be
expected (i) to form the basis of an Environmental Claim against the Borrower,
any of its Subsidiaries or any Real Property of the Borrower or any of its
Subsidiaries, or (ii) to cause such Real Property to be subject to any
restrictions on the ownership, occupancy, use or transferability of such Real
Property under any Environmental Law, except in each such case, such
Environmental Claims or restrictions that individually or in the aggregate are
not reasonably likely to have a Material Adverse Effect.
(b) Hazardous Materials have not at any time been (i) generated,
used, treated or stored on, or transported to or from, any Real Property of the
Borrower or any of its Subsidiaries or (ii) released on any Real Property, in
each case where such occurrence or event individually or in the aggregate is
reasonably likely to have a Material Adverse Effect.
5.17 PROPERTIES. The Borrower and each of its Subsidiaries have good
and marketable title to all properties owned by them, including all property
reflected in the consolidated balance sheet of the Borrower and its
Subsidiaries, and the Financial Statements, referred to in Section 5.10(b), free
and clear of all Liens, other than (i) as referred to in the consolidated
balance sheet, or the Financial Statements, or, in either case, in the notes
thereto or (ii) otherwise permitted by Section 7.03. Annex V contains a true
and complete list of each Real Property owned or leased by the Borrower or any
of its Subsidiaries on the Closing Date (other than properties that are solely
sign locations) and the type of interest therein held
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by the Borrower or the respective Subsidiary. Holdings owns no properties or
assets (other than the Tax Sharing Agreement) other than all of the capital
stock of the Borrower.
5.18 LABOR RELATIONS. Holdings, the Borrower and its Subsidiaries
are not engaged in any unfair labor practice that could reasonably be expected
to have a Material Adverse Effect. There is (i) no unfair labor practice
complaint pending against Holdings, the Borrower or any of its Subsidiaries or
threatened against any of them, before the National Labor Relations Board, and
no grievance or arbitration proceeding arising out of or under any collective
bargaining agreement is so pending against any of them or threatened against any
of them, (ii) no strike, labor dispute, slowdown or stoppage pending against
Holdings, the Borrower or any of its Subsidiaries or threatened against any of
them and (iii) no union representation question existing with respect to the
employees of Holdings, the Borrower or any of its Subsidiaries and no union
organizing activities are taking place, except with respect to any matter
specified in clause (i), (ii) or (iii) above, either individually or in the
aggregate, such as is not reasonably likely to have a Material Adverse Effect.
5.19 EXISTING INDEBTEDNESS. Annex VI sets forth a true and complete
list of all Indebtedness of Holdings, the Borrower and each of its Subsidiaries
as of the Consolidation Date that is in excess of $5,000 for any one issue and
is to remain outstanding thereafter (all such Indebtedness, of whatever size,
but excluding Indebtedness hereunder, the "Existing Indebtedness"), in each case
showing the aggregate principal amount thereof and the name of the respective
borrower (or issuer) and any other entity which directly or indirectly
guaranteed such debt.
SECTION 6. AFFIRMATIVE COVENANTS. The Borrower covenants and agrees
that on the Closing Date and thereafter for so long as this Agreement is in
effect and until no Notes are outstanding and the Loans, together with interest,
Fees and all other Obligations incurred hereunder, are paid in full:
1.061 INFORMATION COVENANTS. The Borrower will furnish to each Bank:
(a) ANNUAL FINANCIAL STATEMENTS. Within 90 days after the close of
each fiscal year of the Borrower, the consolidated balance sheet of the Borrower
and its Subsidiaries and of Holdings and its Subsidiaries, as at the end of such
fiscal year and the related consolidated statements of income and retained
earnings and of cash flows for such fiscal year, in each case setting forth
comparative consolidated figures for the preceding fiscal year, and examined by
independent certified public accountants of recognized national standing whose
opinion shall not be qualified as to the scope of audit and as to the status of
Holdings, the Borrower or any of its Subsidiaries as a going concern, together
with a certificate of such accounting firm stating that in the course of its
regular audit of the business of Holdings and of the Borrower, which audit was
conducted in accordance with generally accepted auditing standards, such
accounting firm has obtained no knowledge of
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any Default or Event of Default which has occurred and is continuing or, if in
the opinion of such accounting firm such a Default or Event of Default has
occurred and is continuing, a statement as to the nature thereof.
(b) QUARTERLY FINANCIAL STATEMENTS. As soon as available and in any
event within 45 days after the close of each of the first three quarterly
accounting periods in each fiscal year, the consolidated balance sheet of the
Borrower and its Subsidiaries and of Holdings and its Subsidiaries, as at the
end of such quarterly period and the related consolidated statements of income
and retained earnings and of cash flows for such quarterly period and for the
elapsed portion of the fiscal year ended with the last day of such quarterly
period, and in each case setting forth comparative consolidated figures for the
related periods in the prior fiscal year, all of which shall be certified by the
chief financial officer or controller of the Borrower or Holdings, as
appropriate, subject to changes resulting from audit and normal year-end audit
adjustments.
(c) MONTHLY REPORTS. As soon as practicable, and in any event within
30 days, after the end of each monthly accounting period of each fiscal year the
consolidated balance sheet of the Borrower and its Subsidiaries and of Holdings
and its Subsidiaries, as at the end of such period, and the related consolidated
statements of income and retained earnings for such period, setting forth
comparative figures for the corresponding period of the previous year, all of
which shall be certified by the chief financial officer or controller of the
Borrower or Holdings, as appropriate, subject to changes resulting from audit
and normal year-end audit adjustments.
(d) BUDGETS; ETC. Not more than 60 days after the commencement of
each fiscal year of the Borrower, a budget of the Borrower and its Subsidiaries
in reasonable detail for each of the twelve months of such fiscal year.
Together with each delivery of consolidated financial statements pursuant to
Sections 6.01(a), (b) and (c), a comparison of the current year to date
financial results against the budgets required to be submitted pursuant to this
clause (d) shall be presented.
(e) OFFICER'S CERTIFICATES. (i) At the time of the delivery of the
financial statements provided for in Sections 6.01(a), (b) and (c), a
certificate of the chief financial officer, controller or other Authorized
Officer of the Borrower to the effect that no Default or Event of Default exists
or, if any Default or Event of Default does exist, specifying the nature and
extent thereof, which certificate, shall set forth the calculations required to
establish (I) the Modified Holdings Leverage Ratio for the Relevant
Determination Date occurring on the last day of such fiscal year, quarter or
month, (II) whether the Borrower and its Subsidiaries were in compliance with
the provisions of Sections 7.11, 7.12 and 7.13, as applicable, as at the end of
such fiscal period or year, as the case may be and (III) whether there was any
Event of Default under Section 8.08(B) and/or 8.08(C) as at the end of such
fiscal period.
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(ii) At the time of any incurrence of Consolidated Debt of Holdings
and its Subsidiaries at a time when the Margin Reduction Discount is (or based
on the last officer's certificate delivered pursuant to clause (i) above will
be) greater than zero, a certificate of any of the persons specified in clause
(i) above setting forth the calculations establishing the Modified Holdings
Leverage Ratio after giving effect to the incurrence of such Consolidated Debt.
(f) NOTICE OF DEFAULT OR LITIGATION. Promptly, and in any event
within three Business Days after the Borrower obtains knowledge thereof, notice
of (x) the occurrence of any event which constitutes a Default or Event of
Default which notice shall specify the nature thereof, the period of existence
thereof and what action the Borrower proposes to take with respect thereto and
(y) the commencement of or any significant development in any litigation or
governmental proceeding pending against Holdings, the Borrower or any of its
Subsidiaries which is likely to have a Material Adverse Effect or is likely to
have a material adverse effect on the ability of the Borrower to perform its
obligations hereunder or under any other Credit Document.
(g) AUDITORS' REPORTS. Promptly upon receipt thereof, a copy of each
other final report or "management letter" submitted to Holdings or the Borrower
by its independent accountants in connection with any annual, interim or special
audit made by it of the books of Holdings and/or the Borrower.
(h) ENVIRONMENTAL MATTERS. Promptly upon, and in any event within 20
Business Days after an officer of Holdings, the Borrower or any Subsidiary
obtains knowledge thereof, notice of one or more of the following environmental
matters: (i) any pending or threatened (in writing) material Environmental
Claim against, or for which liability would attach to, the Borrower or any of
its Subsidiaries or any Real Property owned or operated by the Borrower or any
of its Subsidiaries; (ii) any condition or occurrence on or arising from any
Real Property owned or operated by the Borrower or any of its Subsidiaries that
(a) results in material noncompliance by Holdings, the Borrower or any of its
Subsidiaries with any applicable material Environmental Law or (b) would
reasonably be expected to form the basis of a material Environmental Claim
against, or for which liability would attach to, the Borrower or any of its
Subsidiaries or any such Real Property; (iii) any condition or occurrence on any
Real Property owned or operated by the Borrower or any of its Subsidiaries that
could reasonably be expected to cause such Real Property to be subject to any
material restrictions on the ownership, occupancy, use or transferability by the
Borrower or any of its Subsidiaries of such Real Property under any
Environmental Law; and (iv) the taking of any material removal or remedial
action in response to the actual or alleged presence of any Hazardous Material
on any Real Property owned or operated by the Borrower or any of its
Subsidiaries as required by any Environmental Law or any governmental or other
administrative agency, and all such notices shall describe in reasonable detail
the nature of
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the claim, investigation, condition, occurrence or removal or remedial action
and the Borrower's or such Subsidiary's response thereto.
(i) OTHER INFORMATION. Promptly upon transmission thereof, (i)
copies of any filings and registrations with, and reports to, the Securities and
Exchange Commission or any successor thereto (the "SEC") by Holdings, the
Borrower or any of its Subsidiaries and (ii) with reasonable promptness, such
other information or documents (financial or otherwise) as the Agent on its own
behalf or on behalf of the Required Banks may reasonably request from time to
time.
1.062 BOOKS, RECORDS AND INSPECTIONS. The Borrower will, and will
cause its Subsidiaries to, permit, upon reasonable notice to the chief financial
officer, controller or any other Authorized Officer of the Borrower officers and
designated representatives of the Agent or the Required Banks to visit and
inspect any of the properties or assets of the Borrower and any of its
Subsidiaries in whomsoever's possession, and to examine the books of account of
Holdings, the Borrower and any of its Subsidiaries and discuss the affairs,
finances and accounts of Holdings, the Borrower and of any of its Subsidiaries
with, and be advised as to the same by, its and their officers and independent
accountants, all at such reasonable times and intervals and to such reasonable
extent as the Agent or the Required Banks may desire.
1.063 INSURANCE. The Borrower will, and will cause each of its
Subsidiaries to, at all times maintain in full force and effect insurance in
such amounts, covering such risks and liabilities and with such deductibles or
self-insured retentions as are in accordance with normal industry practice,
provided that in no event will any such deductible or self-insured retention in
respect of liability claims or in respect of casualty damage, exceed, in each
such case, (i) $250,000 per occurrence or (ii) $1,000,000 in the aggregate per
fiscal year. At any time that insurance at the levels described in Annex VII is
not being maintained by the Borrower and its Subsidiaries, the Borrower will
notify the Banks in writing thereof and, if thereafter notified by the Agent to
do so, the Borrower will, and will cause its Subsidiaries to, obtain insurance
at such levels at least equal to those set forth in Annex VII to the extent then
generally available (but in any event within the deductible or self-insured
retention limitations set forth in the preceding sentence) or otherwise as are
acceptable to the Agent. The Borrower will, and will cause each of its
Subsidiaries to, furnish on the Closing Date and annually thereafter to the
Agent a summary of the insurance carried together with certificates of insurance
and other evidence of such insurance, if any, naming the Collateral Agent as an
additional insured and/or loss payee.
1.064 PAYMENT OF TAXES. The Borrower will pay and discharge, and
will cause each Subsidiary to pay and discharge, all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits, or
upon any properties belonging to it, prior to the date on which penalties attach
thereto, and all lawful claims which, if unpaid,
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might become a Lien or charge upon any properties of Holdings, the Borrower or
any of its Subsidiaries, provided that neither Holdings, the Borrower nor any
Subsidiary shall be required to pay any such tax, assessment, charge, levy or
claim which is being contested in good faith and by proper proceedings if it has
maintained adequate reserves (in the good faith judgment of the management of
the Borrower) with respect thereto in accordance with GAAP.
1.065 CONSOLIDATED CORPORATE FRANCHISES. The Borrower will do, and
will cause each Subsidiary to do, or cause to be done, all things necessary to
preserve and keep in full force and effect its existence, material rights and
authority, provided that any transaction permitted by Section 7.02 will not
constitute a breach of this Section 6.05.
1.066 COMPLIANCE WITH STATUTES, ETC. The Borrower will, and will
cause each Subsidiary to, comply with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of its business and the ownership
of its property other than those the non-compliance with which would not have a
Material Adverse Effect or would not have a material adverse effect on the
ability of the Borrower to perform its obligations under any Credit Document.
1.067 ERISA. As soon as possible and, in any event, within 10 days
after the Borrower or any of its Subsidiaries or ERISA Affiliates knows or has
reason to know of the occurrence of any of the following, the Borrower will
deliver to each of the Banks a certificate of the chief financial officer of the
Borrower setting forth details as to such occurrence and such action, if any,
which the Borrower, such Subsidiary or such ERISA Affiliate is required or
proposes to take, together with any notices required or proposed to be given to
or filed with or by the Borrower, the Subsidiary, the ERISA Affiliate, the PBGC,
a Plan participant (other than notices relating to an individual participant's
benefits) or the Plan administrator with respect thereto: that a Reportable
Event has occurred; that an accumulated funding deficiency has been incurred or
an application is reasonably likely to be or has been made to the Secretary of
the Treasury for a waiver or modification of the minimum funding standard
(including any required installment payments) or an extension of any
amortization period under Section 412 of the Code with respect to a Plan; that a
Plan which has an Unfunded Current Liability has been or may be terminated,
reorganized, partitioned or declared insolvent under Title IV of ERISA; that a
Plan has an Unfunded Current Liability and there is a failure to make a required
contribution, which gives rise to a lien under ERISA or the Code; that
proceedings are reasonably likely to be or have been instituted to terminate a
Plan which has an Unfunded Current Liability; that a proceeding has been
instituted pursuant to Section 515 of ERISA to collect a delinquent contribution
to a Plan; that the Borrower, any Subsidiary or any ERISA Affiliate will or may
incur any liability (including, any contingent or secondary liability) to or on
account of the termination of or withdrawal from a Plan under Section 4062,
4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or with
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respect to a Plan under Section 401(a)(29), 4971, 4975 or 4980 of the Code or
Section 409, 502(l) or 502(l) of ERISA or that the Borrower or any Subsidiary or
Holdings may incur any material liability pursuant to any employee welfare
benefit plan (as defined in Section 3(1) of ERISA) that provides benefits to
retired employees or other former employees (other than as required by Section
601 of ERISA) or any employee pension benefit plan (as defined in Section 3(2)
of ERISA). Upon request of a Bank, the Borrower will deliver to such Bank a
complete copy of the annual report (Form 5500) of each Plan required to be filed
with the Internal Revenue Service. In addition to any certificates or notices
delivered to the Banks pursuant to the first sentence hereof, copies of any
annual reports and any other material notices received by Holdings, the Borrower
or any Subsidiary with respect to a Plan shall be delivered to the Banks no
later than 10 days after the later of the date such notice has been filed with
the Internal Revenue Service or the PBGC, given to Plan participants (other than
notices relating to an individual participant's benefits) or received by
Holdings, the Borrower or such Subsidiary.
1.068 GOOD REPAIR. The Borrower will, and will cause each of its
Subsidiaries to, ensure that its properties and equipment used or useful in its
business in whomsoever's possession they may be, are kept in good repair,
working order and condition, normal wear and tear excepted, and, subject to
Section 7.05, that from time to time there are made in such properties and
equipment all needful and proper repairs, renewals, replacements, extensions,
additions, betterments and improvements thereto, to the extent and in the manner
useful or customary for companies in similar businesses.
1.069 END OF FISCAL YEARS; FISCAL QUARTERS. The Borrower will, for
financial reporting purposes, cause (i) each of its, and each of its
Subsidiaries' fiscal years to end on December 31 of each year and (ii) each of
its, and each of its Subsidiaries' fiscal quarters to end on March 31, June 30,
September 30 and December 31 of each year.
6.10 ADDITIONAL SECURITY; FURTHER ASSURANCES. (a) No later than 60
days following the Closing Date, the Borrower shall deliver to the Agent a duly
authorized and executed counterpart or counterparts of deeds of trust, mortgages
and similar documents in form and substance reasonably satisfactory to the Agent
(the "Additional Mortgages") covering all of the Real Property owned by the
Borrower not subject to Mortgages on the Closing Date (x) which Additional
Mortgages shall constitute valid and enforceable Liens superior to and prior to
the rights of all third Persons and subject to instruments related thereto)
shall have been duly recorded or filed in such manner and in such places as are
required by law to establish, perfect, preserve and protect the Liens in favor
of the Collateral Agent required to be granted thereunder and all taxes, fees
and other charges payable in connection therewith shall have been paid in full,
with each such Additional Mortgage to be accompanied by mortgage policies
relating thereto reasonably satisfactory to the Agent.
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(b) The Borrower will, and will cause the Subsidiary Guarantors to,
grant to the Collateral Agent security interests and mortgages (each a "New
Mortgage") in such owned Real Property (x) of the Borrower acquired (including
as a result of the merger of one or more Subsidiaries with the Borrower) after
the Closing Date or (y) of a Subsidiary Guarantor owned on the date it first
becomes a Subsidiary Guarantor or thereafter acquired, in each case as may be
requested from time to time by the Agent. Such New Mortgages shall be granted
pursuant to documentation reasonably satisfactory in form and substance to the
Agent and shall constitute valid and enforceable Liens superior to and prior to
the rights of all third Persons and subject to no other Liens except as are
permitted by Section 8.03. The New Mortgages or instruments related thereto
shall have been duly recorded or filed in such manner and in such places as are
required by law to establish, perfect, preserve and protect the Liens in favor
of the Collateral Agent for the benefit of the Secured Creditors required to be
granted pursuant to the New Mortgages and all taxes, fees and other charges
payable in connection therewith shall have been paid in full, with each New
Mortgage to be accompanied by mortgage policies related thereto reasonably
satisfactory to the Agent.
(c) The Borrower will, and will cause its Subsidiaries to, at the
expense of the Borrower, make, execute, endorse, acknowledge, file and/or
deliver to the Collateral Agent from time to time such vouchers, invoices,
schedules, confirmatory assignments, conveyances, financing statements, transfer
endorsements, powers of attorney, certificates, real property surveys, reports
and other assurances or instruments and take such further steps relating to the
collateral covered by any of the Security Documents as the Collateral Agent may
reasonably require. Furthermore, the Borrower shall cause to be delivered to
the Collateral Agent such opinions of counsel, title insurance and other related
documents as may be requested by the Agent to assure themselves that this
Section 6.10 has been complied with.
(d) The Borrower agrees that each action required above by Section
6.10(b) or (c) shall be completed as soon as possible, but in no event later
than 60 days after such action is requested to be taken by the Agent or the
Required Banks, provided that in no event shall the Borrower be required to take
any action, other than using its reasonable commercial efforts without any
material expenditure, to obtain consents from third parties with respect to its
compliance with this Section 6.10.
6.11 CORPORATE SEPARATENESS. The Borrower will take, and will cause
each of its Subsidiaries to take, all such action as is necessary to keep the
operations of the Borrower and its Subsidiaries separate and apart from those of
Holdings, including, without limitation, ensuring that all customary formalities
regarding corporate existence, including holding regular board of directors'
meetings and maintenance of corporate records, are followed. All financial
statements of the Borrower and its Subsidiaries provided to creditors will
clearly evidence the corporate separateness of the Borrower and its Subsidiaries
from Holdings. Finally, neither the Borrower nor any of its Subsidiaries will
take any action, or conduct its affairs in a manner which is likely to result in
the corporate existence of Holdings
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on the one hand, and the Borrower and its Subsidiaries on the other, being
ignored, or in the assets and liabilities of the Borrower or any of its
Subsidiaries being substantively consolidated with those of Holdings in a
bankruptcy, reorganization or other insolvency proceeding. No action expressly
provided for in this Agreement or the other Credit Documents will breach this
covenant.
6.12 COMPLIANCE WITH ENVIRONMENTAL LAWS. (i) The Borrower will
comply, and the Borrower will cause each of its Subsidiaries to comply, with all
Environmental Laws applicable to the ownership, lease or use of all Real
Property now or hereafter owned, leased or operated by the Borrower or any of
its Subsidiaries, will promptly pay or cause to be paid all costs and expenses
incurred in connection with such compliance, and will keep or cause to be kept
all such Real Property free and clear of any Liens imposed pursuant to such
Environmental Laws and (ii) neither the Borrower nor any of its Subsidiaries
will generate, use, treat, store, release or dispose of, or permit the
generation, use, treatment, storage, release or disposal of Hazardous Materials
on any Real Property now or hereafter owned, leased or operated by the Borrower
or any of its Subsidiaries, or transport or permit the transportation of
Hazardous Materials to or from any such Real Property, except to the extent that
the failure to comply with the requirements specified in clause (i) or (ii)
above, either individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect. If required to do so under any applicable
directive or order of any governmental agency, the Borrower agrees to undertake,
and cause each of its Subsidiaries to undertake, any clean up, removal, remedial
or other action necessary to remove and clean up any Hazardous Materials from
any Real Property owned, leased or operated by the Borrower or any of its
Subsidiaries in accordance with, in all material respects, the requirements of
all applicable Environmental Laws and in accordance with, in all material
respects, such orders and directives of all governmental authorities, except to
the extent that the Borrower or such Subsidiary is contesting such order or
directive in good faith and by appropriate proceedings and for which adequate
reserves have been established to the extent required by generally accepted
accounting principles.
SECTION 7. NEGATIVE COVENANTS. The Borrower hereby covenants and
agrees, as of the Closing Date and thereafter for so long as this Agreement is
in effect and until no Notes are outstanding and the Loans, together with
interest, Fees and all other Obligations incurred hereunder, are paid in full,
that:
1.071 CHANGES IN BUSINESS. The Borrower will not, and will not
permit any of its Subsidiaries to, engage in any line of business other than the
business of outdoor advertising, including transit and bus shelter, stadium,
transport terminal and other similar out-of-home advertising services and any
administrative or similar activities reasonably related thereto.
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1.072 CONSOLIDATION, MERGER, SALE OR PURCHASE OF ASSETS, ETC. The
Borrower will not, and will not permit any Subsidiary to, wind up, liquidate or
dissolve its affairs, or enter into any transaction of merger or consolidation,
sell or otherwise dispose of all or any part of its property or assets (other
than inventory or obsolete equipment or excess equipment no longer needed in the
conduct of the business in the ordinary course of business) or purchase, lease
or otherwise acquire all or any part of the property or assets of any Person
(other than purchases or other acquisitions of inventory, leases, materials and
equipment in the ordinary course of business) or agree to do any of the
foregoing at any future time, except that the following shall be permitted:
(a) any Subsidiary of the Borrower may be merged or consolidated with
or into, or be liquidated into, the Borrower (so long as the Borrower is
the surviving corporation) or any other Subsidiary (so long as a Subsidiary
Guarantor, if a party thereto, is the surviving corporation), or all or any
part of its business, properties and assets may be conveyed, leased, sold
or transferred to the Borrower or any other Subsidiary Guarantor;
(b) capital expenditures to the extent within the limitations set
forth in Section 7.05 hereof;
(c) the investments, acquisitions and transfers or dispositions of
properties permitted pursuant to Section 7.06;
(d) each of the Borrower and its Subsidiaries may lease (as lessee)
real or personal property in the ordinary course of business (so long as
such lease does not create a Capitalized Lease Obligation not otherwise
permitted by Section 7.04(d));
(e) licenses or sublicenses by the Borrower and its Subsidiary of
software, customer lists, trademarks and other intellectual property in the
ordinary course of business, provided, that such licenses or sublicenses
shall not interfere with the business of the Borrower or any Subsidiary;
(f) other sales or dispositions of assets (I) for cash in an amount
equal to the fair market value thereof as determined by the Borrower and/or
(II) in exchange for other assets permitted to be held under Section 7.01
provided that, in each case, (i) the assets so sold or disposed of,
together with all other assets, previously sold or disposed of pursuant to
this clause (f) after or during the Calculation Period applicable to such
sale or disposition, shall not have generated Adjusted EBITDA of the
Borrower during such Calculation Period (taken as one accounting period)
equal to 15% or more of the aggregate Adjusted EBITDA of the Borrower
during such Calculation Period (taken as one accounting period), (ii) the
assets so sold or disposed of, together with all other assets previously
sold or disposed of pursuant to
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this clause (f) after the Restatement Effective Date, shall not have
generated Adjusted EBITDA of the Borrower during the period (taken as one
accounting period) commencing on the Restatement Effective Date and ending
on the last day of the last month for which financial statements of the
Borrower are reasonably available equal to 25% or more of the aggregate
Adjusted EBITDA of the Borrower during such period (taken as one accounting
period) and (iii) the Net Cash Proceeds, if any, of any such sale are
applied to repay the Loans to the extent required by Section 3.02(A)(b),
and, provided further, that the sale or disposition of the capital stock of
any Subsidiary of the Borrower shall be prohibited unless it is for all of
the outstanding capital stock of such Subsidiary owned by the Borrower;
(g) other sales or dispositions of assets in each case to the extent
the Required Banks have consented in writing thereto and subject to such
conditions as may be set forth in such consent;
(h) any Subsidiary may be liquidated into the Borrower; and
(i) Permitted Acquisitions provided that after giving effect thereto
and the related borrowings to finance same there would be no default under
Sections 7.11 through 7.13 or 8.08(B) or (C) determined on a PRO FORMA
basis as if such Permitted Acquisition and the related borrowings were
consummated on the first day of the 12-month period ending on the
Measurement Date last to occur and with pro forma adjustments to the
Consolidated EBITDA of the Person being acquired to give effect to
contemplated cost savings as estimated in good faith by the Borrower and
agreed to by the Agent.
1.073 LIENS. The Borrower will not, and will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets of any kind (real or personal, tangible or
intangible) of the Borrower or any such Subsidiary whether now owned or
hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such property
or assets (including sales of accounts receivable or notes with recourse to the
Borrower or any of its Subsidiaries) or assign any right to receive income, or
file or permit the filing of any financing statement under the UCC or any other
similar notice of Lien under any similar recording or notice statute, except:
(a) Liens for taxes not yet due or Liens for taxes being contested in
good faith and by appropriate proceedings for which adequate reserves (in
the good faith judgment of the management of the Borrower) have been
established;
(b) Liens in respect of property or assets of the Borrower or any of
its Subsidiaries imposed by law which were incurred in the ordinary course
of business,
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such as carriers', warehousemen's and mechanics' Liens, statutory
landlord's Liens, and other similar Liens arising in the ordinary course of
business, and (x) which do not in the aggregate materially detract from the
value of such property or assets or materially impair the use thereof in
the operation of the business of the Borrower or any Subsidiary or (y)
which are being contested in good faith by appropriate proceedings, which
proceedings have the effect of preventing the forfeiture or sale of the
property or asset subject to such Lien;
(c) Liens created by or pursuant to this Agreement, the other Credit
Documents or the Existing Credit Agreement Documents;
(d) (x) Liens on assets of the Borrower and each Subsidiary existing
on the Consolidation Date and listed on Part A of Annex VIII hereto,
without giving effect to any subsequent extensions or renewals thereof, (y)
immaterial Liens on assets of the Borrower and each Subsidiary existing on
the Consolidation Date at the locations listed on Part B of Annex VIII and
(z) immaterial Liens on assets of the Borrower and each Subsidiary existing
on the Closing Date at the location listed on Part C of Annex VIII which
Annex is to be provided to the Agent within 30 days following the Closing
Date and to be satisfactory to the Agent;
(e) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under Section 8.09
provided, that no cash or property is deposited or delivered to secure any
respective judgment or award (or any appeal bond in respect thereof, except
as permitted by the following clause (f));
(f) Liens (other than any Lien imposed by ERISA) incurred or deposits
made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security, or
to secure the performance of tenders, statutory obligations, surety and
appeal bonds, bids, leases, government contracts, performance and
return-of-money bonds and other similar obligations incurred in the
ordinary course of business (exclusive of obligations in respect of the
payment for borrowed money) provided, that the aggregate amount of deposits
at any time pursuant to this clause (f) shall not exceed $500,000;
(g) Leases or subleases granted to others not interfering in any
material respect with the business of the Borrower or any of its
Subsidiaries;
(h) Easements, rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the ordinary conduct of the
business of the Borrower or any of its Subsidiaries;
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(i) Liens arising from UCC financing statements regarding leases
permitted by this Agreement;
(j) Purchase money Liens securing payables arising from the purchase
by the Borrower of any equipment or goods in the normal course of business,
provided that such payables shall not constitute Indebtedness;
(k) Any interest or title of a lessor or any lien on the interest or
title of a lessor under any lease permitted by this Agreement;
(l) Liens arising pursuant to purchase money mortgages relating to,
or security interests securing Indebtedness representing the purchase price
of, assets acquired by the Borrower or any Subsidiary Guarantor after the
Restatement Effective Date, provided that any such Liens attach only to the
assets so acquired and that all Indebtedness secured by Liens created
pursuant to this clause (l) shall not exceed $5,000,000 at any time
outstanding;
(m) Liens created pursuant to Capital Leases permitted pursuant to
Section 7.04(d);
(n) Liens on assets of Subsidiaries of the Borrower in favor of the
Borrower;
(o) Liens securing Indebtedness permitted by Section 7.04(i) provided
that such Liens attach only to the assets (or to the assets of the Person
whose stock is being) acquired; and
(p) Liens on assets of the Borrower securing Indebtedness not in
excess of $1,000,000 at any time outstanding.
1.074 INDEBTEDNESS. The Borrower will not, and will not permit any
of its Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement, the other
Credit Documents and the Existing Credit Agreement Documents;
(b) Indebtedness owing by (i) any Subsidiary to the Borrower or
another Subsidiary and (ii) the Borrower to any Subsidiary;
(c) Permitted Subordinated Debt;
(d) Capitalized Lease Obligations of the Borrower or any Subsidiary
Guarantor, provided that the aggregate Capitalized Lease Obligations under
all
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Capital Leases entered into after the Restatement Effective Date shall not
exceed $10,000,000;
(e) Existing Indebtedness, without giving effect to any subsequent
extension, renewal or refinancing thereof;
(f) Additional Subordinated Debt;
(g) to the extent same has been assumed by the Borrower, Indebtedness
evidenced by the promissory note originally executed by Holdings in favor
of William H. Smith (the "Smith Note");
(h) Indebtedness incurred pursuant to purchase money mortgages
permitted by Section 8.03(l);
(i) Indebtedness of a Person, or secured by assets, acquired after
the Restatement Effective Date pursuant to a Permitted Acquisition provided
that such Indebtedness (x) existed at the time of such Permitted
Acquisition and was not created in connection therewith or in anticipation
thereof, (y) is not guaranteed in any respect by the Borrower or any of its
Subsidiaries, except to the extent such Person merges into, or such assets
are directly acquired by, the Borrower or such Subsidiary and (z) shall not
exceed in the aggregate for all Indebtedness permitted by this clause (i)
$10,000,000 at any time outstanding, without giving effect to any
subsequent extension, renewal or refinancing thereof; and
(j) additional Indebtedness of the Borrower not to exceed an
aggregate outstanding principal amount of $5,000,000 at any time.
1.075 CAPITAL EXPENDITURES. (a) The Borrower will not, and will not
permit any of its Subsidiaries to, incur Consolidated Capital Expenditures,
provided that the Borrower and any Subsidiary Guarantor may make Consolidated
Capital Expenditures (x) during the period from the Restatement Effective Date
through December 31, 1996 (taken as one accounting period) in an aggregate
amount not in excess of $3,000,000 plus the Additional Cap Ex for such period,
(y) during the fiscal year of the Borrower ended December 31, 1997, $12,000,000
plus the Additional Cap Ex for such fiscal year and (z) during each successive
fiscal year of the Borrower, in an aggregate amount not in excess of 105% of the
maximum amount for the prior fiscal year, determined by excluding the Additional
Cap Ex for such prior fiscal year, plus the Modified Additional Cap Ex for each
such fiscal year.
(b) In the event that the maximum amount which is permitted to be
expended in respect of Consolidated Capital Expenditures during any fiscal year
pursuant to Section
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7.05(a) (without giving effect to this clause (b)) is not fully expended during
such fiscal year, the maximum amount which may be expended during the
immediately succeeding fiscal year pursuant to Section 7.05(a) shall be
increased by such unutilized amount provided that such increase shall not exceed
$5,000,000 in any fiscal year.
(c) In addition to the foregoing, the Borrower and any Subsidiary
Guarantor may make Consolidated Capital Expenditures in amounts in excess of
those permitted under Sections 7.05(a) and (b) provided that the amount of such
additional Consolidated Capital Expenditures shall not exceed the sum of (x) the
Available ECF Amount and (y) the Available Equity Amount in each case as
determined at the time of, but immediately prior to, the making thereof.
1.077 SUBSIDIARIES; ETC. The Borrower will not (x) sell, assign or
otherwise encumber or dispose of, and will not permit any of its Subsidiaries
directly or indirectly to issue, sell, assign, pledge or otherwise encumber or
dispose of, any shares of a Subsidiary's capital stock or other securities (or
warrants, rights or options to acquire shares or other equity securities) of
such Subsidiary, except to the Borrower (to the extent otherwise permitted
hereunder) and except for dispositions permitted by Section 7.02 and (y) after
the Restatement Effective Date, create or permit to be created any new
Subsidiary except to the extent created in compliance with the second sentence
of Section 7.06.
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1.078 PREPAYMENTS OF INDEBTEDNESS, ETC. The Borrower will not, and
will not permit any of its Subsidiaries to:
(a) make (or give any notice in respect thereof) any voluntary or
optional payment or prepayment or redemption or acquisition for value of
(including, without limitation, by way of depositing with the trustee with
respect thereto money or securities before due for the purpose of paying
when due) or exchange of any Subordinated Debt, the Smith Note or any other
Existing Indebtedness;
(b) amend or modify, or permit the amendment or modification of, any
provisions of any Subordinated Debt Documents;
(c) amend, modify or change in any manner adverse to the interests of
the Banks the Certificate of Incorporation (including, without limitation,
by the filing of any certificate of designation) or By-Laws of the Borrower
or any agreement entered into by the Borrower, with respect to its capital
stock or enter into any new agreement in any manner adverse to the
interests of the Banks with respect to the capital stock of the Borrower;
and/or
(d) amend, modify or change, directly or indirectly, any covenant or
event of default in the Existing Credit Agreement without the consent of
the Required Banks hereunder.
1.079 DIVIDENDS, ETC. (a) The Borrower will not redeem, retire,
purchase or otherwise acquire, directly or indirectly, any Capital Stock of
Borrower or other evidence of ownership interest, or declare or pay dividends
upon any Capital Stock of Borrower or make any distribution of Borrower's
property or assets (any of the foregoing, a "Dividend"), provided that this
Section 7.09 will not prohibit, so long as no Event of Default shall have
occurred and is continuing or would occur as a consequence thereof, (i) the
repurchase, redemption or other acquisition or retirement for value of any
shares of Capital Stock of the Borrower from the estate of Daniel L. Simon
solely out of the proceeds of any policy of insurance maintained to provide
funds for such purpose, (ii) to the extent the Indebtedness evidenced by such
Note has not been assumed by the Borrower, the payment of dividends to Holdings
in an annual amount not to exceed $120,000 to fund payments of interest on the
Smith Note, (iii) the payment of cash Dividends to Holdings to the extent the
proceeds are promptly used to pay administrative costs arising in the ordinary
course of business and cash interest when due on the Permitted Holdings Debt and
(iv) the payment of cash Dividends to Holdings to be promptly utilized by
Holdings to purchase its Common Stock (or options or warrants to purchase such
Common Stock) from officers, employees and directors (or their estates) upon the
death, permanent disability, retirement or termination of employment of any such
Person or otherwise in accordance with any stock option plan or any employee
stock ownership plan or any warrant plan.
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(b) The Borrower will not, and will not permit any of its
Subsidiaries to, create or otherwise cause or suffer to exist any encumbrance or
restriction which prohibits or otherwise restricts (A) the ability of any
Subsidiary to (a) pay dividends or make other distributions or pay any
Indebtedness owed to the Borrower or any Subsidiary, (b) make loans or advances
to the Borrower or any Subsidiary or (c) transfer any of its properties or
assets to the Borrower or any Subsidiary or (B) the ability of the Borrower or
any other Subsidiary of the Borrower to create, incur, assume or suffer to exist
any Lien upon its property or assets to secure the Obligations, other than
prohibitions or restrictions existing under or by reason of: (i) this Agreement,
the other Credit Documents and any Subordinated Debt Indenture (once
executed);(ii) applicable law;(iii) customary non-assignment provisions entered
into in the ordinary course of business and consistent with past practices;(iv)
any restriction or encumbrance with respect to a Subsidiary of the Borrower
imposed pursuant to an agreement which has been entered into for the sale or
disposition of all or substantially all of the capital stock or assets of such
Subsidiary, so long as such sale or disposition is permitted under this
Agreement; and (v) Liens permitted under Section 7.03 and any documents or
instruments governing the terms of any Indebtedness or other obligations secured
by any such Liens, provided that such prohibitions or restrictions apply only to
the assets subject to such Liens.
7.10 TRANSACTIONS WITH AFFILIATES. (a) No later than 60 days
following the Closing Date, the Borrower shall deliver to the Agent a duly
authorized and executed counterpart or counterparts of deeds of trust, mortgages
and similar documents in form and substance reasonably satisfactory to the Agent
(the "Additional Mortgages") covering all of the Real Property owned by the
Borrower not subject to Mortgages on the Closing Date (x) which Additional
Mortgages shall constitute valid and enforceable Liens superior to and prior to
the rights of all third Persons and subject to no other Liens except as
permitted by Section 7.03 and (y) which Additional Mortgages (or instruments
related thereto) shall have been duly recorded or filed in such manner and in
such places as are required by law to establish, perfect, preserve and protect
the Liens in favor of the Collateral Agent required to be granted thereunder and
all taxes, fees and other charges payable in connection therewith shall have
been paid in full, with each such Additional Mortgage to be accompanied by
mortgage policies relating thereto reasonably satisfactory to the Agent.
(b) The Borrower will not, and will not permit any Subsidiary to,
sell, lease, license, transfer, exchange, or otherwise dispose of any of its
properties, assets or services to, or purchase, lease, or license the use of any
property, assets or services from, or transfer funds to, or enter into any
contract, agreement, understanding, loan, advance or guarantee with, to or for
the benefit of, any Affiliate (each of the foregoing, an "Affiliate
Transaction," whether constituting one transaction or a series of related
transactions), unless (a) such Affiliate Transaction is on terms that are no
less favorable to the Borrower or the relevant Subsidiary than those that would
have been obtained in a comparable transaction by the Borrower or such
Subsidiary with an unrelated person and (b) Borrower delivers to the Agent
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(i) with respect to any Affiliate Transaction involving aggregate payments in
excess of $250,000, an officers' certificate setting forth a resolution of the
Board of Directors of the Borrower approved by a majority of the members of the
Board of Directors (and a majority of the disinterested members of the Board of
Directors, if any) certifying that such Affiliate Transaction complies with
clause(a) above and (ii) with respect to any Affiliate Transaction involving
aggregate payments in excess of $3.0 million, an opinion as to the fairness,
from a financial point of view, of such Affiliate Transaction to the Borrower or
such Subsidiary issued by an independent investment banking firm of national
standing with total assets in excess of $1.0 billion. The foregoing limitation
does not limit, and shall not apply to, (i) the payment of reasonable annual
compensation to directors or executive officers of the Borrower or any
Subsidiary thereof, (ii) transactions described in Annex IX hereto, provided
that the fees described in Annex IX shall accrue and not be paid at any time
that a Default or an Event of Default specified in Section 8.01 shall occur and
be continuing or (iii) payments by the Borrower to Holdings under the Tax
Sharing Agreement.
7.11 FIXED CHARGE COVERAGE RATIO. The Borrower will not permit the
ratio of (i) Adjusted EBITDA of the Borrower to (ii) Consolidated Fixed Charges
of the Borrower for any 12 month period (taken as one accounting period) ending
on a Measurement Date (or if less the period from the Initial Borrowing Date to
such Measurement Date) to be less than 1.00 to 1.
7.12 MINIMUM MODIFIED ADJUSTED EBITDA. The Borrower will not permit
Modified Adjusted EBITDA of the Borrower for any 12 month period (taken as one
accounting period) ending on a Measurement Date occurring in a period set forth
below to be less than (A) the amount set forth opposite such period plus (B) the
Aggregate Acquired EBITDA as of such Measurement Date:
Period Amount
------ ------
Closing Date through
December 30, 1997 $57,000,000
December 31, 1997 through
December 30, 1998 $58,400,000
December 31, 1998 through
December 30, 1999 $60,750,000
December 31, 1999 through
December 30, 2000 $65,750,000
December 31, 2000 and
thereafter $70,500,000
7.13 SENIOR LEVERAGE RATIO. On and after the Consolidation Date the
Borrower will not permit the Senior Leverage Ratio as of any Measurement Date
occurring in a period set forth below to be more than the ratio set forth
opposite such period:
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Period Ratio
------ -----
Closing Date through
December 30, 1997 5.50 to 1.0
December 31, 1997 through
December 30, 1998 5.00 to 1.0
December 31, 1998 and
thereafter 4.50 to 1.0
SECTION 8. EVENTS OF DEFAULT. Upon the occurrence of any of the
following specified events (each an "Event of Default"):
1.081 PAYMENTS. The Borrower shall (i) default in the payment when
due of any principal of the Loans or (ii) default, and such default shall
continue for five or more days, in the payment when due of any interest on the
Loans or any Fees or any other amounts owing hereunder or under any other Credit
Document; or
1.082 REPRESENTATIONS, ETC. Any representation, warranty or
statement made by the Borrower herein or in any other Credit Document or in any
statement or certificate delivered or required to be delivered pursuant hereto
or thereto shall prove to be untrue in any material respect on the date as of
which made or deemed made; or
1.083 COVENANTS. The Borrower shall (a) default in the due
performance or observance by it of any term, covenant or agreement contained in
Sections 6.10, 6.11 or 7, or (b) default in the due performance or observance by
it of any term, covenant or agreement (other than those referred to in Section
8.01, 8.02 or clause (a) of this Section 8.03) contained in this Agreement and
such default shall continue unremedied for a period of at least 30 days after
notice to the defaulting party by the Agent or the Required Banks; or
1.084 DEFAULT UNDER OTHER AGREEMENTS. (a) Holdings, the Borrower or
any of its Subsidiaries shall (i) default in any payment with respect to any
Indebtedness (other than the Obligations) beyond the period of grace, if any,
applicable thereto or (ii) default in the observance or performance of any
agreement or condition relating to any such Indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or holders of such
Indebtedness (or a trustee or agent on behalf of such holder or holders) to
cause any such Indebtedness to become due prior to its stated maturity; or (b)
any such Indebtedness of Holdings, the Borrower or any of its Subsidiaries shall
be declared to be due and payable, or required to be prepaid other than by a
regularly scheduled required prepayment, prior to the stated maturity thereof,
provided that it shall not constitute an Event of Default pursuant to this
Section 8.04 unless the principal amount of such Indebtedness exceeds $2,500,000
individually or in the aggregate at any one time; or
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1.085 BANKRUPTCY, ETC. Holdings, the Borrower or any of its
Subsidiaries shall commence a voluntary case concerning itself under Title 11 of
the United States Code entitled "Bankruptcy," as now or hereafter in effect, or
any successor thereto (the "Bankruptcy Code"); or an involuntary case is
commenced against Holdings, the Borrower or any of its Subsidiaries and the
petition is not controverted within 10 days, or is not dismissed within 60 days,
after commencement of the case; or a custodian (as defined in the Bankruptcy
Code) is appointed for, or takes charge of, all or substantially all of the
property of Holdings, the Borrower or any of its Subsidiaries; or Holdings, the
Borrower or any of its Subsidiaries commences any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to Holdings, the Borrower or any of its
Subsidiaries; or there is commenced against Holdings, the Borrower or any of its
Subsidiaries any such proceeding which remains undismissed for a period of 60
days; or Holdings, the Borrower or any of its Subsidiaries is adjudicated
insolvent or bankrupt; or any order of relief or other order approving any such
case or proceeding is entered; Holdings, the Borrower or any of its Subsidiaries
suffers any appointment of any custodian or the like for it or any substantial
part of its property to continue undischarged or unstayed for a period of 60
days; or Holdings, the Borrower or any of its Subsidiaries makes a general
assignment for the benefit of creditors; or any corporate action is taken by
Holdings, the Borrower or any of its Subsidiaries for the purpose of effecting
any of the foregoing; or
1.086 ERISA. (a) A single-employer plan (as defined in Section 4001
of ERISA) established by the Borrower, any of its Subsidiaries or any ERISA
Affiliate shall fail to maintain the minimum funding standard required by
Section 412 of the Code for any plan year or a waiver of such standard or
extension of any amortization period is sought or granted under Section 412 of
the Code or shall provide security to induce the issuance of such waiver or
extension, (b) any Plan is or shall have been or is likely to be terminated or
the subject of termination proceedings under ERISA or an event has occurred
entitling the PBGC to terminate a Plan under Section 4042(a) of ERISA, (c) any
Plan shall have an Unfunded Current Liability or (d) the Borrower or a
Subsidiary or any ERISA Affiliate has incurred or is likely to incur a material
liability to or on account of a termination of or a withdrawal from a Plan under
Section 515, 4062, 4063, 4064, 4201 or 4204 of ERISA; and there shall result
from any such event or events described in the preceding clauses of this Section
9.06 the imposition of a Lien upon the assets of Holdings, the Borrower or any
Subsidiary, the granting of a security interest, or a liability or a material
risk of incurring a liability to the PBGC or a Plan or a trustee appointed under
ERISA or a penalty under Section 4971 of the Code, in each case which would
have, in the opinion of the Required Banks a Material Adverse Effect; or
1.087 CREDIT DOCUMENTS. Any Security Document or Guaranty (once
executed) shall cease to be in full force and effect (except as provided for
therein), or any Security Document shall cease to give the Collateral Agent any
Lien encumbering assets with
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an aggregate fair market value in excess of $2,500,000 (and, if encumbering
assets with a fair market value of less than $2,500,000, for a period greater
than thirty or more days), or any material rights, powers and privileges
purported to be created thereby in favor of the Collateral Agent or any Credit
Party shall default in any material respect in the due performance or observance
of any term, covenant or agreement on its part to be performed or observed
pursuant to any such Security Document or Guaranty or shall disaffirm or seek to
disaffirm any Guaranty; or
1.088 HOLDINGS. (A) Holdings shall after the Restatement Effective
Date (i) incur any Indebtedness except for Permitted Holdings Debt and the
Holdings Guaranty, (ii) grant or create any Lien on any of its assets that
secures Indebtedness other than pursuant to the Holdings Pledge Agreement, (iii)
modify or amend, or prepay, any Permitted Holdings Debt, (iv) engage in any
business or activity other than the ownership of all of the capital stock of the
Borrower and administrative activities directly related thereto, (v) sell or
dispose of any of, or otherwise cease to own all of, the capital stock of the
Borrower, (vi) change its fiscal quarters or fiscal year from those applicable
also to the Borrower, (vii) fail to maintain its own payroll and books of
account and bank accounts separate from those of the Borrower and its
Subsidiaries, (viii) fail to pay its liabilities, including all administrative
expenses, from its own separate assets, (ix) fail to separately identify and
segregate its assets from the assets of the Borrower and its Subsidiaries and/or
(x) amend, modify or change in any way adverse to the interests of the Banks,
its Certificate of Incorporation (including, without limitation, by the filing
or modification of any certificate of designation) or By-Laws or any agreement
entered into by Holdings with respect to its capital stock, except in each case
(a) as expressly required by any of the Shareholders' Agreements, Management
Agreements, Tax Sharing Agreements and subscription agreements with members of
management, all as in effect on the Restatement Effective Date, (b) as expressly
required by law and (c) Holdings issuing Capital Stock in any public offering to
the extent the proceeds thereof are used to repay the Loans as required by
Section 3.02(A)(c) hereof;
(B) The Holdings Leverage Ratio as of any Measurement Date occurring
in a period set forth below is more than the ratio set forth opposite such
period:
Period Ratio
------ -----
Closing Date through
June 29, 1998 6.50 to 1.0
June 30, 1998 through
December 30, 1999 6.25 to 1.0
December 31, 1999 and
thereafter 6.00 to 1.0
(C) The ratio of (i) Adjusted EBITDA of Holdings to (ii) Consolidated
Interest Expense of Holdings for any 12 month period (taken as one accounting
period)
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ending on a Measurement Date occurring in a period set forth below is less than
the ratio set forth opposite such period:
Period Ratio
------ -----
Closing Date through
December 30, 1997 1.50 to 1.0
December 31, 1997 through
December 30, 1998 1.75 to 1.0
December 31, 1998 through
December 30, 1999 1.85 to 1.0
December 31, 1999 through
December 30, 2001 2.00 to 1.0
December 31, 2001 and
thereafter 2.50 to 1.0
1.089 JUDGMENTS. One or more judgments or decrees shall be entered
against Holdings, the Borrower and/or any of its Subsidiaries involving a
liability of $2,500,000 or more or in the aggregate (not paid or to the extent
not covered by insurance) and any such judgments or decrees shall not have been
vacated, discharged or stayed or bonded pending appeal within 60 days from the
entry thereof;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Agent shall, upon the written request of the
Required Banks, by written notice to the Borrower, take any or all of the
following actions, without prejudice to the rights of the Agent or any Bank to
enforce its claims against the Borrower, except as otherwise specifically
provided for in this Agreement (provided that, if an Event of Default specified
in Section 8.05 shall occur with respect to the Borrower, the result which would
occur upon the giving of written notice by the Agent as specified in clauses (i)
and (ii) below shall occur automatically without the giving of any such notice):
(i) declare the principal of and any accrued interest in respect of all Loans
and all obligations owing hereunder to be, whereupon the same shall become,
forthwith due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Borrower; and/or (ii)
enforce, as Collateral Agent (or direct the Collateral Agent to enforce), any or
all of the Liens and security interests created pursuant to the Security
Documents.
SECTION 9. DEFINITIONS. As used herein, the following terms shall
have the meanings herein specified unless the context otherwise requires.
Defined terms in this Agreement shall include in the singular number the plural
and in the plural the singular:
"Additional Cap Ex" for any fiscal year (or portion thereof) shall
mean an amount equal to the aggregate of (x) the "Prior Year Cap Ex" of each
Person acquired by the Borrower and its Subsidiaries during such fiscal year (or
portion thereof) pursuant to a
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Permitted Acquisition times (y) the "Remaining Percentage" applicable to such
acquisition, with the "Prior Year Cap Ex" for each such Person to be 105% of the
consolidated capital expenditures for such Person for the fiscal year of such
Person last ended prior to such acquisition and "Remaining Percentage" for an
acquisition shall mean the percentage determined by dividing the days remaining
in such fiscal year after such acquisition by the total number of days in such
fiscal year.
"Additional Mortgages" shall have the meaning provided in Section
6.10(a).
"Additional Subordinated Debt" shall mean subordinated debt issued by
the Borrower after the Closing Date, provided that (i) the terms and conditions
(other than pricing and maturities, provided that no scheduled payment of
principal shall be due and payable prior to the Final Maturity Date) are (in the
reasonable opinion of the Agent) substantially the same as those contained in
the Permitted Subordinated Debt or are consented to by the Required Banks and
(ii) the Additional Subordinated Debt shall not exceed in the aggregate (x) $50
million less (y) the aggregate principal amount of Permitted Holdings Debt.
"Adjusted Additional Cap Ex" for any fiscal year shall mean the
Additional Cap Ex for such year determined in each case as if the Remaining
Percentage for such year were equal to 100%.
"Adjusted Cash Flow" for any fiscal year shall mean Consolidated Net
Income of the Borrower for such fiscal year (after provision for taxes) plus the
amount of all net non-cash charges (including, without limitation, depreciation,
deferred tax expense, non-cash interest expense, amortization and other non-cash
charges) that were deducted in arriving at such Consolidated Net Income for such
fiscal year, minus the amount of all non-cash gains and gains from sales of
assets (other than sales of inventory and equipment in the normal course of
business) that were added in arriving at such Consolidated Net Income for such
fiscal year.
"Adjusted EBITDA" of any Person shall mean, for any period (x) the
Consolidated EBITDA of such Person for such period plus or minus (y) the
adjustments thereto provided for in Exhibit J.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including, but not limited to, all directors
and officers of such Person), controlled by, or under direct or indirect common
control with such Person. A Person shall be deemed to control a corporation if
such Person possesses, directly or indirectly, the power (i) to vote 10% or more
of the securities having ordinary voting power for the election of directors of
such corporation or (ii) to direct or cause the direction of the
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management and policies of such corporation, whether through the ownership of
voting securities, by contract or otherwise.
"Agent" shall have the meaning provided in the first paragraph of this
Agreement and shall include any successor to the Agent appointed pursuant to
Section 10.09.
"Aggregate Acquired EBITDA" shall mean, as at any Measurement Date, an
amount equal to the aggregate of 85% of the "12-month Consolidated EBITDA" of
each Person acquired by the Borrower and its Subsidiaries after the Restatement
Effective Date, with the "12-month Consolidated EBITDA" of each such Person to
be the Consolidated EBITDA of such Person for the 12 months last ended prior to
the acquisition of such Person with a pro forma adjustment thereto to give
effect to contemplated cost savings as estimated in good faith by the Borrower
and agreed to by the Agent.
"Agreement" shall mean this Term Loan Agreement, as the same may be
from time to time further modified, amended and/or supplemented.
"Anticipated Reinvestment Amount" shall mean, with respect to any
Reinvestment Election, the amount specified in the Reinvestment Notice delivered
by the Borrower in connection therewith as the amount of the Net Cash Proceeds
from the related Permitted Asset Sale that the Borrower intends to use to
purchase, construct or otherwise acquire Reinvestment Assets.
"Applicable Base Rate Margin" shall mean 1.75% less the Margin
Reduction Discount, if any.
"Applicable Eurodollar Margin" shall mean 2.75% less the Margin
Reduction Discount, if any.
"AR Loan" shall have the meaning provided in the Existing Credit
Agreement.
"AR Percentage" shall mean at any time that percentage obtained by
dividing (i) the outstanding principal amount of AR Loans by (ii) the
outstanding principal amount of the Loans.
"AR Termination Date" shall have the meaning provided in the Existing
Credit Agreement.
"Asset Sale" shall mean and include (x) the sale, transfer or other
disposition by the Borrower or any Subsidiary to any Person other than the
Borrower or any Subsidiary of any asset of the Borrower or such Subsidiary
(other than sales, transfers or other
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dispositions in the ordinary course of business of inventory and/or obsolete or
excess equipment and other than sales in which the Net Cash Proceeds are $50,000
or less) and/or (y) the receipt by the Borrower or any Subsidiary of any
insurance, condemnation or similar proceeds in connection with a casualty or
taking of any of its assets.
"Assignment Agreement" shall mean an Assignment and Assumption
Agreement substantially in form of Exhibit K hereto.
"Authorized Officer" shall mean any senior officer of the Borrower
designated as such in writing to the Agent by the Borrower in each case to the
extent acceptable to the Agent.
"Available ECF Amount" shall mean at any time, an amount equal to (A)
50% of Excess Cash Flow determined for the fiscal year of the Borrower
(commencing with the fiscal year ending on December 31, 1999) then last ended
less (B) the aggregate Consolidated Capital Expenditures theretofore made during
the then current fiscal year pursuant to Section 7.05(c)(x).
"Available Equity Amount" shall mean at any time (A) an amount equal
to the aggregate net cash proceeds at such time from the sale or issuance of
equity by Holdings or the Borrower after the Consolidation Date not required to
be utilized to repay (x) the Loans under Section 3.02(A)(c) and (y) AR Loans
under Section 4.02(A)(d) of the Existing Credit Agreement (whether or not AR
Loans are then outstanding) less (B) the aggregate of any amounts theretofore
expended after the Restatement Effective Date as permitted by Section 7.05(c)(y)
of this Agreement to the extent in excess of the Available ECF Amount at such
time.
"Bank" shall have the meaning provided in the first paragraph of this
Agreement.
"Bankruptcy Code" shall have the meaning provided in Section 8.05.
"Base Rate" at any time shall mean the higher, (i) the rate which is
1/2 of 1% in excess of the Federal Funds Effective Rate and (ii) the Prime
Lending Rate.
"Base Rate Loan" shall mean each Loan bearing interest at the rates
provided in Section 1.08(a).
"Borrower" shall mean Universal Outdoor, Inc., an Illinois
corporation.
"Borrower Pledge Agreement" shall have the meaning provided in Section
4.01(h)(I).
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"Borrowing" shall mean the incurrence of one Type of Loan from all of
the Banks on a PRO RATA basis on a given date (or resulting from conversions on
a given date), having in the case of Eurodollar Loans the same Interest Period;
provided that Base Rate Loans incurred pursuant to Section 1.10(b) shall be
considered part of any related Borrowing of Eurodollar Loans.
"BTCo" shall mean Bankers Trust Company.
"Business Day" shall mean (i) for all purposes other than as covered
by clause (ii) below, any day excluding Saturday, Sunday and any day which shall
be in the City of New York a legal holiday or a day on which banking
institutions are authorized by law or other governmental actions to close and
(ii) with respect to all notices and determinations in connection with, and
payments of principal and interest on, Eurodollar Loans, any day which is a
Business Day described in clause (i) and which is also a day for trading by and
between banks in U.S. dollar deposits in the interbank Eurodollar market.
"Calculation Period" shall mean, with respect to any sale or
disposition of assets made pursuant to Section 7.02(f), the last 12 month period
for which financial statements of the Borrower are reasonably available.
"Capital Lease" as applied to any Person shall mean any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of such Person's
capital stock, whether or not voting, including but not limited to common stock,
preferred stock, convertible debentures, warrants, options or similar rights to
acquire such capital stock, and all agreements, instruments and documents
convertible, in whole or in part, into any one or more or all of the foregoing.
"Capitalized Lease Obligations" shall mean all obligations under
Capital Leases of the Borrower or any of its Subsidiaries in each case taken at
the amount thereof accounted for as liabilities in accordance with GAAP.
"Cash Equivalents" shall mean (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than six months from the date of acquisition, (ii) U.S. dollar denominated time
deposits, certificates of deposit and bankers' acceptances of (x) any Bank, (y)
any domestic commercial bank of recognized standing having capital and surplus
in excess of $500,000,000 or (z) any bank (or the parent company of such bank)
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whose short-term commercial paper rating from Standard & Poor's Corporation
("S&P") is at least A-1 or the equivalent thereof or from Moody's Investors
Service, Inc. ("Moody's") is at least P-1 or the equivalent thereof (any such
bank, an "Approved Bank"), in each case with maturities of not more than six
months from the date of acquisition, (iii) repurchase obligations with a term of
not more than seven days for underlying securities of the types described in
clause (i) above entered into with any bank meeting the qualifications specified
in clause (ii) above, (iv) commercial paper issued by any Bank or Approved Bank
or by the parent company of any Bank or Approved Bank and commercial paper
issued by, or guaranteed by, any industrial or financial company with a
short-term commercial paper rating of at least A-1 or the equivalent thereof by
S&P or at least P-1 or the equivalent thereof by Moody's (any such company, an
"Approved Company"), or guaranteed by any industrial company with a long term
unsecured debt rating of at least A or A2, or the equivalent of each thereof,
from S&P or Moody's, as the case may be, and in each case maturing within six
months after the date of acquisition and (v) investments in money market funds
substantially all of whose assets are comprised of securities of the type
described in clauses (i) through (iv) above.
"Cash Proceeds" shall mean, with respect to any Asset Sale, the
aggregate cash payments (including any cash received by way of deferred payment
pursuant to a note receivable issued in connection with such Asset Sale, other
than the portion of such deferred payment constituting interest, but only as and
when so received) and/or insurance or condemnation proceeds received by the
Borrower and/or any Subsidiary from such Asset Sale.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601 ET
SEQ.
"Change of Control" shall mean (i) Holdings shall cease to own legally
and beneficially 100% of the outstanding capital stock of the Borrower, (ii)
Management Investors or their Permitted Transferees shall cease to be the
beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) of
75% or more (on a fully diluted basis) of the Common Stock so beneficially owned
by the Management Investors on the Closing Date, (iii) any "person" (as such
term is used in Sections 13(d) and 14(d) of the Exchange Act), other than one or
more Permitted Holders, is or becomes the beneficial owner (as defined in clause
(ii) above, except that a person shall be deemed to have "beneficial ownership"
of all shares that any such person has the right to acquire, whether such right
is exercisable immediately or only after the passage of time), directly or
indirectly, of more than 30% of the total voting and economic ownership
interests of Holdings; PROVIDED, HOWEVER, that the Permitted Holders
"beneficially own" (as defined in clause (ii) above), directly or indirectly, in
the aggregate a lesser percentage of the total voting and economic ownership
interests of Holdings than such other person and do not have the right or
ability by voting power, contract or otherwise to elect or designate for
election a majority of the
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Board of Directors of Holdings, (iv) during any period of two consecutive years
individuals who at the beginning of such period constituted the Board of
Directors of Holdings (together with any new directors whose election by such
Board of Directors or whose nomination for election by the stockholders of
Holdings was approved by either (i) the Permitted Holders or (ii) a vote of a
majority of the directors of Holdings then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of Holdings then in office or (v) any "Change
of Control" or similar term as defined in any Subordinated Debt Documents.
"Closing Date" shall mean the date on which the Loans are incurred
upon satisfaction of the conditions set forth in Section 4.01.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time and the regulations promulgated and the rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the Effective
Date and any subsequent provisions of the Code, amendatory thereof, supplemental
thereto or substituted therefor.
"Collateral" shall mean all of the Collateral as defined in each of
the Security Documents.
"Collateral Agent" shall mean the Agent acting as collateral agent for
the Banks.
"Commitment" shall mean, with respect to each Bank, the amount set
forth opposite such Bank's name in Annex I hereto directly below the column
entitled "Commitment," as the same may be terminated pursuant to Section 2.02.
"Common Stock" shall mean the common stock of Holdings.
"Consolidated Capital Expenditures" shall mean, for any period, the
aggregate of all expenditures (whether paid in cash or accrued as liabilities
and including in all events all amounts expended or capitalized under Capital
Leases but excluding any amount representing capitalized interest) by the
Borrower and its Subsidiaries during that period that, in conformity with GAAP,
are or are required to be included in the property, plant or equipment reflected
in the consolidated balance sheet of the Borrower and its Subsidiaries, provided
that Consolidated Capital Expenditures shall in any event exclude the purchase
price paid in connection with any Permitted Acquisition (whether or not
allocable to property, plant and equipment).
"Consolidated Cash Interest Expense" of any Person shall mean, for any
period, Consolidated Interest Expense of such Person, but excluding, however,
interest
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expense not payable in cash and amortization of discount and deferred issuance
and financing costs.
"Consolidated Credit Agreement" shall mean the Consolidated Credit
Agreement dated as of October 31, 1996 among the Borrower and the banks party
thereto as in effect immediately prior to the Closing Date.
"Consolidated Current Assets" shall mean, as to any Person at any
time, the current assets (other than cash and Cash Equivalents) of such Person
and its Subsidiaries determined on a consolidated basis in accordance with GAAP.
"Consolidated Current Liabilities" shall mean, as to any Person at any
time, the current liabilities of such Person and its Subsidiaries determined on
a consolidated basis in accordance with GAAP, but excluding all short-term
Indebtedness for borrowed money and the current portion of any long-term
Indebtedness of such Person or its Subsidiaries, in each case to the extent
otherwise included therein.
"Consolidated Debt" of any Person shall mean, as at any date of
determination, the aggregate stated balance sheet amount of all Indebtedness of
such Person and its Subsidiaries on a consolidated basis as determined in
accordance with GAAP.
"Consolidated EBIT" of any Person shall mean, for any period, (A) the
sum of the amounts for such period for such Person of (i) Consolidated Net
Income, (ii) provisions for taxes based on income, (iii) Consolidated Interest
Expense and (iv) losses on sales of assets (excluding sales in the ordinary
course of business) and other extraordinary losses less (B) the amount for such
period of gains on sales of assets (excluding sales in the ordinary course of
business) and other extraordinary gains, all as determined on a consolidated
basis for such Person and its Subsidiaries in accordance with GAAP.
"Consolidated EBITDA" of any Person shall mean, for any period, the
sum of the amounts for such period for such Person of (i) Consolidated EBIT,
(ii) depreciation expense and (iii) amortization expense, all as determined on a
consolidated basis for such Person and its Subsidiaries in accordance with GAAP.
"Consolidated Fixed Charges" of any Person shall mean, for any period,
the sum, without duplication, for such Person of the amounts for such period of
(i) Consolidated Cash Interest Expense, (ii) Dividends paid to Holdings, (iii)
Consolidated Capital Expenditures (x) made other than pursuant to Section
7.05(c) and (y) paid in cash, (iv) taxes paid or payable in cash and (v)
scheduled payments on the Loans and Existing Indebtedness, all as determined on
a consolidated basis for such Person and its Subsidiaries in accordance with
GAAP.
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"Consolidated Interest Expense" of any Person shall mean, for any
period, total interest expense (including that attributable to Capital Leases in
accordance with GAAP) of such Person and its Subsidiaries on a consolidated
basis with respect to all outstanding Indebtedness of such Person and its
Subsidiaries, including, without limitation, all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers'
acceptance financing and net costs under Interest Rate Agreements.
"Consolidated Net Income" of any Person (a "Designated Person") shall
mean for any period, the net income (or loss) of such Designated Person and its
Subsidiaries on a consolidated basis for such period taken as a single
accounting period determined in conformity with GAAP, provided that there shall
be (A) deducted, in the case of the Borrower, any Dividends paid to Holdings and
(B) excluded (i) the income (or loss) of any Person (other than Subsidiaries of
the Designated Person) in which any other Person (other than the Designated
Person or any of its Subsidiaries) has a joint interest, except to the extent of
the amount of dividends or other distributions actually paid to the Designated
Person or any of its Subsidiaries by such Person during such period, (ii) the
income (or loss) of any Person accrued prior to the date it becomes a Subsidiary
of the Designated Person or is merged into or consolidated with the Designated
Person or any of its Subsidiaries or that Person's assets are acquired by the
Designated Person or any of its Subsidiaries, (iii) the income of any Subsidiary
of the Designated Person to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary, (iv) Transaction Expenses, (v) barter revenues
and barter expenses, in each case other than those relating to goods reasonably
expected to be used in the ordinary course of business and (vi) compensation
expense resulting from the issuance of capital stock, stock options or stock
appreciation rights issued to employees, including officers, of the Designated
Person or any Subsidiary, or the exercise of such options or rights, in each
case to the extent the obligation (if any) associated therewith is not expected
to be settled by the payment of cash by the Designated Person or any Affiliate
of the Designated Person and compensation expense resulting from the repurchase
of any such capital stock, options and rights.
"Consolidated Senior Debt" of any Person shall mean, as of any date of
determination, (x) the Consolidated Debt of such Person less (y) all Permitted
Subordinated Debt included in determining such Consolidated Debt.
"Consolidation Date" shall have the meaning provided in the
Consolidated Credit Agreement.
"Contingent Obligations" shall mean as to any Person any obligation of
such Person guaranteeing or intending to guarantee any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any
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manner, whether directly or indirectly, including, without limitation, any
obligation of such Person, whether or not contingent, (a) to purchase any such
primary obligation or any property constituting direct or indirect security
therefor, (b) to advance or supply funds (i) for the purchase or payment of any
such primary obligation or (ii) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (c) to purchase property, securities or services primarily for
the purpose of assuring the owner of any such primary obligation of the ability
of the primary obligor to make payment of such primary obligation or (d)
otherwise to assure or hold harmless the owner of such primary obligation
against loss in respect thereof, provided however, that the term Contingent
Obligation shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Contingent Obligation
is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof (assuming such Person is required to perform
thereunder) as determined by such Person in good faith.
"Credit Documents" shall mean this Agreement, the Notes, the Security
Documents, any documents executed in connection therewith and the Guaranties.
"Credit Party" shall mean the Borrower and each Guarantor.
"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Designated UOH Stockholders" shall mean the Management Investors,
Kelso Investment Associates V, L.P. and Kelso Equity Partners V, L.P.
"Dividends" shall have the meaning provided in Section 8.09.
"Domestic Subsidiary" shall mean a Subsidiary of the Borrower that is
organized under the laws of the United States or any state thereof.
"Environmental Claims" means any and all administrative, regulatory or
judicial actions, suits, demand letters, claims, liens, notices of noncompliance
or violation, investigations (other than internal reports prepared by the
Borrower or any of its Subsidiaries solely in the ordinary course of such
Person's business and not in response to any third party action or request of
any kind) or proceedings relating to any Environmental Law or any permit issued,
or any written approval given, under any such Environmental Law (hereafter,
"Claims"), including, without limitation, (a) any and all Claims by governmental
or regulatory authorities for enforcement, cleanup, removal, response, remedial
or other actions or damages pursuant to any applicable Environmental Law, and
(b) any and all Claims by any
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third party seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from Hazardous Materials arising
from alleged injury or threat of injury to health, safety or the environment.
"Environmental Law" means any applicable Federal, state, foreign or
local statute, law, rule, regulation, ordinance, code, guide, policy and rule of
common law now or hereafter in effect and in each case as amended, and any
judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to the environment,
health, safety or Hazardous Materials, including, without limitation, CERCLA;
RCRA; the Federal Water Pollution Control Act, as amended, 33 U.S.C. Section
1251 ET SEQ.; the Toxic Substances Control Act, 15 U.S.C. Section 7401 ET
SEQ.; the Clean Air Act, 42 U.S.C. Section 7401 ET SEQ.; the Safe Drinking
Water Act, 42 U.S.C. Section 3808 ET SEQ.; the Oil Pollution Act of 1990, 33
U.S.C. Section 2701 ET SEQ. and any applicable state and local or foreign
counterparts or equivalents.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder. Section references to ERISA are to ERISA, as in effect at
the Initial Borrowing Date and any subsequent provisions of ERISA, amendatory
thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9)
of ERISA) which together with Holdings, the Borrower or a Subsidiary would be
deemed to be a "single employer" within the meaning of Sections 414(b), (c), (m)
and (o) of the Code.
"Eurodollar Loans" shall mean each Loan bearing interest at the rates
provided in Section 1.08(b).
"Eurodollar Rate" shall mean with respect to each Interest Period for
a Eurodollar Loan, (i) the offered quotation to first-class banks in the
interbank Eurodollar market by the Agent for dollar deposits of amounts in same
day funds comparable to the outstanding principal amount of the Eurodollar Loan
of the Agent for which an interest rate is then being determined with maturities
comparable to the Interest Period to be applicable to such Eurodollar Loan,
determined as of 10:00 A.M. (New York time) on the date which is two Business
Days prior to the commencement of such Interest Period divided (and rounded
upward to the next whole multiple of 1/16 of 1%) by (ii) a percentage equal to
100% minus the then stated maximum rate of all reserve requirements (including,
without limitation, any marginal, emergency, supplemental, special or other
reserves) applicable to any member bank of the Federal Reserve System in respect
of Eurocurrency liabilities as defined in Regulation D (or any successor
category of liabilities under Regulation D).
"Event of Default" shall have the meaning provided in Section 8.
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"Excess Cash Flow" shall mean, for any fiscal year, the remainder of
(i) the sum of (x) Adjusted Cash Flow for such fiscal year and (y) the decrease,
if any, in Working Capital from the first day to the last day of such fiscal
year, plus (ii) to the extent not included in (i) above, any amounts received by
the Borrower and its Subsidiaries in settlement of, or in payment of any
judgments resulting from, actions, suits or proceedings with respect to the
Borrower and/or its Subsidiaries from the first day to the last day of such
fiscal year, plus (iii) to the extent not included in (i) above, any amounts
received by the Borrower and/or its Subsidiaries in connection with the
repayment or redemption of any long-term promissory notes and/or preferred stock
of other Persons held by them, minus (iv) the sum of (x) the amount of
Consolidated Capital Expenditures (except to the extent (x) financed through the
incurrence of Indebtedness other than Revolving Loans or (y) made pursuant to
Section 7.05(c)) made during such fiscal year and (y) the increase, if any, in
Working Capital from the first day to the last day of such fiscal year and (z)
any repayments or prepayments of the principal amount of (I) Existing
Indebtedness, (II) AR Loans on and after the AR Termination Date pursuant to
Section 4.01 or 4.02(A)(b) of the Existing Credit Agreement and/or (III) Loans
pursuant to Section 3.01 or 3.02(A)(a).
"Existing Borrower Pledge Agreement" shall mean the Borrower Pledge
Agreement as defined in the Consolidated Credit Agreement.
"Existing Credit Agreement" shall mean the Amendment and Restatement
dated as of May 21, 1997 to the Consolidated Credit Agreement dated as of
October 31, 1996 among the Borrower and the Banks party thereto as in effect on
the Closing Date and as the same may be subsequently amended, modified or
supplemented in accordance with the terms thereof and hereof.
"Existing Credit Agreement Documents" shall mean all the Credit
Documents as defined in the Existing Credit Agreement.
"Existing Holdings Pledge Agreement" shall mean the Holdings Pledge
Agreement as defined in the Consolidated Credit Agreement.
"Existing Indebtedness" shall have the meaning provided in Section
5.19.
"Existing Mortgages" and "Existing Mortgage Policies" shall mean the
Mortgages and Mortgages Policies as defined in the Consolidated Credit Agreement
and shall include any Additional Mortgage (as defined in the Consolidated Credit
Agreement) and all Mortgage Policies delivered in connection therewith.
"Existing Security Agreement" shall mean the Security Agreement as
defined in the Existing Credit Agreement as in effect immediately prior to the
Closing Date.
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"Federal Funds Effective Rate" shall mean for any period, a
fluctuating interest rate equal for each day during such period to the weighted
average of the rates on overnight Federal Funds transactions with members of the
Federal Reserve System arranged by Federal Funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Agent from three Federal Funds brokers of
recognized standing selected by the Agent.
"Fees" shall mean all amounts payable pursuant to, or referred to in,
Section 2.01.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect on the date of this Agreement; it being
understood and agreed that determinations in accordance with GAAP for purposes
of Section 8, including defined terms as used therein, are subject (to the
extent provided therein) to Section 12.07(a).
"Guarantor" shall mean and include Holdings and, once created, each
Subsidiary Guarantor.
"Guaranties" shall mean and include the Holdings TL Guaranty and, once
executed, the Subsidiary Guaranty.
"Hazardous Materials" means (a) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, transformers or other equipment that
contained, electric fluid containing levels of polychlorinated biphenyls, and
radon gas; and (b) any chemicals, materials or substances defined as or included
in the definition of "hazardous substances," "hazardous waste," "hazardous
materials," "extremely hazardous waste," "restricted hazardous waste," "toxic
substances," "toxic pollutants," "contaminants," or "pollutants," or words of
similar import, under any Environmental Law.
"Holdings" shall mean Universal Outdoor Holdings, Inc., a Delaware
corporation.
"Holdings Leverage Ratio" shall mean, at any Measurement Date, the
ratio of (x) Consolidated Debt of Holdings on such date to (y) Modified Adjusted
EBITDA of Holdings for the 12-month period (taken as one accounting period)
ending on such date.
"Holdings Pledge Agreement" shall have the meaning provided in Section
4.01(h)(III).
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"Holdings TL Guaranty" shall have the meaning provided in Section
4.01(g).
"Indebtedness" of any Person shall mean without duplication (i) all
indebtedness of such Person for borrowed money, (ii) the deferred purchase price
of assets or services which in accordance with GAAP would be shown on the
liability side of the balance sheet of such Person, (iii) the face amount of all
letters of credit issued for the account of such Person and, without
duplication, all drafts drawn thereunder, (iv) all Indebtedness of a second
Person secured by any Lien on any property owned by such first Person, whether
or not such indebtedness has been assumed, (v) all Capitalized Lease Obligations
of such Person, (vi) all obligations of such Person to pay a specified purchase
price for goods or services whether or not delivered or accepted, I.E.,
take-or-pay and similar obligations, (vii) all net obligations of such Person
under Interest Rate Agreements and (viii) all Contingent Obligations of such
Person, (other than Contingent Obligations arising from the guaranty by such
Person of the obligations of the Borrower and/or its Subsidiaries to the extent
such guaranteed obligations do not constitute Indebtedness and are otherwise
permitted hereunder) provided that Indebtedness shall not include trade payables
and accrued expenses, in each case arising in the ordinary course of business.
"Interest Period" with respect to any Loan shall mean the interest
period applicable thereto, as determined pursuant to Section 1.09.
"Interest Rate Agreement" shall mean any interest rate swap agreement,
any interest rate cap agreement, any interest rate collar agreement or other
similar agreement or arrangement designed to protect the Borrower or any
Subsidiary against fluctuations in interest rates.
"Investment" shall mean, with respect to any Person, all investments
by such Person in other Persons (including Affiliates and Subsidiaries) in the
forms of loans, guarantees, advances or capital contributions (excluding
commission, travel and similar advances to officers and employees made in the
ordinary course of business), purchases or other acquisitions for consideration
of Indebtedness, Capital Stock or other securities and all other items that are
or would be classified as investments on a balance sheet prepared in accordance
with GAAP.
"Kelso" shall mean Kelso & Company, L.P., a Delaware limited
partnership doing business as Kelso & Company.
"Kelso Designees" shall mean William A. Marquard, John F.
McGillicuddy, David M. Roderick, John Rutledge IRA, Michael Rapoport, Patricia
Hetter Kelso and George L. Shinn.
"LaSalle" shall mean LaSalle National Bank.
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"Leasehold" of any Person means all of the right, title and interest
of such Person as lessee or licensee in, to and under leases or licenses of
land, improvements and/or fixtures.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement or any
lease in the nature thereof).
"Loan" shall have the meaning provided in Section 1.01.
"Management Agreements" shall mean those agreements with members of,
or with respect to, the management of Holdings, the Borrower or any Subsidiary
that were made available to the Agent pursuant to Section 5.06 of the Original
Credit Agreement.
"Management Investors" shall mean Daniel Simon and Brian Clingen.
"Margin Reduction Discount" shall mean zero, provided that the Margin
Reduction Discount shall be increased to 1/4 of 1%, 3/4 of 1%, 1-1/4% or 1-3/4%,
as the case may be, as specified in clauses (i), (ii), (iii) or (iv) below, at
any time on or after the Closing Date, when, and for so long as, the ratio set
forth in such clause has been satisfied as at the Relevant Determination Date:
(i) the Margin Reduction Discount shall be 1/4 of 1% in the event
that at the Relevant Determination Date the Modified Holdings Leverage
Ratio is equal to or greater than 5.0 to 1 but less than 6.0 to 1;
(ii) the Margin Reduction Discount shall be 3/4 of 1% in the event
that as at the Relevant Determination Date the Modified Holdings Leverage
Ratio is equal to or greater than 4.0 to 1 but less than 5.0 to 1;
(iii) the Margin Reduction Discount shall be 1-1/4% in the event
that as at the Relevant Determin
ation Date the Modified Holdings Leverage
Ratio is equal to or greater than 3.0 to 1 but less than 4.0 to 1; or
(iv) the Margin Reduction Discount shall be 1-3/4% in the event that
as at the Relevant Determination Date the Modified Holdings Leverage Ratio
is less than 3.0 to 1.
The Modified Holdings Leverage Ratio shall be determined (x) for the last day of
a fiscal month, quarter or year, by delivery of an officer's certificate of the
Borrower to the Banks pursuant to Section 6.01(e)(i) and (y) for the date of the
incurrence of Consolidated Debt after delivery of the officer's certificate
referred to in clause (x), by delivery of an officer's
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certificate of the Borrower to the Banks pursuant to Section 6.01(e)(ii), each
of which certificates shall set forth the calculation of the Modified Holdings
Leverage Ratio. The Margin Reduction Discount so determined shall apply, except
as set forth below, from five Business Days after the date on which such
officer's certificate is delivered to the Agent to the earlier of (x) the date
on which the next certificate is delivered to the Agent pursuant to Section
6.01(e)(i) or (ii) and (y) the 30th day following the end of the fiscal month in
which such first certificate was delivered to the Agent pursuant to Section
6.01(e)(i). Notwithstanding anything to the contrary contained above, the
Margin Reduction Discount shall be zero (x) if no officer's certificate has been
delivered to the Banks pursuant to Section 6.01(e) (i) which sets forth the
Modified Holdings Leverage Ratio for the Relevant Determination Date or the
financial statements upon which any such calculations are based have not been
delivered, until such a certificate and/or financial statements are delivered
and (y) at all times when there shall exist a violation of Section 8.01 or an
Event of Default. It is understood and agreed that the Margin Reduction
Discount as provided above shall in no event be cumulative and only the Margin
Reduction Discount applicable under either clause (i), (ii), (iii) or (iv), if
any, contained in this definition shall be applicable.
"Margin Stock" shall have the meaning provided in Regulation U.
"Material Adverse Effect" shall mean a material adverse effect on the
business, property, assets, liabilities, operations, condition (financial or
otherwise) or prospects of (x) Holdings and its Subsidiaries taken as a whole
and/or (y) the Borrower and its Subsidiaries taken as a whole.
"Maturity Date" shall mean September 30, 2003.
"Measurement Date" shall mean the last day of each fiscal quarter of
the Borrower.
"Minimum Borrowing Amount" shall mean (i) for Loans maintained as Base
Rate Loans, $500,000 and (ii) for Loans maintained as Eurodollar Loans,
$1,000,000.
"Modified Additional Cap Ex" shall mean for any fiscal year the sum of
(i) the Additional Cap Ex for such fiscal year plus (ii) the Adjusted Additional
Cap Ex for the preceding fiscal year.
"Modified Adjusted EBITDA" of any Person shall mean, for any period
(i) the Adjusted EBITDA of such Person for such period plus (ii) with respect to
any business or assets acquired during such period pursuant to a Permitted
Acquisition consummated after the Closing Date, but only to the extent of
businesses or assets acquired directly by the Borrower or owned by a Person that
becomes a Subsidiary Guarantor, the Consolidated
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EBITDA attributable to such business, assets or Person for the portion of such
period prior to the consummation of such Permitted Acquisition.
"Modified Holdings Leverage Ratio" shall mean, with respect to any
Relevant Measurement Date, the Holdings Leverage Ratio determined as of such
date, modified by the inclusion in the computation thereof of any incremental
Consolidated Debt of Holdings incurred after such Relevant Measurement Date and
prior to the delivery of an officer's certificate pursuant to Section 6.01(e)(i)
in respect of the next Relevant Measurement Date.
"Mortgaged Properties" shall mean the Real Properties subject to the
Mortgages.
"Net Cash Proceeds" shall mean, with respect to any Asset Sale, the
Cash Proceeds resulting therefrom net of expenses of sale or recovery (including
payment of principal, premium and interest of Indebtedness secured by the assets
which are the subject of the Asset Sale and required to be, and which is, repaid
under the terms thereof as a result of such Asset Sale), and incremental taxes
paid or payable as a result thereof.
"New Mortgage" shall have the meaning provided in Section 6.10(b).
"Note" shall have the meaning provided in Section 1.05.
"Notice of Borrowing" shall have the meaning provided in Section 1.03.
"Notice of Conversion" shall have the meaning provided in Section
1.06.
"Notice Office" shall mean the office of the Agent at 130 Liberty
Street, New York, New York or such other office as the Agent may designate to
the Borrower from time to time.
"Obligations" shall mean all amounts, direct or indirect, contingent
or absolute, of every type or description, and at any time existing, owing to
the Agent, the Collateral Agent or any Bank pursuant to the terms of this
Agreement or any other Credit Document.
"Original Credit Agreements" shall have the meaning provided in the
Existing Credit Agreement.
"Payment Office" shall mean the office of the Agent at 130 Liberty
Street, New York, New York or such other office as the Agent may designate to
the Borrower from time to time.
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"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"Permitted Acquisition" shall mean any acquisition (including through
a stock acquisition) of property or assets of a nature or type, or which will be
used in a business, permitted to be held or engaged in by Section 7.01 provided
that (x) the Holdings Leverage Ratio as of the last Measurement Date prior to
the consummation of such acquisition was less than 5.50 to 1.0 determined on a
pro forma basis as if the Permitted Acquisition and the related borrowings were
consummated on the first day of the 12-month period ending on such Measurement
Date and giving effect to pro forma adjustments to the Consolidated EBITDA of
the Person being acquired to give effect to contemplated cost savings as
estimated in good faith by the Borrower and agreed to by the Agent, or (y)
aggregate amount expended for all such acquisitions after the Restatement
Effective Date to the extent not effected in compliance with clause (x) above or
clause (z) below does not exceed $50,000,000 or (z) consented to in writing by
the Super-Majority Banks.
"Permitted Asset Sale" shall mean an Asset Sale (x) permitted by the
expressed language of Section 7.02 (and not by the parenthetical in the lead in
paragraph of Section 7) and (y) resulting from a casualty or taking of assets of
the Borrower or any Subsidiary.
"Permitted Encumbrances" shall mean, with respect to the Mortgaged
Property, such exceptions to title as are set forth in the title insurance
policy or title commitment delivered with respect thereto, all of which
exceptions must be reasonably acceptable to the Agent.
"Permitted Holders" means Kelso and its Affiliates, the Kelso
Designees, the Management Investors, any employee stock ownership plan
established by the Borrower for the benefit of the employees of the Borrower or
any Subsidiary and their Permitted Transferees.
"Permitted Holdings Debt" shall mean debt of Holdings, subordinated to
Holdings' obligations under the Holdings Guaranty, issued by Holdings after the
Consolidation Date provided that (i) all proceeds of such debt shall be
contributed as common capital to the Borrower, (ii) the terms and conditions
(other than the issuer, pricing (including whether cash pay or pay-in-kind) and
maturities, provided that no scheduled payment of principal or any one-time cash
payment of all accreted interest under a pay-in-kind issue, shall be due and
payable prior to the Maturity Date) are (in the reasonable opinion of the Agent)
substantially the same as, or no more adverse to the interests of the Banks
than, those contained in the Permitted Subordinated Debt or are consented to by
the Required Banks, (iii) such debt shall not be guaranteed by the Borrower or
any of its Subsidiaries and (iv) the
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Permitted Holdings Debt shall not exceed in the aggregate (x) $50 million less
(y) the aggregate principal amount of Additional Subordinated Debt.
"Permitted Investments" shall mean (a) cash and Cash Equivalents, (b)
Investments in Subsidiary Guarantors, (c) (x) Investments in Specified
Subsidiaries to the extent made in connection with the acquisition thereof as
permitted by clause (B) of the second sentence of Section 7.06 and (y) all other
Investments not permitted by clause (b) and (c)(x) in an amount up to $7,500,000
in the aggregate, including Investments in a Person that becomes a Subsidiary of
the Borrower immediately after such Investment, provided (i) an Event of Default
has not occurred and is continuing and will not occur as a result of, in
connection with or after giving effect to such Investment and (ii) such Person,
at the time of such Investment or at the time such Person becomes a Subsidiary,
engages exclusively in the business permitted to be engaged in by Borrower and
its Subsidiaries pursuant to Section 7.01, (d) loans and advances of money in
the ordinary course of business and consistent with past practice to officers
and employees of Borrower or any of its Subsidiaries, (e) investments in
receivables owing to the Borrower and/or any Subsidiary, if created or acquired
in the ordinary course of business and payable or dischargeable in accordance
with customary trade terms, and (f) investments (including debt obligations)
received in connection with the bankruptcy or reorganization of suppliers and
customers and in settlement of delinquent obligations of, and other disputes
with, customers and suppliers arising in the ordinary course of business.
"Permitted Liens" shall mean Liens described in clauses (a), (b) and
(d) of Section 7.03.
"Permitted Subordinated Debt" shall mean the $325 million principal
amount of Senior Subordinated Notes, due 2006, issued by the Borrower on October
11, 1996 and December 11, 1996.
"Permitted Subordinated Debt Documents" shall mean all indentures,
agreements, notes and other instruments governing or evidencing Permitted
Subordinated Debt as in effect on the Closing Date.
"Permitted Transferees" means (i) in the case of Kelso, (A) any
Affiliate thereof (other than any corporation or other Person (except for any
corporation or other Person engaged in a business similar, complementary or
related to the nature or type of the business of Holdings and its Subsidiaries)
controlled by, or any investment fund (other than Kelso Investment Associates V,
L.P. or any investment fund that is solely comprised of current and former
professionals of Kelso) managed by, Kelso), (B) any managing director, general
partner, limited partner, director, officer or employee of Kelso or any
Affiliate thereof (collectively, "Kelso Associates"), (C) the heirs, executors,
administrators, testamentary trustees, legatees or beneficiaries of any Kelso
Associate or Kelso Designee and
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(D) any trust, the beneficiaries of which, or a corporation or partnership, the
stockholders or partners of which, include only a Kelso Associate or Kelso
Designee, his spouse, parents, siblings, or direct lineal descendants, and (ii)
in the case of any Management Investors, (A) his executor, administrator,
testamentary trustee, legatee or beneficiaries, (B) his spouse, parents,
siblings, members of his or her immediate family (including adopted children)
and/or direct lineal descendants or (C) a trust, the beneficiaries of which, or
a corporation or partnership, the stockholders or partners of which, include
only the Management Investor, as the case may be, and his spouse, parents,
siblings, members of his or her immediate family (including adopted children)
and/or direct lineal descendants.
"Person" shall mean any individual, partnership, joint venture, firm,
corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.
"Plan" shall mean any multi-employer or single-employer plan as
defined in Section 4001 of ERISA, which is maintained or contributed to by (or
to which there is an obligation to contribute of) Holdings, the Borrower, a
Subsidiary or an ERISA Affiliate, and each such plan for the five year period
immediately following the latest date on which Holdings, the Borrower, a
Subsidiary, or an ERISA Affiliate maintained, contributed to or had an
obligation to contribute to such plan.
"Pledge Agreements" shall mean the Borrower Pledge Agreement, the
Holdings Pledge Agreement and, once executed, the Subsidiary Pledge Agreement.
"Pledged Securities" shall mean all the Pledged Securities as defined
in the relevant Pledge Agreement.
"Prime Lending Rate" shall mean the rate which Bankers Trust Company
announces from time to time as its prime lending rate, the Prime Lending Rate to
change when and as such prime lending rate changes. The Prime Lending Rate is a
reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. Bankers Trust Company may make commercial
loans or other loans at rates of interest at, above or below the Prime Lending
Rate.
"RCRA" shall mean the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. Section 6901 ET SEQ.
"Real Property" of any Person shall mean all of the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
"Register" shall have the meaning provided in Section 11.16.
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"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing reserve requirements.
"Regulation U" shall mean Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing margin requirements.
"Reinvestment Assets" shall mean any assets to be employed in the
business of the Borrower and its Subsidiaries as permitted by Section 7.01.
"Reinvestment Election" shall have the meaning provided in Section
3.02(A)(b).
"Reinvestment Notice" shall mean a written notice signed by an
Authorized Officer of the Borrower stating that the Borrower, in good faith,
intends and expects to use all or a specified portion of the Net Cash Proceeds
of a Permitted Asset Sale to purchase, construct or otherwise acquire
Reinvestment Assets.
"Reinvestment Prepayment Amount" shall mean, with respect to any
Reinvestment Election, the amount, if any, on the Reinvestment Prepayment Date
relating thereto by which (a) the Anticipated Reinvestment Amount in respect of
such Reinvestment Election exceeds (b) the aggregate amount thereof expended by
the Borrower and its Subsidiaries to acquire Reinvestment Assets.
"Reinvestment Prepayment Date" shall mean, with respect to any
Reinvestment Election, the earliest of (i) the date, if any, upon which the
Agent, on behalf of the Required Banks or the Required Banks (ECA), shall have
delivered a written termination notice to the Borrower, provided that such
notice may only be given while an Event of Default exists, (ii) the date
occurring 180 days after such Reinvestment Election and (iii) the date on which
the Borrower shall have determined not to, or shall have otherwise ceased to,
proceed with the purchase, construction or other acquisition of Reinvestment
Assets with the related Anticipated Reinvestment Amount.
"Relevant Determination Date" shall mean, at any time, (x) the last
day of the then most recently ended fiscal month, quarter or year of Holdings
with respect to which an officer's certificate has been, or is required to be,
delivered to the Banks pursuant to Section 6.01(e)(i) or (y) if the Margin
Reduction Discount is then greater than zero, the last date subsequent to the
date specified in clause (x) on which any Consolidated Debt of Holdings and its
Subsidiaries has been incurred.
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"Reportable Event" shall mean an event described in Section 4043(c) of
ERISA with respect to a Plan as to which the 30-day notice requirement has not
been waived by the PBGC.
"Required Banks" shall mean Banks holding more than 50% of the
aggregate principal amount of the Loans (or, if prior to the Closing Date, of
the aggregate Commitments).
"Required Banks (ECA)" shall mean the Required Banks as defined in the
Existing Credit Agreement.
"Restatement Effective Date" shall mean October 8, 1996.
"Scheduled Repayment" shall have the meaning provided in Section
3.02(A)(a).
"SEC" shall have the meaning provided in Section 7.01(h).
"SEC Regulation D" shall mean Regulation D as promulgated under the
Securities Act of 1933, as amended, as the same may be in effect from time to
time.
"Secured Creditors" shall mean the Banks hereunder and the Banks party
to the Existing Credit Agreement.
"Security Agreement" shall have the meaning provided in Section
4.01(h)(II).
"Security Agreement Collateral" shall mean all "Collateral" as defined
in the Security Agreement.
"Security Documents" shall mean each Pledge Agreement, the Security
Agreement, each Mortgage and, once executed, each New Mortgage and the
Subsidiary Security Agreement.
"Senior Leverage Ratio" shall mean, at any Measurement Date, the ratio
of (x) Consolidated Senior Debt of the Borrower on such date to (y) Modified
Adjusted EBITDA of the Borrower for the 12-month period (taken as one accounting
period) ending on such date.
"Shareholders' Agreements" shall mean the agreements entered into by
Holdings or any Subsidiary governing its capital stock and/or by shareholders
relating to any such entity or its capital stock that were made available to the
Agent pursuant to Section 5.06 of the Original Credit Agreements.
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"Smith Note" shall have the meaning provided in Section 7.04(g).
"Specified Subsidiaries" shall have the meaning provided in Section
7.06.
"Subordinated Debt" shall mean and include the Permitted Subordinated
Debt, the Additional Subordinated Debt and the Permitted Holdings Debt, in each
case once issued.
"Subordinated Debt Documents" shall mean and include the Permitted
Subordinated Debt Documents and the execution version of all indentures,
agreements, notes and instruments governing, or evidencing, Additional
Subordinated Debt and/or Permitted Holdings Debt.
"Subordinated Debt Indentures" shall mean the indentures governing
Permitted Subordinated Debt, Additional Subordinated Debt and/or Permitted
Holdings Debt.
"Subsidiary" of any Person shall mean and include (i) any corporation
more than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person directly or
indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity in which such Person directly or indirectly through
Subsidiaries, has more than a 50% equity interest at the time. Unless otherwise
expressly provided, all references herein to "Subsidiary" shall mean a
Subsidiary of the Borrower.
"Subsidiary Guarantor" shall mean each Domestic Subsidiary, if any,
party to the Subsidiary Guaranty on the Closing Date and each Domestic
Subsidiary created thereafter that executes and delivers a counterpart of the
Subsidiary Guaranty, provided that at such time such Subsidiary also executes
and delivers a Subsidiary Pledge Agreement and a Subsidiary Security Agreement,
and takes such actions with respect thereto as the Administrative Agent
reasonably requests to perfect the Liens granted thereunder.
"Subsidiary Guaranty" shall mean a guaranty agreement in form and
substance satisfactory to the Agent guaranteeing the Obligations.
"Subsidiary Pledge Agreement" shall mean a pledge agreement in form
substantially the same as the Borrower Pledge Agreement and otherwise reasonably
satisfactory to the Agent.
"Subsidiary Security Agreement" shall mean a security agreement in
form substantially the same as the Security Agreement and otherwise reasonably
satisfactory to the Agent.
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"Super-Majority Banks" shall mean the Banks which would constitute the
Required Banks if the reference to "50%" in the definition of Required Banks
were to read "66 2/3%."
"Tax Sharing Agreement" shall mean the Tax Sharing Agreement dated as
of November 18, 1993 between the Borrower and Holdings in the form delivered to
the Banks prior to the Restatement Effective Date and as the same may be
modified with the consent of the Required Banks.
"Taxes" shall have the meaning provided in Section 4.04(a).
"TL Measurement Date" shall mean the last day of the last month ended
prior to the Closing Date.
"TL Percentage" shall mean, at any time, that percentage equal to 100%
multiplied by a fraction the numerator of which is the outstanding principal
amount of the Loans and the denominator of which is the sum of (i) the
outstanding principal amount of the Loans and (ii) the outstanding principal
amount of AR Loans provided that for the purposes of any determination made
under Section 3.02(A)(c) during the period from the Closing Date to the date 180
days after the Closing Date "TL Percentage" shall equal 0%.
"Total Commitment" shall mean the sum of the Commitments of each of
the Banks.
"Transaction Expenses" shall have the meaning provided in the Existing
Credit Agreement.
"Type" shall mean any type of Loan determined with respect to the
interest option applicable thereto, I.E., a Base Rate Loan or Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code.
"Unfunded Current Liability" of any Plan shall mean the amount, if
any, by which the actuarial present value of the accumulated plan benefits under
the Plan as of the close of its most recent plan year determined in accordance
with Statement of Financial Accounting Standards No. 35, based upon the
actuarial assumptions used by the Plan's actuary in the most recent annual
valuation of the Plan, exceeds the fair market value of the assets thereof,
determined in accordance with Section 412 of the Code.
"Working Capital" shall mean the excess of Consolidated Current Assets
over Consolidated Current Liabilities.
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"Written" or "in writing" shall mean any form of written communication
or a communication by means of telex, facsimile transmission, telegraph or
cable.
SECTION 10. THE AGENT.
1.101 APPOINTMENT. The Banks hereby designate Bankers Trust Company
as Agent (for purposes of this Section 10, the term "Agent" shall include BTCo
in its capacity as Collateral Agent for the Secured Creditors pursuant to the
Security Documents) to act as specified herein and in the other Credit
Documents. Each Bank hereby irrevocably authorizes, and each holder of any Note
by the acceptance of such Note shall be deemed irrevocably to authorize, the
Agent to take such action on its behalf under the provisions of this Agreement,
the other Credit Documents and any other instruments and agreements referred to
herein or therein and to exercise such powers and to perform such duties
hereunder and thereunder as are specifically delegated to or required of the
Agent by the terms hereof and thereof and such other powers as are reasonably
incidental thereto. The Agent may perform any of its duties hereunder by or
through its respective officers, directors, agents, employees or affiliates.
The Co-Agent shall have no duties or liabilities in acting in such capacity
hereunder.
1.102 NATURE OF DUTIES. The Agent shall not have any duties or
responsibilities except those expressly set forth in this Agreement and the
Security Documents. Neither the Agent nor any of its respective officers,
directors, agents, employees or affiliates shall be liable for any action taken
or omitted by it or them hereunder or under any other Credit Document or in
connection herewith or therewith, unless caused by its or their gross negligence
or willful misconduct. The duties of the Agent shall be mechanical and
administrative in nature; the Agent shall not have by reason of this Agreement
or any other Credit Document a fiduciary relationship in respect of any Bank or
the holder of any Note; and nothing in this Agreement or any other Credit
Document, expressed or implied, is intended to or shall be so construed as to
impose upon the Agent any obligations in respect of this Agreement or any other
Credit Document except as expressly set forth herein or therein.
1.103 LACK OF RELIANCE ON THE AGENT. Independently and without
reliance upon the Agent, each Bank and the holder of each Note, to the extent it
deems appropriate, has made and shall continue to make (i) its own independent
investigation of the financial condition and affairs of Holdings, the Borrower
and its Subsidiaries in connection with the making and the continuance of the
Loans and the taking or not taking of any action in connection herewith and (ii)
its own appraisal of the creditworthiness of Holdings, the Borrower and its
Subsidiaries and, except as expressly provided in this Agreement, the Agent
shall not have any duty or responsibility, either initially or on a continuing
basis, to provide any Bank or the holder of any Note with any credit or other
information with respect thereto, whether coming into its possession before the
making of the Loans or at any time or times thereafter.
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The Agent shall not be responsible to any Bank or the holder of any Note for any
recitals, statements, information, representations or warranties herein or in
any document, certificate or other writing delivered in connection herewith or
for the execution, effectiveness, genuineness, validity, enforceability,
perfection, collectibility, priority or sufficiency of this Agreement or any
other Credit Document or the financial condition of the Borrower and its
Subsidiaries or be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or conditions of this
Agreement or any other Credit Document, or the financial condition of Holdings,
the Borrower and its Subsidiaries or the existence or possible existence of any
Default or Event of Default.
1.104 CERTAIN RIGHTS OF THE AGENT. If the Agent shall request
instructions from the Required Banks (or, where applicable, the Super-Majority
Banks) with respect to any act or action (including failure to act) in
connection with this Agreement or any other Credit Document, the Agent shall be
entitled to refrain from such act or taking such action unless and until the
Agent shall have received instructions from the Required Banks (or, where
applicable, the Super-Majority Banks); and the Agent shall not incur liability
to any Person by reason of so refraining. Without limiting the foregoing,
neither any Bank nor the holder of any Note shall have any right of action
whatsoever against the Agent as a result of the Agent acting or refraining from
acting hereunder or under any other Credit Document in accordance with the
instructions of the Required Banks (or, where applicable, the Super-Majority
Banks).
1.105 RELIANCE. The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram,
radiogram, order or other document or telephone message signed, sent or made by
any Person that the Agent believed to be the proper Person, and, with respect to
all legal matters pertaining to this Agreement and any other Credit Document and
its duties hereunder and thereunder, upon advice of counsel selected by the
Agent.
1.106 INDEMNIFICATION. To the extent the Agent is not reimbursed and
indemnified by the Borrower, the Banks will reimburse and indemnify the Agent,
in proportion to their respective Loans (or, if prior to the Closing Date,
Commitments), for and against any and all liabilities, obligations, losses,
damages, penalties, claims, actions, judgments, costs, expenses or disbursements
of whatsoever kind or nature which may be imposed on, asserted against or
incurred by the Agent in performing its respective duties hereunder or under any
other Credit Document, in any way relating to or arising out of this Agreement
or any other Credit Document; provided that no Bank shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Agent's
gross negligence or willful misconduct.
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1.107 THE AGENT IN ITS INDIVIDUAL CAPACITY. With respect to its
obligation to make Loans under this Agreement, the Agent shall have the rights
and powers specified herein for a "Bank" and may exercise the same rights and
powers as though it were not performing the duties specified herein; and the
term "Banks," "Required Banks," "Letter of Credit Issuer", "Super-Majority
Banks," "holders of Notes" or any similar terms shall, unless the context
clearly otherwise indicates, include the Agent in its individual capacity. The
Agent may accept deposits from, lend money to, and generally engage in any kind
of banking, trust or other business with the Borrower or any Affiliate of the
Borrower as if it were not performing the duties specified herein, and may
accept fees and other consideration from the Borrower for services in connection
with this Agreement and otherwise without having to account for the same to the
Banks.
1.108 HOLDERS. The Agent may deem and treat the payee of any Note as
the owner thereof for all purposes hereof unless and until a written notice of
the assignment, transfer or endorsement thereof, as the case may be, shall have
been filed with the Agent. Any request, authority or consent of any Person who,
at the time of making such request or giving such authority or consent, is the
holder of any Note shall be conclusive and binding on any subsequent holder,
transferee, assignee or indorsee, as the case may be, of such Note or of any
Note or Notes issued in exchange therefor.
1.109 RESIGNATION BY THE AGENT. (a) The Agent may resign from the
performance of all its functions and duties hereunder and/or under the other
Credit Documents at any time by giving 15 Business Days' prior written notice to
the Borrower and the Banks. Such resignation shall take effect upon the
appointment of a successor Agent pursuant to clauses (b) and (c) below or as
otherwise provided below.
(b) Upon any such notice of resignation, the Banks shall appoint a
successor Agent hereunder or thereunder who shall be the Co-Agent or such other
commercial bank or trust company as is reasonably acceptable to the Borrower.
(c) If a successor Agent shall not have been so appointed within such
15 Business Day period, the Agent, with the consent of the Borrower, shall then
appoint a successor Agent who shall serve as Agent hereunder or thereunder until
such time, if any, as the Banks appoint a successor Agent as provided above.
(d) If no successor Agent has been appointed pursuant to clause (b)
or (c) above by the 20th Business Day after the date such notice of resignation
was given by the Agent, the Agent's resignation shall become effective and the
Required Banks shall thereafter perform all the duties of the Agent hereunder
and/or under any other Credit Document until such time, if any, as the Banks
appoint a successor Agent as provided above.
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SECTION 11. MISCELLANEOUS.
1.111 PAYMENT OF EXPENSES, ETC. The Borrower agrees to: (i) whether
or not the transactions herein contemplated are consummated, pay all reasonable
out-of-pocket costs and expenses of the Agent and the Co-Agent in connection
with the negotiation, preparation, execution and delivery of the Credit
Documents and the documents and instruments referred to therein and any
amendment, waiver or consent relating thereto (including, without limitation,
the reasonable fees and disbursements of their respective counsel) and of the
Agent, the Co-Agent and each of the Banks in connection with the enforcement of
the Credit Documents and the documents and instruments referred to therein
(including, without limitation, the reasonable fees and disbursements of counsel
for the Agent, the Co-Agent and for each of the Banks); (ii) pay and hold each
of the Banks harmless from and against any and all present and future stamp and
other similar taxes with respect to the foregoing matters and save each of the
Banks harmless from and against any and all liabilities with respect to or
resulting from any delay or omission (other than to the extent attributable to
such Bank) to pay such taxes; and (iii) indemnify each Bank (including in its
capacity as the Agent or Co-Agent), its officers, directors, employees,
representatives and agents from and hold each of them harmless against any and
all losses, liabilities, claims, damages or expenses incurred by any of them as
a result of, or arising out of, or in any way related to, or by reason of, (a)
any investigation, litigation or other proceeding (whether or not any Bank is a
party thereto) related to the entering into and/or performance of any
Transaction Document or the use of the proceeds of any Loans hereunder or the
Transaction or the consummation of any transactions contemplated in any Credit
Document, or (b) the actual or alleged presence of Hazardous Materials in the
air, surface water or groundwater or on the surface or subsurface of any Real
Property owned or at any time operated by the Borrower or any of its
Subsidiaries, the release, generation, storage, transportation, handling or
disposal of Hazardous Materials at any location, whether or not owned or
operated by the Borrower or any of its Subsidiaries, the non-compliance of any
Real Property with foreign, federal, state and local laws, regulations, and
ordinances (including applicable permits thereunder) applicable to any Real
Property, or any Environmental Claim asserted against the Borrower, any of its
Subsidiaries or any Real Property owned or at any time operated by the Borrower
or any of its Subsidiaries, including, in each case, without limitation, the
reasonable fees and disbursements of counsel incurred in connection with any
such investigation, litigation or other proceeding (but excluding any such
losses, liabilities, claims, damages or expenses to the extent incurred by
reason of the gross negligence or willful misconduct of the Person to be
indemnified).
1.112 RIGHT OF SETOFF. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, if an Event of Default then exists, each Bank is hereby authorized
at any time or from time to time, without presentment, demand, protest or other
notice of any kind to the Borrower or to any other Person, any such notice being
hereby expressly waived, to set off and to
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appropriate and apply any and all deposits (general or special) and any other
Indebtedness at any time held or owing by such Bank (including without
limitation by branches and agencies of such Bank wherever located) to or for the
credit or the account of the Borrower against and on account of the Obligations
and liabilities of the Borrower to such Bank under this Agreement or under any
of the other Credit Documents, including, without limitation, all interests in
Obligations purchased by such Bank pursuant to Section 11.06(b), and all other
claims of any nature or description arising out of or connected with this
Agreement or any other Credit Document, irrespective of whether or not such Bank
shall have made any demand hereunder and although said Obligations, liabilities
or claims, or any of them, shall be contingent or unmatured.
1.113 NOTICES. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, telecopier or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered, if to the Borrower, at
the address specified opposite its signature below; if to any Bank, at its
address specified for such Bank on Annex II hereto; or, at such other address as
shall be designated by any party in a written notice to the other parties
hereto. All such notices and communications shall be mailed, telegraphed,
telexed, telecopied, or cabled or sent by overnight courier, and shall be
effective when received.
1.114 BENEFIT OF AGREEMENT. (a) This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective successors
and assigns of the parties hereto, provided that the Borrower may not assign or
transfer any of its rights or obligations hereunder without the prior written
consent of the Banks. Each Bank may at any time grant participations in any of
its rights hereunder or under any of the Notes to another financial institution,
provided that in the case of any such participation, the participant shall not
have any rights under this Agreement or any of the other Credit Documents (the
participant's rights against such Bank in respect of such participation to be
those set forth in the agreement executed by such Bank in favor of the
participant relating thereto) and all amounts payable by the Borrower hereunder
shall be determined as if such Bank had not sold such participation, except that
the participant shall be entitled to the benefits of Sections 1.10 and 4.04 of
this Agreement to the extent that such Bank would be entitled to such benefits
if the participation had not been entered into or sold, and, provided further
that no Bank shall transfer, grant or assign any participation under which the
participant shall have rights to approve any amendment to or waiver of this
Agreement or any other Credit Document except to the extent such amendment or
waiver would (i) extend the final scheduled maturity of any Loan or Note in
which such participant is participating (it being understood that any waiver of
the application of any prepayment or the method of any application of any
prepayment to, the amortization of the Loans shall not constitute an extension
of the final maturity date), or reduce the rate or extend the time of payment of
interest or Fees thereon (except in connection with a waiver of the
applicability of any post-default increase in interest rates), or reduce the
principal amount thereof, or increase such participant's participating interest
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in any Commitment over the amount thereof then in effect (it being understood
that a waiver of any Default or Event of Default or of a mandatory reduction in
the Total Commitment, or a mandatory prepayment, shall not constitute a change
in the terms of any Commitment), (ii) release all or substantially all of the
Collateral or (iii) consent to the assignment or transfer by the Borrower of any
of its rights and obligations under this Agreement or any other Credit Document.
(b) Notwithstanding the foregoing, (x) any Bank may assign all or a
portion of its outstanding Loans and its rights and obligations hereunder to
another Bank, and (y) with the consent of the Agent and the Borrower (which
consents shall not be unreasonably withheld), any Bank may assign all or a
portion of its outstanding Loans and its rights and obligations hereunder to one
or more commercial banks or other financial institutions (including one or more
Banks). No assignment pursuant to the immediately preceding sentence shall to
the extent such assignment represents an assignment to an institution other than
one or more Banks hereunder, be in an aggregate amount less than $5,000,000
unless the entire Loans of the assigning Bank are so assigned. If any Bank so
sells or assigns all or a part of its rights hereunder or under the Notes, any
reference in this Agreement or the Notes to such assigning Bank shall thereafter
refer to such Bank and to the respective assignee to the extent of their
respective interests and the respective assignee shall have, to the extent of
such assignment (unless otherwise provided therein), the same rights and
benefits as it would if it were such assigning Bank. Each assignment pursuant
to this Section 11.04(b) shall be effected by the assigning Bank and the
assignee Bank executing an Assignment Agreement substantially in the form of
Exhibit H (appropriately completed). In the event of any such assignment (x) to
a commercial bank or other financial institution not previously a Bank
hereunder, either the assigning or the assignee Bank shall pay to the Agent a
nonrefundable assignment fee of $3,500 and (y) to a Bank, either the assigning
or assignee Bank shall pay to Agent a nonrefundable assignment fee of $2,000,
and at the time of any assignment pursuant to this Section 11.04(b), (i) Annex I
shall be deemed to be amended to reflect the Loans of the respective assignee
(which shall result in a direct reduction to the Loans of the assigning Bank)
and of the other Banks, and (ii) the Borrower will issue new Notes to the
respective assignee and to the assigning Bank in conformity with the
requirements of Section 1.05. Each Bank and the Borrower agree to execute such
documents (including without limitation amendments to this Agreement and the
other Credit Documents) as shall be necessary to effect the foregoing. Nothing
in this clause (b) shall prevent or prohibit any Bank from pledging its Notes or
Loans to a Federal Reserve Bank in support of borrowings made by such Bank from
such Federal Reserve Bank.
(c) Notwithstanding any other provisions of this Section 11.04, no
transfer or assignment of the interests or obligations of any Bank hereunder or
any grant of participation therein shall be permitted if such transfer,
assignment or grant would require the Borrower to file a registration statement
with the SEC or to qualify the Loans under the "Blue Sky" laws of any State.
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(d) Each Bank initially party to this Agreement hereby represents,
and each Person that becomes a Bank pursuant to an assignment permitted by this
Section 12 will, upon its becoming party to this Agreement, represent that it is
a commercial lender, other financial institution or other "accredited" investor
(as defined in SEC Regulation D) which makes loans in the ordinary course of its
business and that it will make or acquire Loans for its own account in the
ordinary course of such business, provided that subject to the preceding clauses
(a) and (b), the disposition of any promissory notes or other evidences of or
interests in Indebtedness held by such Bank shall at all times be within its
exclusive control.
1.115 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the
part of the Agent or any Bank in exercising any right, power or privilege
hereunder or under any other Credit Document and no course of dealing between
the Borrower and the Agent or any Bank shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder
or under any other Credit Document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder or
thereunder. The rights and remedies herein expressly provided are cumulative
and not exclusive of any rights or remedies which the Agent or any Bank would
otherwise have. No notice to or demand on the Borrower in any case shall
entitle the Borrower to any other or further notice or demand in similar or
other circumstances or constitute a waiver of the rights of the Agent or the
Banks to any other or further action in any circumstances without notice or
demand.
1.116 PAYMENTS PRO RATA. (a) The Agent agrees that promptly after
its receipt of each payment from or on behalf of the Borrower in respect of any
Obligations hereunder, it shall distribute such payment to the Banks (other than
any Bank that has expressly waived its right to receive its PRO RATA share
thereof) PRO RATA based upon their respective shares, if any, of the Obligations
with respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise) which is applicable to the payment of the principal of, or interest
on, the Loans or Fees, of a sum which with respect to the related sum or sums
received by other Banks is in a greater proportion than the total of such
Obligation then owed and due to such Bank bears to the total of such Obligation
then owed and due to all of the Banks immediately prior to such receipt, then
such Bank receiving such excess payment shall purchase for cash without recourse
or warranty from the other Banks an interest in the Obligations to such Banks in
such amount as shall result in a proportional participation by all of the Banks
in such amount, provided that if all or any portion of such excess amount is
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thereafter recovered from such Bank, such purchase shall be rescinded and the
purchase price restored to the extent of such recovery, but without interest.
1.117 CALCULATIONS; COMPUTATIONS. (a) The financial statements to
be furnished to the Banks pursuant hereto shall be made and prepared in
accordance with GAAP consistently applied throughout the periods involved
(except as set forth in the notes thereto or as otherwise disclosed in writing
by the Borrower to the Banks), provided that (x) except as otherwise
specifically provided herein, all computations determining compliance with
Sections 7 and 8, including definitions used therein, shall utilize accounting
principles and policies in effect at the time of the preparation of, and in
conformity with those used to prepare, the December 31, 1995 historical
financial statements of the Borrower delivered to the Banks pursuant to Section
5.10(b) and (y) that if at any time the computations determining compliance with
Sections 7 and 8 utilize accounting principles different from those utilized in
the financial statements furnished to the Banks, such financial statements shall
be accompanied by reconciliation work-sheets.
(b) All computations of interest and Fees hereunder shall be made on
the actual number of days elapsed over a year of 360 days.
1.118 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF
JURY TRIAL. (a) This Agreement and the other Credit Documents and the rights
and obligations of the parties hereunder and thereunder shall be construed in
accordance with and be governed by the law of the state of New York. Any legal
action or proceeding with respect to this Agreement or any other Credit Document
may be brought in the courts of the State of New York or of the United States
for the Southern District of New York, and, by execution and delivery of this
Agreement, the Borrower hereby irrevocably accepts for itself and in respect of
its property, generally and unconditionally, the jurisdiction of the aforesaid
courts. The Borrower further irrevocably consents to the service of process out
of any of the aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
the Borrower located outside New York City and by hand delivery to the Borrower
located within New York City, at its address for notices pursuant to Section
11.03, such service to become effective 30 days after such mailing. The
Borrower hereby irrevocably designates appoints and empowers CT Corporation
System, with offices on the date hereof located at 1633 Broadway, New York, New
York 10019, as its agent for service of process in respect of any such action or
proceeding. Nothing herein shall affect the right of the Agent or any Bank to
serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the Borrower in any other jurisdiction.
(b) The Borrower hereby irrevocably waives any objection which it may
now or hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement or any other
Credit Document brought in the
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courts referred to in clause (a) above and hereby further irrevocably waives and
agrees not to plead or claim in any such court that any such action or
proceeding brought in any such court has been brought in an inconvenient forum.
(c) Each of the parties to this agreement hereby irrevocably waives
all right to a trial by jury in any action, proceeding or counterclaim arising
out of or relating to this Agreement, the other Credit Documents or the
transactions contemplated hereby or thereby.
1.119 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Agent.
11.10 EXECUTION. This Agreement shall be deemed executed by all
parties when the Borrower and each of the Banks shall have signed a copy hereof
(whether the same or different copies) and shall have delivered the same to the
Agent at the Payment Office of the Agent or, in the case of the Banks, shall
have given to the Agent telephonic (confirmed in writing), written telex or
facsimile transmission notice (actually received) at such office that the same
has been signed and mailed to it.
11.11 HEADINGS DESCRIPTIVE. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
11.12 AMENDMENT OR WAIVER. Neither this Agreement nor any other
Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by the Borrower and the Required Banks, provided that no such
change, waiver, discharge or termination shall, without the consent of each Bank
affected thereby, (i) extend the Maturity Date (it being understood that any
waiver of the application of any prepayment of or the method of application of
any prepayment to the amortization of, the Loans shall not constitute any such
extension), or reduce the rate or extend the time of payment of interest (other
than as a result of waiving the applicability of any post-default increase in
interest rates) or Fees thereon, or reduce the principal amount thereof, or
increase the Commitment of any Bank over the amount thereof then in effect (it
being understood that a waiver of any Default or Event of Default, or of a
mandatory reduction in the Total Commitment, shall not constitute a change in
the terms of any Commitment of any Bank), (ii) release or permit the release of
all or substantially all of the Collateral except as expressly provided in the
Credit Documents, (iii) amend, modify or waive any provision of this Section
11.12, (iv) reduce the percentage specified in, or otherwise modify, the
definition of Required Banks or (v) consent to the assignment or transfer by the
Borrower of any of its rights and obligations under this
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Agreement provided further that no such change, waiver, discharge or termination
shall without the consent of the Super-Majority Banks change directly or
indirectly the definition of Permitted Acquisition or Super-Majority Banks,
extend the date of payment of, or reduce the amount of, any Scheduled Repayment,
or release Holdings from the Holdings Guaranty and/or release the Borrower's
stock pledged under the Holdings Pledge Agreement. No provision of Section 10
may be amended without the consent of the Agent and to the extent any such
amendment would affect the Co-Agent solely in its capacity as such, the
Co-Agent.
11.13 SURVIVAL. All indemnities set forth herein including, without
limitation, in Section 1.10, 1.11, 3.04, 10.06 or 11.01 shall survive the
execution and delivery of this Agreement and the making and repayment of the
Loans.
11.14 DOMICILE OF LOANS. Each Bank may transfer and carry its Loans
at, to or for the account of any branch office, subsidiary or affiliate of such
Bank, provided that the Borrower shall not be responsible for costs arising
under Section 1.10 or 3.04 resulting from any such transfer (other than a
transfer pursuant to Section 1.12) to the extent not otherwise applicable to
such Bank prior to such transfer.
11.15 CONFIDENTIALITY. Subject to Section 11.04, the Banks shall
hold all non-public information obtained pursuant to the requirements of this
Agreement which has been identified as such by the Borrower in accordance with
its customary procedure for handling confidential information of this nature and
in accordance with safe and sound banking practices and in any event may make
disclosure reasonably required by any bona fide transferee or participant in
connection with the contemplated transfer of any Loans or participation therein
(so long as such transferee or participant agrees to abide by the provisions of
this Section 11.15) or as required or requested by any governmental agency or
representative thereof or pursuant to legal process, provided that, unless
specifically prohibited by applicable law or court order, each Bank shall notify
the Borrower of any request by any governmental agency or representative thereof
(other than any such request in connection with an examination of the financial
condition of such Bank by such governmental agency) for disclosure of any such
non-public information prior to disclosure of such information, and provided
further that in no event shall any Bank be obligated or required to return any
materials furnished by the Borrower or any Subsidiary.
11.16 LENDER REGISTER. The Borrower hereby designates the Agent to
serve as its agent, solely for purposes of this Section 11.16, to maintain a
register (the "Register") on which it will record the Commitment, if any, from
time to time of each of the Banks, the Loans made by each of the Banks and each
repayment in respect of the principal amount of the Loans of each Bank. Failure
to make any such recordation, or any error in such recordation, shall not affect
the Borrower's obligations in respect of such Loans. With respect to any Bank,
the transfer of the rights to the principal of, and interest on, any Loans shall
not be effective until such transfer is recorded on the Register maintained by
the Agent
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with respect to ownership of such Loans and prior to such recordation all
amounts owing to the transferor with respect to such Loans shall remain owing to
the transferor. The registration of assignment or transfer of all or part of
any Loans shall be recorded by the Agent on the Register only upon the
acceptance by the Agent of a properly executed and delivered Assignment
Agreement pursuant to Section 11.04(b). The Borrower agrees to indemnify the
Agent from and against any and all losses, claims, damages and liabilities of
whatsoever nature which may be imposed on, asserted against or incurred by the
Agent in performing its duties under this Section 11.16 other than those
resulting from the Agent's willful misconduct or gross negligence.
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IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Agreement to be duly executed and delivered as of the date
first above written.
ADDRESS:
- -------
321 N. Clark Street UNIVERSAL OUTDOOR, INC.,
Suite 1010 as Borrower
Chicago, Illinois
Attention: Brian T. Clingen
Tel. No.: (312) 644-8673 By:
Fax No.: (312) 644-8071 --------------------------
Name:
Title:
BANKERS TRUST COMPANY,
Individually and as Agent
By:
--------------------------
Name:
Title:
LA SALLE NATIONAL BANK,
Individually and as Co-Agent
By:
--------------------------
Name:
Title:
BANK OF AMERICA ILLINOIS
By:
--------------------------
Name:
Title:
<PAGE>
BANKBOSTON, N.A.
By:
--------------------------
Name:
Title:
UNION BANK OF CALIFORNIA, N.A.
By:
--------------------------
Name:
Title:
THE BANK OF NEW YORK
By:
--------------------------
Name:
Title:
BANQUE PARIBAS
By:
--------------------------
Name:
Title:
CREDIT LYONNAIS, Chicago Branch
By:
--------------------------
Name:
Title:
<PAGE>
THE FIRST NATIONAL BANK
OF CHICAGO
By:
--------------------------
Name:
Title:
FLEET BANK, N.A.
By:
--------------------------
Name:
Title:
HELLER FINANCIAL, INC.
By:
--------------------------
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY
By:
--------------------------
Name:
Title:
SUN TRUST BANK
By:
--------------------------
Name:
Title:
<PAGE>
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME FUND
By:
--------------------------
Name:
Title:
SOUTHERN PACIFIC THRIFT AND LOAN
By:
--------------------------
Name:
Title:
<PAGE>
ANNEX I
COMMITMENTS
BANK COMMITMENT
---- ----------
Bankers Trust $ 6,333,334
Company
La Salle National 8,500,000
Bank
Bank of America 8,333,332
Illinois
BankBoston 8,333,332
(formerly known as First
National Bank of Boston)
Union Bank of 8,333,332
California, N.A.
The Bank of New 3,666,667
York
Banque Paribas 3,666,667
Credit Lyonnais 3,666,667
The First National 3,666,667
Bank of Chicago
Fleet Bank, N.A. 3,666,667
Heller Financial, Inc. 3,666,667
State Street Bank and 3,666,667
Trust Company
<PAGE>
ANNEX I
Page 2
BANK COMMITMENT
---- ----------
Sun Trust Bank 3,666,667
Van Kampen American 3,666,667
Capital Prime Rate
Southern Pacific 2,166,667
Thrift and Loan
------------
Total: $ 75,000,000
------------
------------
<PAGE>
ANNEX II
BANK ADDRESSES
Bankers Trust Company
130 Liberty Street
New York, New York 10006
Attention: Anthony LoGrippo
Tel. No.: (212) 250-4886
Fax No.: (212) 250-7218
La Salle National Bank 120 South LaSalle Street
Chicago, Illinois 60603
Attention: Jeffrey D. Steele
Tel. No.: (312) 904-2721
Fax No.: (312) 904-4364
Bank of America Illinois 231 South LaSalle Street
Chicago, Illinois 60697
Attention: Charles Gonzalez
Tel. No.: (312) 828-2710
Fax No. : (312) 828-1974
BankBoston
Mail Stop 01-08-08
(formerly known as 100 Federal Street
First National Bank Boston, Massachusetts 02110
of Boston) Attention: Julie Jalelian
Tel. No.: (617) 434-9974
Fax No. : (617) 434-3401
Union Bank 445 South Figuera Street
15th Floor
Los Angeles, California 90071
Attention: Kevin Sampson
Tel. No.: (213) 236-6585
Fax No. : (213) 236-5747
The Bank of New York One Wall Street
New York, New York 10286
Attention: Jerome Kapelus
Tel. No.: (212) 635-8694
Fax No. : (212) 635-8593
<PAGE>
Banque Paribas 787 Seventh Avenue
New York, New York 10019
Attention: Phillip Vuarchex
Tel. No.: (212) 841-2000
Fax No. : (212) 841-2146
Credit Lyonnais 1301 Avenue of the Americas
New York, New York 10019
Attention: Mr. Michael Regan
Tel. No.: (212) 261-7000
Fax No. : (212) 459-3170
The First National One First National Plaza
Bank of Chicago Chicago, Illinois 60670
Attention: Jeff Bakalar
Tel. No.: (312) 732-3179
Fax No. : (312) 732-8587
Fleet Bank, N.A. 175 Water Street
28th Floor
New York, New York 10038
Attention: Tanya Crossley
Tel. No.: (212) 602-2995
Fax No. : (212) 602-2663
<PAGE>
Heller Financial, Inc. 500 West Monroe Street
Chicago, Illinois 60661
Attention: Joann Holmann
Tel. No.: (312) 441-7596
Fax No. : (312) 441-7357
State Street Bank and 225 Franklin Street
Trust Company Boston, Massachusetts 02110
Attention: John Tyler
Tel. No.: (617) 664-4303
Sun Trust Bank Mail Code FL-Orlando-2047
Post Office Box 3833
Orlando, Florida 32802
Attention: Chris Aguliar
Tel. No.: (407) 237-5210
Fax No. : (407) 237-4253
Van Kampen American One Parkview Plaza
Capital Oakbrook Terrace, Illinois 60181
Attention: Jeff Maillet
Tel. No.: (708) 684-6438
Fax No. : (708) 684-6740
Southern Pacific Thrift 12300 Wilshire Boulevard
and Loan Suite 200
Los Angeles, California 90025
Attention: Chris Kelleher
Tel. No.: (310) 442-3351
Fax No. : (310) 207-4067
<PAGE>
ANNEX III
GOVERNMENT APPROVALS
<PAGE>
ANNEX IV
SUBSIDIARIES
<PAGE>
ANNEX V
PROPERTIES
<PAGE>
ANNEX VI
EXISTING INDEBTEDNESS
<PAGE>
ANNEX VII
INSURANCE POLICIES
<PAGE>
ANNEX VIII
EXISTING LIENS
<PAGE>
ANNEX IX
MANAGEMENT FEES
None
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AMENDED AND RESTATED
CREDIT AGREEMENT
among
UNIVERSAL OUTDOOR, INC.
VARIOUS LENDING INSTITUTIONS,
LA SALLE NATIONAL BANK,
AS CO-AGENT
and
BANKERS TRUST COMPANY,
AS AGENT
------------------------------
Dated as of May 21, 1997
------------------------------
$225,000,000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. Amount and Terms of Credit . . . . . . . . . . . . . . . . . . . 1
1.01 Commitment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Minimum Borrowing Amounts, etc. . . . . . . . . . . . . . . . . . 3
1.03 Notice of Borrowing, etc. . . . . . . . . . . . . . . . . . . . . 3
1.04 Disbursement of Funds . . . . . . . . . . . . . . . . . . . . . . 4
1.05 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.06 Conversions . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.07 Pro Rata Borrowings . . . . . . . . . . . . . . . . . . . . . . . 6
1.08 Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.09 Interest Periods. . . . . . . . . . . . . . . . . . . . . . . . . 7
1.10 Increased Costs, Illegality, etc. . . . . . . . . . . . . . . . . 9
1.11 Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.12 Change of Lending Office. . . . . . . . . . . . . . . . . . . . . 11
1.13 Replacement of Banks. . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2. Letters of Credit. . . . . . . . . . . . . . . . . . . . . . . . 12
2.01 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . 12
2.02 Minimum Stated Amount . . . . . . . . . . . . . . . . . . . . . . 13
2.03 Letter of Credit Requests; Notices of Issuance. . . . . . . . . . 13
2.04 Agreement to Repay Letter of Credit Drawings. . . . . . . . . . . 13
2.05 Letter of Credit Participations . . . . . . . . . . . . . . . . . 14
2.06 Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3. Fees; Commitments. . . . . . . . . . . . . . . . . . . . . . . . 17
3.01 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.02 Voluntary Reduction of Commitments. . . . . . . . . . . . . . . . 19
3.03 Mandatory Adjustments of Commitments, etc.. . . . . . . . . . . . 19
SECTION 4. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.01 Voluntary Prepayments . . . . . . . . . . . . . . . . . . . . . . 19
4.02 Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . 20
(i)
<PAGE>
Page
----
4.03 Method and Place of Payment . . . . . . . . . . . . . . . . . . . 23
4.04 Net Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 5. Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . 25
5.01 Operative Date. . . . . . . . . . . . . . . . . . . . . . . . . 25
5.02 All Credit Events . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 6. Representations, Warranties and Agreements . . . . . . . . . . . 26
6.01 Corporate Status. . . . . . . . . . . . . . . . . . . . . . . . . 26
6.02 Corporate Power and Authority . . . . . . . . . . . . . . . . . . 27
6.03 No Violation. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.04 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.05 Use of Proceeds; Margin Regulations . . . . . . . . . . . . . . . 27
6.06 Governmental Approvals. . . . . . . . . . . . . . . . . . . . . . 28
6.07 Investment Company Act. . . . . . . . . . . . . . . . . . . . . . 28
6.08 Public Utility Holding Company Act. . . . . . . . . . . . . . . . 28
6.09 True and Complete Disclosure. . . . . . . . . . . . . . . . . . . 28
6.10 Financial Condition; Financial Statements . . . . . . . . . . . . 29
6.11 Security Interests. . . . . . . . . . . . . . . . . . . . . . . . 30
6.12 Tax Returns and Payments. . . . . . . . . . . . . . . . . . . . . 30
6.13 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . 30
6.14 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.15 Patents, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.16 Pollution and Other Regulations . . . . . . . . . . . . . . . . . 31
6.17 Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.18 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.19 Existing Indebtedness . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 7. Affirmative Covenants. . . . . . . . . . . . . . . . . . . . . . 33
7.01 Information Covenants . . . . . . . . . . . . . . . . . . . . . . 33
7.02 Books, Records and Inspections. . . . . . . . . . . . . . . . . . 36
7.03 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.04 Payment of Taxes. . . . . . . . . . . . . . . . . . . . . . . . . 37
7.05 Consolidated Corporate Franchises . . . . . . . . . . . . . . . . 37
7.06 Compliance with Statutes, etc.. . . . . . . . . . . . . . . . . . 37
7.07 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.08 Good Repair . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.09 End of Fiscal Years; Fiscal Quarters. . . . . . . . . . . . . . . 38
7.10 Additional Security; Further Assurances . . . . . . . . . . . . . 38
7.11 Corporate Separateness. . . . . . . . . . . . . . . . . . . . . . 39
(ii)
<PAGE>
Page
----
7.12 Compliance with Environmental Laws. . . . . . . . . . . . . . . . 40
SECTION 8. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . 40
8.01 Changes in Business . . . . . . . . . . . . . . . . . . . . . . . 41
8.02 Consolidation, Merger, Sale or Purchase of Assets, etc. . . . . . 41
8.03 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.04 Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . 44
8.05 Capital Expenditures. . . . . . . . . . . . . . . . . . . . . . . 45
8.06 Investments and Loans . . . . . . . . . . . . . . . . . . . . . . 46
8.07 Subsidiaries; etc.. . . . . . . . . . . . . . . . . . . . . . . . 47
8.08 Prepayments of Indebtedness, etc. . . . . . . . . . . . . . . . . 47
8.09 Dividends, etc. . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.10 Transactions with Affiliates. . . . . . . . . . . . . . . . . . . 48
8.11 Fixed Charge Coverage Ratio . . . . . . . . . . . . . . . . . . . 49
8.12 Minimum Modified Adjusted EBITDA. . . . . . . . . . . . . . . . . 49
8.13 Senior Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 9. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . 50
9.01 Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
9.02 Representations, etc. . . . . . . . . . . . . . . . . . . . . . . 50
9.03 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
9.04 Default Under Other Agreements. . . . . . . . . . . . . . . . . . 50
9.05 Bankruptcy, etc.. . . . . . . . . . . . . . . . . . . . . . . . . 51
9.06 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
9.07 Credit Documents. . . . . . . . . . . . . . . . . . . . . . . . . 51
9.08 Holdings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
9.09 Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 10. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 11. The Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
11.01 Appointment. . . . . . . . . . . . . . . . . . . . . . . . . . . 82
11.02 Nature of Duties . . . . . . . . . . . . . . . . . . . . . . . . 82
11.03 Lack of Reliance on the Agent. . . . . . . . . . . . . . . . . . 82
11.04 Certain Rights of the Agent. . . . . . . . . . . . . . . . . . . 83
11.05 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
11.06 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . 83
11.07 The Agent in Its Individual Capacity . . . . . . . . . . . . . . 84
11.08 Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
11.09 Resignation by the Agent . . . . . . . . . . . . . . . . . . . . 84
(iii)
<PAGE>
Page
----
SECTION 12. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . 85
12.01 Payment of Expenses, etc.. . . . . . . . . . . . . . . . . . . . 85
12.02 Right of Setoff. . . . . . . . . . . . . . . . . . . . . . . . . 85
12.03 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
12.04 Benefit of Agreement . . . . . . . . . . . . . . . . . . . . . . 86
12.05 No Waiver; Remedies Cumulative . . . . . . . . . . . . . . . . . 88
12.06 Payments Pro Rata. . . . . . . . . . . . . . . . . . . . . . . . 88
12.07 Calculations; Computations . . . . . . . . . . . . . . . . . . . 89
12.08 Governing Law; Submission to Jurisdiction; Venue;
Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . 89
12.09 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 90
12.10 Execution. . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
12.11 Headings Descriptive . . . . . . . . . . . . . . . . . . . . . . 90
12.12 Amendment or Waiver. . . . . . . . . . . . . . . . . . . . . . . 90
12.13 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
12.14 Domicile of Loans. . . . . . . . . . . . . . . . . . . . . . . . 91
12.15 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . 91
12.16 Lender Register. . . . . . . . . . . . . . . . . . . . . . . . . 92
ANNEX I -- Commitments
ANNEX II -- Bank Addresses
ANNEX III -- Government Approvals
ANNEX IV -- Subsidiaries
ANNEX V -- Properties
ANNEX VI -- Existing Indebtedness
ANNEX VII -- Insurance Policies
ANNEX VIII -- Existing Liens
ANNEX IX -- Management Fees
EXHIBIT A-1 -- Form of Notice of Borrowing
EXHIBIT A-2 -- Form of Letter of Credit Request
EXHIBIT B-1 -- Form of AR Note
EXHIBIT B-2 -- Form of Revolving Note
EXHIBIT B-3 -- Form of Swingline Note
EXHIBIT C-1 -- Form of Borrower Pledge Agreement
EXHIBIT C-2 -- Amendment to Borrower Pledge Agreement
EXHIBIT D-1 -- Form of Holdings Pledge Agreement
EXHIBIT D-2 -- Form of Amendment to Holdings Pledge Agreement
EXHIBIT E-1 -- Form of Security Agreement
(iv)
<PAGE>
EXHIBIT E-2 -- Form of Amendment to Security Agreement
EXHIBIT F -- Form of Holdings Guaranty
EXHIBIT G -- Adjusted EBITDA
EXHIBIT H -- Form of Assignment Agreement
(v)
<PAGE>
AMENDMENT AND RESTATEMENT dated as of May 21, 1997 to CONSOLIDATED
CREDIT AGREEMENT dated as of October 31, 1996, among UNIVERSAL OUTDOOR, INC., an
Illinois corporation, the lending institutions listed from time to time on Annex
I hereto (each a "Bank" and, collectively, the "Banks"), LA SALLE NATIONAL BANK,
as Co-Agent and BANKERS TRUST COMPANY, as agent (the "Agent"). Unless otherwise
defined herein, all capitalized terms used herein and defined in Section 10 are
used herein as so defined.
W I T N E S S E T H :
WHEREAS, the Borrower and certain financial institutions are party to
a Consolidated Credit Agreement dated as of October 31, 1996 (as amended and in
effect immediately prior to the Operative Date, the "Consolidated Credit
Agreement"); and
WHEREAS, the parties hereto wish to amend and restate the Consolidated
Credit Agreement as herein provided;
NOW, THEREFORE, the parties hereto agree that the Consolidated Credit
Agreement shall be and is hereby amended and restated as follows:
SECTION 1. AMOUNT AND TERMS OF CREDIT.
1.011 COMMITMENT. (A) Subject to and upon the terms and conditions
herein set forth, each Bank severally agrees to make or continue loans (together
with the Swingline Loans referred to below, each a "Loan" and, collectively, the
"Loans") to the Borrower, which Loans shall be drawn or continued, as the case
may be, to the extent such Bank has a commitment under such Facility, under the
AR Facility and the Revolving Facility, as set forth below:
(a) Loans under the AR Facility (each an "AR Loan" and, collectively,
the "AR Loans") (i) may be made at any time and from time to time on and
after the Operative Date and prior to the AR Termination Date, (ii) except
as hereinafter provided, may, at the option of the Borrower, be incurred
and maintained as, and/or converted into, Base Rate Loans or Eurodollar
Loans, provided that all AR Loans made as part of the same Borrowing shall,
unless otherwise specifically provided herein, consist of Loans of the same
Type, (iii) may be repaid and, prior to the AR Termination Date, be
reborrowed in accordance with the provisions hereof and (iv) shall not
exceed for any Bank at any time outstanding that aggregate principal amount
which, when combined with the aggregate outstanding principal amount of all
other
<PAGE>
AR Loans of such Bank, equals the AR Commitment, if any, of such Bank at
such time.
(b) Loans under the Revolving Facility (each a "Revolving Loan" and,
collectively, the "Revolving Loans") (i) may be made at any time and from
time to time on and after the Operative Date and prior to the Expiry Date,
(ii) except as hereinafter provided, may, at the option of the Borrower, be
incurred and maintained as, and/or converted into, Base Rate Loans or
Eurodollar Loans, provided that all Revolving Loans made as part of the
same Borrowing shall, unless otherwise specifically provided herein,
consist of Loans of the same Type, (iii) may be repaid and be reborrowed in
accordance with the provisions hereof and (iv) shall not exceed for any
Bank at any time outstanding that aggregate principal amount which, when
combined with the aggregate outstanding principal amount of all other
Revolving Loans of such Bank and with such Bank's Adjusted RC Percentage of
the sum of (x) the Letter of Credit Outstandings (exclusive of Unpaid
Drawings which are repaid with the proceeds of, and simultaneously with the
incurrence of, the respective incurrence of Revolving Loans) at such time
and (y) the outstanding principal amount of Swingline Loans (exclusive of
Swingline Loans which are repaid with the proceeds of, and simultaneously
with the incurrence of, the respective incurrence of Revolving Loans) at
such time, equals (1) if such Bank is a Non-Defaulting Bank, the Adjusted
Revolving Commitment of such Bank at such time and (2) if such Bank is a
Defaulting Bank, the Revolving Commitment of such Bank at such time.
(B) (a) Subject to and upon the terms and conditions herein set
forth, BTCo in its individual capacity agrees to make at any time and from time
to time on or after the Operative Date and prior to the Swingline Expiry Date, a
loan or loans to the Borrower (each a "Swingline Loan," and, collectively, the
"Swingline Loans"), which Swingline Loans (i) shall be made and maintained as
Base Rate Loans, (ii) may be repaid and reborrowed in accordance with the
provisions hereof, (iii) shall not exceed in aggregate principal amount at any
time outstanding, when combined with the aggregate principal amount of all
Revolving Loans made by Non-Defaulting Banks then outstanding and the Letter of
Credit Outstandings (exclusive of Unpaid Drawings which are repaid with the
proceeds of, and simultaneously with the incurrence of, the respective
incurrence of Swingline Loans) at such time, an amount equal to the Adjusted
Total Revolving Commitment then in effect and (iv) shall not exceed in aggregate
principal amount at any time outstanding the Maximum Swingline Amount. BTCo
will not make a Swingline Loan after it has received written notice from the
Required Banks that one or more of the applicable conditions to Credit Events
specified in Section 5.01 are not then satisfied.
(b) On any Business Day, BTCo may, in its sole discretion, give
notice to the Banks that its outstanding Swingline Loans shall be funded with a
Borrowing of Revolving Loans (PROVIDED that each such notice shall be deemed to
have been automatically
-2-
<PAGE>
given upon the occurrence of an Event of Default under Section 9.05 or upon the
exercise of any of the remedies provided in the last paragraph of Section 9), in
which case a Borrowing of Revolving Loans constituting Base Rate Loans (each
such Borrowing, a "Mandatory Borrowing") shall be made on the immediately
succeeding Business Day by all Banks PRO RATA based on each Bank's Adjusted RC
Percentage, and the proceeds thereof shall be applied directly to repay BTCo for
such outstanding Swingline Loans. Each Bank hereby irrevocably agrees to make
Base Rate Loans upon one Business Day's notice pursuant to each Mandatory
Borrowing in the amount and in the manner specified in the preceding sentence
and on the date specified in writing by BTCo notwithstanding (i) that the amount
of the Mandatory Borrowing may not comply with the Minimum Borrowing Amount
otherwise required hereunder, (ii) that any conditions specified in Section 5
may not be then satisfied, (iii) that a Default or an Event of Default has
occurred and is continuing, (iv) the date of such Mandatory Borrowing and (v)
any reduction in the Total Revolving Commitment or the Adjusted Total Revolving
Commitment after any such Swingline Loans were made. In the event that any
Mandatory Borrowing cannot for any reason be made on the date otherwise required
above (including, without limitation, as a result of the commencement of a
proceeding under the Bankruptcy Code in respect of the Borrower), each Bank
(other than BTCo) hereby agrees that it shall forthwith purchase from BTCo
(without recourse or warranty) such assignment of the outstanding Swingline
Loans as shall be necessary to cause the Banks to share in such Swingline Loans
ratably based upon their respective Adjusted RC Percentages, provided that all
interest payable on the Swingline Loans shall be for the account of BTCo until
the date the respective assignment is purchased and, to the extent attributable
to the purchased assignment, shall be payable to the Bank purchasing same from
and after such date of purchase.
1.012 MINIMUM BORROWING AMOUNTS, ETC. The aggregate principal amount
of each Borrowing shall not be less than the Minimum Borrowing Amount. More
than one Borrowing may be incurred on any day, provided that at no time shall
there be outstanding more than seven Borrowings of Eurodollar Loans hereunder.
1.013 NOTICE OF BORROWING, ETC. (a) Whenever the Borrower desires
to incur AR Loans or Revolving Loans, it shall give the Agent at its Notice
Office, prior to 11:00 A.M. (New York time), at least three Business Days' prior
written notice (or telephonic notice promptly confirmed in writing) of each
Borrowing of Eurodollar Loans and at least one Business Day's prior written
notice (or telephonic notice promptly confirmed in writing) of each Borrowing of
Base Rate Loans to be made hereunder. Each such notice (each a "Notice of
Borrowing") shall be in the form of Exhibit A-1 and shall be irrevocable and
shall specify (i) the Facility pursuant to which each Borrowing is being made,
(ii) the aggregate principal amount of the Loans to be made pursuant to each
Borrowing, (iii) the date of Borrowing (which shall be a Business Day) and (iv)
whether any respective Borrowing shall consist of Base Rate Loans or Eurodollar
Loans and, if Eurodollar Loans, the Interest Period to be initially applicable
thereto. The Agent shall promptly give each
-3-
<PAGE>
Bank written notice (or telephonic notice promptly confirmed in writing) of each
proposed Borrowing, of such Bank's proportionate share thereof and of the other
matters covered by the Notice of Borrowing.
(b) (i) Whenever the Borrower desires to make a Borrowing of
Swingline Loans hereunder, it shall give BTCo, prior to 11:00 A.M. (New York
time) on the day such Swingline Loan is to be made, written notice (or
telephonic notice promptly confirmed in writing) of each Swingline Loan to be
made hereunder. Each such notice shall be irrevocable and shall specify in each
case (x) the date of such Borrowing (which shall be a Business Day) and (y) the
aggregate principal amount of the Swingline Loan to be made pursuant to such
Borrowing.
(ii) Mandatory Borrowings shall be made upon the notice specified in
Section 1.01(B)(b), with the Borrower irrevocably agreeing, by its incurrence of
any Swingline Loan, to the making of Mandatory Borrowings as set forth in such
Section.
(c) Without in any way limiting the obligation of the Borrower to
confirm in writing any telephonic notice permitted to be given hereunder, the
Agent may prior to receipt of written confirmation act without liability upon
the basis of such telephonic notice, believed by the Agent in good faith to be
from an Authorized Officer of the Borrower. In each such case, the Borrower
hereby waives the right to dispute the Agent's record of the terms of such
telephonic notice.
1.014 DISBURSEMENT OF FUNDS. (a) No later than 1:00 P.M. (New York
time) on the date specified in a Notice of Borrowing, each Bank with a
Commitment under the respective Facility will make available its PRO RATA share
of each Borrowing requested to be made on such date in the manner provided
below, provided that Swingline Loans shall be made available by BTCo no later
than 2:00 P.M. (New York time) on the date requested. All such amounts shall be
made available to the Agent in U.S. dollars and immediately available funds at
the Payment Office and the Agent promptly will make available to the Borrower by
depositing to its account at the Payment Office the aggregate of the amounts so
made available in the type of funds received. Unless the Agent shall have been
notified by any Bank prior to the date of Borrowing that such Bank does not
intend to make available to the Agent its portion of the Borrowing or Borrowings
to be made on such date, the Agent may assume that such Bank has made such
amount available to the Agent on such date of Borrowing, and the Agent, in
reliance upon such assumption, may (in its sole discretion and without any
obligation to do so) make available to the Borrower a corresponding amount. If
such corresponding amount is not in fact made available to the Agent by such
Bank and the Agent has made available same to the Borrower, the Agent shall be
entitled to recover such corresponding amount from such Bank. If such Bank does
not pay such corresponding amount forthwith upon the Agent's demand therefor,
the Agent shall promptly notify the Borrower, and the Borrower shall immediately
pay such corresponding amount to the Agent.
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The Agent shall also be entitled to recover on demand from such Bank or the
Borrower, as the case may be, interest on such corresponding amount in respect
of each day from the date such corresponding amount was made available by the
Agent to the Borrower to the date such corresponding amount is recovered by the
Agent, at a rate per annum equal to (x) if paid by such Bank, the overnight
Federal Funds Effective Rate or (y) if paid by the Borrower, the then applicable
rate of interest, calculated in accordance with Section 1.08, for the respective
Loans.
(b) Nothing herein shall be deemed to relieve any Bank from its
obligation to fulfill its commitments hereunder or to prejudice any rights which
the Borrower may have against any Bank as a result of any default by such Bank
hereunder.
1.015 NOTES. (a) The Borrower's obligation to pay the principal of,
and interest on, the Loans made to it by each Bank shall be evidenced (i) if AR
Loans, by a promissory note substantially in the form of Exhibit B-1 with blanks
appropriately completed in conformity herewith (each an "AR Note" and,
collectively, the "AR Notes"), (ii) if Revolving Loans, by a promissory note
substantially in the form of Exhibit B-2 with blanks appropriately completed in
conformity herewith (each a "Revolving Note" and, collectively, the "Revolving
Notes") and (iii) if Swingline Loans, by a promissory note substantially in the
form of Exhibit B-3 with blanks appropriately completed in conformity herewith
(the "Swingline Note").
(b) The AR Note issued to each Bank with an AR Commitment shall (i)
be executed by the Borrower, (ii) be payable to the order of such Bank and be
dated the Consolidation Date, (iii) be in a stated principal amount equal to the
AR Commitment of such Bank and be payable in the principal amount of the AR
Loans evidenced thereby, (iv) mature on the AR Maturity Date, (v) bear interest
as provided in the appropriate clause of Section 1.08 in respect of the Base
Rate Loans and Eurodollar Loans, as the case may be, evidenced thereby, (vi) be
subject to mandatory repayment as provided in Section 4.02 and (vii) be entitled
to the benefits of this Agreement and the other Credit Documents.
(c) The Revolving Note issued to each Bank shall (i) be executed by
the Borrower, (ii) be payable to the order of such Bank and be dated the
Consolidation Date, (iii) be in a stated principal amount equal to the Revolving
Commitment of such Bank and be payable in the principal amount of the Revolving
Loans evidenced thereby, (iv) mature on the Expiry Date, (v) bear interest as
provided in the appropriate clause of Section 1.08 in respect of the Base Rate
Loans and Eurodollar Loans, as the case may be, evidenced thereby, (vi) be
subject to mandatory repayment as provided in Section 4.02 and (vii) be entitled
to the benefits of this Agreement and the other Credit Documents.
(d) The Swingline Note issued to BTCo shall (i) be executed by the
Borrower, (ii) be payable to the order of BTCo and be dated the Consolidation
Date, (iii) be
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in a stated principal amount equal to the Maximum Swingline Amount and be
payable in the principal amount of Swingline Loans evidenced thereby, (iv)
mature on the Swingline Expiry Date, (v) bear interest as provided in Section
1.08 in respect of the Base Rate Loans evidenced thereby and (vi) be entitled to
the benefits of this Agreement and the other Credit Documents.
(e) Each Bank will note on its internal records the amount of each
Loan made by it and each payment in respect thereof and will, prior to any
transfer of any of its Notes, endorse on the reverse side thereof the
outstanding principal amount of Loans evidenced thereby. Failure to make any
such notation shall not affect the Borrower's obligations in respect of such
Loans.
1.016 CONVERSIONS. The Borrower shall have the option to convert on
any Business Day all or a portion at least equal to the applicable Minimum
Borrowing Amount of the outstanding principal amount of the Loans owing pursuant
to a single Facility into a Borrowing or Borrowings pursuant to such Facility of
another Type of Loan (with Swingline Loans at all times to be maintained as Base
Rate Loans), provided that (i) except as otherwise provided in Section 1.10(b),
Eurodollar Loans may be converted into Base Rate Loans only on the last day of
an Interest Period applicable thereto and no partial conversion of a Borrowing
of Eurodollar Loans shall reduce the outstanding principal amount of the
Eurodollar Loans made pursuant to such Borrowing to less than the Minimum
Borrowing Amount applicable thereto, (ii) Base Rate Loans may not be converted
into Eurodollar Loans if any violation of Section 9.01 or any Event of Default
is then in existence to the extent that the Agent or the Required Banks have
determined that any such conversion at such time would be disadvantageous to the
Banks and (iii) Borrowings of Eurodollar Loans resulting from this Section 1.06
shall be limited in number as provided in Section 1.02. Each such conversion
shall be effected by the Borrower giving the Agent at its Notice Office, prior
to 11:00 A.M. (New York time), at least three Business Days' (or two Business
Days', in the case of a conversion into Base Rate Loans) prior written notice
(or telephonic notice promptly confirmed in writing) (each a "Notice of
Conversion") specifying the Loans to be so converted, the Type of Loans to be
converted into and, if to be converted into a Borrowing of Eurodollar Loans, the
Interest Period to be initially applicable thereto. The Agent shall give each
Bank prompt notice of any such proposed conversion affecting any of its Loans.
1.017 PRO RATA BORROWINGS. All AR Loans and all Revolving Loans
shall be made by the Banks PRO RATA on the basis of their respective Adjusted AR
Percentages and Adjusted RC Percentages, as the case may be. It is understood
that no Bank shall be responsible for any default by any other Bank in its
obligation to make Loans hereunder and that each Bank shall be obligated to make
the Loans provided to be made by it hereunder, regardless of the failure of any
other Bank to fulfill its commitments hereunder.
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1.018 INTEREST. (a) The unpaid principal amount of each Base Rate
Loan shall bear interest from the date of the Borrowing thereof until maturity
(whether by acceleration or otherwise) at a rate per annum which shall at all
times be the Applicable Base Rate Margin plus the Base Rate in effect from time
to time.
(b) The unpaid principal amount of each Eurodollar Loan shall bear
interest from the date of the Borrowing thereof until maturity (whether by
acceleration or otherwise) at a rate per annum which shall at all times be the
Applicable Eurodollar Margin plus the relevant Eurodollar Rate.
(c) All overdue principal and, to the extent permitted by law,
overdue interest in respect of each Loan and any other overdue amount payable
hereunder shall bear interest at a rate per annum equal to the Base Rate in
effect from time to time plus the sum of (i) 2% and (ii) the Applicable Base
Rate Margin, provided that no Loan shall bear interest after maturity (whether
by acceleration or otherwise) at a rate per annum less than 2% plus the rate of
interest applicable thereto at maturity.
(d) Interest shall accrue from and including the date of any
Borrowing to but excluding the date of any repayment thereof and shall be
payable (i) in respect of each Base Rate Loan, quarterly in arrears on the last
Business Day of each February, May, August and November, (ii) in respect of each
Eurodollar Loan, on the last day of each Interest Period applicable thereto and,
in the case of an Interest Period of six months, on the date occurring three
months after the first day of such Interest Period and (iii) in respect of each
Loan, on any prepayment or conversion (other than the prepayment and conversion
of Loans that are Base Rate Loans) (on the amount prepaid or converted), at
maturity (whether by acceleration or otherwise) and, after such maturity, on
demand.
(e) All computations of interest hereunder shall be made in
accordance with Section 12.07(b).
(f) The Agent, upon determining the interest rate for any Borrowing
of Eurodollar Loans for any Interest Period, shall promptly notify the Borrower
and the Banks thereof.
1.019 INTEREST PERIODS. (a) At the time the Borrower gives a Notice
of Borrowing or Notice of Conversion in respect of the making of, or conversion
tinto, a Borrowing of Eurodollar Loans (in the case of the initial Interest
Period applicable thereto) or prior to 10:00 A.M. (New York time) on the third
Business Day prior to the expiration of an Interest Period applicable to a
Borrowing of Eurodollar Loans, it shall have the right to elect by giving the
Agent written notice (or telephonic notice promptly confirmed in writing) of the
Interest Period applicable to such Borrowing, which Interest Period shall, at
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the option of the Borrower, be a one, two, three or six month period.
Notwithstanding anything to the contrary contained above:
(i) the initial Interest Period for any Borrowing of Eurodollar
Loans shall commence on the date of such Borrowing (including the date of
any conversion from a Borrowing of Base Rate Loans) and each Interest
Period occurring thereafter in respect of such Borrowing shall commence on
the day on which the next preceding Interest Period expires;
(ii) if any Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period, such Interest Period shall end on the last Business Day of
such calendar month;
(iii) if any Interest Period would otherwise expire on a day which is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day, provided that if any Interest Period would
otherwise expire on a day which is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iv) no Interest Period shall extend beyond (x) in the case of AR
Loans, the AR Maturity Date and (y) in the case of Revolving Loans, the
Expiry Date;
(v) no Interest Period with respect to any Borrowing of AR Loans may
be elected that would extend beyond any date upon which a Scheduled
Repayment is required to be made if, after giving effect to the selection
of such Interest Period, the aggregate principal amount of AR Loans
maintained as Eurodollar Loans with Interest Periods ending after such date
would exceed the aggregate principal amount of AR Loans permitted to be
outstanding after such Scheduled Repayment; and
(vi) no Interest Period may be elected at any time when a violation
of Section 9.01 or an Event of Default is then in existence if the Agent or
the Required Banks have determined that such an election at such time would
be disadvantageous to the Banks.
(b) If upon the expiration of any Interest Period, the Borrower has
failed to (or may not) elect a new Interest Period to be applicable to the
respective Borrowing of Eurodollar Loans as provided above, the Borrower shall
be deemed to have elected to convert such Borrowing into a Borrowing of Base
Rate Loans effective as of the expiration date of such current Interest Period.
1.10 INCREASED COSTS, ILLEGALITY, ETC. (a) In the event that (x) in
the case of clause (i) below, the Agent or (y) in the case of clauses (ii) and
(iii) below, any Bank shall
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have determined (which determination shall, absent manifest error, be final and
conclusive and binding upon all parties hereto):
(i) on any date for determining the Eurodollar Rate for any Interest
Period that, by reason of any changes arising after the Restatement
Effective Date affecting the interbank Eurodollar market, adequate and fair
means do not exist for ascertaining the applicable interest rate on the
basis provided for in the definition of Eurodollar Rate; or
(ii) at any time, that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect to
any Eurodollar Loans (other than any increased cost or reduction in the
amount received or receivable resulting from the imposition of or a change
in the rate of taxes or similar charges) because of (x) any change since
the Restatement Effective Date in any applicable law, governmental rule,
regulation, guideline or order (or in the interpretation or administration
thereof and including the introduction of any new law or governmental rule,
regulation, guideline or order) (such as, for example, but not limited to,
a change in official reserve requirements, but, in all events, excluding
reserves required under Regulation D to the extent included in the
computation of the Eurodollar Rate) and/or (y) other circumstances
affecting such Bank, the interbank Eurodollar market or the position of
such Bank in such market; or
(iii) at any time, that the making or continuance of any Eurodollar
Loan has become unlawful by compliance by such Bank in good faith with any
law, governmental rule, regulation, guideline (or would conflict with any
such governmental rule, regulation, guideline or order not having the force
of law but with which such Bank customarily complies even though the
failure to comply therewith would not be unlawful), or has become
impracticable as a result of a contingency occurring after the Restatement
Effective Date which materially and adversely affects the interbank
Eurodollar market;
then, and in any such event, such Bank (or the Agent in the case of clause (i)
above) shall (x) on such date and (y) within ten Business Days of the date on
which such event no longer exists give notice (by telephone confirmed in
writing) to the Borrower and to the Agent of such determination (which notice
the Agent shall promptly transmit to each of the other Banks). Thereafter (x)
in the case of clause (i) above, Eurodollar Loans shall no longer be available
until such time as the Agent notifies the Borrower and the Banks that the
circumstances giving rise to such notice by the Agent no longer exist, and any
Notice of Borrowing or Notice of Conversion given by the Borrower with respect
to Eurodollar Loans which have not yet been incurred shall be deemed rescinded
by the Borrower, (y) in the case of clause (ii) above, the Borrower shall pay to
such Bank, upon written demand therefor, such additional amounts (in the form of
an increased rate of, or a different method of
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calculating, interest or otherwise as such Bank in its sole discretion shall
determine) as shall be required to compensate such Bank for such increased costs
or reductions in amounts receivable hereunder (a written notice as to the
additional amounts owed to such Bank, showing the basis for the calculation
thereof, submitted to the Borrower by such Bank shall, absent manifest error, be
final and conclusive and binding upon all parties hereto) and (z) in the case of
clause (iii) above, the Borrower shall take one of the actions specified in
Section 1.10(b) as promptly as possible and, in any event, within the time
period required by law.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the Borrower may (and
in the case of a Eurodollar Loan affected pursuant to Section 1.10(a)(iii) the
Borrower shall) either (i) if the affected Eurodollar Loan is then being made
pursuant to a Borrowing, cancel said Borrowing by giving the Agent telephonic
notice (confirmed promptly in writing) thereof on the same date that the
Borrower was notified by a Bank pursuant to Section 1.10(a)(ii) or (iii), or
(ii) if the affected Eurodollar Loan is then outstanding, upon at least three
Business Days' notice to the Agent, require the affected Bank to convert each
such Eurodollar Loan into a Base Rate Loan, provided that if more than one Bank
is affected at any time, then all affected Banks must be treated the same
pursuant to this Section 1.10(b).
(c) If any Bank shall have determined that after the Restatement
Effective Date, the adoption or effectiveness of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Bank with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on such Bank's capital or assets as a consequence of
its commitments or obligations hereunder to a level below that which such Bank
could have achieved but for such adoption, effectiveness, change or compliance
(taking into consideration such Bank's policies with respect to capital
adequacy), then from time to time, within 15 days after demand by such Bank
(with a copy to the Agent), the Borrower shall pay to such Bank such additional
amount or amounts as will compensate such Bank for such reduction. Each Bank,
upon determining in good faith that any additional amounts will be payable
pursuant to this Section 1.10(c), will give prompt written notice thereof to the
Borrower, which notice shall set forth the basis of the calculation of such
additional amounts, although the failure to give any such notice shall not
release or diminish any of the Borrower's obligations to pay additional amounts
pursuant to this Section 1.10(c) upon the subsequent receipt of such notice.
1.11 COMPENSATION. (a) The Borrower shall compensate each Bank,
upon its written request (which request shall set forth the basis for requesting
such compensation), for all reasonable losses, expenses and liabilities
(including, without limitation, any loss, expense or liability incurred by
reason of the liquidation or reemployment of deposits or
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other funds required by such Bank to fund its Eurodollar Loans but excluding in
any event the loss of anticipated profits) which such Bank may sustain: (i) if
for any reason (other than a default by such Bank or the Agent) a Borrowing of
Eurodollar Loans does not occur on a date specified therefor in a Notice of
Borrowing or Notice of Conversion (whether or not withdrawn by the Borrower or
deemed withdrawn pursuant to Section 1.10(a)); (ii) if any prepayment, repayment
or conversion of any of its Eurodollar Loans occurs on a date which is not the
last day of an Interest Period applicable thereto; (iii) if any prepayment of
any of its Eurodollar Loans is not made on any date specified in a notice of
prepayment given by the Borrower; or (iv) as a consequence of (x) any other
default by the Borrower to repay its Eurodollar Loans when required by the terms
of this Agreement or (y) an election made pursuant to Sections 1.10(b) and 1.13.
(b) Notwithstanding anything in this Agreement to the contrary, to
the extent any notice required by Section 1.10, 2.06 or 4.04 is given by any
Bank more than 180 days after such Bank obtained, or reasonably should have
obtained, knowledge of the occurrence of the event giving rise to the additional
costs of the type described in such Section, such Bank shall not be entitled to
compensation under Section 1.10, 2.06 or 4.04 for any amounts incurred or
accruing prior to the giving of such notice to the Borrower.
1.12 CHANGE OF LENDING OFFICE. Each Bank agrees that, upon the
occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or
(iii), 1.10(c), 2.06 or 4.04 with respect to such Bank, it will, if requested by
the Borrower, use reasonable efforts (subject to overall policy considerations
of such Bank) to designate another lending office for any Loans affected by such
event, provided that such designation is made on such terms that such Bank and
its lending office suffer no economic, legal or regulatory disadvantage, with
the object of avoiding the consequence of the event giving rise to the operation
of any such Section. Nothing in this Section 1.12 shall affect or postpone any
of the obligations of the Borrower or the right of any Bank provided in Section
1.10, 2.06 or 4.04.
1.13 REPLACEMENT OF BANKS. (x) Upon the occurrence of any event
giving rise to the operation of Section 1.10(a)(ii) or (iii), Section 1.10(c),
2.06 or Section 4.04 with respect to any Bank which results in such Bank
charging to the Borrower increased costs in excess of those being generally
charged by the other Banks, (y) if a Bank becomes a Defaulting Bank and/or (z)
in the case of a refusal by a Bank to consent to a proposed change, waiver,
discharge or termination with respect to this Agreement which has been approved
by the Required Banks or Super Majority Banks, as the case may be, as provided
in Section 12.12, the Borrower shall have the right, if no Default or Event of
Default then exists, to replace such Bank (the "Replaced Bank") with one or more
other transferee or transferees who shall be acceptable to the Agent and none of
whom shall constitute a Defaulting Bank at the time of such replacement
(collectively, the "Replacement Bank") reasonably acceptable to the Agent,
provided that (i) at the time of any replacement pursuant to this Section 1.13,
the Replacement Bank shall enter into one or more Assignment
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Agreements pursuant to Section 12.04(b) (and with all fees payable pursuant to
said Section 12.04(b) to be paid by the Replacement Bank) pursuant to which the
Replacement Bank shall acquire all of the Commitments and outstanding Loans of
the Replaced Bank and, in connection therewith, shall pay to the Replaced Bank
in respect thereof an amount equal to the sum of (A) an amount equal to the
principal of, and all accrued interest on, all outstanding Loans of the Replaced
Bank and (B) an amount equal to all accrued, but theretofore unpaid, Fees owing
to the Replaced Bank pursuant to Section 3.01 and (ii) all obligations of the
Borrower owing to the Replaced Bank (other than those specifically described in
clause (i) above in respect of which the assignment purchase price has been, or
is concurrently being, paid) shall be paid in full to such Replaced Bank
concurrently with such replacement. Upon the execution of the respective
Assignment Agreement, the payment of amounts referred to in clauses (i) and (ii)
above and, if so requested by the Replacement Bank, delivery to the Replacement
Bank of the appropriate Note or Notes executed by the Borrower, the Replacement
Bank shall become a Bank hereunder and the Replaced Bank shall cease to
constitute a Bank hereunder, except with respect to indemnification provisions
applicable to the Replaced Bank under this Agreement, which shall survive as to
such Replaced Bank.
SECTION 2. LETTERS OF CREDIT.
1.021 LETTERS OF CREDIT. (a) Subject to and upon the terms and
conditions herein set forth, the Borrower may request that a Letter of Credit
Issuer at any time and from time to time on or after the Operative Date and
prior to the Expiry Date to issue, for the account of the Borrower and in
support of such standby obligations of the Borrower that are acceptable to the
Agent (each such letter of credit a "Letter of Credit" and, collectively, the
"Letters of Credit"), and subject to and upon the terms and conditions herein
set forth the Letter of Credit Issuer agrees to issue from time to time,
irrevocable letters of credit denominated in U.S. dollars in such form as may be
approved by the Letter of Credit Issuer and the Agent. Letters of Credit shall
include the Existing Letters of Credit, which shall be deemed issued, for
purposes of Sections 2.05(a), 3.01(b) and 3.01(c), on the Operative Date.
(b) Notwithstanding the foregoing, (i) no Letter of Credit shall be
issued, the Stated Amount of which, when added to the Letter of Credit
Outstandings (exclusive of Unpaid Drawings which are repaid on the date of, and
prior to the issuance of, the respective Letter of Credit) at such time, would
exceed either (x) $5,000,000 or (y) when added to the aggregate principal amount
of all Revolving Loans made by Non-Defaulting Banks and Swingline Loans then
outstanding, the Adjusted Total Revolving Commitment at such time; and (ii) each
Letter of Credit shall have an expiry date occurring not later than one year
after such Letter of Credit's date of issuance (other than Existing Letters of
Credit) although any Letter of Credit may be extendable for successive periods
of up to 12 months, but not beyond the Business Day next preceding the Expiry
Date, on terms acceptable to the Letter of Credit
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Issuer and in no event shall any Letter of Credit have an expiry date occurring
later than the Business Day next preceding the Expiry Date.
(c) Notwithstanding the foregoing, in the event a Bank Default
exists, the Letter of Credit Issuer shall not be required to issue any Letter of
Credit unless the Letter of Credit Issuer has entered into arrangements
satisfactory to it and the Borrower to eliminate the Letter of Credit Issuer's
risk with respect to the participation in Letters of Credit of the Defaulting
Bank or Banks, including by cash collateralizing such Defaulting Bank's or
Banks' Percentage of the Letter of Credit Outstandings.
1.022 MINIMUM STATED AMOUNT. The initial Stated Amount of each
Letter of Credit shall be not less than $25,000 or such lesser amount acceptable
to the Letter of Credit Issuer.
1.023 LETTER OF CREDIT REQUESTS; NOTICES OF ISSUANCE. (a) Whenever
it desires that a Letter of Credit be issued after the Initial Borrowing Date,
the Borrower shall give the Agent and the Letter of Credit Issuer written notice
(including by way of telecopier) in the form of Exhibit A-2 thereof prior to
1:00 P.M. (New York time) at least three Business Days (or such shorter period
as may be acceptable to the Letter of Credit Issuer) prior to the proposed date
of issuance (which shall be a Business Day) (each a "Letter of Credit Request"),
which Letter of Credit Request shall include any other documents that the Letter
of Credit Issuer customarily requires in connection therewith.
(b) The Letter of Credit Issuer shall, promptly after each issuance
of a Letter of Credit by it, give the Agent, each Bank and the Borrower written
notice of the issuance of such Letter of Credit, accompanied by a copy to the
Agent of the Letter of Credit or Letters of Credit issued by it.
1.024 AGREEMENT TO REPAY LETTER OF CREDIT DRAWINGS. (a) The
Borrower hereby agrees to reimburse the Letter of Credit Issuer, by making
payment to the Agent at the Payment Office, for any payment or disbursement made
by the Letter of Credit Issuer under any Letter of Credit (each such amount so
paid or disbursed until reimbursed, an "Unpaid Drawing") immediately after, and
in any event on the date on which the Borrower is notified by the Letter of
Credit Issuer of such payment or disbursement with interest on the amount so
paid or disbursed by the Letter of Credit Issuer, to the extent not reimbursed
prior to 1:00 P.M. (New York time) on the date of such payment or disbursement,
from and including the date paid or disbursed to but not including the date the
Letter of Credit Issuer is reimbursed therefor at a rate per annum which shall
be the Applicable Margin in excess of the Base Rate as in effect from time to
time (plus an additional 2% per annum if not reimbursed by the third Business
Day after the date of such notice of payment or disbursement), such interest
also to be payable on demand.
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(b) The Borrower's obligation under this Section 2.04 to reimburse
the Letter of Credit Issuer with respect to Unpaid Drawings (including, in each
case, interest thereon) shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to payment
which the Borrower may have or have had against the Letter of Credit Issuer, the
Agent or any Bank, including, without limitation, any defense based upon the
failure of any drawing under a Letter of Credit to conform to the terms of the
Letter of Credit or any non-application or misapplication by the beneficiary of
the proceeds of such drawing; PROVIDED, HOWEVER, that the Borrower shall not be
obligated to reimburse the Letter of Credit Issuer for any wrongful payment made
by the Letter of Credit Issuer under a Letter of Credit as a result of acts or
omissions constituting willful misconduct or gross negligence on the part of the
Letter of Credit Issuer.
1.025 LETTER OF CREDIT PARTICIPATIONS. (a) Immediately upon the
issuance by the Letter of Credit Issuer of any Letter of Credit, (and on the
Operative Date with respect to any Existing Letter of Credit), the Letter of
Credit Issuer shall be deemed to have sold and transferred to each other Bank,
and each such Bank (each a "Participant") shall be deemed irrevocably and
unconditionally to have purchased and received from such Letter of Credit
Issuer, without recourse or warranty, an undivided interest and participation,
to the extent of such Bank's Adjusted RC Percentage, in such Letter of Credit,
each substitute letter of credit, each drawing made thereunder and the
obligations of the Borrower under this Agreement with respect thereto (although
the Letter of Credit Fee shall be payable directly to the Agent for the account
of the Banks as provided in Section 3.01(b) and the Participants shall have no
right to receive any portion of any Facing Fees) and any security therefor or
guaranty pertaining thereto. Upon any change in the Revolving Commitments or
Adjusted RC Percentages of the Banks pursuant to Section 12.04(b) or upon a Bank
Default, it is hereby agreed that, with respect to all outstanding Letters of
Credit and Unpaid Drawings, there shall be an automatic adjustment to the
participations pursuant to this Section 2.05 to reflect the new Adjusted RC
Percentages of the assigning and assignee Bank or of all Banks, as the case may
be.
(b) In determining whether to pay under any Letter of Credit, the
Letter of Credit Issuer shall not have any obligation relative to the
Participants other than to determine that any documents required to be delivered
under such Letter of Credit have been delivered and that they substantially
comply on their face with the requirements of such Letter of Credit. Any action
taken or omitted to be taken by the Letter of Credit Issuer under or in
connection with any Letter of Credit if taken or omitted in the absence of gross
negligence or willful misconduct, shall not create for the Letter of Credit
Issuer any resulting liability.
(c) In the event that the Letter of Credit Issuer makes any payment
under any Letter of Credit and the Borrower shall not have reimbursed such
amount in full to the Letter of Credit Issuer pursuant to Section 2.04(a), the
Letter of Credit Issuer shall promptly notify the Agent, and the Agent shall
promptly notify each Participant of such failure, and each
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Participant shall promptly and unconditionally pay to the Agent for the account
of the Letter of Credit Issuer, the amount of such Participant's Adjusted RC
Percentage of such payment in U.S. dollars and in same day funds; PROVIDED,
HOWEVER, that no Participant shall be obligated to pay to the Agent its Adjusted
RC Percentage of such unreimbursed amount for any wrongful payment made by the
Letter of Credit Issuer under a Letter of Credit as a result of acts or
omissions constituting willful misconduct or gross negligence on the part of the
Letter of Credit Issuer. If the Agent so notifies any Participant required to
fund an Unpaid Drawing under a Letter of Credit prior to 11:00 A.M. (New York
time) on any Business Day, such Participant shall make available to the Agent
for the account of the Letter of Credit Issuer such Participant's Adjusted RC
Percentage of the amount of such payment on such Business Day in same day funds.
If and to the extent such Participant shall not have so made its Adjusted RC
Percentage of the amount of such Unpaid Drawing available to the Agent for the
account of the Letter of Credit Issuer, such Participant agrees to pay to the
Agent for the account of the Letter of Credit Issuer, forthwith on demand such
amount, together with interest thereon, for each day from such date until the
date such amount is paid to the Agent for the account of the Letter of Credit
Issuer at the overnight Federal Funds Effective Rate. The failure of any
Participant to make available to the Agent for the account of the Letter of
Credit Issuer its Adjusted RC Percentage of any Unpaid Drawing under any Letter
of Credit shall not relieve any other Participant of its obligation hereunder to
make available to the Agent for the account of the Letter of Credit Issuer its
Adjusted RC Percentage of any payment under any Letter of Credit on the date
required, as specified above, but no Participant shall be responsible for the
failure of any other Participant to make available to the Agent for the account
of the Letter of Credit Issuer such other Participant's Adjusted RC Percentage
of any such payment.
(d) Whenever the Letter of Credit Issuer receives a payment of a
reimbursement obligation as to which the Agent has received for the account of
the Letter of Credit Issuer any payments from the Participants pursuant to
clause (c) above, the Letter of Credit Issuer shall pay to the Agent and the
Agent shall promptly pay to each Participant which has paid its Adjusted RC
Percentage thereof, in U.S. dollars and in same day funds, an amount equal to
such Participant's Adjusted RC Percentage of the principal amount thereof and
interest thereon accruing at the overnight Federal Funds Effective Rate after
the purchase of the respective participations.
(e) The obligations of the Participants to make payments to the Agent
for the account of the Letter of Credit Issuer with respect to Letters of Credit
shall be irrevocable and not subject to counterclaim, set-off or other defense
or any other qualification or exception whatsoever (provided that no Participant
shall be required to make payments resulting from the Agent's gross negligence
or willful misconduct) and shall be made in accordance with the terms and
conditions of this Agreement under all circumstances, including, without
limitation, any of the following circumstances:
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(i) any lack of validity or enforceability of this Agreement or any
of the other Credit Documents;
(ii) the existence of any claim, set-off, defense or other right
which the Borrower may have at any time against a beneficiary named in a
Letter of Credit, any transferee of any Letter of Credit (or any Person for
whom any such transferee may be acting), the Agent, the Letter of Credit
Issuer, any Bank or other Person, whether in connection with this
Agreement, any Letter of Credit, the transactions contemplated herein or
any unrelated transactions (including any underlying transaction between
the Borrower and the beneficiary named in any such Letter of Credit);
(iii) any draft, certificate or other document presented under the
Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect;
(iv) the surrender or impairment of any security for the performance
or observance of any of the terms of any of the Credit Documents; or
(v) the occurrence of any Default or Event of Default.
(f) To the extent the Letter of Credit Issuer is not indemnified by
the Borrower, the Participants will reimburse and indemnify the Letter of Credit
Issuer, in proportion to their respective Adjusted RC Percentages, for and
against any and all liabilities, obligations, losses, damages, penalties,
claims, actions, judgments, costs, expenses or disbursements of whatsoever kind
or nature which may be imposed on, asserted against or incurred by the Letter of
Credit Issuer in performing its respective duties in any way relating to or
arising out of its issuance of Letters of Credit; PROVIDED that no Participants
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Letter of Credit Issuer's gross negligence or willful
misconduct.
1.026 INCREASED COSTS. If at any time after the Restatement
Effective Date, the adoption or effectiveness of any applicable law, rule or
regulation, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by the Letter of Credit Issuer or any Bank with any request or directive
(whether or not having the force of law) by any such authority, central bank or
comparable agency shall either (i) impose, modify or make applicable any
reserve, deposit, capital adequacy or similar requirement against Letters of
Credit issued by the Letter of Credit Issuer or such Bank's participation
therein, or (ii) shall impose on the Letter of Credit Issuer or any Bank any
other conditions affecting this Agreement, any Letter of Credit or such Bank's
participation therein; and the result of any of the foregoing is to increase the
cost to the Letter
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of Credit Issuer or such Bank of issuing, maintaining or participating in any
Letter of Credit, or to reduce the amount of any sum received or receivable by
the Letter of Credit Issuer or such Bank hereunder (other than any increased
cost or reduction in the amount received or receivable resulting from the
imposition of or a change in the rate of taxes or similar charges), then, upon
demand to the Borrower by the Letter of Credit Issuer or such Bank (a copy of
which notice shall be sent by the Letter of Credit Issuer or such Bank to the
Agent), the Borrower shall pay to the Letter of Credit Issuer or such Bank such
additional amount or amounts as will compensate the Letter of Credit Issuer or
such Bank for such increased cost or reduction. A certificate submitted to the
Borrower by the Letter of Credit Issuer or such Bank, as the case may be (a copy
of which certificate shall be sent by the Letter of Credit Issuer or such Bank
to the Agent), setting forth the basis for the determination of such additional
amount or amounts necessary to compensate the Letter of Credit Issuer or such
Bank as aforesaid shall be conclusive and binding on the Borrower absent
manifest error, although the failure to deliver any such certificate shall not
release or diminish any of the Borrower's obligations to pay additional amounts
pursuant to this Section 2.06 upon the subsequent receipt thereof.
SECTION 3. FEES; COMMITMENTS.
1.031 FEES. (a) The Borrower agrees to pay to the Agent a
commitment commission ("AR Commitment Commission") for the account of each Non-
Defaulting Bank with an AR Commitment for the period from and including the
Operative Date to, but not including, the AR Termination Date, or, if earlier,
the date upon which the Total AR Commitment has been terminated, computed at a
rate for each day equal to 1/2 of 1% per annum on such Bank's unutilized AR
Commitment on such day provided that the first payment of AR Commitment
Commission under this Agreement shall be accompanied by the payment of all AR
Commitment Commission accrued but unpaid under the Consolidated Credit Agreement
as of the Operative Date. Such AR Commitment Commission shall be due and
payable in arrears on the last Business Day of each February, May, August and
November and on the AR Termination Date.
(b) The Borrower agrees to pay to the Agent a commitment commission
("RC Commitment Commission") for the account of each Non-Defaulting Bank with a
Revolving Commitment for the period from and including the Operative Date to,
but not including, the Expiry Date, or, if earlier, the date upon which the
Total Revolving Commitment has been terminated, computed at a rate for each day
equal to 1/2 of 1% per annum on such Bank's Unutilized Revolving Commitment on
such day provided that the first payment of RC Commitment Commission under the
Agreement shall be accompanied by the payment of all RC Commitment Commission
accrued but unpaid under the Consolidated Credit Agreement as of the Operative
Date. Such RC Commitment Commission shall be due and payable in arrears on the
last Business Day of each February, May, August and November and on the
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Expiry Date, or, if earlier, the date upon which the Total Revolving Commitment
is terminated.
(c) The Borrower agrees to pay to the Agent for the account of each
Non-Defaulting Bank with a Revolving Commitment PRO RATA on the basis of their
respective Adjusted RC Percentages, a fee in respect of each Letter of Credit
(the "Letter of Credit Fee") computed for each day at the rate equal to the
Applicable Eurodollar Margin then in effect on the Stated Amount of such Letter
of Credit on such day provided that the first payment of the Letter of Credit
Fee under the Agreement shall be accompanied by the payment of all Letter of
Credit Fees accrued but unpaid under the Consolidated Credit Agreement as of the
Operative Date. Accrued Letter of Credit Fees shall be due and payable
quarterly in arrears on the last Business Day of each February, May, August and
November of each year and on the date upon which the Total Revolving Commitment
is terminated.
(d) The Borrower agrees to pay directly to the Letter of Credit
Issuer a fee in respect of each Letter of Credit (the "Facing Fee") computed for
each day at the rate of 1/4 of 1% per annum on the Stated Amount of such Letter
of Credit on such day provided that (x) in no event shall the annual Facing Fee
be less than $500 and (y) the first payment of Facing Fee under the Agreement
shall be accompanied by the payment of all Facing Fees accrued but unpaid under
the Consolidated Credit Agreement as of the Operative Date. Accrued Facing Fees
shall be due and payable quarterly in arrears on the last Business Day of each
February, May, August and November of each year and on the date upon which the
Total Revolving Commitment is terminated.
(e) The Borrower agrees to pay directly to the Letter of Credit
Issuer upon each issuance of, payment under, and/or amendment of, a Letter of
Credit such amount as shall at the time of such issuance, payment or amendment
be the administrative charge which the Letter of Credit Issuer is customarily
charging for issuances of, payments under or amendments of, letters of credit
issued by it.
(f) The Borrower shall pay to the Agent for its own account such
other fees as agreed to between the Borrower and the Agent, when and as due.
(g) All computations of Fees shall be made in accordance with Section
12.07(b).
1.032 VOLUNTARY REDUCTION OF COMMITMENTS. Upon at least three
Business Days' prior written notice (or telephonic notice confirmed in writing)
to the Agent at its Notice Office (which notice the Agent shall promptly
transmit to each of the Banks), the Borrower shall have the right, without
premium or penalty, to terminate or partially reduce the unutilized Total AR
Commitment and/or the Unutilized Total Revolving Commitment, provided that (w)
any such termination shall apply to proportionately and permanently reduce
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the AR Commitment and/or Revolving Commitment, as the case may be, of each Bank,
(x) no such reduction shall reduce any Non-Defaulting Bank's AR Commitment to an
amount that is less than the outstanding AR Loans of such Bank, (y) no such
reduction shall reduce any Non-Defaulting Bank's Revolving Commitment to an
amount that is less than the sum of (A) the outstanding Revolving Loans of such
Bank and (B) such Bank's Adjusted RC Percentage of outstanding Swingline Loans
and of Letter of Credit Outstandings and (z) any partial reduction pursuant to
this Section 3.02 of either the Total AR Commitment or the Total Revolving
Commitment shall be in the amount of at least $1,000,000.
1.033 MANDATORY ADJUSTMENTS OF COMMITMENTS, ETC. (a) The Total AR
Commitment shall terminate on the earlier of (x) the AR Termination Date and (y)
the date on which any Change of Control occurs.
(b) The Total Revolving Commitment shall terminate on the earlier of
(x) the Expiry Date and (y) the date on which any Change of Control occurs.
(c) The Total AR Commitment shall be reduced, at the time that any
required mandatory repayment of AR Loans would be made prior to the AR
Termination Date pursuant to Section 4.02(A)(c), (e) or (f) if AR Loans were
then outstanding, in the amount of such required repayment (determined as if an
unlimited amount of AR Loans were then outstanding).
(d) Each partial reduction of the Total AR Commitment pursuant to
this Section 3.03 shall apply proportionately to the AR Commitment, if any, of
each Bank.
SECTION 4. PAYMENTS.
1.041 VOLUNTARY PREPAYMENTS. The Borrower shall have the right to
prepay Loans in whole or in part, without premium or penalty, from time to time
on the following terms and conditions: (i) the Borrower shall give the Agent at
the Payment Office written notice (or telephonic notice promptly confirmed in
writing) of its intent to prepay the Loans, whether such Loans are AR Loans,
Revolving Loans or Swingline Loans, the amount of such prepayment and (in the
case of Eurodollar Loans) the specific Borrowing(s) pursuant to which made,
which notice shall be given by the Borrower at least one Business Day prior to
the date of such prepayment with respect to Base Rate Loans (except that any
such notice with respect to Swingline Loans may be given prior to 1:00 P.M. (New
York time) on the date of prepayment) and two Business Days prior to the date of
such prepayment with respect to Eurodollar Loans, which notice shall promptly be
transmitted by the Agent to each of the Banks; (ii) each partial prepayment of
any Borrowing shall be in an aggregate principal amount of at least $500,000
and, if greater, in an integral multiple of $100,000, provided that (x)
Swingline Loans may be prepaid in an aggregate amount of at least $250,000 and
(y) no partial prepayment of Eurodollar Loans made pursuant to a Borrowing shall
reduce the
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aggregate principal amount of the Eurodollar Loans outstanding pursuant to such
Borrowing to an amount less than the Minimum Borrowing Amount applicable
thereto; (iii) at the time of any prepayment of Eurodollar Loans pursuant to
this Section 4.01 on any date other than the last day of the Interest Period
applicable thereto, the Borrower shall pay the amounts required pursuant to
Section 1.11; (iv) each prepayment in respect of any Loans made pursuant to a
Borrowing shall be applied PRO RATA among such Loans, provided, that at the
Borrower's election in connection with any prepayment pursuant to this Section
4.01 of (x) AR Loans prior to the AR Termination Date or (y) Revolving Loans,
such prepayment shall not be applied to any AR Loans or Revolving Loans, as the
case may be, of a Defaulting Bank; and (v) each prepayment made after the AR
Termination Date of AR Loans pursuant to this Section 4.01 shall (x) reduce the
remaining Scheduled Repayments on a PRO RATA basis (based upon the then
remaining principal amount of each such Scheduled Repayment) and (y) be
accompanied by a prepayment of the Term Loans in principal amount equal to the
TL Percentage times the principal amount of the AR Loans being repaid.
1.042 MANDATORY PREPAYMENTS.
(A) REQUIREMENTS:
(a) (i) If on any date prior to the AR Termination Date the
aggregate outstanding principal amount of AR Loans made by Non-Defaulting Banks
exceeds the Adjusted Total AR Commitment as then in effect, the Borrower shall
repay on such date the principal of AR Loans of Non-Defaulting Banks in an
aggregate amount equal to such excess.
(ii) If on any date prior to the AR Termination Date the aggregate
outstanding principal amount of the AR Loans made by a Defaulting Bank exceeds
the AR Commitment of such Defaulting Bank, the Borrower shall repay principal of
the AR Loans of such Defaulting Bank in an amount equal to such excess.
(iii) If on any date the sum of the aggregate outstanding principal
amount of Revolving Loans made by Non-Defaulting Banks, Swingline Loans and the
Letter of Credit Outstandings exceeds the Adjusted Total Revolving Commitment as
then in effect, the Borrower shall repay on such date the principal of Swingline
Loans, and if no Swingline Loans are or remain outstanding, Revolving Loans of
Non-Defaulting Banks, in an aggregate amount equal to such excess. If, after
giving effect to the repayment of all outstanding Swingline Loans and Revolving
Loans of Non-Defaulting Banks, the aggregate amount of Letter of Credit
Outstandings exceeds the Adjusted Total Revolving Commitment then in effect, the
Borrower shall pay to the Agent an amount in cash and/or Cash Equivalents equal
to such excess and the Agent shall hold such payment as security for the
obligations of the Borrower hereunder pursuant to a cash collateral agreement to
be entered into in form and substance satisfactory to the Agent (which shall
permit certain investments in Cash
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Equivalents satisfactory to the Agent, until the proceeds are applied to the
secured obligations).
(iv) If on any date the aggregate outstanding principal amount of the
Revolving Loans made by a Defaulting Bank exceeds the Revolving Commitment of
such Defaulting Bank, the Borrower shall repay principal of the Revolving Loans
of such Defaulting Bank in an amount equal to such excess.
(b) On each date set forth below, the Borrower shall be required to
repay the Applicable Percentage of the principal amount of AR Loans set forth
opposite such date (each such repayment, a "Scheduled Repayment").
Date Amount
---- ------
December 31, 1999 $10,625,000
March 31, 2000 $10,625,000
June 30, 2000 $10,625,000
September 30, 2000 $10,625,000
December 31, 2000 $13,281,250
March 31, 2001 $13,281,250
June 30, 2001 $13,281,250
September 30, 2001 $13,281,250
December 31, 2001 $14,609,375
March 31, 2002 $14,609,375
June 30, 2003 $14,609,375
September 30, 2002 $14,609,375
December 31, 2002 $14,609,375
March 31, 2003 $14,609,375
June 30, 2003 $14,609,375
AR Maturity Date $14,609,375
(c) On the Business Day following the date of receipt thereof by
Holdings, the Borrower and/or any of its Subsidiaries of the Cash Proceeds from
any Asset Sale, an amount equal to the AR Percentage of the Net Cash Proceeds
from such Asset Sale shall be applied as a mandatory repayment of the principal
of the then outstanding AR Loans, provided that such Net Cash Proceeds from
Permitted Asset Sales shall not be required to be used to so repay Loans to the
extent the Borrower elects, as hereinafter provided, to cause such Net Cash
Proceeds to be reinvested in Reinvestment Assets (a "Reinvestment Election").
The Borrower may exercise its Reinvestment Election (within the parameters
specified in the preceding sentence) with respect to an Asset Sale if (x) no
Default or Event of Default exists and (y) the Borrower delivers a Reinvestment
Notice to the Agent on the Business Day following the date of the consummation
of the respective Asset Sale, with such Reinvestment
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Election being effective with respect to the Net Cash Proceeds of such Asset
Sale equal to the Anticipated Reinvestment Amount specified in such Reinvestment
Notice.
(d) On the date of the receipt thereof by Holdings or the Borrower,
as the case may be, an amount equal to 75% of the AR Percentage of the cash
proceeds (net of underwriting discounts and commissions and other reasonable
costs associated therewith) of any sale or issuance of equity by Holdings or the
Borrower, respectively (other than equity issued to management and other
employees of Holdings, the Borrower or its Subsidiaries, the exercise of any
warrants outstanding on the Operative Date and/or any amount of cash received by
Holdings or the Borrower in connection with any capital contributions made by
any of the Designated UOH Stockholders or, in the case of the Borrower, by
Holdings) shall be applied as a mandatory repayment of the principal of the then
outstanding AR Loans provided that the first $5,000,000 of such proceeds in the
aggregate do not have to be so applied to repay AR Loans or Term Loans.
(e) On each date which is 90 days after the last day of each fiscal
year of the Borrower (commencing with the fiscal year ending on December 31,
1999), 50% of the AR Percentage of Excess Cash Flow for the fiscal year then
last ended shall be applied as a mandatory repayment of the principal of the
then outstanding AR Loans.
(f) On the Reinvestment Prepayment Date with respect to a
Reinvestment Election, an amount equal to the AR Percentage of the Reinvestment
Prepayment Amount, if any, for such Reinvestment Election shall be applied as a
repayment of the principal of the then outstanding AR Loans.
(g) On the date on which any Change of Control occurs, the
outstanding principal amount of all Loans shall become due and payable in full.
(B) APPLICATION:
(a) Each mandatory repayment made after the AR Termination Date of AR
Loans pursuant to Section 4.02(A) (other than pursuant to clause (a) or (b)
thereof) shall be applied to reduce the Scheduled Repayments on a PRO RATA basis
(based upon the then remaining outstanding principal amount of each such
Scheduled Repayment).
(b) With respect to each prepayment of Loans required by Section
4.02, the Borrower may designate the Types of Loans which are to be prepaid and
the specific Borrowing(s) under the affected Facility pursuant to which made,
provided that (i) Eurodollar Loans may so be designated for prepayment pursuant
to this Section 4.02 only on the last day of an Interest Period applicable
thereto unless all Eurodollar Loans made pursuant to such Facility with Interest
Periods ending on such date of required prepayment and all Base Rate Loans made
pursuant to such Facility have been paid in full; (ii) if any prepayment of
Eurodollar
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Loans made pursuant to a single Borrowing shall reduce the outstanding Loans
made pursuant to such Borrowing to an amount less than the Minimum Borrowing
Amount for such Borrowing, such Borrowing shall be immediately converted into
Base Rate Loans; (iii) each prepayment of any AR Loans or Revolving Loans made
by Non-Defaulting Banks pursuant to a Borrowing shall be applied PRO RATA among
such AR Loans or Revolving Loans, as the case may be; and (iv) each prepayment
of any AR Loans or Revolving Loans made by Defaulting Banks pursuant to a
Borrowing shall be applied PRO RATA among such AR Loans or Revolving Loans, as
the case may be. In the absence of a designation by the Borrower as described
in the preceding sentence, the Agent shall, subject to the above, make such
designation in its sole discretion with a view, but no obligation, to minimize
breakage costs owing under Section 1.11.
1.043 METHOD AND PLACE OF PAYMENT. Except as otherwise specifically
provided herein, all payments under this Agreement shall be made to the Agent
for the ratable (based on its PRO RATA share) account of the Banks entitled
thereto, not later than 1:00 P.M. (New York time) on the date when due and shall
be made in immediately available funds and in lawful money of the United States
of America at the Payment Office, it being understood that written notice by the
Borrower to the Agent to make a payment from the funds in the Borrower's account
at the Payment Office shall constitute the making of such payment to the extent
of such funds held in such account. Any payments under this Agreement which are
made later than 1:00 P.M. (New York time) shall be deemed to have been made on
the next succeeding Business Day. Whenever any payment to be made hereunder
shall be stated to be due on a day which is not a Business Day, the due date
thereof shall be extended to the next succeeding Business Day and, with respect
to payments of principal, interest shall be payable during such extension at the
applicable rate in effect immediately prior to such extension.
1.044 NET PAYMENTS. (a) All payments made by the Borrower
hereunder, under any Note or any other Credit Document, will be made without
setoff, counterclaim or other defense. Except as provided for in Section
4.04(b), all such payments will be made free and clear of, and without deduction
or withholding for, any present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by any
jurisdiction or by any political subdivision or taxing authority thereof or
therein (but excluding, except as provided in the second succeeding sentence,
any tax imposed on or measured by the net income (or any franchise tax) of a
Bank pursuant to the laws of the jurisdiction in which the principal office or
applicable lending office of such Bank is located or under the laws of any
political subdivision or taxing authority of any such jurisdiction in which the
principal office or applicable lending office of such Bank is located) and all
interest, penalties or similar liabilities with respect thereto (collectively,
"Taxes"). If any Taxes are so levied or imposed, the Borrower agrees to pay the
full amount of such Taxes and such additional amounts as may be necessary so
that every payment of all amounts due hereunder, under any Note or under any
other Credit Document, after withholding or
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deduction for or on account of any Taxes, will not be less than the amount
provided for herein or in such Note or in such other Credit Document. If any
amounts are payable in respect of Taxes pursuant to the preceding sentence, then
the Borrower shall also reimburse each Bank, upon the written request of such
Bank, for taxes imposed on or measured by the net income of such Bank pursuant
to the laws of the jurisdiction in which the principal office or applicable
lending office of such Bank is located or of any political subdivision or taxing
authority of any such jurisdiction and for any withholding of income or similar
taxes imposed by the United States of America as such Bank shall determine are
payable by, or withheld from, such Bank in respect of Taxes paid to or on behalf
of such Bank pursuant to this or the preceding sentence. The Borrower will
furnish to the Agent within 45 days after the date the payment of any Taxes, or
any withholding or deduction on account thereof, is due pursuant to applicable
law certified copies of tax receipts evidencing such payment by the Borrower.
The Borrower will indemnify and hold harmless the Agent and each Bank, and
reimburse the Agent or such Bank upon its written request, for the amount of any
Taxes so levied or imposed and paid or withheld by such Bank.
(b) Each Bank which is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) for Federal income tax purposes
agrees (i) to provide to the Borrower on or prior to the Operative Date two
original signed copies of Internal Revenue Service Form 4224 or Form 1001
certifying to such Bank's entitlement to a complete exemption from United States
withholding tax with respect to payments to be made under this Agreement, under
any Note and under any other Credit Document and (ii) that, (x) to the extent
legally entitled to do so, with respect to a Bank that is an assignee or
transferee of an interest under this Agreement pursuant to Section 12.04 hereof
(unless the respective Bank was already a Bank hereunder immediately prior to
such assignment or transfer), upon the date of such assignment or transfer to
such Bank, and (y) with respect to any Bank which is not a United States person
(as such term is defined in Section 7701(a)(30) of the Code) for U.S. Federal
income tax purposes (including, without limitation, any assignee or transferee),
from time to time, upon the reasonable request by the Borrower or the Agent
after the Operative Date, such Bank will provide to each of the Borrower and the
Agent two original signed copies of Internal Revenue Service Form 4224 or Form
1001 (or any successor forms) certifying to such Bank's entitlement to a
complete exemption from, or reduction in, United States withholding tax with
respect to payments to be made under this Agreement, under any Note and under
any other Credit Document. Notwithstanding anything to the contrary contained
in Section 4.04(a), the Borrower shall be entitled, to the extent it is required
to do so by law, to deduct or withhold income or other similar taxes imposed by
the United States (or any political subdivision or taxing authority thereof or
therein) from interest, fees or other amounts payable hereunder (without any
obligation under Section 4.04(a) to pay the respective Bank such taxes or any
additional amounts with respect thereto) for the account of any Bank which is
not a United States person (as such term is defined in Section 7701(a)(30) of
the Code) for United States federal income tax purposes and which has not
provided to the Borrower such forms required to be provided to the
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Borrower by a Bank pursuant to the first sentence of this Section 4.04(b),
provided that if the Borrower shall so deduct or withhold any such taxes, it
shall provide a statement to the Agent and such Bank, setting forth the amount
of such taxes so deducted or withheld, the applicable rate and any other
information or documentation which such Bank may reasonably request for
assisting such Bank in obtaining any allowable credits or deductions for the
taxes so deducted or withheld in the jurisdiction or jurisdictions in which such
Bank is subject to tax. Notwithstanding anything to the contrary contained in
the preceding sentence, the Borrower agrees to indemnify each Bank in the manner
set forth in Section 4.04(a) in respect of any amounts deducted or withheld by
it as described in the previous sentence as a result of any changes after the
Operative Date in any applicable law, treaty, governmental rule, regulation,
guideline or order, or in the interpretation thereof, relating to the deducting
or withholding of income or similar Taxes.
SECTION 5. CONDITIONS PRECEDENT.
1.051 OPERATIVE DATE. This Agreement shall become effective on the
date (the "Operative Date") which is the date on which the following conditions
shall first have been satisfied.
(a) Each of the Borrower and each Bank shall have duly executed a
copy of this Agreement (whether the same or different copies) and shall
have delivered (including by way of facsimile transmission of the signature
page hereof) the same to the Agent at its Notice Office.
(b) The Agent shall have received an opinion, addressed to the Agent,
and each of the Banks and dated the Operative Date, from Winston & Strawn,
counsel to Holdings and the Borrower, which opinion shall cover such
matters relating to the Agreement as reasonably requested by, and shall be
reasonably satisfactory to, the Agent.
(c) Concurrently with the effectiveness of this Agreement, the Term
Loan Agreement shall have become effective in accordance with its terms,
promptly followed by the making of the Term Loans thereunder and the
application of the proceeds of the Term Loans to repay outstanding AR
Loans.
1.052 ALL CREDIT EVENTS. The obligation of the Banks to make each
Loan and of the Letter of Credit Issuer to issue each Letter of Credit is
subject, at the time thereof, to the satisfaction of the following conditions:
(a) NOTICE OF BORROWING. The Agent shall have received a Notice of
Borrowing meeting the requirements of Section 1.02 or a Letter of Credit Request
meeting the requirements of Section 2.03.
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(b) NO DEFAULT; REPRESENTATIONS AND WARRANTIES. At the time of each
Credit Event and also after giving effect thereto, (i) there shall exist no
Default or Event of Default and (ii) all representations and warranties
contained herein or in the other Credit Documents shall be true and correct in
all material respects with the same effect as though such representations and
warranties had been made on and as of the date of such Credit Event, except to
the extent that such representations and warranties expressly relate to an
earlier date.
(c) TESTED BORROWINGS. At the time of incurring any Tested
Borrowing, each of the covenants set forth in Sections 8.11 through 8.14 shall
have been satisfied as of, and no Event of Default under Section 9.08(B) or (C)
shall exist as of, the Measurement Date relating to such Tested Borrowing
determined on a PRO FORMA basis as if such Tested Borrowing occurred on such
Measurement Date and, in the case of a Tested Borrowing financing a Permitted
Acquisition, such Permitted Acquisition was consummated on the first day of the
12-month period ending on such Measurement Date.
The acceptance of the benefits of each Credit Event shall constitute a
representation and warranty by the Borrower to the Agent and each of the Banks
that all of the applicable conditions specified above exist as of that time.
SECTION 6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. In order to
induce the Banks to enter into this Agreement and to make the Loans, the
Borrower makes the following representations and warranties to, and agreements
with, the Banks, all of which shall survive the execution and delivery of this
Agreement and the making of the Loans.
1.061 CORPORATE STATUS. Each of Holdings, the Borrower and its
Subsidiaries (i) is a duly organized and validly existing corporation in good
standing under the laws of the jurisdiction of its organization and has the
corporate power and authority to own its property and assets and to transact the
business in which it is engaged and presently proposes to engage and (ii) has
duly qualified and is authorized to do business and is in good standing in all
jurisdictions where it is required to be so qualified and where the failure to
be so qualified would have a Material Adverse Effect.
1.062 CORPORATE POWER AND AUTHORITY. Each Credit Party has the
corporate power and authority to execute, deliver and carry out the terms and
provisions of the Transaction Documents to which it is a party and has taken all
necessary corporate action to authorize the execution, delivery and performance
of the Credit Documents to which it is a party. Each Credit Party has duly
executed and delivered each Credit Document to which it is a party and each such
Credit Document constitutes the legal, valid and binding obligation of such
Credit Party enforceable in accordance with its terms.
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1.063 NO VIOLATION. Neither the execution, delivery and performance
by any Credit Party of the Credit Documents to which it is a party nor
compliance with the terms and provisions thereof, nor the consummation of the
transactions contemplated therein (i) will contravene any applicable provision
of any law, statute, rule, regulation, order, writ, injunction or decree of any
court or governmental instrumentality, (ii) will conflict or be inconsistent
with or result in any breach of, any of the terms, covenants, conditions or
provisions of, or constitute a default under, or (other than pursuant to the
Security Documents) result in the creation or imposition of (or the obligation
to create or impose) any Lien upon any of the property or assets of any Credit
Party or any of its Subsidiaries pursuant to the terms of any indenture,
mortgage, deed of trust, agreement or other instrument to which Holdings, the
Borrower or any of its Subsidiaries is a party or by which it or any of its
property or assets are bound or to which it may be subject or (iii) will violate
any provision of the Charter or By-Laws of any Credit Party or any of its
Subsidiaries.
1.064 LITIGATION. There are no actions, suits or proceedings pending
or, to the Borrower's knowledge, threatened with respect to Holdings, the
Borrower or any of its Subsidiaries (i) that are likely to have a Material
Adverse Effect or (ii) that could reasonably be expected to have a material
adverse effect on the rights or remedies of the Banks or on the ability of the
Credit Parties to perform their obligations to them under the Credit Documents.
1.065 USE OF PROCEEDS; MARGIN REGULATIONS. (a) The proceeds of AR
Loans may be used to finance Permitted Acquisitions.
(b) The proceeds of Revolving Loans and Swingline Loans may be used
for the general corporate and working capital purposes of the Borrower and its
Subsidiaries.
(c) Neither the making or continuance of any Loan hereunder, nor the
use of the proceeds thereof, will violate or be inconsistent with the provisions
of Regulation G, T, U or X of the Board of Governors of the Federal Reserve
System and no part of the proceeds of any Loan will be used to purchase or carry
any Margin Stock in violation of Regulation U or to extend credit for the
purpose of purchasing or carrying any Margin Stock.
1.066 GOVERNMENTAL APPROVALS. Except for filings and recordings in
connection with the Security Documents, and those items listed on Annex III, no
order, consent, approval, license, authorization, or validation of, or filing,
recording or registration with, or exemption by, any foreign or domestic
governmental or public body or authority, or any subdivision thereof, that has
not been obtained or made is required to authorize or is required in connection
with (i) the execution, delivery and performance of any Credit Document or (ii)
the legality, validity, binding effect or enforceability of any Credit Document.
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1.067 INVESTMENT COMPANY ACT. None of Holdings, the Borrower nor any
of its Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
1.068 PUBLIC UTILITY HOLDING COMPANY ACT. None of Holdings, the
Borrower or any of its Subsidiaries is a "holding company," or a "subsidiary
company" of a "holding company," or an "affiliate" of a "holding company," or of
a "subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
1.069 TRUE AND COMPLETE DISCLOSURE. All factual information (taken
as a whole) heretofore or contemporaneously furnished by or on behalf of
Holdings, the Borrower or any of its Subsidiaries in writing to the Agent or any
Bank for purposes of or in connection with this Agreement or any transaction
contemplated herein is, and all other such factual information (taken as a
whole) hereafter furnished by or on behalf of any such Person in writing to any
Bank will be, true and accurate in all material respects on the date as of which
such information is dated or certified and not incomplete by omitting to state
any material fact necessary to make such information (taken as a whole) not
misleading at such time in light of the circumstances under which such
information was provided. The projections and PRO FORMA financial information
contained in such materials are based on good faith estimates and assumptions
believed by such Persons to be reasonable at the time made, it being recognized
by the Banks that such projections as to future events are not to be viewed as
facts and that actual results during the period or periods covered by any such
projections may differ from the projected results. There is no fact known to
the Borrower which would have a Material Adverse Effect, which has not been
disclosed herein or in such other documents, certificates and statements
furnished to the Banks for use in connection with the transactions contemplated
hereby.
6.10 FINANCIAL CONDITION; FINANCIAL STATEMENTS. (a) On and as of the
Operative Date, on a PRO FORMA basis after giving effect to all Indebtedness
incurred, and to be incurred, and Liens created, and to be created, in
connection therewith, (x) the sum of the assets, at a fair valuation, of the
Borrower and its Subsidiaries, and of Holdings and is Subsidiaries, taken as a
whole will exceed their debts, (y) the Borrower and its Subsidiaries, and
Holdings and its Subsidiaries, taken as a whole will not have incurred or
intended to, or believe that they will, incur debts beyond their ability to pay
such debts as such debts mature and (z) the Borrower and its Subsidiaries, and
Holdings and its Subsidiaries, taken as a whole will not have unreasonably small
capital with which to conduct their business. For purposes of this Section
6.10, "debt" means any liability on a claim, and "claim" means (i) right to
payment whether or not such a right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured; or (ii) right to an equitable remedy for
breach of performance if such breach gives
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rise to a payment, whether or not such right to an equitable remedy is reduced
to judgment, fixed, contingent, matured, unmatured, disputed, undisputed,
secured or unsecured.
(b)(i) The consolidated balance sheet of Holdings and of the Borrower
at December 31, 1995 and December 31, 1996 and the related consolidated
statements of operations and cash flows of Holdings and of the Borrower for the
fiscal years ended as of said dates, which have been examined by Price
Waterhouse LLP, independent certified public accountants, who delivered an
unqualified opinion in respect therewith and (ii) the Financial Statements (as
defined in the Acquisition Agreement), copies of which have heretofore been
furnished to each Bank, present fairly the financial position of such entities
at the dates of said statements and the results for the periods covered thereby
at the date thereof) in accordance with GAAP, except to the extent provided in
the notes to said financial statements. All such financial statements have been
prepared in accordance with generally accepted accounting principles and
practices consistently applied except to the extent provided in the notes to
said financial statements. Nothing has occurred since December 31, 1996 that
has had or could reasonably be expected to have a Material Adverse Effect.
(c) Except as reflected in the financial statements and the notes
thereto described in Section 6.10(b), there were as of the Operative Date no
liabilities or obligations with respect to Holdings, the Borrower or any of its
Subsidiaries of a nature (whether absolute, accrued, contingent or otherwise and
whether or not due) which, either individually or in aggregate, would be
material to the Borrower and its Subsidiaries, and to Holdings and its
Subsidiaries, taken as a whole, except as incurred in the ordinary course of
business consistent with past practices subsequent to December 31, 1996.
6.11 SECURITY INTERESTS. On and after the Operative Date (or the
date of the execution and delivery thereof, in the case of all Security
Documents first executed after such date), each of the Security Documents
create, as security for the Obligations purported to be secured thereby, a valid
and enforceable perfected security interest in and Lien on all of the Collateral
subject thereto, superior to and prior to the rights of all third Persons and
subject to no other Liens (except (x) that the Security Agreement Collateral may
be subject to the security interests evidenced by Permitted Liens relating
thereto and (y) the Mortgaged Properties may be subject to Permitted
Encumbrances relating thereto), in favor of the Collateral Agent for the benefit
of the Banks. No filings or recordings are required in order to perfect the
security interests created under any Security Document except for filings or
recordings required in connection with any such Security Document (other than
the Pledge Agreements) which shall have been made upon prior to (or are the
subject of arrangements, satisfactory to the Agent, for filing on or promptly
after the date of) the execution and delivery thereof.
6.12 TAX RETURNS AND PAYMENTS. Each of Holdings, the Borrower and
its Subsidiaries has filed all federal income tax returns and all other material
tax returns,
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domestic and foreign, required to be filed by it and has paid all material taxes
and assessments payable by it which have become due, other than those not yet
delinquent and except for those contested in good faith. Holdings, the Borrower
and its Subsidiaries have paid, or have provided adequate reserves (in the good
faith judgment of the management of the Borrower) for the payment of, all
federal, state and foreign income taxes applicable for all prior fiscal years
and for the current fiscal year to the date hereof.
6.13 COMPLIANCE WITH ERISA. Each Plan is in substantial compliance
with ERISA and the Code; no Reportable Event has occurred with respect to a
Plan; no Plan is insolvent or in reorganization; no Plan has an Unfunded Current
Liability; no Plan has an accumulated or waived funding deficiency, has
permitted decreases in its funding standard account or has applied for an
extension of any amortization period within the meaning of Section 412 of the
Code; neither the Borrower, nor any Subsidiary nor any ERISA Affiliate has
incurred any material liability to or on account of a Plan pursuant to Section
409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or
Section 401(a)(29), 4971, 4975 or 4980 of the Code or expects to incur any
liability (including any indirect, contingent or secondary liability) under any
of the foregoing Sections with respect to any Plan; no proceedings have been
instituted to terminate or appoint a trustee to administer any Plan; no
condition exists which presents a material risk to the Borrower or any
Subsidiary or any ERISA Affiliate of incurring a liability to or on account of a
Plan pursuant to the foregoing provisions of ERISA and the Code; using actuarial
assumptions and computation methods consistent with Part 1 of subtitle E of
Title IV of ERISA, the aggregate liabilities of the Borrower and its
Subsidiaries and its ERISA Affiliates to all Plans which are multiemployer plans
(as defined in Section 4001(a)(3) of ERISA) in the event of a complete
withdrawal therefrom, as of the close of the most recent fiscal year of each
such Plan ended prior to the date of the most recent Credit Event, would not
exceed $150,000; no lien imposed under the Code or ERISA on the assets of the
Borrower or any Subsidiary or any ERISA Affiliate exists or is likely to arise
on account of any Plan; and Holdings, the Borrower and its Subsidiaries do not
maintain or contribute to any employee welfare benefit plan (as defined in
Section 3(1) of ERISA) which provides benefits to retired employees (other than
as required by Section 601 of ERISA) or any employee pension benefit plan (as
defined in Section 3(2) of ERISA), except to the extent that all events
described in the preceding clauses of this Section 6.13 and then in existence
would not, in the aggregate, have or be likely to have a Material Adverse
Effect. With respect to Plans that are multiemployer plans (within the meaning
of Section 4001(a)(3) of ERISA) the representations and warranties in this
Section 6.13 are made to the best knowledge of the Borrower.
6.14 SUBSIDIARIES. (a) Annex IV hereto lists each Subsidiary of the
Borrower existing on the Operative Date. Except as set forth on Annex IV, the
Borrower owns 100% of the outstanding capital stock of each such Subsidiary.
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(b) There are no restrictions on the Borrower or any of its
Subsidiaries which prohibit or otherwise restrict the transfer of cash or other
assets from any Subsidiary of the Borrower to the Borrower, other than
prohibitions or restrictions existing under or by reason of (i) this Agreement,
the other Credit Documents, the Term Loan Documents or any Subordinated Debt
Indenture, (ii) applicable law, (iii) customary non-assignment provisions
entered into in the ordinary course of business and consistent with past
practices, (iv) any restriction or encumbrance with respect to a Subsidiary of
the Borrower imposed pursuant to an agreement which has been entered into for
the sale or disposition of all or substantially all of the capital stock or
assets of such Subsidiary, so long as such sale or disposition is permitted
under this Agreement, and (v) any documents or instruments governing the terms
of any Indebtedness or other obligations secured by Liens permitted by Section
8.03, provided that such prohibitions or restrictions apply only to the assets
subject to such Liens.
6.15 PATENTS, ETC. The Borrower and each of its Subsidiaries have
obtained all material patents, trademarks, service marks, trade names,
copyrights, licenses and other rights, free from burdensome restrictions, that
are necessary for the operation of their businesses taken as a whole as
presently conducted and as proposed to be conducted.
6.16 POLLUTION AND OTHER REGULATIONS. (a) Each of Holdings, the
Borrower and its Subsidiaries is in compliance with all Environmental Laws
governing its business for which failure to comply is reasonably likely to have
a Material Adverse Effect, and neither Holdings, the Borrower nor any of its
Subsidiaries is liable for any material penalties, fines or forfeitures for
failure to comply with any of the foregoing in the manner set forth above. All
licenses, permits, registrations or approvals required for the business of the
Borrower and each of its Subsidiaries, as conducted as of the Restatement
Effective Date, under any Environmental Law have been secured and the Borrower
and each of its Subsidiaries is in substantial compliance therewith, except such
licenses, permits, registrations or approvals the failure to secure or to comply
therewith is not likely to have a Material Adverse Effect. Neither Holdings,
the Borrower nor any of its Subsidiaries is in noncompliance with, breach of or
default under any applicable writ, order, judgment, injunction, or decree to
which Holdings, the Borrower or such Subsidiary is a party or which would affect
the ability of the Borrower or such Subsidiary to operate any real property and
no event has occurred and is continuing which, with the passage of time or the
giving of notice or both, would constitute noncompliance, breach of or default
thereunder, except in each such case, such noncompliance, breaches or defaults
as are not likely to, in the aggregate, have a Material Adverse Effect. There
are as of the Restatement Effective Date no Environmental Claims pending or, to
the best knowledge of the Borrower, threatened, which (a) challenge the
validity, term or entitlement of the Borrower or any of its Subsidiaries for any
permit, license, order or registration required for the operation of any
facility under the Environmental Laws which the Borrower or any of its
Subsidiaries operates and (b) wherein an unfavorable decision, ruling or finding
would be reasonably likely to have a Material Adverse Effect. There are no
facts, circumstances, conditions or occurrences concerning Holdings, the
Borrower or any of its
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Subsidiaries, any of their operations or on any Real Property or, to the
knowledge of the Borrower, on any property adjacent to any such Real Property
that could reasonably be expected (i) to form the basis of an Environmental
Claim against the Borrower, any of its Subsidiaries or any Real Property of the
Borrower or any of its Subsidiaries, or (ii) to cause such Real Property to be
subject to any restrictions on the ownership, occupancy, use or transferability
of such Real Property under any Environmental Law, except in each such case,
such Environmental Claims or restrictions that individually or in the aggregate
are not reasonably likely to have a Material Adverse Effect.
(b) Hazardous Materials have not at any time been (i) generated,
used, treated or stored on, or transported to or from, any Real Property of the
Borrower or any of its Subsidiaries or (ii) released on any Real Property, in
each case where such occurrence or event individually or in the aggregate is
reasonably likely to have a Material Adverse Effect.
6.17 PROPERTIES. The Borrower and each of its Subsidiaries have good
and marketable title to all properties owned by them, including all property
reflected in the consolidated balance sheet of the Borrower and its
Subsidiaries, and the Financial Statements, referred to in Section 6.10(b), free
and clear of all Liens, other than (i) as referred to in the consolidated
balance sheet, or the Financial Statements, or, in either case, in the notes
thereto or (ii) otherwise permitted by Section 8.03. Annex V contains a true
and complete list of each Real Property owned or leased by the Borrower or any
of its Subsidiaries on the Operative Date (other than properties that are solely
sign locations) and the type of interest therein held by the Borrower or the
respective Subsidiary. Holdings owns no properties or assets (other than the
Tax Sharing Agreement) other than all of the capital stock of the Borrower.
6.18 LABOR RELATIONS. Holdings, the Borrower and its Subsidiaries
are not engaged in any unfair labor practice that could reasonably be expected
to have a Material Adverse Effect. There is (i) no unfair labor practice
complaint pending against Holdings, the Borrower or any of its Subsidiaries or
threatened against any of them, before the National Labor Relations Board, and
no grievance or arbitration proceeding arising out of or under any collective
bargaining agreement is so pending against any of them or threatened against any
of them, (ii) no strike, labor dispute, slowdown or stoppage pending against
Holdings, the Borrower or any of its Subsidiaries or threatened against any of
them and (iii) no union representation question existing with respect to the
employees of Holdings, the Borrower or any of its Subsidiaries and no union
organizing activities are taking place, except with respect to any matter
specified in clause (i), (ii) or (iii) above, either individually or in the
aggregate, such as is not reasonably likely to have a Material Adverse Effect.
6.19 EXISTING INDEBTEDNESS. Annex VI sets forth a true and complete
list of all Indebtedness of Holdings, the Borrower and each of its Subsidiaries
as of the Consolidation Date that is in excess of $5,000 for any one issue and
is to remain outstanding
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thereafter (all such Indebtedness, of whatever size, but excluding Indebtedness
hereunder, the "Existing Indebtedness"), in each case showing the aggregate
principal amount thereof and the name of the respective borrower (or issuer) and
any other entity which directly or indirectly guaranteed such debt.
SECTION 7. AFFIRMATIVE COVENANTS. The Borrower covenants and agrees
that on the Operative Date and thereafter for so long as this Agreement is in
effect and until the Commitments have terminated, no Notes are outstanding and
the Loans, together with interest, Fees and all other Obligations incurred
hereunder, are paid in full:
1.071 INFORMATION COVENANTS. The Borrower will furnish to each Bank:
(a) ANNUAL FINANCIAL STATEMENTS. Within 90 days after the close of
each fiscal year of the Borrower, the consolidated balance sheet of the Borrower
and its Subsidiaries and of Holdings and its Subsidiaries, as at the end of such
fiscal year and the related consolidated statements of income and retained
earnings and of cash flows for such fiscal year, in each case setting forth
comparative consolidated figures for the preceding fiscal year, and examined by
independent certified public accountants of recognized national standing whose
opinion shall not be qualified as to the scope of audit and as to the status of
Holdings, the Borrower or any of its Subsidiaries as a going concern, together
with a certificate of such accounting firm stating that in the course of its
regular audit of the business of Holdings and of the Borrower, which audit was
conducted in accordance with generally accepted auditing standards, such
accounting firm has obtained no knowledge of any Default or Event of Default
which has occurred and is continuing or, if in the opinion of such accounting
firm such a Default or Event of Default has occurred and is continuing, a
statement as to the nature thereof.
(b) QUARTERLY FINANCIAL STATEMENTS. As soon as available and in any
event within 45 days after the close of each of the first three quarterly
accounting periods in each fiscal year, the consolidated balance sheet of the
Borrower and its Subsidiaries and of Holdings and its Subsidiaries, as at the
end of such quarterly period and the related consolidated statements of income
and retained earnings and of cash flows for such quarterly period and for the
elapsed portion of the fiscal year ended with the last day of such quarterly
period, and in each case setting forth comparative consolidated figures for the
related periods in the prior fiscal year, all of which shall be certified by the
chief financial officer or controller of the Borrower or Holdings, as
appropriate, subject to changes resulting from audit and normal year-end audit
adjustments.
(c) MONTHLY REPORTS. As soon as practicable, and in any event within
30 days, after the end of each monthly accounting period of each fiscal year the
consolidated balance sheet of the Borrower and its Subsidiaries and of Holdings
and its Subsidiaries, as at the end of such period, and the related consolidated
statements of income and retained
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earnings for such period, setting forth comparative figures for the
corresponding period of the previous year, all of which shall be certified by
the chief financial officer or controller of the Borrower or Holdings, as
appropriate, subject to changes resulting from audit and normal year-end audit
adjustments.
(d) BUDGETS; ETC. Not more than 60 days after the commencement of
each fiscal year of the Borrower, a budget of the Borrower and its Subsidiaries
in reasonable detail for each of the twelve months of such fiscal year.
Together with each delivery of consolidated financial statements pursuant to
Sections 7.01(a), (b) and (c), a comparison of the current year to date
financial results against the budgets required to be submitted pursuant to this
clause (d) shall be presented.
(e) OFFICER'S CERTIFICATES. (i) At the time of the delivery of the
financial statements provided for in Sections 7.01(a), (b) and (c), a
certificate of the chief financial officer, controller or other Authorized
Officer of the Borrower to the effect that no Default or Event of Default exists
or, if any Default or Event of Default does exist, specifying the nature and
extent thereof, which certificate, shall set forth the calculations required to
establish (I) the Modified Holdings Leverage Ratio for the Relevant
Determination Date occurring on the last day of such fiscal year, quarter or
month, (II) whether the Borrower and its Subsidiaries were in compliance with
the provisions of Sections 8.11, 8.12 and 8.13, as applicable, as at the end of
such fiscal period or year, as the case may be and (III) whether there was any
Event of Default under Section 9.08(B) and/or 9.08(C) as at the end of such
fiscal period.
(ii) At the time of any incurrence of Consolidated Debt of Holdings
and its Subsidiaries at a time when the Margin Reduction Discount is (or based
on the last officer's certificate delivered pursuant to clause (i) above will
be) greater than zero, a certificate of any of the persons specified in clause
(i) above setting forth the calculations establishing the Modified Holdings
Leverage Ratio after giving effect to the incurrence of such Consolidated Debt.
(f) NOTICE OF DEFAULT OR LITIGATION. Promptly, and in any event
within three Business Days after the Borrower obtains knowledge thereof, notice
of (x) the occurrence of any event which constitutes a Default or Event of
Default which notice shall specify the nature thereof, the period of existence
thereof and what action the Borrower proposes to take with respect thereto and
(y) the commencement of or any significant development in any litigation or
governmental proceeding pending against Holdings, the Borrower or any of its
Subsidiaries which is likely to have a Material Adverse Effect or is likely to
have a material adverse effect on the ability of the Borrower to perform its
obligations hereunder or under any other Credit Document.
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(g) AUDITORS' REPORTS. Promptly upon receipt thereof, a copy of each
other final report or "management letter" submitted to Holdings or the Borrower
by its independent accountants in connection with any annual, interim or special
audit made by it of the books of Holdings and/or the Borrower.
(h) ENVIRONMENTAL MATTERS. Promptly upon, and in any event within 20
Business Days after an officer of Holdings, the Borrower or any Subsidiary
obtains knowledge thereof, notice of one or more of the following environmental
matters: (i) any pending or threatened (in writing) material Environmental
Claim against, or for which liability would attach to, the Borrower or any of
its Subsidiaries or any Real Property owned or operated by the Borrower or any
of its Subsidiaries; (ii) any condition or occurrence on or arising from any
Real Property owned or operated by the Borrower or any of its Subsidiaries that
(a) results in material noncompliance by Holdings, the Borrower or any of its
Subsidiaries with any applicable material Environmental Law or (b) would
reasonably be expected to form the basis of a material Environmental Claim
against, or for which liability would attach to, the Borrower or any of its
Subsidiaries or any such Real Property; (iii) any condition or occurrence on any
Real Property owned or operated by the Borrower or any of its Subsidiaries that
could reasonably be expected to cause such Real Property to be subject to any
material restrictions on the ownership, occupancy, use or transferability by the
Borrower or any of its Subsidiaries of such Real Property under any
Environmental Law; and (iv) the taking of any material removal or remedial
action in response to the actual or alleged presence of any Hazardous Material
on any Real Property owned or operated by the Borrower or any of its
Subsidiaries as required by any Environmental Law or any governmental or other
administrative agency, and all such notices shall describe in reasonable detail
the nature of the claim, investigation, condition, occurrence or removal or
remedial action and the Borrower's or such Subsidiary's response thereto.
(i) OTHER INFORMATION. Promptly upon transmission thereof, (i)
copies of any filings and registrations with, and reports to, the Securities and
Exchange Commission or any successor thereto (the "SEC") by Holdings, the
Borrower or any of its Subsidiaries and (ii) with reasonable promptness, such
other information or documents (financial or otherwise) as the Agent on its own
behalf or on behalf of the Required Banks may reasonably request from time to
time.
1.072 BOOKS, RECORDS AND INSPECTIONS. The Borrower will, and will
cause its Subsidiaries to, permit, upon reasonable notice to the chief financial
officer, controller or any other Authorized Officer of the Borrower officers and
designated representatives of the Agent or the Required Banks to visit and
inspect any of the properties or assets of the Borrower and any of its
Subsidiaries in whomsoever's possession, and to examine the books of account of
Holdings, the Borrower and any of its Subsidiaries and discuss the affairs,
finances and accounts of Holdings, the Borrower and of any of its Subsidiaries
with, and be advised as to the same by, its and their officers and independent
accountants, all at such
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reasonable times and intervals and to such reasonable extent as the Agent or the
Required Banks may desire.
1.073 INSURANCE. The Borrower will, and will cause each of its
Subsidiaries to, at all times maintain in full force and effect insurance in
such amounts, covering such risks and liabilities and with such deductibles or
self-insured retentions as are in accordance with normal industry practice,
provided that in no event will any such deductible or self-insured retention in
respect of liability claims or in respect of casualty damage, exceed, in each
such case, (i) $250,000 per occurrence or (ii) $1,000,000 in the aggregate per
fiscal year. At any time that insurance at the levels described in Annex VII is
not being maintained by the Borrower and its Subsidiaries, the Borrower will
notify the Banks in writing thereof and, if thereafter notified by the Agent to
do so, the Borrower will, and will cause its Subsidiaries to, obtain insurance
at such levels at least equal to those set forth in Annex VII to the extent then
generally available (but in any event within the deductible or self-insured
retention limitations set forth in the preceding sentence) or otherwise as are
acceptable to the Agent. The Borrower will, and will cause each of its
Subsidiaries to, furnish on the Operative Date and annually thereafter to the
Agent a summary of the insurance carried together with certificates of insurance
and other evidence of such insurance, if any, naming the Collateral Agent as an
additional insured and/or loss payee.
1.074 PAYMENT OF TAXES. The Borrower will pay and discharge, and
will cause each Subsidiary to pay and discharge, all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits, or
upon any properties belonging to it, prior to the date on which penalties attach
thereto, and all lawful claims which, if unpaid, might become a Lien or charge
upon any properties of Holdings, the Borrower or any of its Subsidiaries,
provided that neither Holdings, the Borrower nor any Subsidiary shall be
required to pay any such tax, assessment, charge, levy or claim which is being
contested in good faith and by proper proceedings if it has maintained adequate
reserves (in the good faith judgment of the management of the Borrower) with
respect thereto in accordance with GAAP.
1.075 CONSOLIDATED CORPORATE FRANCHISES. The Borrower will do, and
will cause each Subsidiary to do, or cause to be done, all things necessary to
preserve and keep in full force and effect its existence, material rights and
authority, provided that any transaction permitted by Section 8.02 will not
constitute a breach of this Section 7.05.
1.076 COMPLIANCE WITH STATUTES, ETC. The Borrower will, and will
cause each Subsidiary to, comply with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of its business and the ownership
of its property other than those the non-compliance with which would not have a
Material Adverse Effect or would not have a
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material adverse effect on the ability of the Borrower to perform its
obligations under any Credit Document.
1.077 ERISA. As soon as possible and, in any event, within 10 days
after the Borrower or any of its Subsidiaries or ERISA Affiliates knows or has
reason to know of the occurrence of any of the following, the Borrower will
deliver to each of the Banks a certificate of the chief financial officer of the
Borrower setting forth details as to such occurrence and such action, if any,
which the Borrower, such Subsidiary or such ERISA Affiliate is required or
proposes to take, together with any notices required or proposed to be given to
or filed with or by the Borrower, the Subsidiary, the ERISA Affiliate, the PBGC,
a Plan participant (other than notices relating to an individual participant's
benefits) or the Plan administrator with respect thereto: that a Reportable
Event has occurred; that an accumulated funding deficiency has been incurred or
an application is reasonably likely to be or has been made to the Secretary of
the Treasury for a waiver or modification of the minimum funding standard
(including any required installment payments) or an extension of any
amortization period under Section 412 of the Code with respect to a Plan; that a
Plan which has an Unfunded Current Liability has been or may be terminated,
reorganized, partitioned or declared insolvent under Title IV of ERISA; that a
Plan has an Unfunded Current Liability and there is a failure to make a required
contribution, which gives rise to a lien under ERISA or the Code; that
proceedings are reasonably likely to be or have been instituted to terminate a
Plan which has an Unfunded Current Liability; that a proceeding has been
instituted pursuant to Section 515 of ERISA to collect a delinquent contribution
to a Plan; that the Borrower, any Subsidiary or any ERISA Affiliate will or may
incur any liability (including, any contingent or secondary liability) to or on
account of the termination of or withdrawal from a Plan under Section 4062,
4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or with respect to a Plan under
Section 401(a)(29), 4971, 4975 or 4980 of the Code or Section 409, 502(l) or
502(l) of ERISA or that the Borrower or any Subsidiary or Holdings may incur any
material liability pursuant to any employee welfare benefit plan (as defined in
Section 3(1) of ERISA) that provides benefits to retired employees or other
former employees (other than as required by Section 601 of ERISA) or any
employee pension benefit plan (as defined in Section 3(2) of ERISA). Upon
request of a Bank, the Borrower will deliver to such Bank a complete copy of the
annual report (Form 5500) of each Plan required to be filed with the Internal
Revenue Service. In addition to any certificates or notices delivered to the
Banks pursuant to the first sentence hereof, copies of any annual reports and
any other material notices received by Holdings, the Borrower or any Subsidiary
with respect to a Plan shall be delivered to the Banks no later than 10 days
after the later of the date such notice has been filed with the Internal Revenue
Service or the PBGC, given to Plan participants (other than notices relating to
an individual participant's benefits) or received by Holdings, the Borrower or
such Subsidiary.
1.078 GOOD REPAIR. The Borrower will, and will cause each of its
Subsidiaries to, ensure that its properties and equipment used or useful in its
business in
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whomsoever's possession they may be, are kept in good repair, working order and
condition, normal wear and tear excepted, and, subject to Section 8.05, that
from time to time there are made in such properties and equipment all needful
and proper repairs, renewals, replacements, extensions, additions, betterments
and improvements thereto, to the extent and in the manner useful or customary
for companies in similar businesses.
1.079 END OF FISCAL YEARS; FISCAL QUARTERS. The Borrower will, for
financial reporting purposes, cause (i) each of its, and each of its
Subsidiaries' fiscal years to end on December 31 of each year and (ii) each of
its, and each of its Subsidiaries' fiscal quarters to end on March 31, June 30,
September 30 and December 31 of each year.
7.10 ADDITIONAL SECURITY; FURTHER ASSURANCES. (a) No later than 60
days following the Operative Date, the Borrower shall deliver to the Agent a
duly authorized and executed counterpart or counterparts of deeds of trust,
mortgages and similar documents in form and substance reasonably satisfactory to
the Agent (the "Additional Mortgages") covering all of the Real Property owned
by the Borrower not subject to Mortgages on the Operative Date (x) which
Additional Mortgages shall constitute valid and enforceable Liens superior to
and prior to the rights of all third Persons and subject to instruments related
thereto) shall have been duly recorded or filed in such manner and in such
places as are required by law to establish, perfect, preserve and protect the
Liens in favor of the Collateral Agent required to be granted thereunder and all
taxes, fees and other charges payable in connection therewith shall have been
paid in full, with each such Additional Mortgage to be accompanied by mortgage
policies relating thereto reasonably satisfactory to the Agent.
(b) The Borrower will, and will cause the Subsidiary Guarantors to,
grant to the Collateral Agent security interests and mortgages (each a "New
Mortgage") in such owned Real Property (x) of the Borrower acquired (including
as a result of the merger of one or more Subsidiaries with the Borrower) after
the Operative Date or (y) of a Subsidiary Guarantor owned on the date it first
becomes a Subsidiary Guarantor or thereafter acquired, in each case as may be
requested from time to time by the Agent. Such New Mortgages shall be granted
pursuant to documentation reasonably satisfactory in form and substance to the
Agent and shall constitute valid and enforceable Liens superior to and prior to
the rights of all third Persons and subject to no other Liens except as are
permitted by Section 8.03. The New Mortgages or instruments related thereto
shall have been duly recorded or filed in such manner and in such places as are
required by law to establish, perfect, preserve and protect the Liens in favor
of the Collateral Agent for the benefit of the Secured Creditors required to be
granted pursuant to the New Mortgages and all taxes, fees and other charges
payable in connection therewith shall have been paid in full, with each New
Mortgage to be accompanied by mortgage policies related thereto reasonably
satisfactory to the Agent.
(c) The Borrower will, and will cause its Subsidiaries to, at the
expense of the Borrower, make, execute, endorse, acknowledge, file and/or
deliver to the Collateral
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Agent from time to time such vouchers, invoices, schedules, confirmatory
assignments, conveyances, financing statements, transfer endorsements, powers of
attorney, certificates, real property surveys, reports and other assurances or
instruments and take such further steps relating to the collateral covered by
any of the Security Documents as the Collateral Agent may reasonably require.
Furthermore, the Borrower shall cause to be delivered to the Collateral Agent
such opinions of counsel, title insurance and other related documents as may be
requested by the Agent to assure themselves that this Section 7.10 has been
complied with.
(d) The Borrower agrees that each action required above by Section
7.10(b) or (c) shall be completed as soon as possible, but in no event later
than 60 days after such action is requested to be taken by the Agent or the
Required Banks, provided that in no event shall the Borrower be required to take
any action, other than using its reasonable commercial efforts without any
material expenditure, to obtain consents from third parties with respect to its
compliance with this Section 7.10.
7.11 CORPORATE SEPARATENESS. The Borrower will take, and will cause
each of its Subsidiaries to take, all such action as is necessary to keep the
operations of the Borrower and its Subsidiaries separate and apart from those of
Holdings, including, without limitation, ensuring that all customary formalities
regarding corporate existence, including holding regular board of directors'
meetings and maintenance of corporate records, are followed. All financial
statements of the Borrower and its Subsidiaries provided to creditors will
clearly evidence the corporate separateness of the Borrower and its Subsidiaries
from Holdings. Finally, neither the Borrower nor any of its Subsidiaries will
take any action, or conduct its affairs in a manner which is likely to result in
the corporate existence of Holdings on the one hand, and the Borrower and its
Subsidiaries on the other, being ignored, or in the assets and liabilities of
the Borrower or any of its Subsidiaries being substantively consolidated with
those of Holdings in a bankruptcy, reorganization or other insolvency
proceeding. No action expressly provided for in this Agreement or the other
Credit Documents will breach this covenant.
7.12 COMPLIANCE WITH ENVIRONMENTAL LAWS. (i) The Borrower will
comply, and the Borrower will cause each of its Subsidiaries to comply, with all
Environmental Laws applicable to the ownership, lease or use of all Real
Property now or hereafter owned, leased or operated by the Borrower or any of
its Subsidiaries, will promptly pay or cause to be paid all costs and expenses
incurred in connection with such compliance, and will keep or cause to be kept
all such Real Property free and clear of any Liens imposed pursuant to such
Environmental Laws and (ii) neither the Borrower nor any of its Subsidiaries
will generate, use, treat, store, release or dispose of, or permit the
generation, use, treatment, storage, release or disposal of Hazardous Materials
on any Real Property now or hereafter owned, leased or operated by the Borrower
or any of its Subsidiaries, or transport or permit the transportation of
Hazardous Materials to or from any such Real Property, except to the extent that
the failure to comply with the requirements specified in clause (i) or (ii)
above, either
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individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect. If required to do so under any applicable directive or
order of any governmental agency, the Borrower agrees to undertake, and cause
each of its Subsidiaries to undertake, any clean up, removal, remedial or other
action necessary to remove and clean up any Hazardous Materials from any Real
Property owned, leased or operated by the Borrower or any of its Subsidiaries in
accordance with, in all material respects, the requirements of all applicable
Environmental Laws and in accordance with, in all material respects, such orders
and directives of all governmental authorities, except to the extent that the
Borrower or such Subsidiary is contesting such order or directive in good faith
and by appropriate proceedings and for which adequate reserves have been
established to the extent required by generally accepted accounting principles.
SECTION 8. NEGATIVE COVENANTS. The Borrower hereby covenants and
agrees, as of the Operative Date and thereafter for so long as this Agreement is
in effect and until the Commitments have terminated, no Notes are outstanding
and the Loans, together with interest, Fees and all other Obligations incurred
hereunder, are paid in full, that:
1.081 CHANGES IN BUSINESS. The Borrower will not, and will not
permit any of its Subsidiaries to, engage in any line of business other than the
business of outdoor advertising, including transit and bus shelter, stadium,
transport terminal and other similar out-of-home advertising services and any
administrative or similar activities reasonably related thereto.
1.082 CONSOLIDATION, MERGER, SALE OR PURCHASE OF ASSETS, ETC. The
Borrower will not, and will not permit any Subsidiary to, wind up, liquidate or
dissolve its affairs, or enter into any transaction of merger or consolidation,
sell or otherwise dispose of all or any part of its property or assets (other
than inventory or obsolete equipment or excess equipment no longer needed in the
conduct of the business in the ordinary course of business) or purchase, lease
or otherwise acquire all or any part of the property or assets of any Person
(other than purchases or other acquisitions of inventory, leases, materials and
equipment in the ordinary course of business) or agree to do any of the
foregoing at any future time, except that the following shall be permitted:
(a) any Subsidiary of the Borrower may be merged or consolidated with
or into, or be liquidated into, the Borrower (so long as the Borrower is
the surviving corporation) or any other Subsidiary (so long as a Subsidiary
Guarantor, if a party thereto, is the surviving corporation), or all or any
part of its business, properties and assets may be conveyed, leased, sold
or transferred to the Borrower or any other Subsidiary Guarantor;
(b) capital expenditures to the extent within the limitations set
forth in Section 8.05 hereof;
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(c) the investments, acquisitions and transfers or dispositions of
properties permitted pursuant to Section 8.06;
(d) each of the Borrower and its Subsidiaries may lease (as lessee)
real or personal property in the ordinary course of business (so long as
such lease does not create a Capitalized Lease Obligation not otherwise
permitted by Section 8.04(d));
(e) licenses or sublicenses by the Borrower and its Subsidiary of
software, customer lists, trademarks and other intellectual property in the
ordinary course of business, provided, that such licenses or sublicenses
shall not interfere with the business of the Borrower or any Subsidiary;
(f) other sales or dispositions of assets (I) for cash in an amount
equal to the fair market value thereof as determined by the Borrower and/or
(II) in exchange for other assets permitted to be held under Section 8.01
provided that, in each case, (i) the assets so sold or disposed of,
together with all other assets, previously sold or disposed of pursuant to
this clause (f) after or during the Calculation Period applicable to such
sale or disposition, shall not have generated Adjusted EBITDA of the
Borrower during such Calculation Period (taken as one accounting period)
equal to 15% or more of the aggregate Adjusted EBITDA of the Borrower
during such Calculation Period (taken as one accounting period), (ii) the
assets so sold or disposed of, together with all other assets previously
sold or disposed of pursuant to this clause (f) after the Restatement
Effective Date, shall not have generated Adjusted EBITDA of the Borrower
during the period (taken as one accounting period) commencing on the
Restatement Effective Date and ending on the last day of the last month for
which financial statements of the Borrower are reasonably available equal
to 25% or more of the aggregate Adjusted EBITDA of the Borrower during such
period (taken as one accounting period) and (iii) the Net Cash Proceeds, if
any, of any such sale are applied to repay the Loans to the extent required
by Section 4.02(A)(c), and, provided further, that the sale or disposition
of the capital stock of any Subsidiary of the Borrower shall be prohibited
unless it is for all of the outstanding capital stock of such Subsidiary
owned by the Borrower;
(g) other sales or dispositions of assets in each case to the extent
the Required Banks have consented in writing thereto and subject to such
conditions as may be set forth in such consent;
(h) any Subsidiary may be liquidated into the Borrower; and
(i) Permitted Acquisitions provided that after giving effect thereto
and the related borrowings to finance same there would be no default under
Sections 8.11 through 8.13 or 9.08(B) or (C) determined on a PRO FORMA
basis as if such Permitted
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Acquisition and the related borrowings were consummated on the first day of
the 12-month period ending on the Measurement Date last to occur and with
pro forma adjustments to the Consolidated EBITDA of the Person being
acquired to give effect to contemplated cost savings as estimated in good
faith by the Borrower and agreed to by the Agent.
1.083 LIENS. The Borrower will not, and will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets of any kind (real or personal, tangible or
intangible) of the Borrower or any such Subsidiary whether now owned or
hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such property
or assets (including sales of accounts receivable or notes with recourse to the
Borrower or any of its Subsidiaries) or assign any right to receive income, or
file or permit the filing of any financing statement under the UCC or any other
similar notice of Lien under any similar recording or notice statute, except:
(a) Liens for taxes not yet due or Liens for taxes being contested in
good faith and by appropriate proceedings for which adequate reserves (in
the good faith judgment of the management of the Borrower) have been
established;
(b) Liens in respect of property or assets of the Borrower or any of
its Subsidiaries imposed by law which were incurred in the ordinary course
of business, such as carriers', warehousemen's and mechanics' Liens,
statutory landlord's Liens, and other similar Liens arising in the ordinary
course of business, and (x) which do not in the aggregate materially
detract from the value of such property or assets or materially impair the
use thereof in the operation of the business of the Borrower or any
Subsidiary or (y) which are being contested in good faith by appropriate
proceedings, which proceedings have the effect of preventing the forfeiture
or sale of the property or asset subject to such Lien;
(c) Liens created by or pursuant to this Agreement, the other Credit
Documents or the Term Loan Documents;
(d) (x) Liens on assets of the Borrower and each Subsidiary existing
on the Consolidation Date and listed on Part A of Annex VIII hereto,
without giving effect to any subsequent extensions or renewals thereof, (y)
immaterial Liens on assets of the Borrower and each Subsidiary existing on
the Consolidation Date at the locations listed on Part B of Annex VIII and
(z) immaterial Liens on the assets of the Borrower and each Subsidiary
existing on the Operative Date at the locations listed on Part C of Annex
VIII, which Annex is to be provided toco the Agent within 30 days following
the Operative Date and to be satisfactory to the Agent;
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(e) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under Section 9.09
provided, that no cash or property is deposited or delivered to secure any
respective judgment or award (or any appeal bond in respect thereof, except
as permitted by the following clause (f));
(f) Liens (other than any Lien imposed by ERISA) incurred or deposits
made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security, or
to secure the performance of tenders, statutory obligations, surety and
appeal bonds, bids, leases, government contracts, performance and
return-of-money bonds and other similar obligations incurred in the
ordinary course of business (exclusive of obligations in respect of the
payment for borrowed money) provided, that the aggregate amount of deposits
at any time pursuant to this clause (f) shall not exceed $500,000;
(g) Leases or subleases granted to others not interfering in any
material respect with the business of the Borrower or any of its
Subsidiaries;
(h) Easements, rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the ordinary conduct of the
business of the Borrower or any of its Subsidiaries;
(i) Liens arising from UCC financing statements regarding leases
permitted by this Agreement;
(j) Purchase money Liens securing payables arising from the purchase
by the Borrower of any equipment or goods in the normal course of business,
provided that such payables shall not constitute Indebtedness;
(k) Any interest or title of a lessor or any lien on the interest or
title of a lessor under any lease permitted by this Agreement;
(l) Liens arising pursuant to purchase money mortgages relating to,
or security interests securing Indebtedness representing the purchase price
of, assets acquired by the Borrower or any Subsidiary Guarantor after the
Restatement Effective Date, provided that any such Liens attach only to the
assets so acquired and that all Indebtedness secured by Liens created
pursuant to this clause (l) shall not exceed $5,000,000 at any time
outstanding;
(m) Liens created pursuant to Capital Leases permitted pursuant to
Section 8.04(d);
(n) Liens on assets of Subsidiaries of the Borrower in favor of the
Borrower;
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(o) Liens securing Indebtedness permitted by Section 8.04(i) provided
that such Liens attach only to the assets (or to the assets of the Person
whose stock is being) acquired; and
(p) Liens on assets of the Borrower securing Indebtedness not in
excess of $1,000,000 at any time outstanding.
1.084 INDEBTEDNESS. The Borrower will not, and will not permit any
of its Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement, the other
Credit Documents and the Term Loan Documents;
(b) Indebtedness owing by (i) any Subsidiary to the Borrower or
another Subsidiary and (ii) the Borrower to any Subsidiary;
(c) Permitted Subordinated Debt;
(d) Capitalized Lease Obligations of the Borrower or any Subsidiary
Guarantor, provided that the aggregate Capitalized Lease Obligations under
all Capital Leases entered into after the Restatement Effective Date shall
not exceed $10,000,000;
(e) Existing Indebtedness, without giving effect to any subsequent
extension, renewal or refinancing thereof;
(f) Additional Subordinated Debt;
(g) to the extent same has been assumed by the Borrower, Indebtedness
evidenced by the promissory note originally executed by Holdings in favor
of William H. Smith (the "Smith Note");
(h) Indebtedness incurred pursuant to purchase money mortgages
permitted by Section 8.03(l);
(i) Indebtedness of a Person, or secured by assets, acquired after
the Restatement Effective Date pursuant to a Permitted Acquisition provided
that such Indebtedness (x) existed at the time of such Permitted
Acquisition and was not created in connection therewith or in anticipation
thereof, (y) is not guaranteed in any respect by the Borrower or any of its
Subsidiaries, except to the extent such Person merges into, or such assets
are directly acquired by, the Borrower or such Subsidiary and (z) shall not
exceed in the aggregate for all Indebtedness permitted by this clause
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(i) $10,000,000 at any time outstanding, without giving effect to any
subsequent extension, renewal or refinancing thereof; and
(j) additional Indebtedness of the Borrower not to exceed an
aggregate outstanding principal amount of $5,000,000 at any time.
1.085 CAPITAL EXPENDITURES. (a) The Borrower will not, and will not
permit any of its Subsidiaries to, incur Consolidated Capital Expenditures,
provided that the Borrower and any Subsidiary Guarantor may make Consolidated
Capital Expenditures (x) during the period from the Restatement Effective Date
through December 31, 1996 (taken as one accounting period) in an aggregate
amount not in excess of $3,000,000 plus the Additional Cap Ex for such period,
(y) during the fiscal year of the Borrower ended December 31, 1997, $12,000,000
plus the Additional Cap Ex for such fiscal year and (z) during each successive
fiscal year of the Borrower, in an aggregate amount not in excess of 105% of the
maximum amount for the prior fiscal year, determined by excluding the Additional
Cap Ex for such prior fiscal year, plus the Modified Additional Cap Ex for each
such fiscal year.
(b) In the event that the maximum amount which is permitted to be
expended in respect of Consolidated Capital Expenditures during any fiscal year
pursuant to Section 8.05(a) (without giving effect to this clause (b)) is not
fully expended during such fiscal year, the maximum amount which may be expended
during the immediately succeeding fiscal year pursuant to Section 8.05(a) shall
be increased by such unutilized amount provided that such increase shall not
exceed $5,000,000 in any fiscal year.
(c) In addition to the foregoing, the Borrower and any Subsidiary
Guarantor may make Consolidated Capital Expenditures in amounts in excess of
those permitted under Sections 8.05(a) and (b) provided that the amount of such
additional Consolidated Capital Expenditures shall not exceed the sum of (x) the
Available ECF Amount and (y) the Available Equity Amount in each case as
determined at the time of, but immediately prior to, the making thereof.
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1.087 SUBSIDIARIES; ETC. The Borrower will not (x) sell, assign or
otherwise encumber or dispose of, and will not permit any of its Subsidiaries
directly or indirectly to issue, sell, assign, pledge or otherwise encumber or
dispose of, any shares of a Subsidiary's capital stock or other securities (or
warrants, rights or options to acquire shares or other equity securities) of
such Subsidiary, except to the Borrower (to the extent otherwise permitted
hereunder) and except for dispositions permitted by Section 8.02 and (y) after
the Operative Date, create or permit to be created any new Subsidiary except to
the extent created in compliance with the second sentence of Section 8.06.
1.088 PREPAYMENTS OF INDEBTEDNESS, ETC. The Borrower will not, and
will not permit any of its Subsidiaries to:
(a) make (or give any notice in respect thereof) any voluntary or
optional payment or prepayment or redemption or acquisition for value of
(including, without limitation, by way of depositing with the trustee with
respect thereto money or securities before due for the purpose of paying
when due) or exchange of any Subordinated Debt, the Smith Note or any other
Existing Indebtedness;
(b) amend or modify, or permit the amendment or modification of, any
provisions of any Subordinated Debt Documents; and/or
(c) amend, modify or change in any manner adverse to the interests of
the Banks the Certificate of Incorporation (including, without limitation,
by the filing of any certificate of designation) or By-Laws of the Borrower
or any agreement entered into by the Borrower, with respect to its capital
stock or enter into any new agreement in any manner adverse to the
interests of the Banks with respect to the capital stock of the Borrower;
and/or
(d) amend, modify or change, directly or indirectly, any covenant or
event of default in the Term Loan Agreement without the consent of the
Required Banks hereunder.
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1.089 DIVIDENDS, ETC. (a) The Borrower will not redeem, retire,
purchase or otherwise acquire, directly or indirectly, any Capital Stock of
Borrower or other evidence of ownership interest, or declare or pay dividends
upon any Capital Stock of Borrower or make any distribution of Borrower's
property or assets (any of the foregoing, a "Dividend"), provided that this
Section 8.09 will not prohibit, so long as no Event of Default shall have
occurred and is continuing or would occur as a consequence thereof, (i) the
repurchase, redemption or other acquisition or retirement for value of any
shares of Capital Stock of the Borrower from the estate of Daniel L. Simon
solely out of the proceeds of any policy of insurance maintained to provide
funds for such purpose, (ii) to the extent the Indebtedness evidenced by such
Note has not been assumed by the Borrower, the payment of dividends to Holdings
in an annual amount not to exceed $120,000 to fund payments of interest on the
Smith Note, (iii) the payment of cash Dividends to Holdings to the extent the
proceeds are promptly used to pay administrative costs arising in the ordinary
course of business and cash interest when due on the Permitted Holdings Debt and
(iv) the payment of cash Dividends to Holdings to be promptly utilized by
Holdings to purchase its Common Stock (or options or warrants to purchase such
Common Stock) from officers, employees and directors (or their estates) upon the
death, permanent disability, retirement or termination of employment of any such
Person or otherwise in accordance with any stock option plan or any employee
stock ownership plan or any warrant plan.
(b) The Borrower will not, and will not permit any of its
Subsidiaries to, create or otherwise cause or suffer to exist any encumbrance
or restriction which prohibits or otherwise restricts (A) the ability of any
Subsidiary to (a) pay dividends or make other distributions or pay any
Indebtedness owed to the Borrower or any Subsidiary, (b) make loans or
advances to the Borrower or any Subsidiary or (c) transfer any of its
properties or assets to the Borrower or any Subsidiary or (B) the ability of
the Borrower or any other Subsidiary of the Borrower to create, incur, assume
or suffer to exist any Lien upon its property or assets to secure the
Obligations, other than prohibitions or restrictions existing under or by
reason of: (i) this Agreement, the other Credit Documents and any
Subordinated Debt Indenture (once executed); (ii) applicable law; (iii)
customary non-assignment provisions entered into in the ordinary course of
business and consistent with past practices; (iv) any restriction or
encumbrance with respect to a Subsidiary of the Borrower imposed pursuant to
an agreement which has been entered into for the sale or disposition of all
or substantially all of the capital stock or assets of such Subsidiary, so
long as such sale or disposition is permitted under this Agreement; and (v)
Liens permitted under Section 8.03 and any documents or instruments governing
the terms of any Indebtedness or other obligations secured by any such Liens,
provided that such prohibitions or restrictions apply only to the assets
subject to such Liens.
8.10 TRANSACTIONS WITH AFFILIATES. The Borrower will not, and will
not permit any Subsidiary to, sell, lease, license, transfer, exchange, or
otherwise dispose of any of its properties, assets or services to, or purchase,
lease, or license the use of any property,
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assets or services from, or transfer funds to, or enter into any contract,
agreement, understanding, loan, advance or guarantee with, to or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction," whether
constituting one transaction or a series of related transactions), unless (a)
such Affiliate Transaction is on terms that are no less favorable to the
Borrower or the relevant Subsidiary than those that would have been obtained in
a comparable transaction by the Borrower or such Subsidiary with an unrelated
person and (b) Borrower delivers to the Agent (i) with respect to any Affiliate
Transaction involving aggregate payments in excess of $250,000, an officers'
certificate setting forth a resolution of the Board of Directors of the Borrower
approved by a majority of the members of the Board of Directors (and a majority
of the disinterested members of the Board of Directors, if any) certifying that
such Affiliate Transaction complies with clause(a) above and (ii) with respect
to any Affiliate Transaction involving aggregate payments in excess of $3.0
million, an opinion as to the fairness, from a financial point of view, of such
Affiliate Transaction to the Borrower or such Subsidiary issued by an
independent investment banking firm of national standing with total assets in
excess of $1.0 billion. The foregoing limitation does not limit, and shall not
apply to, (i) the payment of reasonable annual compensation to directors or
executive officers of the Borrower or any Subsidiary thereof, (ii) transactions
described in Annex IX hereto, provided that the fees described in Annex IX shall
accrue and not be paid at any time that a Default or an Event of Default
specified in Section 9.01 shall occur and be continuing or (iii) payments by the
Borrower to Holdings under the Tax Sharing Agreement.
8.11 FIXED CHARGE COVERAGE RATIO. The Borrower will not permit the
ratio of (i) Adjusted EBITDA of the Borrower to (ii) Consolidated Fixed Charges
of the Borrower for any 12 month period (taken as one accounting period) ending
on a Measurement Date (or if less the period from the Initial Borrowing Date to
such Measurement Date) to be less than 1.00 to 1.
8.12 MINIMUM MODIFIED ADJUSTED EBITDA. The Borrower will not permit
Modified Adjusted EBITDA of the Borrower for any 12 month period (taken as one
accounting period) ending on a Measurement Date occurring in a period set forth
below to be less than (A) the amount set forth opposite such period plus (B) the
Aggregate Acquired EBITDA as of such Measurement Date:
Period Amount
------ ------
Operative Date through
December 30, 1997 $57,000,000
December 31, 1997 through
December 30, 1998 $58,400,000
December 31, 1998 through
December 30, 1999 $60,750,000
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December 31, 1999 through
December 30, 2000 $65,750,000
December 31, 2000 and
thereafter $70,500,000
8.13 SENIOR LEVERAGE RATIO. On and after the Consolidation Date
the Borrower will not permit the Senior Leverage Ratio as of any Measurement
Date occurring in a period set forth below to be more than the ratio set
forth opposite such period:
Period Ratio
------ -----
Operative Date through
December 30, 1997 5.50 to 1.0
December 31, 1997 through
December 30, 1998 5.00 to 1.0
December 31, 1998 and
thereafter 4.50 to 1.0
SECTION 9. EVENTS OF DEFAULT. Upon the occurrence of any of the
following specified events (each an "Event of Default"):
1.091 PAYMENTS. The Borrower shall (i) default in the payment when
due of any principal of the Loans or (ii) default, and such default shall
continue for five or more days, in the payment when due of any interest on the
Loans or any Fees or any other amounts owing hereunder or under any other Credit
Document; or
1.092 REPRESENTATIONS, ETC. Any representation, warranty or
statement made by the Borrower herein or in any other Credit Document or in any
statement or certificate delivered or required to be delivered pursuant hereto
or thereto shall prove to be untrue in any material respect on the date as of
which made or deemed made; or
1.093 COVENANTS. The Borrower shall (a) default in the due
performance or observance by it of any term, covenant or agreement contained in
Sections 7.10, 7.11 or 8, or (b) default in the due performance or observance by
it of any term, covenant or agreement (other than those referred to in Section
9.01, 9.02 or clause (a) of this Section 9.03) contained in this Agreement and
such default shall continue unremedied for a period of at least 30 days after
notice to the defaulting party by the Agent or the Required Banks; or
1.094 DEFAULT UNDER OTHER AGREEMENTS. (a) Holdings, the Borrower or
any of its Subsidiaries shall (i) default in any payment with respect to any
Indebtedness (other than the Obligations) beyond the period of grace, if any,
applicable thereto or (ii) default in the observance or performance of any
agreement or condition relating to any such Indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which default or other
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event or condition is to cause, or to permit the holder or holders of such
Indebtedness (or a trustee or agent on behalf of such holder or holders) to
cause any such Indebtedness to become due prior to its stated maturity; or (b)
any such Indebtedness of Holdings, the Borrower or any of its Subsidiaries shall
be declared to be due and payable, or required to be prepaid other than by a
regularly scheduled required prepayment, prior to the stated maturity thereof,
provided that it shall not constitute an Event of Default pursuant to this
Section 9.04 unless the principal amount of such Indebtedness exceeds $2,500,000
individually or in the aggregate at any one time; or
1.095 BANKRUPTCY, ETC. Holdings, the Borrower or any of its
Subsidiaries shall commence a voluntary case concerning itself under Title 11 of
the United States Code entitled "Bankruptcy," as now or hereafter in effect, or
any successor thereto (the "Bankruptcy Code"); or an involuntary case is
commenced against Holdings, the Borrower or any of its Subsidiaries and the
petition is not controverted within 10 days, or is not dismissed within 60 days,
after commencement of the case; or a custodian (as defined in the Bankruptcy
Code) is appointed for, or takes charge of, all or substantially all of the
property of Holdings, the Borrower or any of its Subsidiaries; or Holdings, the
Borrower or any of its Subsidiaries commences any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to Holdings, the Borrower or any of its
Subsidiaries; or there is commenced against Holdings, the Borrower or any of its
Subsidiaries any such proceeding which remains undismissed for a period of 60
days; or Holdings, the Borrower or any of its Subsidiaries is adjudicated
insolvent or bankrupt; or any order of relief or other order approving any such
case or proceeding is entered; Holdings, the Borrower or any of its Subsidiaries
suffers any appointment of any custodian or the like for it or any substantial
part of its property to continue undischarged or unstayed for a period of 60
days; or Holdings, the Borrower or any of its Subsidiaries makes a general
assignment for the benefit of creditors; or any corporate action is taken by
Holdings, the Borrower or any of its Subsidiaries for the purpose of effecting
any of the foregoing; or
1.096 ERISA. (a) A single-employer plan (as defined in Section 4001
of ERISA) established by the Borrower, any of its Subsidiaries or any ERISA
Affiliate shall fail to maintain the minimum funding standard required by
Section 412 of the Code for any plan year or a waiver of such standard or
extension of any amortization period is sought or granted under Section 412 of
the Code or shall provide security to induce the issuance of such waiver or
extension, (b) any Plan is or shall have been or is likely to be terminated or
the subject of termination proceedings under ERISA or an event has occurred
entitling the PBGC to terminate a Plan under Section 4042(a) of ERISA, (c) any
Plan shall have an Unfunded Current Liability or (d) the Borrower or a
Subsidiary or any ERISA Affiliate has incurred or is likely to incur a material
liability to or on account of a termination of or a withdrawal from a Plan under
Section 515, 4062, 4063, 4064, 4201 or 4204 of ERISA; and there shall result
from any such event or events described in the preceding clauses of this
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Section 9.06 the imposition of a Lien upon the assets of Holdings, the Borrower
or any Subsidiary, the granting of a security interest, or a liability or a
material risk of incurring a liability to the PBGC or a Plan or a trustee
appointed under ERISA or a penalty under Section 4971 of the Code, in each case
which would have, in the opinion of the Required Banks a Material Adverse
Effect; or
1.097 CREDIT DOCUMENTS. Any Security Document or Guaranty (once
executed) shall cease to be in full force and effect (except as provided for
therein), or any Security Document shall cease to give the Collateral Agent any
Lien encumbering assets with an aggregate fair market value in excess of
$2,500,000 (and, if encumbering assets with a fair market value of less than
$2,500,000, for a period greater than thirty or more days), or any material
rights, powers and privileges purported to be created thereby in favor of the
Collateral Agent or any Credit Party shall default in any material respect in
the due performance or observance of any term, covenant or agreement on its part
to be performed or observed pursuant to any such Security Document or Guaranty
or shall disaffirm or seek to disaffirm any Guaranty; or
1.098 HOLDINGS. (A) Holdings shall after the Restatement Effective
Date (i) incur any Indebtedness except for Permitted Holdings Debt and the
Holdings Guaranty, (ii) grant or create any Lien on any of its assets that
secures Indebtedness other than pursuant to the Holdings Pledge Agreement, (iii)
modify or amend, or prepay, any Permitted Holdings Debt, (iv) engage in any
business or activity other than the ownership of all of the capital stock of the
Borrower and administrative activities directly related thereto, (v) sell or
dispose of any of, or otherwise cease to own all of, the capital stock of the
Borrower, (vi) change its fiscal quarters or fiscal year from those applicable
also to the Borrower, (vii) fail to maintain its own payroll and books of
account and bank accounts separate from those of the Borrower and its
Subsidiaries, (viii) fail to pay its liabilities, including all administrative
expenses, from its own separate assets, (ix) fail to separately identify and
segregate its assets from the assets of the Borrower and its Subsidiaries and/or
(x) amend, modify or change in any way adverse to the interests of the Banks,
its Certificate of Incorporation (including, without limitation, by the filing
or modification of any certificate of designation) or By-Laws or any agreement
entered into by Holdings with respect to its capital stock, except in each case
(a) as expressly required by any of the Shareholders' Agreements, Management
Agreements, Tax Sharing Agreements and subscription agreements with members of
management, all as in effect on the Restatement Effective Date, (b) as expressly
required by law and (c) Holdings issuing Capital Stock in any public offering to
the extent the proceeds thereof are used to repay the Loans as required by
Section 4.02(A)(d) hereof;
(B) The Holdings Leverage Ratio as of any Measurement Date occurring
in a period set forth below is more than the ratio set forth opposite such
period:
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Period Ratio
------ -----
Operative Date through
June 29, 1998 6.50 to 1.0
June 30, 1998 through
December 30, 1999 6.25 to 1.0
December 31, 1999 and
thereafter 6.00 to 1.0
(C) The ratio of (i) Adjusted EBITDA of Holdings to (ii) Consolidated
Interest Expense of Holdings for any 12 month period (taken as one accounting
period) ending on a Measurement Date occurring in a period set forth below is
less than the ratio set forth opposite such period:
Period Ratio
------ -----
Operative Date through
December 30, 1997 1.50 to 1.0
December 31, 1997 through
December 30, 1998 1.75 to 1.0
December 31, 1998 through
December 30, 1999 1.85 to 1.0
December 31, 1999 through
December 30, 2001 2.00 to 1.0
December 31, 2001 and
thereafter 2.50 to 1.0
1.099 JUDGMENTS. One or more judgments or decrees shall be entered
against Holdings, the Borrower and/or any of its Subsidiaries involving a
liability of $2,500,000 or more or in the aggregate (not paid or to the extent
not covered by insurance) and any such judgments or decrees shall not have been
vacated, discharged or stayed or bonded pending appeal within 60 days from the
entry thereof;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Agent shall, upon the written request of the
Required Banks, by written notice to the Borrower, take any or all of the
following actions, without prejudice to the rights of the Agent or any Bank to
enforce its claims against the Borrower, except as otherwise specifically
provided for in this Agreement (provided that, if an Event of Default specified
in Section 9.05 shall occur with respect to the Borrower, the result which would
occur upon the giving of written notice by the Agent as specified in clauses (i)
and (ii) below shall occur automatically without the giving of any such notice):
(i) declare the Total Commitment terminated, whereupon the Commitment of each
Bank shall forthwith terminate immediately and any Commitment Commission shall
forthwith become due and payable
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without any other notice of any kind; (ii) declare the principal of and any
accrued interest in respect of all Loans and all obligations owing hereunder to
be, whereupon the same shall become, forthwith due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower; and/or (iii) enforce, as Collateral Agent (or
direct the Collateral Agent to enforce), any or all of the Liens and security
interests created pursuant to the Security Documents.
SECTION 10. DEFINITIONS. As used herein, the following terms shall
have the meanings herein specified unless the context otherwise requires.
Defined terms in this Agreement shall include in the singular number the plural
and in the plural the singular:
"Acquisition Agreement" shall have the meaning provided in the
Consolidated Credit Agreement.
"Additional Cap Ex" for any fiscal year (or portion thereof) shall
mean an amount equal to the aggregate of (x) the "Prior Year Cap Ex" of each
Person acquired by the Borrower and its Subsidiaries during such fiscal year (or
portion thereof) pursuant to a Permitted Acquisition times (y) the "Remaining
Percentage" applicable to such acquisition, with the "Prior Year Cap Ex" for
each such Person to be 105% of the consolidated capital expenditures for such
Person for the fiscal year of such Person last ended prior to such acquisition
and "Remaining Percentage" for an acquisition shall mean the percentage
determined by dividing the days remaining in such fiscal year after such
acquisition by the total number of days in such fiscal year.
"Additional Mortgages" shall have the naming provided in Section
7.10(c).
"Additional Subordinated Debt" shall mean subordinated debt issued by
the Borrower after the Operative Date, provided that (i) the terms and
conditions (other than pricing and maturities, provided that no scheduled
payment of principal shall be due and payable prior to the Final Maturity Date)
are (in the reasonable opinion of the Agent) substantially the same as those
contained in the Permitted Subordinated Debt or are consented to by the Required
Banks and (ii) the Additional Subordinated Debt shall not exceed in the
aggregate (x) $50 million less (y) the aggregate principal amount of Permitted
Holdings Debt.
"Adjusted Additional Cap Ex" for any fiscal year shall mean the
Additional Cap Ex for such year determined in each case as if the Remaining
Percentage for such year were equal to 100%.
"Adjusted AR Percentage" shall mean (x) for each Bank that is a
Defaulting Bank, zero and (y) for each other Bank the percentage obtained by
dividing such Bank's AR Commitment at such time by the Adjusted Total AR
Commitment at such time.
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"Adjusted Cash Flow" for any fiscal year shall mean Consolidated Net
Income of the Borrower for such fiscal year (after provision for taxes) plus the
amount of all net non-cash charges (including, without limitation, depreciation,
deferred tax expense, non-cash interest expense, amortization and other non-cash
charges) that were deducted in arriving at such Consolidated Net Income for such
fiscal year, minus the amount of all non-cash gains and gains from sales of
assets (other than sales of inventory and equipment in the normal course of
business) that were added in arriving at such Consolidated Net Income for such
fiscal year.
"Adjusted EBITDA" of any Person shall mean, for any period (x) the
Consolidated EBITDA of such Person for such period plus or minus (y) the
adjustments thereto provided for in Exhibit G.
"Adjusted RC Percentage" shall mean (x) at a time when no Bank Default
exists, for each Bank such Bank's RC Percentage and (y) at a time when a Bank
Default exists (i) for each Bank that is a Defaulting Bank, zero and (ii) for
each Bank that is a Non-Defaulting Bank, the percentage determined by dividing
such Bank's Revolving Commitment at such time by the Adjusted Total Revolving
Commitment at such time, it being understood that all references herein to
Revolving Commitments and the Adjusted Total Revolving Commitment at a time when
the Total Revolving Commitment or Adjusted Total Revolving Commitment, as the
case may be, has been terminated shall be references to the Revolving Loan
Commitments or Adjusted Total Revolving Commitment, as the case may be, in
effect immediately prior to such termination, PROVIDED that (A) no Bank's
Adjusted RC Percentage shall change upon the occurrence of a Bank Default from
that in effect immediately prior to such Bank Default if, after giving effect to
such Bank Default and any repayment of Revolving Loans and Swingline Loans at
such time pursuant to Section 4.02(A)(a) or otherwise, the sum of (i) the
aggregate outstanding principal amount of Revolving Loans of all Non-Defaulting
Banks plus (ii) the aggregate outstanding principal amount of Swingline Loans
plus (iii) the Letter of Credit Outstandings, exceeds the Adjusted Total
Revolving Loan Commitment; (B) the changes to the Adjusted RC Percentage that
would have become effective upon the occurrence of a Bank Default but that did
not become effective as a result of the preceding clause (A) shall become
effective on the first date after the occurrence of the relevant Bank Default on
which the sum of (i) the aggregate outstanding principal amount of the Revolving
Loans of all Non-Defaulting Banks plus (ii) the aggregate outstanding principal
amount of the Swingline Loans plus (iii) the Letter of Credit Outstandings is
equal to or less than the Adjusted Total Revolving Commitment; and (C) if (i) a
Non-Defaulting Bank's Adjusted RC Percentage is changed pursuant to the
preceding clause (B) and (ii) any repayment of such Bank's Revolving Loans, or
of Unpaid Drawings or of Swingline Loans, that were made during the period
commencing after the date of the relevant Bank Default and ending on the date of
such change to its Adjusted RC Percentage must be returned to the Borrower as a
preferential or similar payment in any bankruptcy or similar proceeding of the
Borrower, then the change to such Non-Defaulting Bank's Adjusted RC Percentage
effected
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pursuant to said clause (B) shall be reduced to that positive change, if any, as
would have been made to its Adjusted RC Percentage if (x) such repayments had
not been made and (y) the maximum change to its Adjusted RC Percentage would
have resulted in the sum of the outstanding principal of Revolving Loans made by
such Bank plus such Bank's new Adjusted RC Percentage of the outstanding
principal amount of Swingline Loans and of Letter of Credit Outstandings
equalling such Bank's Revolving Commitment at such time.
"Adjusted Revolving Commitment" for each Non-Defaulting Bank shall
mean at any time the product of such Bank's Adjusted RC Percentage and the
Adjusted Total Revolving Commitment.
"Adjusted Total AR Commitment" shall mean at any time the Total AR
Commitment less the aggregate AR Commitments of all Defaulting Banks.
"Adjusted Total Revolving Commitment" shall mean at any time the Total
Revolving Commitment less the aggregate Revolving Commitments of all Defaulting
Banks.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including, but not limited to, all directors
and officers of such Person), controlled by, or under direct or indirect common
control with such Person. A Person shall be deemed to control a corporation if
such Person possesses, directly or indirectly, the power (i) to vote 10% or more
of the securities having ordinary voting power for the election of directors of
such corporation or (ii) to direct or cause the direction of the management and
policies of such corporation, whether through the ownership of voting
securities, by contract or otherwise.
"Agent" shall have the meaning provided in the first paragraph of this
Agreement and shall include any successor to the Agent appointed pursuant to
Section 11.09.
"Aggregate Acquired EBITDA" shall mean, as at any Measurement Date, an
amount equal to the aggregate of 85% of the "12-month Consolidated EBITDA" of
each Person acquired by the Borrower and its Subsidiaries after the Restatement
Effective Date, with the "12-month Consolidated EBITDA" of each such Person to
be the Consolidated EBITDA of such Person for the 12 months last ended prior to
the acquisition of such Person with a pro forma adjustment thereto to give
effect to contemplated cost savings as estimated in good faith by the Borrower
and agreed to by the Agent.
"Agreement" shall mean this Amendment and Restatement to Credit
Agreement, as the same may be from time to time further modified, amended and/or
supplemented.
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"Anticipated Reinvestment Amount" shall mean, with respect to any
Reinvestment Election, the amount specified in the Reinvestment Notice delivered
by the Borrower in connection therewith as the amount of the Net Cash Proceeds
from the related Permitted Asset Sale that the Borrower intends to use to
purchase, construct or otherwise acquire Reinvestment Assets.
"Applicable Base Rate Margin" shall mean 1.75% less the Margin
Reduction Discount, if any.
"Applicable Eurodollar Margin" shall mean 2.75% less the Margin
Reduction Discount, if any.
"Applicable Percentage" shall mean the percentage obtained by dividing
(x) the aggregate principal amount of AR Loans outstanding on the AR Termination
Date by (y) $212,500,000.
"AR Commitment" shall mean, with respect to each Bank, the amount set
forth opposite such Bank's name in Annex I hereto directly below the column
entitled "AR Commitment," as the same may be reduced from time to time pursuant
to Section 3.02, 3.03 and/or 9 or (y) adjusted from time to time as a result of
assignments to or from such Bank pursuant to Section 12.04.
"AR Commitment Commission" shall have the meaning provided in Section
3.01(a).
"AR Facility" shall mean the Facility evidenced by the Total AR
Commitment.
"AR Loan" shall have the meaning provided in Section 1.01(A)(a).
"AR Maturity Date" shall mean September 30, 2003.
"AR Note" shall have the meaning provided in Section 1.05(a).
"AR Percentage" shall mean, at any time, that percentage equal to 100%
multiplied by a fraction the numerator of which is the outstanding principal
amount of the AR Loans and the denominator of which is the sum of (i) the
outstanding principal amount of the AR Loans and (ii) the outstanding principal
amount of the Term Loans provided that for the purposes of any determination
made under Section 4.02 (A)(d) during the period from the Operative Date to the
date 180 days after the Operative Date, "AR Percentage" shall mean 100%.
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"AR Termination Date" shall mean September 30, 1999 or if earlier the
date on which the Total AR Commitment is terminated.
"Asset Sale" shall mean and include (x) the sale, transfer or other
disposition by the Borrower or any Subsidiary to any Person other than the
Borrower or any Subsidiary of any asset of the Borrower or such Subsidiary
(other than sales, transfers or other dispositions in the ordinary course of
business of inventory and/or obsolete or excess equipment and other than sales
in which the Net Cash Proceeds are $50,000 or less) and/or (y) the receipt by
the Borrower or any Subsidiary of any insurance, condemnation or similar
proceeds in connection with a casualty or taking of any of its assets.
"Assignment Agreement" shall mean an Assignment and Assumption
Agreement substantially in the form of Exhibit H hereto.
"Authorized Officer" shall mean any senior officer of the Borrower
designated as such in writing to the Agent by the Borrower in each case to the
extent acceptable to the Agent.
"Available ECF Amount" shall mean at any time, an amount equal to (A)
50% of Excess Cash Flow determined for the fiscal year of the Borrower
(commencing with the fiscal year ending on December 31, 1999) then last ended
less (B) the aggregate Consolidated Capital Expenditures theretofore made during
the then current fiscal year pursuant to Section 8.05(c)(x).
"Available Equity Amount" shall mean at any time (A) an amount equal
to the aggregate net cash proceeds at such time from the sale or issuance of
equity by Holdings or the Borrower after the Consolidation Date not required to
be utilized to repay (x) AR Loans under Section 4.02(A)(d) (whether or not AR
Loans are then outstanding) and (y) the Term Loans under Section 3.02(A)(c) the
Term Loan Agreement less (B) the aggregate of any amounts theretofore expended
after the Restatement Effective Date as permitted by Section 8.05(c)(y) of this
Agreement to the extent in excess of the Available ECF Amount at such time.
"Bank" shall have the meaning provided in the first paragraph of this
Agreement.
"Bank Default" shall mean (i) the refusal (which has not been
retracted) of a Bank to make available its portion of any incurrence of Loans or
to fund its portion of any unreimbursed payments under Section 2.05(c) or (ii) a
Bank having notified the Agent and/or the Borrower that it does not intend to
comply with the obligations under Section 1.01 or under Section 2.05(c), in the
case of either (i) or (ii) as a result of the appointment of a
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receiver or conservator with respect to such Bank at the direction or request of
any regulatory agency or authority.
"Bankruptcy Code" shall have the meaning provided in Section 9.05.
"Base Rate" at any time shall mean the higher, (i) the rate which is
1/2 of 1% in excess of the Federal Funds Effective Rate and (ii) the Prime
Lending Rate.
"Base Rate Loan" shall mean each Loan bearing interest at the rates
provided in Section 1.08(a).
"Borrower" shall mean Universal Outdoor, Inc., an Illinois
corporation.
"Borrower Pledge Agreement" shall mean the Pledge Agreement in the
form of Exhibit C-1 hereto, as amended by the Amendment in the form of Exhibit
C-2 hereto and as the same may be subsequently amended, modified or supplemented
from time to time.
"Borrowing" shall mean the incurrence of (i) Swingline Loans by the
Borrower from BTCo on a given date and (ii) one Type of Loan pursuant to a
single Facility by the Borrower from all of the Banks having Commitments with
respect to such Facility on a PRO RATA basis on a given date (or resulting from
conversions on a given date), having in the case of Eurodollar Loans the same
Interest Period; provided that Base Rate Loans incurred pursuant to Section
1.10(b) shall be considered part of any related Borrowing of Eurodollar Loans.
"BTCo" shall mean Bankers Trust Company.
"Business Day" shall mean (i) for all purposes other than as covered
by clause (ii) below, any day excluding Saturday, Sunday and any day which shall
be in the City of New York a legal holiday or a day on which banking
institutions are authorized by law or other governmental actions to close and
(ii) with respect to all notices and determinations in connection with, and
payments of principal and interest on, Eurodollar Loans, any day which is a
Business Day described in clause (i) and which is also a day for trading by and
between banks in U.S. dollar deposits in the interbank Eurodollar market.
"Calculation Period" shall mean, with respect to any sale or
disposition of assets made pursuant to Section 8.02(f), the last 12 month period
for which financial statements of the Borrower are reasonably available.
"Capital Lease" as applied to any Person shall mean any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
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"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of such Person's
capital stock, whether or not voting, including but not limited to common stock,
preferred stock, convertible debentures, warrants, options or similar rights to
acquire such capital stock, and all agreements, instruments and documents
convertible, in whole or in part, into any one or more or all of the foregoing.
"Capitalized Lease Obligations" shall mean all obligations under
Capital Leases of the Borrower or any of its Subsidiaries in each case taken at
the amount thereof accounted for as liabilities in accordance with GAAP.
"Cash Equivalents" shall mean (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than six months from the date of acquisition, (ii) U.S. dollar denominated time
deposits, certificates of deposit and bankers' acceptances of (x) any Bank, (y)
any domestic commercial bank of recognized standing having capital and surplus
in excess of $500,000,000 or (z) any bank (or the parent company of such bank)
whose short-term commercial paper rating from Standard & Poor's Corporation
("S&P") is at least A-1 or the equivalent thereof or from Moody's Investors
Service, Inc. ("Moody's") is at least P-1 or the equivalent thereof (any such
bank, an "Approved Bank"), in each case with maturities of not more than six
months from the date of acquisition, (iii) repurchase obligations with a term of
not more than seven days for underlying securities of the types described in
clause (i) above entered into with any bank meeting the qualifications specified
in clause (ii) above, (iv) commercial paper issued by any Bank or Approved Bank
or by the parent company of any Bank or Approved Bank and commercial paper
issued by, or guaranteed by, any industrial or financial company with a
short-term commercial paper rating of at least A-1 or the equivalent thereof by
S&P or at least P-1 or the equivalent thereof by Moody's (any such company, an
"Approved Company"), or guaranteed by any industrial company with a long term
unsecured debt rating of at least A or A2, or the equivalent of each thereof,
from S&P or Moody's, as the case may be, and in each case maturing within six
months after the date of acquisition and (v) investments in money market funds
substantially all of whose assets are comprised of securities of the type
described in clauses (i) through (iv) above.
"Cash Proceeds" shall mean, with respect to any Asset Sale, the
aggregate cash payments (including any cash received by way of deferred payment
pursuant to a note receivable issued in connection with such Asset Sale, other
than the portion of such deferred payment constituting interest, but only as and
when so received) and/or insurance or condemnation proceeds received by the
Borrower and/or any Subsidiary from such Asset Sale.
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"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601 et
seq.
"Change of Control" shall mean (i) Holdings shall cease to own legally
and beneficially 100% of the outstanding capital stock of the Borrower, (ii)
Management Investors or their Permitted Transferees shall cease to be the
beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) of
75% or more (on a fully diluted basis) of the Common Stock so beneficially owned
by the Management Investors on the Operative Date, (iii) any "person" (as such
term is used in Sections 13(d) and 14(d) of the Exchange Act), other than one or
more Permitted Holders, is or becomes the beneficial owner (as defined in clause
(ii) above, except that a person shall be deemed to have "beneficial ownership"
of all shares that any such person has the right to acquire, whether such right
is exercisable immediately or only after the passage of time), directly or
indirectly, of more than 30% of the total voting and economic ownership
interests of Holdings; PROVIDED, HOWEVER, that the Permitted Holders
"beneficially own" (as defined in clause (ii) above), directly or indirectly, in
the aggregate a lesser percentage of the total voting and economic ownership
interests of Holdings than such other person and do not have the right or
ability by voting power, contract or otherwise to elect or designate for
election a majority of the Board of Directors of Holdings, (iv) during any
period of two consecutive years individuals who at the beginning of such period
constituted the Board of Directors of Holdings (together with any new directors
whose election by such Board of Directors or whose nomination for election by
the stockholders of Holdings was approved by either (i) the Permitted Holders or
(ii) a vote of a majority of the directors of Holdings then still in office who
were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors of Holdings then in office or
(v) any "Change of Control" or similar term as defined in any Subordinated Debt
Documents.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time and the regulations promulgated and the rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the Effective
Date and any subsequent provisions of the Code, amendatory thereof, supplemental
thereto or substituted therefor.
"Collateral" shall mean all of the Collateral as defined in each of
the Security Documents.
"Collateral Agent" shall mean the Agent acting as collateral agent for
the Banks.
"Commitment" shall mean, with respect to each Bank, such Bank's AR
Commitment and Revolving Commitment, if any.
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"Commitment Commission" shall mean and include AR Commitment
Commission and RC Commitment Commission.
"Common Stock" shall mean the common stock of Holdings.
"Consolidated Capital Expenditures" shall mean, for any period, the
aggregate of all expenditures (whether paid in cash or accrued as liabilities
and including in all events all amounts expended or capitalized under Capital
Leases but excluding any amount representing capitalized interest) by the
Borrower and its Subsidiaries during that period that, in conformity with GAAP,
are or are required to be included in the property, plant or equipment reflected
in the consolidated balance sheet of the Borrower and its Subsidiaries, provided
that Consolidated Capital Expenditures shall in any event exclude the purchase
price paid in connection with any Permitted Acquisition (whether or not
allocable to property, plant and equipment).
"Consolidated Cash Interest Expense" of any Person shall mean, for any
period, Consolidated Interest Expense of such Person, but excluding, however,
interest expense not payable in cash and amortization of discount and deferred
issuance and financing costs.
"Consolidated Credit Agreement" shall have the meaning provided in the
first WHEREAS clause of this Agreement.
"Consolidated Current Assets" shall mean, as to any Person at any
time, the current assets (other than cash and Cash Equivalents) of such Person
and its Subsidiaries determined on a consolidated basis in accordance with GAAP.
"Consolidated Current Liabilities" shall mean, as to any Person at any
time, the current liabilities of such Person and its Subsidiaries determined on
a consolidated basis in accordance with GAAP, but excluding all short-term
Indebtedness for borrowed money and the current portion of any long-term
Indebtedness of such Person or its Subsidiaries, in each case to the extent
otherwise included therein.
"Consolidated Debt" of any Person shall mean, as at any date of
determination, the aggregate stated balance sheet amount of all Indebtedness of
such Person and its Subsidiaries on a consolidated basis as determined in
accordance with GAAP.
"Consolidated EBIT" of any Person shall mean, for any period, (A) the
sum of the amounts for such period for such Person of (i) Consolidated Net
Income, (ii) provisions for taxes based on income, (iii) Consolidated Interest
Expense and (iv) losses on sales of assets (excluding sales in the ordinary
course of business) and other extraordinary losses less (B) the amount for such
period of gains on sales of assets (excluding sales in the
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ordinary course of business) and other extraordinary gains, all as determined on
a consolidated basis for such Person and its Subsidiaries in accordance with
GAAP.
"Consolidated EBITDA" of any Person shall mean, for any period, the
sum of the amounts for such period for such Person of (i) Consolidated EBIT,
(ii) depreciation expense and (iii) amortization expense, all as determined on a
consolidated basis for such Person and its Subsidiaries in accordance with GAAP.
"Consolidated Fixed Charges" of any Person shall mean, for any period,
the sum, without duplication, for such Person of the amounts for such period of
(i) Consolidated Cash Interest Expense, (ii) Dividends paid to Holdings, (iii)
Consolidated Capital Expenditures (x) made other than pursuant to Section
8.05(c) and (y) paid in cash, (iv) taxes paid or payable in cash and (v)
scheduled payments on the Loans and Existing Indebtedness, all as determined on
a consolidated basis for such Person and its Subsidiaries in accordance with
GAAP.
"Consolidated Interest Expense" of any Person shall mean, for any
period, total interest expense (including that attributable to Capital Leases in
accordance with GAAP) of such Person and its Subsidiaries on a consolidated
basis with respect to all outstanding Indebtedness of such Person and its
Subsidiaries, including, without limitation, all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers'
acceptance financing and net costs under Interest Rate Agreements.
"Consolidated Net Income" of any Person (a "Designated Person") shall
mean for any period, the net income (or loss) of such Designated Person and its
Subsidiaries on a consolidated basis for such period taken as a single
accounting period determined in conformity with GAAP, provided that there shall
be (A) deducted, in the case of the Borrower, any Dividends paid to Holdings and
(B) excluded (i) the income (or loss) of any Person (other than Subsidiaries of
the Designated Person) in which any other Person (other than the Designated
Person or any of its Subsidiaries) has a joint interest, except to the extent of
the amount of dividends or other distributions actually paid to the Designated
Person or any of its Subsidiaries by such Person during such period, (ii) the
income (or loss) of any Person accrued prior to the date it becomes a Subsidiary
of the Designated Person or is merged into or consolidated with the Designated
Person or any of its Subsidiaries or that Person's assets are acquired by the
Designated Person or any of its Subsidiaries, (iii) the income of any Subsidiary
of the Designated Person to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary, (iv) Transaction Expenses, (v) barter revenues
and barter expenses, in each case other than those relating to goods reasonably
expected to be used in the ordinary course of business and (vi) compensation
expense resulting from the issuance of capital stock, stock
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options or stock appreciation rights issued to employees, including officers, of
the Designated Person or any Subsidiary, or the exercise of such options or
rights, in each case to the extent the obligation (if any) associated therewith
is not expected to be settled by the payment of cash by the Designated Person or
any Affiliate of the Designated Person and compensation expense resulting from
the repurchase of any such capital stock, options and rights.
"Consolidated Senior Debt" of any Person shall mean, as of any date of
determination, (x) the Consolidated Debt of such Person less (y) all Permitted
Subordinated Debt included in determining such Consolidated Debt.
"Consolidation Date" shall have the meaning provided in the
Consolidated Credit Agreement.
"Contingent Obligations" shall mean as to any Person any obligation of
such Person guaranteeing or intending to guarantee any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(a) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (b) to advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (c) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation or (d) otherwise to assure or hold harmless the owner of
such primary obligation against loss in respect thereof, provided however, that
the term Contingent Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.
"Credit Documents" shall mean this Agreement, the Notes, the Security
Documents, any documents executed in connection therewith and the Guaranties.
"Credit Event" shall mean the making or continuance of a Loan or the
issuance of a Letter of Credit.
"Credit Party" shall mean the Borrower and each Guarantor.
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"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a Bank
Default is in effect.
"Designated UOH Stockholders" shall mean the Management Investors,
Kelso Investment Associates V, L.P. and Kelso Equity Partners V, L.P.
"Dividends" shall have the meaning provided in Section 8.09.
"Domestic Subsidiary" shall mean a Subsidiary of the Borrower that is
organized under the laws of the United States or any state thereof.
"Environmental Claims" means any and all administrative, regulatory or
judicial actions, suits, demand letters, claims, liens, notices of noncompliance
or violation, investigations (other than internal reports prepared by the
Borrower or any of its Subsidiaries solely in the ordinary course of such
Person's business and not in response to any third party action or request of
any kind) or proceedings relating to any Environmental Law or any permit issued,
or any written approval given, under any such Environmental Law (hereafter,
"Claims"), including, without limitation, (a) any and all Claims by governmental
or regulatory authorities for enforcement, cleanup, removal, response, remedial
or other actions or damages pursuant to any applicable Environmental Law, and
(b) any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting from
Hazardous Materials arising from alleged injury or threat of injury to health,
safety or the environment.
"Environmental Law" means any applicable Federal, state, foreign or
local statute, law, rule, regulation, ordinance, code, guide, policy and rule of
common law now or hereafter in effect and in each case as amended, and any
judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to the environment,
health, safety or Hazardous Materials, including, without limitation, CERCLA;
RCRA; the Federal Water Pollution Control Act, as amended, 33 U.S.C. Section
1251 ET SEQ.; the Toxic Substances Control Act, 15 U.S.C. Section 7401 ET SEQ.;
the Clean Air Act, 42 U.S.C. Section 7401 ET SEQ.; the Safe Drinking Water Act,
42 U.S.C. Section 3808 ET SEQ.; the Oil Pollution Act of 1990, 33 U.S.C.
Section 2701 ET SEQ. and any applicable state and local or foreign counterparts
or equivalents.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder. Section references to ERISA are to ERISA, as in effect at
the Initial Borrowing
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Date and any subsequent provisions of ERISA, amendatory thereof, supplemental
thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9)
of ERISA) which together with Holdings, the Borrower or a Subsidiary would be
deemed to be a "single employer" within the meaning of Sections 414(b), (c), (m)
and (o) of the Code.
"Eurodollar Loans" shall mean each Loan bearing interest at the rates
provided in Section 1.08(b).
"Eurodollar Rate" shall mean with respect to each Interest Period for
a Eurodollar Loan, (i) the offered quotation to first-class banks in the
interbank Eurodollar market by the Agent for dollar deposits of amounts in same
day funds comparable to the outstanding principal amount of the Eurodollar Loan
of the Agent for which an interest rate is then being determined with maturities
comparable to the Interest Period to be applicable to such Eurodollar Loan,
determined as of 10:00 A.M. (New York time) on the date which is two Business
Days prior to the commencement of such Interest Period divided (and rounded
upward to the next whole multiple of 1/16 of 1%) by (ii) a percentage equal to
100% minus the then stated maximum rate of all reserve requirements (including,
without limitation, any marginal, emergency, supplemental, special or other
reserves) applicable to any member bank of the Federal Reserve System in respect
of Eurocurrency liabilities as defined in Regulation D (or any successor
category of liabilities under Regulation D).
"Event of Default" shall have the meaning provided in Section 9.
"Excess Cash Flow" shall mean, for any fiscal year, the remainder of
(i) the sum of (x) Adjusted Cash Flow for such fiscal year and (y) the decrease,
if any, in Working Capital from the first day to the last day of such fiscal
year, plus (ii) to the extent not included in (i) above, any amounts received by
the Borrower and its Subsidiaries in settlement of, or in payment of any
judgments resulting from, actions, suits or proceedings with respect to the
Borrower and/or its Subsidiaries from the first day to the last day of such
fiscal year, plus (iii) to the extent not included in (i) above, any amounts
received by the Borrower and/or its Subsidiaries in connection with the
repayment or redemption of any long-term promissory notes and/or preferred stock
of other Persons held by them, minus (iv) the sum of (x) the amount of
Consolidated Capital Expenditures (except to the extent (x) financed through the
incurrence of Indebtedness other than Revolving Loans or (y) made pursuant to
Section 8.05(c)) made during such fiscal year and (y) the increase, if any, in
Working Capital from the first day to the last day of such fiscal year and (z)
any repayments or prepayments of the principal amount of (I) Existing
Indebtedness, (II) AR Loans on and after the AR Termination Date pursuant to
Section 4.01 or 4.02(A)(b) hereof and/or (III) Term Loans pursuant to Section
3.01 or 3.02(A)(a) of the Term Loan Agreement.
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"Existing Indebtedness" shall have the meaning provided in Section
6.21.
"Existing Letters of Credit" shall mean each Letter of Credit under
the Original Credit Agreement that continued as a Letter of Credit under the
Restated Revolving Credit Agreement.
"Expiry Date" shall mean September 30, 2003.
"Facility" shall mean any of the credit facilities established under
this Agreement, I.E., the AR Facility and the Revolving Facility.
"Facing Fee" shall have the meaning provided in Section 3.01(d).
"Federal Funds Effective Rate" shall mean for any period, a
fluctuating interest rate equal for each day during such period to the weighted
average of the rates on overnight Federal Funds transactions with members of the
Federal Reserve System arranged by Federal Funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Agent from three Federal Funds brokers of
recognized standing selected by the Agent.
"Fees" shall mean all amounts payable pursuant to, or referred to in,
Section 3.01.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect on the date of this Agreement; it being
understood and agreed that determinations in accordance with GAAP for purposes
of Section 8, including defined terms as used therein, are subject (to the
extent provided therein) to Section 12.07(a).
"Guarantor" shall mean and include Holdings and, once created, each
Subsidiary Guarantor.
"Guaranties" shall mean and include the Holdings Guaranty and, once
executed, the Subsidiary Guaranty.
"Hazardous Materials" means (a) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, transformers or other equipment that
contained, electric fluid containing levels of polychlorinated biphenyls, and
radon gas; and (b) any chemicals, materials or substances defined as or included
in the definition of "hazardous substances," "hazardous waste," "hazardous
materials," "extremely hazardous waste," "restricted
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hazardous waste," "toxic substances," "toxic pollutants," "contaminants," or
"pollutants," or words of similar import, under any Environmental Law.
"Holdings" shall mean Universal Outdoor Holdings, Inc., a Delaware
corporation.
"Holdings Guaranty" shall mean the Guaranty executed by Holdings in
the form of Exhibit F hereto.
"Holdings Leverage Ratio" shall mean, at any Measurement Date, the
ratio of (x) Consolidated Debt of Holdings on such date to (y) Modified Adjusted
EBITDA of Holdings for the 12-month period (taken as one accounting period)
ending on such date.
"Holdings Pledge Agreement" shall mean the Pledge Agreement in the
form of Exhibit D-1 hereto, as amended by the Amendment in the form of Exhibit
D-2 hereto and as the same may be subsequently amended, modified or supplemented
from time to time.
"Indebtedness" of any Person shall mean without duplication (i) all
indebtedness of such Person for borrowed money, (ii) the deferred purchase price
of assets or services which in accordance with GAAP would be shown on the
liability side of the balance sheet of such Person, (iii) the face amount of all
letters of credit issued for the account of such Person and, without
duplication, all drafts drawn thereunder, (iv) all Indebtedness of a second
Person secured by any Lien on any property owned by such first Person, whether
or not such indebtedness has been assumed, (v) all Capitalized Lease Obligations
of such Person, (vi) all obligations of such Person to pay a specified purchase
price for goods or services whether or not delivered or accepted, I.E.,
take-or-pay and similar obligations, (vii) all net obligations of such Person
under Interest Rate Agreements and (viii) all Contingent Obligations of such
Person, (other than Contingent Obligations arising from the guaranty by such
Person of the obligations of the Borrower and/or its Subsidiaries to the extent
such guaranteed obligations do not constitute Indebtedness and are otherwise
permitted hereunder) provided that Indebtedness shall not include trade payables
and accrued expenses, in each case arising in the ordinary course of business.
"Interest Period" with respect to any Loan shall mean the interest
period applicable thereto, as determined pursuant to Section 1.09.
"Interest Rate Agreement" shall mean any interest rate swap agreement,
any interest rate cap agreement, any interest rate collar agreement or other
similar agreement or arrangement designed to protect the Borrower or any
Subsidiary against fluctuations in interest rates.
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"Investment" shall mean, with respect to any Person, all investments
by such Person in other Persons (including Affiliates and Subsidiaries) in the
forms of loans, guarantees, advances or capital contributions (excluding
commission, travel and similar advances to officers and employees made in the
ordinary course of business), purchases or other acquisitions for consideration
of Indebtedness, Capital Stock or other securities and all other items that are
or would be classified as investments on a balance sheet prepared in accordance
with GAAP.
"Kelso" shall mean Kelso & Company, L.P., a Delaware limited
partnership doing business as Kelso & Company.
"Kelso Designees" shall mean William A. Marquard, John F.
McGillicuddy, David M. Roderick, John Rutledge IRA, Michael Rapoport, Patricia
Hetter Kelso and George L. Shinn.
"LaSalle" shall mean LaSalle National Bank.
"Leasehold" of any Person means all of the right, title and interest
of such Person as lessee or licensee in, to and under leases or licenses of
land, improvements and/or fixtures.
"Letter of Credit" shall have the meaning provided in Section 2.01(a).
"Letter of Credit Fee" shall have the meaning provided in Section
3.01(c).
"Letter of Credit Issuer" shall mean BTCo, LaSalle with respect to the
Existing Letters of Credit and/or any Bank which at the request of the Borrower
and with the consent of the Agent agrees, in such Bank's sole discretion, to
become a Letter of Credit Issuer for purposes of issuing Letters of Credit
pursuant to Section 2.
"Letter of Credit Outstandings" shall mean, at any time, the sum of,
without duplication, (i) the aggregate Stated Amount of all outstanding Letters
of Credit and (ii) the aggregate amount of all Unpaid Drawings in respect of all
Letters of Credit.
"Letter of Credit Request" shall have the meaning provided in Section
2.03(a).
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement or any
lease in the nature thereof).
"Loan" shall have the meaning provided in Section 1.01.
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"Management Agreements" shall mean those agreements with members of,
or with respect to, the management of Holdings, the Borrower or any Subsidiary
that were made available to the Agent pursuant to Section 5.06 of the Original
Credit Agreement.
"Management Investors" shall mean Daniel Simon and Brian Clingen.
"Mandatory Borrowing" shall have the meaning provided in Section
1.01(B)(b).
"Margin Reduction Discount" shall mean zero, provided that the Margin
Reduction Discount shall be increased to 1/4 of 1%, 3/4 of 1%, 1-1/4% or 1-3/4%,
as the case may be, as specified in clauses (i), (ii), (iii) or (iv) below, at
any time on or after the Operative Date, when, and for so long as, the ratio set
forth in such clause has been satisfied as at the Relevant Determination Date:
(i) the Margin Reduction Discount shall be 1/4 of 1% in the event
that at the Relevant Determination Date the Modified Holdings Leverage
Ratio is equal to or greater than 5.0 to 1 but less than 6.0 to 1;
(ii) the Margin Reduction Discount shall be 3/4 of 1% in the event
that as at the Relevant Determination Date the Modified Holdings Leverage
Ratio is equal to or greater than 4.0 to 1 but less than 5.0 to 1;
(iii) the Margin Reduction Discount shall be 1-1/4% in the event that
as at the Relevant Determination Date the Modified Holdings Leverage Ratio
is equal to or greater than 3.0 to 1 but less than 4.0 to 1; or
(iv) the Margin Reduction Discount shall be 1-3/4% in the event that
as at the Relevant Determination Date the Modified Holdings Leverage Ratio
is less than 3.0 to 1.
The Modified Holdings Leverage Ratio shall be determined (x) for the last day of
a fiscal month, quarter or year, by delivery of an officer's certificate of the
Borrower to the Banks pursuant to Section 7.01(e)(i) and (y) for the date of the
incurrence of Consolidated Debt after delivery of the officer's certificate
referred to in clause (x), by delivery of an officer's certificate of the
Borrower to the Banks pursuant to Section 7.01(e)(ii), each of which
certificates shall set forth the calculation of the Modified Holdings Leverage
Ratio. The Margin Reduction Discount so determined shall apply, except as set
forth below, from five Business Days after the date on which such officer's
certificate is delivered to the Agent to the earlier of (x) the date on which
the next certificate is delivered to the Agent pursuant to Section 7.01(e)(i) or
(ii) and (y) the 30th day following the end of the fiscal month in which such
first certificate was delivered to the Agent pursuant to Section 7.01(e)(i).
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Notwithstanding anything to the contrary contained above, the Margin Reduction
Discount shall be zero (x) if no officer's certificate has been delivered to the
Banks pursuant to Section 7.01(e) (i) which sets forth the Modified Holdings
Leverage Ratio for the Relevant Determination Date or the financial statements
upon which any such calculations are based have not been delivered, until such a
certificate and/or financial statements are delivered and (y) at all times when
there shall exist a violation of Section 9.01 or an Event of Default. It is
understood and agreed that the Margin Reduction Discount as provided above shall
in no event be cumulative and only the Margin Reduction Discount applicable
under either clause (i), (ii), (iii) or (iv), if any, contained in this
definition shall be applicable.
"Margin Stock" shall have the meaning provided in Regulation U.
"Material Adverse Effect" shall mean a material adverse effect on the
business, property, assets, liabilities, operations, condition (financial or
otherwise) or prospects of (x) Holdings and its Subsidiaries taken as a whole
and/or (y) the Borrower and its Subsidiaries taken as a whole.
"Maximum Swingline Amount" shall mean $5,000,000.
"Measurement Date" shall mean (x) the last day of each fiscal quarter
of the Borrower and (y) the last day of the last month ended prior to the date
of a Tested Borrowing.
"Minimum Borrowing Amount" shall mean (i) for AR Loans and Revolving
Loans maintained as Base Rate Loans, $500,000, (ii) for Loans maintained as
Eurodollar Loans, $1,000,000 and (iii) for Swingline Loans, $250,000.
"Modified Additional Cap Ex" shall mean for any fiscal year the sum of
(i) the Additional Cap Ex for such fiscal year plus (ii) the Adjusted Additional
Cap Ex for the preceding fiscal year.
"Modified Adjusted EBITDA" of any Person shall mean, for any period
(i) the Adjusted EBITDA of such Person for such period plus (ii) with respect to
any business or assets acquired during such period pursuant to a Permitted
Acquisition consummated after the Closing Date, but only to the extent of
businesses or assets acquired directly by the Borrower or owned by a Person that
becomes a Subsidiary Guarantor, the Consolidated EBITDA attributable to such
business, assets or Person for the portion of such period prior to the
consummation of such Permitted Acquisition.
"Modified Holdings Leverage Ratio" shall mean, with respect to any
Relevant Measurement Date, the Holdings Leverage Ratio determined as of such
date, modified by the inclusion in the computation thereof of any incremental
Consolidated Debt of Holdings
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incurred after such Relevant Measurement Date and prior to the delivery of an
officer's certificate pursuant to Section 7.01(e)(i) in respect of the next
Relevant Measurement Date.
"Mortgage" shall mean the mortgages, deeds and trust and similar
documents in respect of the Real Property of the Credit Parties as in effect
under the Consolidated Credit Agreement.
"Mortgaged Properties" shall mean the Real Properties subject to the
Mortgages.
"Net Cash Proceeds" shall mean, with respect to any Asset Sale, the
Cash Proceeds resulting therefrom net of expenses of sale or recovery (including
payment of principal, premium and interest of Indebtedness secured by the assets
which are the subject of the Asset Sale and required to be, and which is, repaid
under the terms thereof as a result of such Asset Sale), and incremental taxes
paid or payable as a result thereof.
"New Mortgage" shall have the meaning provided in Section 7.10(b).
"Non-Defaulting Bank" shall mean each Bank other than a Defaulting
Bank.
"Note" shall mean and include each AR Note, each Revolving Note and
the Swingline Note.
"Notice of Borrowing" shall have the meaning provided in Section 1.03.
"Notice of Conversion" shall have the meaning provided in Section
1.06.
"Notice Office" shall mean the office of the Agent at 130 Liberty
Street, New York, New York or such other office as the Agent may designate to
the Borrower from time to time.
"Obligations" shall mean all amounts, direct or indirect, contingent
or absolute, of every type or description, and at any time existing, owing to
the Agent, the Collateral Agent or any Bank pursuant to the terms of this
Agreement or any other Credit Document.
"Operative Date" shall have the meaning provided in Section 5.01.
"Original Credit Agreements" shall have the meaning provided in the
Consolidated Credit Agreement.
"Participant" shall have the meaning provided in Section 2.05(a).
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"Payment Office" shall mean the office of the Agent at 130 Liberty
Street, New York, New York or such other office as the Agent may designate to
the Borrower from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"Permitted Acquisition" shall mean any acquisition (including through
a stock acquisition) of property or assets of a nature or type, or which will be
used in a business, permitted to be held or engaged in by Section 8.01 provided
that (x) the Holdings Leverage Ratio as of the last Measurement Date prior to
the consummation of such acquisition was less than 5.50 to 1.0 determined on a
pro forma basis as if the Permitted Acquisition and the related borrowings were
consummated on the first day of the 12-month period ending on such Measurement
Date and giving effect to pro forma adjustments to the Consolidated EBITDA of
the Person being acquired to give effect to contemplated cost savings as
estimated in good faith by the Borrower and agreed to by the Agent, or (y)
aggregate amount expended for all such acquisitions after the Restatement
Effective Date to the extent not effected in compliance with clause (x) above or
clause (z) below does not exceed $50,000,000 or (z) consented to in writing by
the Super-Majority Banks.
"Permitted Asset Sale" shall mean an Asset Sale (x) permitted by the
expressed language of Section 8.02 (and not by the parenthetical in the lead in
paragraph of Section 8) and (y) resulting from a casualty or taking of assets of
the Borrower or any Subsidiary.
"Permitted Encumbrances" shall mean, with respect to the Mortgaged
Property, such exceptions to title as are set forth in the title insurance
policy or title commitment delivered with respect thereto, all of which
exceptions must be reasonably acceptable to the Agent.
"Permitted Holders" means Kelso and its Affiliates, the Kelso
Designees, the Management Investors, any employee stock ownership plan
established by the Borrower for the benefit of the employees of the Borrower or
any Subsidiary and their Permitted Transferees.
"Permitted Holdings Debt" shall mean debt of Holdings, subordinated to
Holdings' obligations under the Holdings Guaranty, issued by Holdings after the
Consolidation Date provided that (i) all proceeds of such debt shall be
contributed as common capital to the Borrower, (ii) the terms and conditions
(other than the issuer, pricing (including whether cash pay or pay-in-kind) and
maturities, provided that no scheduled payment of principal or any one-time cash
payment of all accreted interest under a pay-in-kind issue, shall be due and
payable prior to the Final Maturity Date) are (in the reasonable opinion of
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the Agent) substantially the same as, or no more adverse to the interests of the
Banks than, those contained in the Permitted Subordinated Debt or are consented
to by the Required Banks, (iii) such debt shall not be guaranteed by the
Borrower or any of its Subsidiaries and (iv) the Permitted Holdings Debt shall
not exceed in the aggregate (x) $50 million less (y) the aggregate principal
amount of Additional Subordinated Debt.
"Permitted Investments" shall mean (a) cash and Cash Equivalents, (b)
Investments in Subsidiary Guarantors, (c) (x) Investments in Specified
Subsidiaries to the extent made in connection with the acquisition thereof as
permitted by clause (B) of the second sentence of Section 8.06 and (y) all other
Investments not permitted by clause (b) and (c)(x) in an amount up to $7,500,000
in the aggregate, including Investments in a Person that becomes a Subsidiary of
the Borrower immediately after such Investment, provided (i) an Event of Default
has not occurred and is continuing and will not occur as a result of, in
connection with or after giving effect to such Investment and (ii) such Person,
at the time of such Investment or at the time such Person becomes a Subsidiary,
engages exclusively in the business permitted to be engaged in by Borrower and
its Subsidiaries pursuant to Section 8.01, (d) loans and advances of money in
the ordinary course of business and consistent with past practice to officers
and employees of Borrower or any of its Subsidiaries, (e) investments in
receivables owing to the Borrower and/or any Subsidiary, if created or acquired
in the ordinary course of business and payable or dischargeable in accordance
with customary trade terms, and (f) investments (including debt obligations)
received in connection with the bankruptcy or reorganization of suppliers and
customers and in settlement of delinquent obligations of, and other disputes
with, customers and suppliers arising in the ordinary course of business.
"Permitted Liens" shall mean Liens described in clauses (a), (b) and
(d) of Section 8.03.
"Permitted Subordinated Debt" shall mean the $325 million principal
amount of Senior Subordinated Notes, due 2006, issued by the Borrower on October
11, 1996 and December 11, 1996.
"Permitted Subordinated Debt Documents" shall mean all indentures,
agreements, notes and other instruments governing or evidencing Permitted
Subordinated Debt as in effect on the Operative Date.
"Permitted Transferees" means (i) in the case of Kelso, (A) any
Affiliate thereof (other than any corporation or other Person (except for any
corporation or other Person engaged in a business similar, complementary or
related to the nature or type of the business of Holdings and its Subsidiaries)
controlled by, or any investment fund (other than Kelso Investment Associates V,
L.P. or any investment fund that is solely comprised of current and former
professionals of Kelso) managed by, Kelso), (B) any managing director,
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general partner, limited partner, director, officer or employee of Kelso or
any Affiliate thereof (collectively, "Kelso Associates"), (C) the heirs,
executors, administrators, testamentary trustees, legatees or beneficiaries
of any Kelso Associate or Kelso Designee and (D) any trust, the beneficiaries
of which, or a corporation or partnership, the stockholders or partners of
which, include only a Kelso Associate or Kelso Designee, his spouse, parents,
siblings, or direct lineal descendants, and (ii) in the case of any
Management Investors, (A) his executor, administrator, testamentary trustee,
legatee or beneficiaries, (B) his spouse, parents, siblings, members of his
or her immediate family (including adopted children) and/or direct lineal
descendants or (C) a trust, the beneficiaries of which, or a corporation or
partnership, the stockholders or partners of which, include only the
Management Investor, as the case may be, and his spouse, parents, siblings,
members of his or her immediate family (including adopted children) and/or
direct lineal descendants.
"Person" shall mean any individual, partnership, joint venture, firm,
corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.
"Plan" shall mean any multi-employer or single-employer plan as
defined in Section 4001 of ERISA, which is maintained or contributed to by (or
to which there is an obligation to contribute of) Holdings, the Borrower, a
Subsidiary or an ERISA Affiliate, and each such plan for the five year period
immediately following the latest date on which Holdings, the Borrower, a
Subsidiary, or an ERISA Affiliate maintained, contributed to or had an
obligation to contribute to such plan.
"Pledge Agreements" shall mean the Borrower Pledge Agreement, the
Holdings Pledge Agreement and, once executed, the Subsidiary Pledge Agreement.
"Pledged Securities" shall mean all the Pledged Securities as defined
in the relevant Pledge Agreement.
"Prime Lending Rate" shall mean the rate which Bankers Trust Company
announces from time to time as its prime lending rate, the Prime Lending Rate to
change when and as such prime lending rate changes. The Prime Lending Rate is a
reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. Bankers Trust Company may make commercial
loans or other loans at rates of interest at, above or below the Prime Lending
Rate.
"RC Commitment Commission" shall have the meaning provided in Section
3.01(b).
"RC Percentage" shall mean at any time for each Bank with a Revolving
Commitment the percentage obtained by dividing such Bank's Revolving Commitment
by the
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Total Revolving Commitment, PROVIDED that if the Total Revolving Commitment has
been terminated, the RC Percentage of each Bank shall be determined by dividing
such Bank's Revolving Commitment immediately prior to such termination by the
Total Revolving Commitment immediately prior to such termination.
"RCRA" shall mean the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. Section 6901 ET SEQ.
"Real Property" of any Person shall mean all of the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
"Register" shall have the meaning provided in Section 12.16.
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing reserve requirements.
"Regulation U" shall mean Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing margin requirements.
"Reinvestment Assets" shall mean any assets to be employed in the
business of the Borrower and its Subsidiaries as permitted by Section 8.01.
"Reinvestment Election" shall have the meaning provided in Section
4.02(A)(c).
"Reinvestment Notice" shall mean a written notice signed by an
Authorized Officer of the Borrower stating that the Borrower, in good faith,
intends and expects to use all or a specified portion of the Net Cash Proceeds
of a Permitted Asset Sale to purchase, construct or otherwise acquire
Reinvestment Assets.
"Reinvestment Prepayment Amount" shall mean, with respect to any
Reinvestment Election, the amount, if any, on the Reinvestment Prepayment Date
relating thereto by which (a) the Anticipated Reinvestment Amount in respect of
such Reinvestment Election exceeds (b) the aggregate amount thereof expended by
the Borrower and its Subsidiaries to acquire Reinvestment Assets.
"Reinvestment Prepayment Date" shall mean, with respect to any
Reinvestment Election, the earliest of (i) the date, if any, upon which the
Agent, on behalf of the Required Banks or the Required Banks (TL), shall have
delivered a written termination notice to the Borrower, provided that such
notice may only be given while an Event of
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Default exists, (ii) the date occurring 180 days after such Reinvestment
Election and (iii) the date on which the Borrower shall have determined not to,
or shall have otherwise ceased to, proceed with the purchase, construction or
other acquisition of Reinvestment Assets with the related Anticipated
Reinvestment Amount.
"Relevant Determination Date" shall mean, at any time, (x) the last
day of the then most recently ended fiscal month, quarter or year of Holdings
with respect to which an officer's certificate has been, or is required to be,
delivered to the Banks pursuant to Section 7.01(e)(i) or (y) if the Margin
Reduction Discount is then greater than zero, the last date subsequent to the
date specified in clause (x) on which any Consolidated Debt of Holdings and its
Subsidiaries has been incurred.
"Reportable Event" shall mean an event described in Section 4043(c) of
ERISA with respect to a Plan as to which the 30-day notice requirement has not
been waived by the PBGC.
"Required Banks" shall mean Non-Defaulting Banks whose AR Commitments
(or, if after the AR Termination Date, outstanding AR Loans) and Revolving
Commitments (or if terminated, as in effect immediately prior to such
termination) constitute greater than 50% of the sum of (i) the Adjusted Total AR
Commitment (or, if after the AR Termination Date, the total outstanding AR Loans
of Non-Defaulting Banks) and (ii) the Revolving Commitments (or if terminated,
as in effect immediately prior to such termination) of all Non-Defaulting Banks.
"Required Banks (TL)" shall mean the Required Banks as defined in the
Term Loan Agreement.
"Restatement Effective Date" shall mean October 8, 1996.
"Revolving Commitment" shall mean, with respect to each Bank, the
amount set forth opposite such Bank's name in Annex I hereto directly below the
column entitled "Revolving Commitment," as the same may be (x) reduced from time
to time pursuant to Section 3.02, 3.03 and/or 9 or (y) adjusted from time to
time as a result of assignments to or from such Bank pursuant to Section 12.04.
"Revolving Facility" shall mean the Facility evidenced by the Total
Revolving Commitments.
"Revolving Loan" shall have the meaning provided in Section
1.01(A)(b).
"Revolving Note" has the meaning provided in Section 1.05(a).
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"Scheduled Repayment" shall have the meaning provided in Section
4.02(A)(b).
"SEC" shall have the meaning provided in Section 7.01(h).
"SEC Regulation D" shall mean Regulation D as promulgated under the
Securities Act of 1933, as amended, as the same may be in effect from time to
time.
"Secured Creditors" shall mean the Banks hereunder and the Banks party
to the Term Loan Agreement.
"Security Agreement" shall mean the Security Agreement in the form of
Exhibit E-1 hereto, as amended by the Amendment in the form of Exhibit E-2
hereto and as the same may be subsequently amended, modified or supplemented
from time to time.
"Security Agreement Collateral" shall mean all "Collateral" as defined
in the Security Agreement.
"Security Documents" shall mean each Pledge Agreement, the Security
Agreement, each Mortgage and, once executed, each Additional Mortgage, each New
Mortgage and the Subsidiary Security Agreement.
"Senior Leverage Ratio" shall mean, at any Measurement Date, the ratio
of (x) Consolidated Senior Debt of the Borrower on such date to (y) Modified
Adjusted EBITDA of the Borrower for the 12-month period (taken as one accounting
period) ending on such date.
"Shareholders' Agreements" shall mean the agreements entered into by
Holdings or any Subsidiary governing its capital stock and/or by shareholders
relating to any such entity or its capital stock that were made available to the
Agent pursuant to Section 5.06 of the Original Credit Agreements.
"Smith Note" shall have the meaning provided in Section 8.04(g).
"Specified Subsidiaries" shall have the meaning provided in Section
8.06.
"Stated Amount" of each Letter of Credit shall mean the maximum
available to be drawn thereunder (regardless of whether any conditions for
drawing could then be met).
"Subordinated Debt" shall mean and include the Permitted Subordinated
Debt, the Additional Subordinated Debt and the Permitted Holdings Debt, in each
case once issued.
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"Subordinated Debt Documents" shall mean and include the Permitted
Subordinated Debt Documents and the execution version of all indentures,
agreements, notes and instruments governing, or evidencing, Additional
Subordinated Debt and/or Permitted Holdings Debt.
"Subordinated Debt Indentures" shall mean the indentures governing
Permitted Subordinated Debt, Additional Subordinated Debt and/or Permitted
Holdings Debt.
"Subsidiary" of any Person shall mean and include (i) any corporation
more than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person directly or
indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity in which such Person directly or indirectly through
Subsidiaries, has more than a 50% equity interest at the time. Unless otherwise
expressly provided, all references herein to "Subsidiary" shall mean a
Subsidiary of the Borrower.
"Subsidiary Guarantor" shall mean each Domestic Subsidiary, if any,
party to the Subsidiary Guaranty on the Operative Date and each Domestic
Subsidiary created thereafter that executes and delivers a counterpart of the
Subsidiary Guaranty, provided that at such time such Subsidiary also executes
and delivers a Subsidiary Pledge Agreement and a Subsidiary Security Agreement,
and takes such actions with respect thereto as the Administrative Agent
reasonably requests to perfect the Liens granted thereunder.
"Subsidiary Guaranty" shall mean a guaranty agreement in form and
substance satisfactory to the Agent guaranteeing the Obligations.
"Subsidiary Pledge Agreement" shall mean a pledge agreement in form
substantially the same as the Borrower Pledge Agreement and otherwise reasonably
satisfactory to the Agent.
"Subsidiary Security Agreement" shall mean a security agreement in
form substantially the same as the Security Agreement and otherwise reasonably
satisfactory to the Agent.
"Super-Majority Banks" shall mean the Non-Defaulting Banks which would
constitute the Required Banks if the reference to "50%" in the definition of
Required Banks were to read "66 2/3%."
"Swingline Expiry Date" shall mean the date which is five Business
Days prior to the Expiry Date.
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"Swingline Loan" shall have the meaning provided in Section
1.01(B)(a).
"Swingline Note" shall have the meaning provided in Section 1.05(a).
"Tax Sharing Agreement" shall mean the Tax Sharing Agreement dated as
of November 18, 1993 between the Borrower and Holdings in the form delivered to
the Banks prior to the Restatement Effective Date and as the same may be
modified with the consent of the Required Banks.
"Taxes" shall have the meaning provided in Section 4.04(a).
"Term Loan" shall mean the Loans under and as defined in the Term Loan
Agreement.
"Term Loan Agreement" shall mean the Term Loan Agreement, dated as of
May 21, 1997, among the Borrower and the Banks party thereto as in effect on the
Operative Date and as the same may be subsequently amended, modified or
supplemented in accordance with the terms thereof and hereof.
"Term Loan Documents" shall mean all the Credit Documents as defined
in the Term Loan Agreement.
"Tested Borrowing" shall mean any incurrence of AR Loans or Revolving
Loans after the Consolidation Date in which the aggregate amount of AR Loans or
Revolving Loans incurred, when added to the aggregate amount of AR Loans and
Revolving Loans incurred during the immediately preceding 30 day period (to the
extent (x) incurred after the Consolidation Date, (y) still outstanding and (z)
not included in establishing an earlier Tested Borrowing), equal or exceed
$1,000,000.
"TL Percentage" shall mean at any time that percentage obtained by
dividing (i) the outstanding principal amount of Term Loans by (ii) the
outstanding principal amount of AR Loans.
"Total AR Commitment" shall mean the sum of the AR Commitments of each
of the Banks.
"Total Commitment" shall mean the sum of the Total AR Commitment and
the Total Revolving Commitment.
"Total Revolving Commitment" shall mean the sum of the Revolving
Commitments of each of the Banks.
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"Transaction Expenses" shall mean all fees and expenses incurred in
connection with, and payable prior to or substantially concurrently with the
closing of, the Transaction (as defined in the Consolidated Credit Agreement)
and including all fees paid to any of the Banks and the Agent hereunder, fees
paid to Kelso or its Affiliates permitted hereunder; attorney's fees,
accountants' fees, placement agents' fees, discounts and commissions and
brokerage, and consultant fees. Transaction Expenses shall include the
amortization of any such fees and expenses that are capitalized and not
classified as an expense on the date incurred.
"Type" shall mean any type of Loan determined with respect to the
interest option applicable thereto, I.E., a Base Rate Loan or Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code.
"Unfunded Current Liability" of any Plan shall mean the amount, if
any, by which the actuarial present value of the accumulated plan benefits under
the Plan as of the close of its most recent plan year determined in accordance
with Statement of Financial Accounting Standards No. 35, based upon the
actuarial assumptions used by the Plan's actuary in the most recent annual
valuation of the Plan, exceeds the fair market value of the assets thereof,
determined in accordance with Section 412 of the Code.
"Unpaid Drawings" shall have the meaning provided in Section 2.04(a).
"Unutilized Revolving Commitment" for any Bank at any time shall mean
the excess of (i) the Revolving Commitment of such Bank over (ii) the sum of (x)
the aggregate outstanding principal amount of Revolving Loans made by such Bank
plus (y) an amount equal to such Bank's Adjusted RC Percentage of the Letter of
Credit Outstandings at such time.
"Unutilized Total Revolving Commitment" shall mean, at any time, (i)
the Total Revolving Commitment at such time less (ii) the sum of the aggregate
principal amount of all Revolving Loans and Swingline Loans at such time plus
the Letter of Credit Outstandings at such time.
"Working Capital" shall mean the excess of Consolidated Current Assets
over Consolidated Current Liabilities.
"Written" or "in writing" shall mean any form of written communication
or a communication by means of telex, facsimile transmission, telegraph or
cable.
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SECTION 11. THE AGENT.
1.111 APPOINTMENT. The Banks hereby designate Bankers Trust Company
as Agent (for purposes of this Section 11, the term "Agent" shall include BTCo
in its capacity as Collateral Agent for the Secured Creditors pursuant to the
Security Documents) to act as specified herein and in the other Credit
Documents. Each Bank hereby irrevocably authorizes, and each holder of any Note
by the acceptance of such Note shall be deemed irrevocably to authorize, the
Agent to take such action on its behalf under the provisions of this Agreement,
the other Credit Documents and any other instruments and agreements referred to
herein or therein and to exercise such powers and to perform such duties
hereunder and thereunder as are specifically delegated to or required of the
Agent by the terms hereof and thereof and such other powers as are reasonably
incidental thereto. The Agent may perform any of its duties hereunder by or
through its respective officers, directors, agents, employees or affiliates.
The Co-Agent shall have no duties or liabilities in acting in such capacity
hereunder.
1.112 NATURE OF DUTIES. The Agent shall not have any duties or
responsibilities except those expressly set forth in this Agreement and the
Security Documents. Neither the Agent nor any of its respective officers,
directors, agents, employees or affiliates shall be liable for any action taken
or omitted by it or them hereunder or under any other Credit Document or in
connection herewith or therewith, unless caused by its or their gross negligence
or willful misconduct. The duties of the Agent shall be mechanical and
administrative in nature; the Agent shall not have by reason of this Agreement
or any other Credit Document a fiduciary relationship in respect of any Bank or
the holder of any Note; and nothing in this Agreement or any other Credit
Document, expressed or implied, is intended to or shall be so construed as to
impose upon the Agent any obligations in respect of this Agreement or any other
Credit Document except as expressly set forth herein or therein.
1.113 LACK OF RELIANCE ON THE AGENT. Independently and without
reliance upon the Agent, each Bank and the holder of each Note, to the extent it
deems appropriate, has made and shall continue to make (i) its own independent
investigation of the financial condition and affairs of Holdings, the Borrower
and its Subsidiaries in connection with the making and the continuance of the
Loans and the taking or not taking of any action in connection herewith and (ii)
its own appraisal of the creditworthiness of Holdings, the Borrower and its
Subsidiaries and, except as expressly provided in this Agreement, the Agent
shall not have any duty or responsibility, either initially or on a continuing
basis, to provide any Bank or the holder of any Note with any credit or other
information with respect thereto, whether coming into its possession before the
making of the Loans or at any time or times thereafter. The Agent shall not be
responsible to any Bank or the holder of any Note for any recitals, statements,
information, representations or warranties herein or in any document,
certificate or other writing delivered in connection herewith or for the
execution, effectiveness, genuine-
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ness, validity, enforceability, perfection, collectibility, priority or
sufficiency of this Agreement or any other Credit Document or the financial
condition of the Borrower and its Subsidiaries or be required to make any
inquiry concerning either the performance or observance of any of the terms,
provisions or conditions of this Agreement or any other Credit Document, or the
financial condition of Holdings, the Borrower and its Subsidiaries or the
existence or possible existence of any Default or Event of Default.
1.114 CERTAIN RIGHTS OF THE AGENT. If the Agent shall request
instructions from the Required Banks (or, where applicable, the Super-Majority
Banks) with respect to any act or action (including failure to act) in
connection with this Agreement or any other Credit Document, the Agent shall be
entitled to refrain from such act or taking such action unless and until the
Agent shall have received instructions from the Required Banks (or, where
applicable, the Super-Majority Banks); and the Agent shall not incur liability
to any Person by reason of so refraining. Without limiting the foregoing,
neither any Bank nor the holder of any Note shall have any right of action
whatsoever against the Agent as a result of the Agent acting or refraining from
acting hereunder or under any other Credit Document in accordance with the
instructions of the Required Banks (or, where applicable, the Super-Majority
Banks).
1.115 RELIANCE. The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram,
radiogram, order or other document or telephone message signed, sent or made by
any Person that the Agent believed to be the proper Person, and, with respect to
all legal matters pertaining to this Agreement and any other Credit Document and
its duties hereunder and thereunder, upon advice of counsel selected by the
Agent.
1.116 INDEMNIFICATION. To the extent the Agent is not reimbursed and
indemnified by the Borrower, the Banks will reimburse and indemnify the Agent,
in proportion to their respective Loans and Commitments as used in determining
the Required Banks, for and against any and all liabilities, obligations,
losses, damages, penalties, claims, actions, judgments, costs, expenses or
disbursements of whatsoever kind or nature which may be imposed on, asserted
against or incurred by the Agent in performing its respective duties hereunder
or under any other Credit Document, in any way relating to or arising out of
this Agreement or any other Credit Document; provided that no Bank shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Agent's gross negligence or willful misconduct.
1.117 THE AGENT IN ITS INDIVIDUAL CAPACITY. With respect to its
obligation to make Loans under this Agreement, the Agent shall have the rights
and powers specified herein for a "Bank" and may exercise the same rights and
powers as though it were not
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performing the duties specified herein; and the term "Banks," "Required Banks,"
"Letter of Credit Issuer", "Super-Majority Banks," "holders of Notes" or any
similar terms shall, unless the context clearly otherwise indicates, include the
Agent in its individual capacity. The Agent may accept deposits from, lend
money to, and generally engage in any kind of banking, trust or other business
with the Borrower or any Affiliate of the Borrower as if it were not performing
the duties specified herein, and may accept fees and other consideration from
the Borrower for services in connection with this Agreement and otherwise
without having to account for the same to the Banks.
1.118 HOLDERS. The Agent may deem and treat the payee of any Note as
the owner thereof for all purposes hereof unless and until a written notice of
the assignment, transfer or endorsement thereof, as the case may be, shall have
been filed with the Agent. Any request, authority or consent of any Person who,
at the time of making such request or giving such authority or consent, is the
holder of any Note shall be conclusive and binding on any subsequent holder,
transferee, assignee or indorsee, as the case may be, of such Note or of any
Note or Notes issued in exchange therefor.
1.119 RESIGNATION BY THE AGENT. (a) The Agent may resign from the
performance of all its functions and duties hereunder and/or under the other
Credit Documents at any time by giving 15 Business Days' prior written notice to
the Borrower and the Banks. Such resignation shall take effect upon the
appointment of a successor Agent pursuant to clauses (b) and (c) below or as
otherwise provided below.
(b) Upon any such notice of resignation, the Banks shall appoint a
successor Agent hereunder or thereunder who shall be the Co-Agent or such other
commercial bank or trust company as is reasonably acceptable to the Borrower.
(c) If a successor Agent shall not have been so appointed within such
15 Business Day period, the Agent, with the consent of the Borrower, shall then
appoint a successor Agent who shall serve as Agent hereunder or thereunder until
such time, if any, as the Banks appoint a successor Agent as provided above.
(d) If no successor Agent has been appointed pursuant to clause (b)
or (c) above by the 20th Business Day after the date such notice of resignation
was given by the Agent, the Agent's resignation shall become effective and the
Required Banks shall thereafter perform all the duties of the Agent hereunder
and/or under any other Credit Document until such time, if any, as the Banks
appoint a successor Agent as provided above.
SECTION 12. MISCELLANEOUS.
1.121 PAYMENT OF EXPENSES, ETC. The Borrower agrees to: (i) whether
or not the transactions herein contemplated are consummated, pay all reasonable
out-of-pocket
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costs and expenses of the Agent and the Co-Agent in connection with the
negotiation, preparation, execution and delivery of the Credit Documents and the
documents and instruments referred to therein and any amendment, waiver or
consent relating thereto (including, without limitation, the reasonable fees and
disbursements of their respective counsel) and of the Agent, the Co-Agent and
each of the Banks in connection with the enforcement of the Credit Documents and
the documents and instruments referred to therein (including, without
limitation, the reasonable fees and disbursements of counsel for the Agent, the
Co-Agent and for each of the Banks); (ii) pay and hold each of the Banks
harmless from and against any and all present and future stamp and other similar
taxes with respect to the foregoing matters and save each of the Banks harmless
from and against any and all liabilities with respect to or resulting from any
delay or omission (other than to the extent attributable to such Bank) to pay
such taxes; and (iii) indemnify each Bank (including in its capacity as the
Agent or Co-Agent), its officers, directors, employees, representatives and
agents from and hold each of them harmless against any and all losses,
liabilities, claims, damages or expenses incurred by any of them as a result of,
or arising out of, or in any way related to, or by reason of, (a) any
investigation, litigation or other proceeding (whether or not any Bank is a
party thereto) related to the entering into and/or performance of any
Transaction Document or the use of the proceeds of any Loans hereunder or the
Transaction or the consummation of any transactions contemplated in any Credit
Document, or (b) the actual or alleged presence of Hazardous Materials in the
air, surface water or groundwater or on the surface or subsurface of any Real
Property owned or at any time operated by the Borrower or any of its
Subsidiaries, the release, generation, storage, transportation, handling or
disposal of Hazardous Materials at any location, whether or not owned or
operated by the Borrower or any of its Subsidiaries, the non-compliance of any
Real Property with foreign, federal, state and local laws, regulations, and
ordinances (including applicable permits thereunder) applicable to any Real
Property, or any Environmental Claim asserted against the Borrower, any of its
Subsidiaries or any Real Property owned or at any time operated by the Borrower
or any of its Subsidiaries, including, in each case, without limitation, the
reasonable fees and disbursements of counsel incurred in connection with any
such investigation, litigation or other proceeding (but excluding any such
losses, liabilities, claims, damages or expenses to the extent incurred by
reason of the gross negligence or willful misconduct of the Person to be
indemnified).
1.122 RIGHT OF SETOFF. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, if an Event of Default then exists, each Bank is hereby authorized
at any time or from time to time, without presentment, demand, protest or other
notice of any kind to the Borrower or to any other Person, any such notice being
hereby expressly waived, to set off and to appropriate and apply any and all
deposits (general or special) and any other Indebtedness at any time held or
owing by such Bank (including without limitation by branches and agencies of
such Bank wherever located) to or for the credit or the account of the Borrower
against and on account of the Obligations and liabilities of the Borrower to
such Bank under
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this Agreement or under any of the other Credit Documents, including, without
limitation, all interests in Obligations purchased by such Bank pursuant to
Section 12.06(b), and all other claims of any nature or description arising out
of or connected with this Agreement or any other Credit Document, irrespective
of whether or not such Bank shall have made any demand hereunder and although
said Obligations, liabilities or claims, or any of them, shall be contingent or
unmatured.
1.123 NOTICES. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, telecopier or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered, if to the Borrower, at
the address specified opposite its signature below; if to any Bank, at its
address specified for such Bank on Annex II hereto; or, at such other address as
shall be designated by any party in a written notice to the other parties
hereto. All such notices and communications shall be mailed, telegraphed,
telexed, telecopied, or cabled or sent by overnight courier, and shall be
effective when received.
1.124 BENEFIT OF AGREEMENT. (a) This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective successors
and assigns of the parties hereto, provided that the Borrower may not assign or
transfer any of its rights or obligations hereunder without the prior written
consent of the Banks. Each Bank may at any time grant participations in any of
its rights hereunder or under any of the Notes to another financial institution,
provided that in the case of any such participation, the participant shall not
have any rights under this Agreement or any of the other Credit Documents (the
participant's rights against such Bank in respect of such participation to be
those set forth in the agreement executed by such Bank in favor of the
participant relating thereto) and all amounts payable by the Borrower hereunder
shall be determined as if such Bank had not sold such participation, except that
the participant shall be entitled to the benefits of Sections 1.10 and 4.04 of
this Agreement to the extent that such Bank would be entitled to such benefits
if the participation had not been entered into or sold, and, provided further
that no Bank shall transfer, grant or assign any participation under which the
participant shall have rights to approve any amendment to or waiver of this
Agreement or any other Credit Document except to the extent such amendment or
waiver would (i) extend the final scheduled maturity of any Loan or Note in
which such participant is participating (it being understood that any waiver of
the application of any prepayment or the method of any application of any
prepayment to, the amortization of the Loans shall not constitute an extension
of the final maturity date), or reduce the rate or extend the time of payment of
interest or Fees thereon (except in connection with a waiver of the
applicability of any post-default increase in interest rates), or reduce the
principal amount thereof, or increase such participant's participating interest
in any Commitment over the amount thereof then in effect (it being understood
that a waiver of any Default or Event of Default or of a mandatory reduction in
the Total Commitment, or a mandatory prepayment, shall not constitute a change
in the terms of any Commitment), (ii) release all or substantially all of the
Collateral or (iii) consent to the assignment or
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transfer by the Borrower of any of its rights and obligations under this
Agreement or any other Credit Document.
(b) Notwithstanding the foregoing, (x) any Bank may assign all or a
portion of its outstanding Loans, AR Commitment and/or Revolving Commitment and
its rights and obligations hereunder to another Bank, and (y) with the consent
of the Agent and the Borrower (which consents shall not be unreasonably
withheld), any Bank may assign all or a portion of its outstanding Loans, AR
Commitment and/or Revolving Commitment and its rights and obligations hereunder
to one or more commercial banks or other financial institutions (including one
or more Banks), provided that all assignments hereunder must be PRo RATA between
the Revolving Commitments and Revolving Loans, on one hand and the AR
Commitments and AR Loans on the other hand. No assignment pursuant to the
immediately preceding sentence shall to the extent such assignment represents an
assignment to an institution other than one or more Banks hereunder, be in an
aggregate amount less than $5,000,000 unless the entire Loans and Commitment of
the assigning Bank are so assigned. If any Bank so sells or assigns all or a
part of its rights hereunder or under the Notes, any reference in this Agreement
or the Notes to such assigning Bank shall thereafter refer to such Bank and to
the respective assignee to the extent of their respective interests and the
respective assignee shall have, to the extent of such assignment (unless
otherwise provided therein), the same rights and benefits as it would if it were
such assigning Bank. Each assignment pursuant to this Section 12.04(b) shall be
effected by the assigning Bank and the assignee Bank executing an Assignment
Agreement substantially in the form of Exhibit H (appropriately completed). In
the event of any such assignment (x) to a commercial bank or other financial
institution not previously a Bank hereunder, either the assigning or the
assignee Bank shall pay to the Agent a nonrefundable assignment fee of $3,500
and (y) to a Bank, either the assigning or assignee Bank shall pay to Agent a
nonrefundable assignment fee of $2,000, and at the time of any assignment
pursuant to this Section 12.04(b), (i) Annex I shall be deemed to be amended to
reflect the Commitment of the respective assignee (which shall result in a
direct reduction to the Commitment of the assigning Bank) and of the other
Banks, and (ii) the Borrower will issue new Notes to the respective assignee and
to the assigning Bank in conformity with the requirements of Section 1.05. Each
Bank and the Borrower agree to execute such documents (including without
limitation amendments to this Agreement and the other Credit Documents) as shall
be necessary to effect the foregoing. Nothing in this clause (b) shall prevent
or prohibit any Bank from pledging its Notes or Loans to a Federal Reserve Bank
in support of borrowings made by such Bank from such Federal Reserve Bank.
(c) Notwithstanding any other provisions of this Section 12.04, no
transfer or assignment of the interests or obligations of any Bank hereunder or
any grant of participation therein shall be permitted if such transfer,
assignment or grant would require the Borrower to file a registration statement
with the SEC or to qualify the Loans under the "Blue Sky" laws of any State.
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(d) Each Bank initially party to this Agreement hereby represents,
and each Person that becomes a Bank pursuant to an assignment permitted by this
Section 12 will, upon its becoming party to this Agreement, represent that it is
a commercial lender, other financial institution or other "accredited" investor
(as defined in SEC Regulation D) which makes loans in the ordinary course of its
business and that it will make or acquire Loans for its own account in the
ordinary course of such business, provided that subject to the preceding clauses
(a) and (b), the disposition of any promissory notes or other evidences of or
interests in Indebtedness held by such Bank shall at all times be within its
exclusive control.
1.125 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the
part of the Agent or any Bank in exercising any right, power or privilege
hereunder or under any other Credit Document and no course of dealing between
the Borrower and the Agent or any Bank shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder
or under any other Credit Document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder or
thereunder. The rights and remedies herein expressly provided are cumulative
and not exclusive of any rights or remedies which the Agent or any Bank would
otherwise have. No notice to or demand on the Borrower in any case shall
entitle the Borrower to any other or further notice or demand in similar or
other circumstances or constitute a waiver of the rights of the Agent or the
Banks to any other or further action in any circumstances without notice or
demand.
1.126 PAYMENTS PRO RATA. (a) The Agent agrees that promptly after
its receipt of each payment from or on behalf of the Borrower in respect of any
Obligations hereunder, it shall distribute such payment to the Banks (other than
any Bank that has expressly waived its right to receive its PRO RATA share
thereof) PRO RATA based upon their respective shares, if any, of the Obligations
with respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise) which is applicable to the payment of the principal of, or interest
on, the Loans or Fees, of a sum which with respect to the related sum or sums
received by other Banks is in a greater proportion than the total of such
Obligation then owed and due to such Bank bears to the total of such Obligation
then owed and due to all of the Banks immediately prior to such receipt, then
such Bank receiving such excess payment shall purchase for cash without recourse
or warranty from the other Banks an interest in the Obligations to such Banks in
such amount as shall result in a proportional participation by all of the Banks
in such amount, provided that if all or any portion of such excess amount is
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thereafter recovered from such Bank, such purchase shall be rescinded and the
purchase price restored to the extent of such recovery, but without interest.
(c) Notwithstanding anything to the contrary contained herein, the
provisions of the preceding Sections 12.06(a) and (b) shall be subject to the
express provisions of this Agreement which require, or permit, differing
payments to be made to Non-Defaulting Banks as opposed to Defaulting Banks.
1.127 CALCULATIONS; COMPUTATIONS. (a) The financial statements to
be furnished to the Banks pursuant hereto shall be made and prepared in
accordance with GAAP consistently applied throughout the periods involved
(except as set forth in the notes thereto or as otherwise disclosed in writing
by the Borrower to the Banks), provided that (x) except as otherwise
specifically provided herein, all computations determining compliance with
Sections 8 and 9, including definitions used therein, shall utilize accounting
principles and policies in effect at the time of the preparation of, and in
conformity with those used to prepare, the December 31, 1995 historical
financial statements of the Borrower delivered to the Banks pursuant to Section
6.10(b) and (y) that if at any time the computations determining compliance with
Sections 8 and 9 utilize accounting principles different from those utilized in
the financial statements furnished to the Banks, such financial statements shall
be accompanied by reconciliation work-sheets.
(b) All computations of interest and Fees hereunder shall be made on
the actual number of days elapsed over a year of 360 days.
1.128 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF
JURY TRIAL. (a) This Agreement and the other Credit Documents and the rights
and obligations of the parties hereunder and thereunder shall be construed in
accordance with and be governed by the law of the state of New York. Any legal
action or proceeding with respect to this Agreement or any other Credit Document
may be brought in the courts of the State of New York or of the United States
for the Southern District of New York, and, by execution and delivery of this
Agreement, the Borrower hereby irrevocably accepts for itself and in respect of
its property, generally and unconditionally, the jurisdiction of the aforesaid
courts. The Borrower further irrevocably consents to the service of process out
of any of the aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
the Borrower located outside New York City and by hand delivery to the Borrower
located within New York City, at its address for notices pursuant to Section
12.03, such service to become effective 30 days after such mailing. The
Borrower hereby irrevocably designates appoints and empowers CT Corporation
System, with offices on the date hereof located at 1633 Broadway, New York, New
York 10019, as its agent for service of process in respect of any such action or
proceeding. Nothing herein shall affect the right of the Agent or any Bank to
serve process
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in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against the Borrower in any other jurisdiction.
(b) The Borrower hereby irrevocably waives any objection which it may
now or hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement or any other
Credit Document brought in the courts referred to in clause (a) above and hereby
further irrevocably waives and agrees not to plead or claim in any such court
that any such action or proceeding brought in any such court has been brought in
an inconvenient forum.
(c) Each of the parties to this agreement hereby irrevocably waives
all right to a trial by jury in any action, proceeding or counterclaim arising
out of or relating to this Agreement, the other Credit Documents or the
transactions contemplated hereby or thereby.
1.129 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Agent.
12.10 EXECUTION. This Agreement shall be deemed executed by all
parties when the Borrower and each of the Banks shall have signed a copy hereof
(whether the same or different copies) and shall have delivered the same to the
Agent at the Payment Office of the Agent or, in the case of the Banks, shall
have given to the Agent telephonic (confirmed in writing), written telex or
facsimile transmission notice (actually received) at such office that the same
has been signed and mailed to it.
12.11 HEADINGS DESCRIPTIVE. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
12.12 AMENDMENT OR WAIVER. Neither this Agreement nor any other
Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by the Borrower and the Required Banks, provided that no such
change, waiver, discharge or termination shall, without the consent of each Bank
(other than a Defaulting Bank) affected thereby, (i) extend the AR Maturity
Date, the AR Termination Date or the Expiry Date, as the case may be (it being
understood that any waiver of the application of any prepayment of or the method
of application of any prepayment to the amortization of, the Loans shall not
constitute any such extension), or reduce the rate or extend the time of payment
of interest (other than as a result of waiving the applicability of any
post-default increase in interest rates) or Fees thereon, or reduce the
principal amount thereof, or increase the Commitment of any Bank
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over the amount thereof then in effect (it being understood that a waiver of any
Default or Event of Default, or of a mandatory reduction in the Total
Commitment, shall not constitute a change in the terms of any Commitment of any
Bank), (ii) release or permit the release of all or substantially all of the
Collateral except as expressly provided in the Credit Documents, (iii) amend,
modify or waive any provision of this Section 12.12, (iv) reduce the percentage
specified in, or otherwise modify, the definition of Required Banks or (v)
consent to the assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement provided further that no such change, waiver,
discharge or termination shall without the consent of the Super-Majority Banks
change directly or indirectly the definition of Permitted Acquisition or
Super-Majority Banks, extend the date of payment of, or reduce the amount of,
any Scheduled Repayment, or release Holdings from the Holdings Guaranty and/or
release the Borrower's stock pledged under the Holdings Pledge Agreement. No
provision of Section 11 may be amended without the consent of the Agent and to
the extent any such amendment would affect the Co-Agent solely in its capacity
as such, the Co-Agent, no provision of Section 2 may be amended without the
consent of the Letter of Credit Issuer affected thereby and no provision of
Section 1.01(B)(a) or (b) or any other provision applicable to Swingline Loans
may be amended without the consent of BTCo.
12.13 SURVIVAL. All indemnities set forth herein including, without
limitation, in Section 1.10, 1.11, 2.06, 4.04, 11.06 or 12.01 shall survive the
execution and delivery of this Agreement and the making and repayment of the
Loans.
12.14 DOMICILE OF LOANS. Each Bank may transfer and carry its Loans
at, to or for the account of any branch office, subsidiary or affiliate of such
Bank, provided that the Borrower shall not be responsible for costs arising
under Section 1.10, 2.06 or 4.04 resulting from any such transfer (other than a
transfer pursuant to Section 1.12) to the extent not otherwise applicable to
such Bank prior to such transfer.
12.15 CONFIDENTIALITY. Subject to Section 12.04, the Banks shall
hold all non-public information obtained pursuant to the requirements of this
Agreement which has been identified as such by the Borrower in accordance with
its customary procedure for handling confidential information of this nature and
in accordance with safe and sound banking practices and in any event may make
disclosure reasonably required by any bona fide transferee or participant in
connection with the contemplated transfer of any Loans or participation therein
(so long as such transferee or participant agrees to abide by the provisions of
this Section 12.15) or as required or requested by any governmental agency or
representative thereof or pursuant to legal process, provided that, unless
specifically prohibited by applicable law or court order, each Bank shall notify
the Borrower of any request by any governmental agency or representative thereof
(other than any such request in connection with an examination of the financial
condition of such Bank by such governmental agency) for disclosure of any such
non-public information prior to disclosure of such information, and
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provided further that in no event shall any Bank be obligated or required to
return any materials furnished by the Borrower or any Subsidiary.
12.16 LENDER REGISTER. The Borrower hereby designates the Agent to
serve as its agent, solely for purposes of this Section 12.16, to maintain a
register (the "Register") on which it will record the Commitment, if any, from
time to time of each of the Banks, the Loans made by each of the Banks and each
repayment in respect of the principal amount of the Loans of each Bank. Failure
to make any such recordation, or any error in such recordation, shall not affect
the Borrower's obligations in respect of such Loans. With respect to any Bank,
the transfer of the rights to the principal of, and interest on, any Loans shall
not be effective until such transfer is recorded on the Register maintained by
the Agent with respect to ownership of such Loans and prior to such recordation
all amounts owing to the transferor with respect to such Loans shall remain
owing to the transferor. The registration of assignment or transfer of all or
part of any Loans shall be recorded by the Agent on the Register only upon the
acceptance by the Agent of a properly executed and delivered Assignment
Agreement pursuant to Section 12.04(b). The Borrower agrees to indemnify the
Agent from and against any and all losses, claims, damages and liabilities of
whatsoever nature which may be imposed on, asserted against or incurred by the
Agent in performing its duties under this Section 12.16 other than those
resulting from the Agent's willful misconduct or gross negligence.
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IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Agreement to be duly executed and delivered as of the date
first above written.
ADDRESS:
321 N. Clark Street UNIVERSAL OUTDOOR, INC.,
Suite 1010 as Borrower
Chicago, Illinois
Attention: Brian T. Clingen
Tel. No.: (312) 644-8673 By
Fax No.: (312) 644-8071 ---------------------------
Name:
Title:
<PAGE>
BANKERS TRUST COMPANY,
Individually and as Agent
By
--------------------------
Name:
Title:
<PAGE>
LA SALLE NATIONAL BANK,
Individually and as Co-Agent
By
--------------------------
Name:
Title:
<PAGE>
BANK OF AMERICA ILLINOIS
By
--------------------------
Name:
Title:
<PAGE>
BANKBOSTON, N.A.
By
--------------------------
Name:
Title:
<PAGE>
UNION BANK OF CALIFORNIA, N.A.
By
--------------------------
Name:
Title:
<PAGE>
THE BANK OF NEW YORK
By
--------------------------
Name:
Title:
<PAGE>
BANQUE PARIBAS
By
--------------------------
Name:
Title:
<PAGE>
CREDIT LYONNAIS, Chicago Branch
By
--------------------------
Name:
Title:
<PAGE>
THE FIRST NATIONAL BANK
OF CHICAGO
By
--------------------------
Name:
Title:
<PAGE>
FLEET BANK, N.A.
By
--------------------------
Name:
Title:
<PAGE>
HELLER FINANCIAL, INC.
By
--------------------------
Name:
Title:
<PAGE>
STATE STREET BANK AND TRUST
COMPANY
By
--------------------------
Name:
Title:
<PAGE>
SUN TRUST BANK
By
--------------------------
Name:
Title:
<PAGE>
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME FUND
By
--------------------------
Name:
Title:
<PAGE>
ANNEX I
COMMITMENTS
AR Revolving
Bank Commitment Commitment
---- ---------- ----------
Bankers Trust $24,083,333 $1,416,667
Company
La Salle National 24,083,333 1,416,667
Bank
Bank of America 23,611,111 1,388,889
Illinois
BankBoston 23,611,111 1,388,889
(formerly known as
First National Bank
of Boston)
Union Bank of 23,611,111 1,388,889
California, N.A.
The Bank of New 10,388,889 611,111
York
Banque Paribas 10,388,889 611,111
Credit Lyonnais 10,388,889 611,111
The First National 10,388,889 611,111
Bank of Chicago
Fleet Bank, N.A. 10,388,889 611,111
Heller Financial, Inc. 10,388,889 611,111
<PAGE>
ANNEX I
Page 2
AR Revolving
Bank Commitment Commitment
---- ---------- ----------
State Street Bank and 10,388,889 611,111
Trust Company
Sun Trust Bank 10,388,889 611,111
Van Kampen American 10,388,889 611,111
Capital Prime Rate
------------ -----------
Total: $212,500,000 $12,500,000
------------ -----------
------------ -----------
<PAGE>
ANNEX II
BANK ADDRESSES
Bankers Trust Company
130 Liberty Street
New York, New York 10006
Attention: Anthony LoGrippo
Tel. No.: (212) 250-4886
Fax No.: (212) 250-7218
La Salle National Bank 120 South LaSalle Street
Chicago, Illinois 60603
Attention: Jeffrey D. Steele
Tel. No.: (312) 904-2721
Fax No.: (312) 904-4364
Bank of America Illinois 231 South LaSalle Street
Chicago, Illinois 60697
Attention: Charles Gonzalez
Tel. No.: (312) 828-2710
Fax No.: (312) 828-1974
BankBoston Mail Stop 01-08-08
(formerly known as First 100 Federal Street
National Bank of Boston) Boston, Massachusetts 02110
Attention: Julie Jalelian
Tel. No.: (617) 434-9974
Fax No.: (617) 434-3401
Union Bank 445 South Figuera Street
15th Floor
Los Angeles, California 90071
Attention: Kevin Sampson
<PAGE>
ANNEX II
Page 2
Tel. No.: (213) 236-6585
Fax No.: (213) 236-5747
The Bank of New York One Wall Street
New York, New York 10286
Attention: Jerome Kapellos
Tel. No.: (212) 635-8694
Fax No.: (212) 635-8593
Banque Paribas 787 Seventh Avenue
New York, New York 10019
Attention: Phillip Vuarchex
Tel. No.: (212) 841-2000
Fax No.: (212) 841-2146
Credit Lyonnais 1301 Avenue of the Americas
New York, New York 10019
Attention: Mr. Michael Regan
Tel. No.: (212) 261-7000
Fax No.: (212) 459-3170
The First National Bank of Chicago One First National Plaza
Chicago, Illinois 60670
Attention: Jeff Bakalar
Tel. No.: (312) 732-3179
Fax No.: (312) 732-8587
Fleet Bank, N.A. 175 Water Street
28th Floor
New York, New York 10038
Attention: Tanya Crossley
Tel. No.: (212) 602-2995
Fax No.: (212) 602-2663
Heller Financial, Inc. 500 West Monroe Street
<PAGE>
ANNEX II
Page 3
Chicago, Illinois 60661
Attention: Joann Holmann
Tel. No.: (312) 441-7596
Fax No.: (312) 441-7357
State Street Bank and Trust Company 225 Franklin Street
Boston, Massachusetts 02110
Attention: John Tyler
Tel. No.: (617) 664-4303
Sun Trust Bank Mail Code FL-Orlando-2047
Post Office Box 3833
Orlando, Florida 32802
Attention: Chris Aguliar
Tel. No.: (407) 237-5210
Fax No.: (407) 237-4253
Van Kampen American Capital One Parkview Plaza
Prime Rate Income Trust Oakbrook Terrace, Illinois 60181
Attention: Jeff Maillet
Tel. No.: (708) 684-6438
Fax No.: (708) 684-6740
<PAGE>
ANNEX III
GOVERNMENT APPROVALS
<PAGE>
ANNEX IV
SUBSIDIARIES
<PAGE>
ANNEX V
PROPERTIES
<PAGE>
ANNEX VI
EXISTING INDEBTEDNESS
<PAGE>
ANNEX VII
INSURANCE POLICIES
<PAGE>
ANNEX VIII
EXISTING LIENS
<PAGE>
ANNEX IX
MANAGEMENT FEES
None
<PAGE>
EXHIBIT 11.1
UNIVERSAL OUTDOOR HOLDINGS, INC.
COMPUTATION OF EARNINGS PER SHARE
(DOLLARS IN THOUSANDS EXCEPT FOR PER SHARE INFORMATION)
<TABLE>
<CAPTION>
1994 1995 1996
--------- --------- ---------
<S> <C> <C> <C>
Loss before extraordinary item.................................................... 5,166 3,703 9,229
Extraordinary loss on early extinguishment of debt................................ -- -- 26,574
--------- --------- ---------
Net loss.......................................................................... 5,166 3,703 35,803
--------- --------- ---------
--------- --------- ---------
Weighted average common and common equivalent shares outstanding.................. 7,654 7,654 15,787
--------- --------- ---------
--------- --------- ---------
Loss per common and common equivalent share:
Loss before extraordinary item.................................................... $ 0.67 $ 0.48 $ 0.58
Extraordinary loss on early extinguishment of debt................................ $ -- $ -- $ 1.68
--------- --------- ---------
Net loss.......................................................................... $ 0.67 $ 0.48 $ 2.27
--------- --------- ---------
--------- --------- ---------
</TABLE>
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of our report dated February 28, 1997
relating to the consolidated financial statements of Universal Outdoor Holdings,
Inc. for each of the three years in the period ended December 31, 1996, our
report dated June 14, 1996 relating to the statement of revenue and direct
expenses of Ad-Sign, and our report dated February 28, 1997 relating to the
financial statements of POA Acquisition Corporation which appear in such
Prospectus. We also consent to the references to us under the headings "Experts"
and "Selected Consolidated Financial and Other Data" in such Prospectus.
However, it should be noted that Price Waterhouse LLP has not prepared or
certified such "Selected Consolidated Financial and Other Data."
Price Waterhouse LLP
Chicago, Illinois
June 20, 1997
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated July 21, 1995, with respect to the financial statements
of NOA Holding Company included in the Post-Effective Amendment No. 5 to the
Registration Statement (No. 33-93852) and related Prospectus of Universal
Outdoor Holdings, Inc.
ERNST & YOUNG LLP
Minneapolis, Minnesota
June 20, 1997
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
(and to all references to our Firm) included in or made a part of Registration
No. 33-93852.
Arthur Andersen LLP
Baltimore, Maryland,
June 20, 1997
