<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JANUARY 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 333-26091
BOOTH CREEK SKI HOLDINGS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 84-1359604
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
HIGHWAY 267 AND NORTHSTAR DRIVE
TRUCKEE, CALIFORNIA 96160
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(530) 562-1010
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
-- ----
As of February 27, 1998, 1,000 shares of the registrant's common stock
were issued and outstanding.
<PAGE> 2
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements............................... 1
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations...... 11
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings.................................. 20
ITEM 2. Changes in Securities.............................. 23
ITEM 6. Exhibits and Reports on Form 8-K................... 23
SIGNATURES......................................... 24
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
Booth Creek Ski Holdings, Inc.
Consolidated Balance Sheets
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
JANUARY 30, OCTOBER 31,
1998 1997
---------------------------
<S> <C> <C>
(Unaudited)
ASSETS
Current assets:
Cash $ 1,511 $ 462
Accounts receivable, net of allowances of $37 and $35,
respectively 1,638 1,528
Inventories 3,965 3,059
Prepaid expenses and other current assets 3,064 1,396
------------------------
Total current assets 10,178 6,445
Property and equipment, net 127,125 123,154
Real estate held for development and sale 11,335 11,335
Deferred financing costs, net of accumulated
amortization of $1,061 and $782, respectively 5,950 6,229
Timber rights and other assets 6,963 7,402
Goodwill, net of accumulated amortization of $2,517 and
$1,953, respectively 31,287 31,851
------------------------
Total assets $ 192,838 $186,416
========================
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Senior credit facility $ 6,500 $ 15,000
Current portion of long-term debt 1,924 947
Accounts payable and accrued liabilities 27,034 17,132
------------------------
Total current liabilities 35,458 33,079
Long-term debt 120,249 120,380
Other long-term liabilities 251 196
Commitments and contingencies
Preferred stock of subsidiary; 28,000 shares authorized,
24,000 shares issued and outstanding at January 30,
1998 (25,000 shares at October 31, 1997); liquidation
preference and redemption value of $3,288 at January 30, 1998 3,288 3,354
Shareholder's equity:
Common stock, $.01 par value; 1,000 shares authorized,
issued and outstanding - -
Additional paid-in capital 46,500 46,500
Accumulated deficit (12,908) (17,093)
------------------------
Total shareholder's equity 33,592 29,407
------------------------
Total liabilities and shareholder's equity $ 192,838 $186,416
========================
</TABLE>
See accompanying notes.
1
<PAGE> 4
Booth Creek Ski Holdings, Inc.
Consolidated Statements of Operations
(In thousands)
<TABLE>
<CAPTION>
(UNAUDITED)
THREE MONTHS ENDED
JANUARY 30, JANUARY 31,
1998 1997
---------------- ----------------
<S> <C> <C>
Revenue:
Resort operations $ 39,016 $ 23,784
Real estate and other - 140
-----------------------------
Total revenue 39,016 23,924
Operating expenses:
Cost of sales - resort operations 22,853 15,370
Cost of sales - real estate and other - 123
Depreciation and depletion 3,029 1,503
Amortization of goodwill 564 268
Selling, general and administrative expense 3,437 2,227
Management fees and corporate expenses 512 306
-----------------------------
Total operating expenses 30,395 19,797
-----------------------------
Operating income 8,621 4,127
Other income (expense):
Interest expense (4,087) (1,961)
Amortization of deferred financing costs (279) (602)
Interest and other income - 14
-----------------------------
Other income (expense), net (4,366) (2,549)
-----------------------------
Income before income taxes and minority interest 4,255 1,578
Income tax expense - (474)
-----------------------------
Income before minority interest 4,255 1,104
Minority interest (70) (15)
-----------------------------
Net income $ 4,185 $ 1,089
=============================
</TABLE>
See accompanying notes.
2
<PAGE> 5
Booth Creek Ski Holdings, Inc.
Consolidated Statement of Shareholder's Equity
Three months ended January 30, 1998 (Unaudited)
and the year ended October 31, 1997
(In thousands)
<TABLE>
<CAPTION>
COMMON STOCK NOTE
-------------- ADDITIONAL RECEIVABLE
SHARES AMOUNT PAID-IN FROM ACCUMULATED
CAPITAL SHAREHOLDER DEFICIT TOTAL
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Initial capitalization and
balance at October 31, 1996 1,000 $- $ 2 $(2) $ - $ -
Payment received on
shareholder note receivable - - - 2 - 2
Capital contributions - - 46,498 - - 46,498
Net loss - - - - (17,093) (17,093)
---------------------------------------------------------------
Balance at October 31, 1997 1,000 - 46,500 - (17,093) 29,407
Net income - - - - 4,185 4,185
---------------------------------------------------------------
Balance at January 30, 1998 1,000 $- $46,500 $ - $(12,908) $ 33,592
==============================================================
</TABLE>
See accompanying notes.
3
<PAGE> 6
Booth Creek Ski Holdings, Inc.
Consolidated Statements of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
(UNAUDITED)
THREE MONTHS ENDED
JANUARY 30, JANUARY 31,
1998 1997
------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,185 $ 1,089
Adjustment to reconcile net income to net cash
provided by operating activities:
Depreciation and depletion 3,029 1,503
Amortization of goodwill 564 268
Noncash cost of real estate sales - 99
Amortization of deferred financing costs 279 602
Deferred income tax expense - 474
Minority interest 70 15
------------------------------------------
Changes in operating assets and liabilities:
Accounts receivable (110) (823)
Inventories (906) (290)
Prepaid expenses and other current assets (1,668) (634)
Accounts payable and accrued liabilities 9,902 4,230
Other long-term liabilities 55 -
------------------------------------------
Net cash provided by operating activities 15,400 6,533
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of ski resorts, net of cash acquired - (133,498)
Capital expenditures for property and equipment (4,473) (211)
Other assets 439 (772)
------------------------------------------
Net cash used in investing activities (4,034) (134,481)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of senior credit facility (8,500) -
Proceeds of long-term debt - 100,000
Principal payments of long-term debt (1,681) (950)
Deferred financing costs - (5,106)
Purchase of preferred stock of subsidiary and
payment of dividends (136) -
Payment received on shareholder note receivable - 2
Capital contributions - 39,998
------------------------------------------
Net cash (used in) provided by financing activities (10,317) 133,944
------------------------------------------
Increase in cash 1,049 5,996
Cash at beginning of period 462 -
------------------------------------------
Cash at end of period $ 1,511 $5,996
==========================================
</TABLE>
See accompanying notes.
4
<PAGE> 7
Booth Creek Ski Holdings, Inc.
Notes to Consolidated Financial Statements
January 30, 1998
1. ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Booth Creek Ski Holdings, Inc. ("Booth Creek") was organized on October 8, 1996
in the State of Delaware for the purpose of acquiring and operating various ski
resorts, including Northstar-at-Tahoe ("Northstar"), Sierra-at-Tahoe
("Sierra"), Bear Mountain, Waterville Valley, Mt. Cranmore, the Summit at
Snoqualmie Pass (the "Summit" - formerly Snoqualmie Pass) and Grand Targhee.
The consolidated financial statements include the accounts of Booth Creek and
its subsidiaries (collectively referred to as the "Company"), all of which are
wholly-owned except for Ski Lifts, Inc. (the owner and operator of the Summit),
which has shares of preferred stock owned by a third party. All
significant intercompany transactions and balances have been eliminated.
Booth Creek is a wholly-owned subsidiary of Booth Creek Ski Group, Inc.
("Parent").
The accompanying consolidated financial statements as of January 30, 1998 and
for the three month periods ended January 30, 1998 and January 31, 1997 are
unaudited, but include all adjustments (consisting only of normal, recurring
adjustments) which, in the opinion of management of the Company, are considered
necessary for a fair presentation of the Company's financial position at
January 30, 1998, and its operating results and cash flows for the three month
periods ended January 30, 1998 and January 31, 1997. Due to the highly seasonal
nature of the Company's business and the effect of acquisitions (Note 2), the
results for the interim periods are not necessarily indicative of results for
the entire year. Certain information and footnote disclosures normally included
in annual financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to generally accepted
accounting principles applicable for interim periods. Management believes that
the disclosures made are adequate to make the information presented not
misleading.
REPORTING PERIODS
The Company's reporting periods end on the Friday closest to the end of each
month.
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 results.
5
<PAGE> 8
Booth Creek Ski Holdings, Inc.
Notes to Consolidated Financial Statements (continued)
2. ACQUISITIONS
HISTORICAL ACQUISITIONS
During the year ended October 31, 1997, the Company made the following
acquisitions (the "Historical Acquisitions"), which have been included in the
accompanying statements of operations since the effective dates of such
acquisitions, and accounted for using the purchase method.
Resort Acquisition Date
------ -----------------
Waterville Valley November 27, 1996
Mt. Cranmore November 27, 1996
Northstar December 3, 1996
Sierra December 3, 1996
Bear Mountain December 3, 1996
The Summit January 15, 1997
Grand Targhee March 18, 1997
LOON MOUNTAIN ACQUISITION
On February 26, 1998, the Company acquired Loon Mountain Recreation Corporation
("LMRC"), the owner and operator of the Loon Mountain ski resort located in New
Hampshire. The acquisition of LMRC (the "Loon Mountain Acquisition") was
effected pursuant to an Agreement and Plan of Merger, dated September 18, 1997,
as amended as of December 22, 1997, by and among the Company, as assignee of
Parent, LMRC Acquisition Corp. and LMRC.
The aggregate net purchase price for the Loon Mountain Acquisition,
determined through negotiations between the Company and LMRC, was approximately
$29.0 million (including the assumption of debt which was repaid in connection
with the acquisition). The Loon Mountain Acquisition was financed through (i)
proceeds from the offering at par of $17,500,000 aggregate principal amount of
the Company's 12.5% Series C Senior Notes due 2007 (See Note 4), issued under
the Indenture, dated as of March 18, 1997, as amended and supplemented, among
the Company, the Guarantors named therein, and the trustee, (ii) a capital
contribution of $10.5 million to the Company by Parent (the "Equity
Financing"), and (iii) available cash on hand and borrowings under the
Company's Amended and Restated Credit Agreement dated March 18, 1997 as amended
(the "Senior Credit Facility").
6
<PAGE> 9
Booth Creek Ski Holdings, Inc.
Notes to Consolidated Financial Statements (continued)
2. ACQUISITIONS (CONTINUED)
PRO FORMA FINANCIAL INFORMATION
The following table represents unaudited pro forma financial information which
presents the Company's consolidated results of operations for the three month
periods ended January 30, 1998 and January 31, 1997 as if the Historical
Acquisitions, Loon Mountain Acquisition and related financing transactions
occurred on November 1, 1996.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JANUARY 30, JANUARY 31,
1998 1997
------------------ ----------------
(In thousands)
<S> <C> <C>
Statement of operations data:
Revenue $ 45,773 $ 38,086
Operating income $ 10,359 $ 833
Net income (loss) $ 5,326 $ (3,285)
Other data:
EBITDA $ 14,548 $ 4,875
Noncash cost of real estate and other $ - $ 232
</TABLE>
EBITDA represents income from operations before depreciation, depletion and
amortization expense and the noncash cost of real estate sales.
The pro forma information does not purport to be indicative of results that
actually would have occurred had the acquisitions been made on the dates
indicated or of results which may occur in the future.
7
<PAGE> 10
Booth Creek Ski Holdings, Inc.
Notes to Consolidated Financial Statements (continued)
3. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities consist of the following at January
30, 1998 and October 31, 1997:
JANUARY 30, OCTOBER 31,
1998 1987
----------------------------------
(In thousands)
Accounts payable $11,832 $7,618
Accrued compensation and benefits 2,548 1,575
Taxes other than income 1,614 545
Unearned income and deposits 4,803 3,341
Interest 5,536 2,027
Other 701 2,026
----------------------------------
$27,034 $17,132
==================================
4. FINANCING ARRANGEMENTS
SENIOR CREDIT FACILITY
Effective February 26, 1998, the borrowing availability under the Senior Credit
Facility was increased to $25 million (the "Senior Credit Facility Amendment").
The Senior Credit Facility requires that the Company not have borrowings
thereunder in excess of $6.0 million between February 15 and two business days
preceding March 15 of each year, have no borrowings on the business day
preceding March 15 of each year and cannot have borrowings in excess of $6.0
million between March 15 and April 15 of each year ($7.5 million between March
15, 1998 and April 15, 1998). Total borrowings outstanding under the Senior
Credit Facility at January 30, 1998 were $6.5 million, which bore interest at
9%.
LONG-TERM DEBT
At January 30, 1998, $116 million of the Company's 12.5% Series B Senior Notes
due 2007 (the "Series B Notes") were outstanding. The Series B Notes mature on
March 15, 2007, and bear interest at 12.5% payable semiannually on each March
15 and September 15.
8
<PAGE> 11
Booth Creek Ski Holdings, Inc.
Notes to Consolidated Financial Statements (continued)
4. FINANCING ARRANGEMENTS (CONTINUED)
LONG-TERM DEBT (CONTINUED)
On February 26, 1998, the Company consummated an offering (the "Offering") of
$17.5 million of its 12.5% Series C Senior Notes (the "Series C Notes" and
together with the Series B Notes, the "Notes"). The net proceeds of the
Offering, the $10.5 million Equity Financing, and available cash on hand and
borrowings under the Senior Credit Facility, were used to finance the Loon
Mountain Acquisition (Note 2). The Series B Notes and Series C Notes are
identical in all respects other than issue dates and the date from which
interest accrues and except that the Notes will be subject to certain transfer
restrictions.
The Notes are unconditionally guaranteed, on an unsecured senior basis, as to
the payment of principal, premium, if any, and interest, jointly and severally
(the "Guarantees"), by all Restricted Subsidiaries of the Company having either
assets or shareholders' equity in excess of $20,000 (the "Guarantors"). All of
the Company's direct and indirect subsidiaries are Restricted Subsidiaries,
except the Real Estate LLC. Each Guarantee is effectively subordinated to all
secured indebtedness of such Guarantor. The Notes are general senior unsecured
obligations of the Company ranking equally in right of payment with all other
existing and future senior indebtedness of the Company and senior in right of
payment to any subordinated indebtedness of the Company. The Notes are
effectively subordinated in right of payment to all secured indebtedness of the
Company and the Guarantors, including indebtedness under the Senior Credit
Facility. In addition, the Notes are structurally subordinated to any
indebtedness of the Company's subsidiaries that are not Guarantors. The
Guarantors are wholly-owned subsidiaries of Booth Creek and have fully and
unconditionally guaranteed the Notes on a joint and several basis. Booth Creek
is a holding company and has no operations, assets or cash flows separate from
its investments in its subsidiaries. In addition, the assets, equity, income
and cash flow of the Real Estate LLC, Booth Creek's only non-guarantor
subsidiary, are inconsequential and the common stock of the Real Estate LLC is
entirely owned by Booth Creek. Accordingly, Booth Creek has not presented
separate financial statements and other disclosures concerning the Guarantors
or its non-guarantor subsidiary because management has determined that such
information is not material to investors.
Prior to the consummation of the Loon Mountain Acquisition, the Company
solicited consents from the holders of its Series B Notes to, among other
things, (i) permit the Offering, (ii) permit the consummation of the Senior
Credit Facility Amendment, (iii) modify the definitions of "Change of Control"
and "Restricted Subsidiary" in the Indenture, and (iv) make minor
modifications to certain other Indenture provisions. On February 20, 1998, the
9
<PAGE> 12
Booth Creek Ski Holdings, Inc.
Notes to Consolidated Financial Statements (continued)
4. FINANCING ARRANGEMENTS (CONTINUED)
LONG-TERM DEBT (CONTINUED)
Company received sufficient consents to effect such actions and entered into a
supplemental indenture modifying the Indenture, which became effective on
February 26, 1998, upon the consummation of the Loon Mountain Acquisition and
Equity Financing.
For the three months ended January 30, 1998 the Company entered into long-term
debt and capital lease obligations of approximately $2.5 million for the
purchase of equipment.
5. INCOME TAXES
During the year ended October 31, 1997, the Company recorded tax benefits for
current operating losses to the extent of recorded deferred tax liabilities.
Due to the Company's lack of profitable history, the tax benefits of excess
operating losses were fully offset by a valuation reserve. Similarly, no
federal income tax provision is expected for the year ended October 30, 1998
due to continued operating losses. Accordingly, during the quarter ended
January 30, 1998, no federal income tax provision has been provided.
Based on preliminary purchase price allocations for the Historical Acquisitions
as described in Note 2, deferred tax liabilities of approximately $4.4 million
were recorded in the preliminary opening balance sheets. This resulted in an
expected effective income tax rate of approximately 25%, which was used by the
Company in preparing its consolidated financial statements for the three months
ended January 31, 1997. Final purchase price allocations, primarily for the
Summit acquisition, resulted in less value being assigned to property and
equipment, more to goodwill and a corresponding reduction in the original
deferred tax liabilities. Accordingly, the actual income tax rate for the year
ended October 31, 1997 was 10.8%, and was adjusted for in the fourth quarter of
1997 on a catch-up basis as a change in estimate.
10
<PAGE> 13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The discussion and analysis below relates to the historical financial
statements and historical and pro forma results of operations of the Company
and the liquidity and capital resources of the Company. The following
discussion should be read in conjunction with the consolidated financial
statements and related notes thereto included elsewhere in this report. The
results of Loon Mountain Recreation Corporation, which was acquired by the
Company on February 26, 1998, are not included in the Company's consolidated
historical results of operations for the periods covered by this report.
Except for historical matters, the matters discussed in Part I, Item 2.
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" are forward-looking statements that involve risks and
uncertainties. Forward-looking statements are based on management's current
views and assumptions and involve risks and uncertainties that could
significantly affect expected results. The Company wishes to caution the reader
that certain factors below could significantly and materially affect the
Company's actual results, causing results to differ materially from those in
any forward-looking statement. These factors include: regional and national
economic conditions, the successful or unsuccessful integration of acquired
businesses, weather conditions, natural disasters (such as earthquakes),
industry competition and governmental regulation and risks associated with
expansion, leased property and property used pursuant to the United States
Forest Service permits.
GENERAL
The Company's ski operations are highly sensitive to regional weather
conditions and the overall strength of the regional economies in the areas in
which the Company operates. The Company believes that the geographic diversity
of the Company's resorts and the use of extensive snowmaking technology coupled
with advanced trail grooming equipment, which together can provide consistent
skiing conditions, can partially mitigate the risk of both economic downturns
and adverse weather conditions in any given region. However, the Company
remains vulnerable to warm weather, heavy rains and drought conditions, which
can have a significant effect on the operating revenues and profitability at
any one of the Company's resorts.
The Company's three most weather-sensitive resorts, Bear Mountain,
Waterville Valley and Mt. Cranmore, have invested heavily in snowmaking
capabilities to provide coverage on virtually all of their trails and have been
open for skiing at least 112, 159, and 103 days, respectively, during each of
the last six ski seasons. The Company's Northstar, Sierra, Summit and Grand
Targhee resorts are less weather-sensitive based on their historical natural
snowfall, averaging approximately 286, 470, 379, and 528 inches of snowfall,
respectively, per year since 1991 through the 1996/97 ski season. As a result
of their historic natural snowfall, their snowmaking capabilities are
considerably less extensive than at Bear Mountain, Waterville Valley or Mt.
Cranmore.
The Company's results of operations are also highly dependent on its
ability to compete in each of the large regional ski markets in which it
operates. At Northstar and Sierra, more than 80% of the 1996/97 ski season
total skier days were attributable to residents of the San Francisco,
Sacramento and Central California Valley regions. At Bear Mountain, more than
95%
11
<PAGE> 14
of the 1996/97 ski season total skier days were attributable to residents of the
Los Angeles and San Diego metropolitan regions. At Waterville Valley and Mt.
Cranmore, more than 79% of the 1996/97 ski season total skier days were
attributable to residents of the Boston metropolitan area and southern New
Hampshire. At the Summit, the Company estimates that more than 95% of the
1996/97 ski season total skier days were attributable to residents of the
Seattle/Tacoma metropolitan region. The Company's Grand Targhee resort attracts
approximately 62% of its skiers from outside its local skiing population.
In addition to revenue generated from skiing operations, the Company's
resorts generate significant revenue from non-ski operations, including
lodging, conference center services, health and tennis clubs and summer
activities such as mountain biking rentals and golf course fees.
A significant portion of total operating costs at the Company's resorts
are variable, consisting primarily of retail and food service cost of sales,
utilities and labor expense. These variable costs can fluctuate significantly
based upon skier days and other seasonal factors. With the exception of certain
management, marketing and maintenance personnel, all of the Company's employees
are compensated on an hourly basis.
RESULTS OF OPERATIONS OF THE COMPANY
Historical Three Months Ended January 30, 1998 as Compared to the
Historical Three Months Ended January 31, 1997
The Company was formed October 8, 1996. During the year ended October 31,
1997, the Company made the following acquisitions which are included in the
results of operations of the Company from the respective purchase dates and
were accounted for using the purchase method:
RESORT ACQUISITION DATE
- -----------------------------------------------------------------------
Waterville Valley November 27, 1996
Mt. Cranmore November 27, 1996
Northstar December 3, 1996
Sierra December 3, 1996
Bear Mountain December 3, 1996
The Summit January 15, 1997
Grand Targhee March 18, 1997
Total revenue for the three months ended January 30, 1998 was
$39,016,000, an increase of $15,092,000, or 63.1%, over the Company's revenues
for the three months ended January 31, 1997. Due to the timing of the
acquisitions, the 1997 period does not reflect a full quarter of operating
revenues for the resorts, which accounts for a significant part of the
increase. The increase in revenue is also due to more typical weather
conditions in the Lake Tahoe region in the current period than during the
comparable period in the 1996/97 ski season. During the 1996/97 ski season,
revenue was negatively impacted by a mudslide which shut down the highway which
provides primary access to Sierra and poor weather conditions during the
holiday period at many of the Company's other resorts.
12
<PAGE> 15
Total operating expenses for the three months ended January 30, 1998 were
$30,395,000, an increase of $10,598,000, or 53.5%, over the Company's total
operating expenses for the three months ended January 31, 1997. Due to the
timing of the acquisitions in the 1997 period, the 1997 period does not reflect
a full quarter of operating expenses for the resorts, which accounts for a
significant part of the increase. During the 1998 quarter, the Company was
able to achieve savings in payroll and other expenses using its management
information systems.
Interest expense for the three months ended January 30, 1998 totaled
$4,087,000, an increase of $2,126,000 over the Company's interest expense for
the three months ended January 31, 1997, reflecting generally higher levels of
borrowings and higher interest rates in the 1998 period. Interest expense for
the three months ended January 30, 1998 is primarily comprised of interest on
$116 million aggregate principal amount of the Company's 12.5% Senior Notes due
2007, and interest on the Senior Credit Facility at approximately 9%. For the
three months ended January 31, 1997, interest expense is primarily comprised of
interest on $90 million in bridge notes and $10 million in intercompany notes
to the Company's parent (together, the "Bridge Financing"), which bore interest
at approximately 11% per annum. The Bridge Financing was initially incurred in
connection with the resort acquisitions which occurred on November 27, 1996 and
December 3, 1996, respectively.
During the year ended October 31, 1997, the Company recorded tax benefits
for current operating losses to the extent of recorded deferred tax
liabilities. Due to the Company's lack of profitable history, the tax benefits
of excess operating losses were fully offset by a valuation reserve. Similarly,
no federal income tax provision is expected for the year ended October 30, 1998
due to continued operating losses. Accordingly, during the quarter ended
January 30, 1998, no federal income tax provision has been provided.
For the quarter ended January 31, 1997, income taxes were based on
preliminary purchase price allocations for the Company's acquisitions of the
resorts. Deferred tax liabilities of approximately $4.4 million were recorded
in the preliminary opening balance sheets. This resulted in an expected income
tax benefit rate of approximately 25%, which was used by the Company in
preparing its financial statements through the third quarter of 1997. Final
purchase allocations, primarily for the Summit acquisition, resulted in less
value being assigned to fixed assets, more to goodwill and a corresponding
reduction in the original deferred tax liabilities. Accordingly, the actual
income tax benefit rate for the year ended October 31, 1997 was 10.8%, and was
adjusted for in the fourth quarter on a catch-up basis as a change in estimate.
Pro Forma Three Months Ended January 30, 1998 as Compared to the Pro
Forma Three Months Ended January 31, 1998
The following unaudited pro forma results of operations of the Company for
the three months ended January 30, 1998 and January 31, 1997 assume that all
the resort acquisitions (including the Loon Mountain Acquisition) and related
financings had occurred on November 1, 1996. These unaudited pro forma results
of operations are not necessarily indicative of the actual results of
operations that would have been achieved nor are they necessarily indicative of
future results of operations.
13
<PAGE> 16
<TABLE>
<CAPTION>
PRO FORMA THREE PRO FORMA THREE
MONTHS ENDED MONTHS ENDED
JANUARY 30, 1998 JANUARY 31, 1997
--------------------------------------------------
<S> <C> <C>
(In thousands)
STATEMENT OF OPERATIONS DATA:
Revenue:
Resort operations $ 45,773 $ 37,642
Real estate and other - 444
--------------------------------------------------
45,773 38,086
Operating expenses:
Resort operations 31,225 33,159
Cost of sales - real estate and other - 284
Depreciation, depletion and amortization 4,189 3,810
--------------------------------------------------
Operating income 10,359 833
Interest expense (net) 4,963 4,437
--------------------------------------------------
Pre-tax income (loss) 5,396 (3,604)
Income tax benefit - (389)
--------------------------------------------------
Income (loss) before minority interest 5,396 (3,215)
Minority interest 70 70
--------------------------------------------------
Net income (loss) $ 5,326 $ (3,285)
==================================================
OTHER DATA:
EBITDA $ 14,548 $ 4,875
Noncash cost of real estate sales $ - $ 232
</TABLE>
Total pro forma revenues for the three months ended January 30, 1998 would
have been $45,773,000, an increase of $7,687,000, or 20.2%, over the comparable
period in 1997. Northstar, Sierra, Grand Targhee, Loon Mountain and Waterville
Valley generated increased revenues in the 1998 period of 40%, 108%, 29%, 21%,
and 9%, respectively, due primarily to paid skier day increases, and improved
yields at Grand Targhee and Loon Mountain. The increase in revenue is
primarily due to more typical weather conditions in the Lake Tahoe region in
the current period than during the comparable period in the 1996/97 ski season.
Paid skier visits would have increased 14%, or approximately 107,000, in the
1998 quarter as compared to the 1997 quarter primarily due to improved weather
conditions during the holiday period which allowed travelers to reach the
Company's resorts. During the first quarter of fiscal 1997, revenues were
negatively impacted by a mudslide which shut down the highway which provides
primary access to Sierra as well as poor weather conditions during the
holiday period at many of the
14
<PAGE> 17
Company's other resorts. The Company's increased revenues and paid skier visits
in the current quarter were partially offset by decreases in revenue during the
1998 period at the Summit and Bear Mountain of 2% and 8%, respectively, due poor
weather conditions which delayed the resorts season opening and resulted in
decreases in paid skier visits. The Company had no sales of real estate during
the three months ended January 30, 1998 as compared to $444,000 in the
comparable 1997 pro forma period.
Pro forma resort operating expenses, excluding depreciation, depletion and
amortization for the three month period ended January 30, 1998 would have been
$31,225,000, a decrease of $1,934,000, or 5.8%, over the comparable period in
1997. Pro forma operating expenses for the three months ended January 30, 1998
at most of the Company's resorts were generally consistent with the comparable
1997 pro forma period except for Bear Mountain which experienced a reduction in
operating expenses of approximately $1.9 million. The late 1997/98 ski season
opening along with a reduction in snowmaking costs resulted in lower operating
expenses at Bear Mountain when compared to the comparable 1997 period.
Pro forma depreciation, depletion and amortization for the pro forma three
month period ended January 30, 1998 was $4,189,000. The increase of $379,000
or 9.9% over the 1997 period was due to higher average asset balances in the
1998 period.
Net interest expense for the pro forma three month period ended January
30, 1998 would have totaled $4,963,000, an increase of $526,000 from the
comparable in period 1997. The increase was due to interest expense on
borrowings under the Senior Credit Facility used to fund capital expenditures,
maintenance activities and normal seasonal working capital requirements in the
off-season period of 1997.
The income tax benefit for the pro forma three months ended January 31,
1997 of $389,000 reflects the benefit of operating losses to the extent of net
deferred tax liabilities recorded in purchase accounting assuming that all the
resort acquisitions were made on November 1, 1996. As it was assumed that all
of the income tax benefit during the pro forma year ended October 31, 1997
reduced deferred taxes to zero, no additional income tax benefit was recorded
during the pro forma three month period ended January 30, 1998 as it was
assumed that valuation allowances will fully offset the benefit of net
operating losses given assumed lack of profitability of the Company for the pro
forma year ended October 30, 1998.
15
<PAGE> 18
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary liquidity needs are to fund capital expenditures,
service indebtedness and support seasonal working capital requirements. The
Company's primary sources of liquidity are cash flow from operations and
borrowings under the Senior Credit Facility. Virtually all of the Company's
operating income is generated by its subsidiaries. As a result, the Company is
dependent on the earnings and cash flow of, and dividends and distributions or
advances from, its subsidiaries to provide the funds necessary to meet its debt
service obligations. The Senior Credit Facility currently provides for
borrowing availability of up to $25 million. The Senior Credit Facility
requires that the Company not have borrowings thereunder in excess of $6.0
million between February 15 and two business days preceding March 15 of each
year, have no borrowings on the business day preceding March 15 of each year
and not have borrowings in excess of $6.0 million between March 15 and April 15
of each year ($7.5 million between March 15, 1998 and April 15, 1998). The
Company intends to use borrowings under the Senior Credit Facility to meet
seasonal fluctuations in working capital requirements, primarily related to
off-season operations and maintenance activities during the months of May
through October, to fund capital expenditures for lifts, trail work, grooming
equipment and other on-mountain equipment and facilities and to build retail
and other inventories prior to the start of the skiing season and for other
cash requirements.
The Company's capital expenditures for the three months ended January 30,
1998 were approximately $4.5 million. Management anticipates that annual capital
expenditures in each of fiscal 1998 and 1999 will be approximately $7.0
million. Future capital expenditures include approximately $4.0 million in each
of the next two years for resort maintenance and safety and $3.0 million for
resort upgrades that management deems appropriate. The Company plans to fund
these capital expenditures from available operating cash flows, vendor
financing to the extent permitted under the Senior Credit Facility and the
Indenture and borrowings under the Senior Credit Facility.
Management believes that there is a considerable degree of flexibility in
the timing (and, to a lesser degree, the scope) of its capital expenditure
program, and even greater flexibility as to its real estate development
objectives. While the capital expenditure program described above is regarded
by management as important, both as to timing and scope, discretionary capital
spending above maintenance levels can be deferred, in some instances for
substantial periods of time, in order to address cash flow or other
constraints. With respect to the Company's potential real estate development
opportunities, management believes that such efforts will enhance ski-related
revenues and will contribute independently to earnings. In addition, with
respect to significant development projects, the Company anticipates entering
into joint venture arrangements that would reduce infrastructure and other
development costs. Nonetheless, existing lodging facilities in the vicinity of
each resort are believed to be adequate to support current skier volumes, and a
deferral or curtailment of these development efforts is not regarded by
management as likely to adversely affect skier days and ski-related revenues or
profitability. The Company also believes that its current infrastructure is
sufficient, and that development of real estate opportunities is not presently
necessary, to support its existing operations.
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<PAGE> 19
The Company's liquidity will be significantly affected by its high
leverage. As a result of its leveraged position, the Company will have
significant cash requirements to service debt and funds available for working
capital, capital expenditures, acquisitions and general corporate purposes are
limited. In addition, the Company's high level of debt may increase its
vulnerability to competitive pressures and the seasonality of the skiing and
recreational industries. Any decline in the Company's expected operating
performance could have a material adverse effect on the Company's liquidity and
on its ability to service its debt and make required capital expenditures.
Management believes that the Company's cash flow from operations and
borrowings available under the Senior Credit Facility will be sufficient to
enable the Company to meet all of its cash operating and debt service
requirements over the next twelve months.
The Company is currently in the process of evaluating its software and
hardware for Year 2000 compliance. Although a final assessment has not been
completed, the Company believes that the costs to be incurred will not be
material to the overall presentation of the consolidated financial statements.
SEASONALITY
The business of the Company is highly seasonal, with the vast majority of
its annual revenues expected to be generated between November and April of each
fiscal year. Management considers it essential to achieve optimal operating
results during key holidays and weekends during this period. During the
off-season months of May through October, the Company's resorts typically
experience a substantial reduction in labor and utility expense due to the
absence of ski operations, but make significant expenditures for maintenance,
expansion and capital improvement in preparation for the ensuing ski season.
REGULATION AND LEGISLATION
The Company's operations are dependent upon its ownership or control over
the real estate constituting each resort. The real property presently used at
the Northstar and Mt. Cranmore resorts is owned by the Company. The Company
has the right to use a substantial portion of the real property associated with
the Bear Mountain, Sierra, the Summit, Grand Targhee and Waterville Valley
resorts under the terms of special use permits issued by the United States
Forest Service (the "Forest Service" or the "USFS"). The special use permits
for the Bear Mountain, Sierra, Waterville Valley, the Summit and Grand Targhee
resorts were reissued at the time of the Company's acquisition of such resorts,
with the Bear Mountain permit expiring in 2020, the Sierra permit expiring in
2008, the Waterville Valley permit expiring in 2034, the Summit permit expiring
in 2032 and the Grand Targhee permit expiring in 2034.
A substantial portion of the real property associated with the Loon
Mountain resort is likewise used under Forest Service permits. In 1993, the
Forest Service authorized various lift, trail and snowmaking improvements on
Loon Mountain and an expansion onto South Mountain.
17
<PAGE> 20
In 1996, the United States Court of Appeals for the First Circuit overturned
this authorization on the ground that the Forest Service had failed to properly
address certain environmental issues under the National Environmental Policy Act
("NEPA"). Certain improvements and part of the expansion had been constructed
before the First Circuit ruled. On May 5, 1997, the United States District
Court for the District of New Hampshire entered a stipulated order which
authorizes existing improvements to remain in place and existing operations to
continue but generally prohibits future construction, restricts use of a major
snowmaking water source, and requires certain water discharge permits to be
pursued, pending Forest Service reconsideration of the projects under NEPA. See
Part II - Item 1 for a more detailed discussion.
Existing use of Loon Mountain is authorized under a term permit, which
covers facilities and expires in 2006, and a supplemental permit, which covers
the balance of Loon Mountain; existing, non-skiing, use of South Mountain is
authorized under an annual permit which expires in February 1999, but is
expected to be reissued. After the Forest Service reconsiders the
improvements and expansion under NEPA, it will need to render a new decision
and, if appropriate, issue a new permit. At that time, the District Court
order will terminate. Based upon the existing administrative record, and
certain proposed modifications to the resort's snowmaking operations which are
intended to better protect water resources, the Company expects that the
improvements and expansion will be approved by the Forest Service. However, no
assurance can be given regarding the timing or outcome of this process.
In August 1997, the Forest Service authorized the Loon Mountain resort to
construct a new snowmaking pipeline across permitted land. The Forest Service
found that such construction is consistent with the District Court order and
will enable the resort to modify its snowmaking operations to better protect
water resources and replace snowmaking capacity lost under the order. Although
the pipeline has been completed, its use has been challenged by private parties
who assert that the Forest Service violated NEPA. On January 20, 1998, the
United States District Court for the District of New Hampshire issued a
decision finding that the Forest Service violated NEPA in failing to address
the potential for the new pipeline to increase the amount of snow made and any
associated environmental effects. The Company expects the pipeline to be
reapproved upon its reconsideration under NEPA by the Forest Service. However,
no assurances can be given regarding the timing or outcome of this process.
See Part II - Item I for a more detailed discussion.
The Forest Service has the right to approve the location, design and
construction of improvements in the permit area and many operational matters.
Under its Forest Service permits, the Company is required to pay fees to the
Forest Service. Under recently enacted legislation, retroactively effect to
the 1995/96 ski season, the fees range from 1.5% to approximately 4.0% of
certain revenues, with the rate generally rising with increased revenues.
However, through fiscal 1998, the Company is required to pay the greater of
(i) the fees due under the new legislation and (ii) the fees actually paid for
the 1994/95 ski season, unless gross revenue in a ski season falls more than
10% below that of the 1994/95 ski season, in which case the fees due are
calculated solely under the new legislation. The calculation of gross revenues
includes, among other things, lift tickets, ski school lessons, food and
beverages, rental equipment and retail merchandise revenues. Total fees paid
to the Forest Service by the Company during the year ended October
18
<PAGE> 21
31, 1997 were approximately $665,000. The new legislation is not expected to
have a material effect on fees payable in future periods.
The Company believes that its relations with the Forest Service are good,
and, to the best of its knowledge, no special use permit for any major ski
resort has ever been terminated by the Forest Service. Prior to permit
termination, the USFS would be required to notify the Company of the grounds
for such action and to provide it with reasonable time to correct any curable
non-compliance.
REGULATORY MATTERS
The Company's resorts are subject to a wide variety of federal, state and
local laws and regulations relating to land use, water resources, discharge,
storage, treatment and disposal of various materials and other environmental
matters. Management believes that the Company's resorts are presently in
compliance with all land use and environmental laws, except where
non-compliance is not expected to result in a material adverse effect on its
financial condition. The Company also believes that the cost of complying with
known requirements, as well as anticipated investigation and remediation
activities, will not have material adverse effect on its financial condition or
future results of operations. However, failure to comply with such laws could
result in the imposition of severe penalties and other costs or restrictions on
operations by government agencies or courts that could adversely affect
operations.
The Company has not received any notice of material non-compliance with
permits, licenses or approvals necessary for the operation of its properties or
of any material liability under any environmental law or regulation. However,
at Grand Targhee, the Wyoming Department of Environmental Quality (the "DEQ")
has issued a Notice of Violation of state water pollution requirements based on
alleged discharge from a wastewater lagoon without a permit. The Company has
entered into a negotiated compliance order with the DEQ requiring construction
and operation of a new wastewater facility by November 1998 at a cost of
approximately $1.0 million. In November 1997, the concrete construction of the
footings, walls and treatment tanks of such facility was completed.
Pursuant to the air emissions reduction program currently in effect in the
area regulated by the South Coast Air Quality Management District, where Bear
Mountain is located, Bear Mountain will be required to "bank" emission credits
from other facilities which have already implemented NOx emission reductions.
The Company may purchase "banked" emission credits in a one-time transaction at
the current market rate of approximately $700,000 or over time up to the year
2010 at prevailing market rates.
The operations at the Company's resorts require permits and approvals from
certain federal, state and local authorities. In addition, the Company's
operations are heavily dependent upon its continued ability, under applicable
laws, regulations, policies, permits, licenses or contractual arrangements, to
have access to adequate supplies of water with which to make snow and service
the other needs of its facilities, and otherwise to conduct its operations.
There can be no assurance that new applications of existing laws, regulations
and policies, or changes in such laws, regulations and policies will not occur
in a manner that could have a detrimental effect on
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<PAGE> 22
the Company, or that material permits, licenses or agreements will not be
canceled, non-renewed, or renewed on terms materially less favorable to the
Company. Major expansions of any one or more resorts could require, among other
things, the filing of an environmental impact statement or other documentation
with the Forest Service and state or local governments NEPA and certain state
or local counterparts if it is determined that the expansion may have a
significant impact upon the environment. Although the Company has no reason to
believe that it will not be successful in implementing its operations and
development plans, no assurance can be given that necessary permits and
approvals will be obtained.
Pursuant to the First Circuit's decision and the District Court order,
each discussed under Part II - Item 1, LMRC has applied to the Environmental
Protection Agency ("EPA") for a Clean Water Act (the "CWA") discharge permit
covering discharges associated with its snowmaking operations. Certain ongoing
discharges are authorized by the District Court order pending final action on
the permit and subject to the Court's reserved power to modify such approval to
address any resulting environmental issues. The Company expects the EPA to
issue a permit addressing future discharges prior to the 1998/99 ski season.
LMRC does not expect this permit to involve costs or restrictions that have a
material adverse effect on the resort's operations, but no assurances may be
given as to the outcome or timing of this process.
Certain regulatory approvals associated with the new snowmaking pipeline
at Loon Mountain impose minimum stream flow requirements on LMRC. These
requirements will compel LMRC to construct water storage facilities within the
next ten years, and such construction will require further regulatory approvals
and environmental documentation under the NEPA.
In addition, LMRC was notified in September 1997 that it had allegedly
filled certain wetlands at the resort in violation of the CWA. In response,
LMRC worked with the EPA to remove the alleged fill and implement certain
erosion control measures. On January 15, 1998, an individual notified the EPA,
LMRC, and certain other persons that he intends to instigate a lawsuit under
the CWA regarding the alleged wetland violation. On February 2, 1998, the EPA
wrote such individual that the alleged fill had been removed and that it does
not believe there is a continuing violation at the site.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Each of the Company's resorts has pending and is regularly subject to
litigation with respect to personal injury claims relating principally to
skiing activities at its resorts. The Company and each of its resorts maintain
extensive liability insurance that the Company considers adequate to insure
claims related to usual and customary risks associated with the operation of
ski resorts. The Company does not believe that it or any of its resorts are
involved in any litigation that will, individually or in the aggregate, have a
material adverse effect on its financial condition or future results of
operations.
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<PAGE> 23
On March 25, 1997, Killington West, Ltd., a California corporation formerly
known as Bear Mountain, Ltd. ("Killington"), filed a breach of contract lawsuit
in the Superior Court of the State of California (County of San Bernardino)
against Fibreboard Corporation ("Fibreboard") and Bear Mountain, Inc. alleging
that Fibreboard and Bear Mountain, Inc. breached the asset purchase agreement
dated October 6, 1995 (the "Original Bear Mountain Agreement") among
Killington, Fibreboard and Bear Mountain, Inc., pursuant to which Bear
Mountain, Inc. acquired the Bear Mountain ski resort from Killington.
Killington's lawsuit concerns an alleged breach by Fibreboard and Bear
Mountain, Inc. of a change of control provision in the Original Bear Mountain
Agreement. In connection with the Company's acquisition of Bear Mountain, Inc.
in December 1996, the Company obtained from Fibreboard indemnification for any
claim that might be made by Killington, and further, required that $1.0 million
of the purchase price be held in escrow pending the outcome of any potential
disputes with Killington. Fibreboard has acknowledged its obligation to
indemnify Bear Mountain, Inc. with respect to the Killington lawsuit and has
commenced the defense of such lawsuit on behalf of Fibreboard and Bear
Mountain, Inc. However, no assurances can be given regarding the outcome of
this litigation.
In connection with the Loon Mountain Acquisition, certain shareholders of
LMRC filed a lawsuit in New Hampshire state court against LMRC and its
directors alleging breach of fiduciary duty and against the Company alleging
that the Company failed to comply with the New Hampshire Security Takeover
Disclosure Act (the "Takeover Statute"). Prior to the filing of the lawsuit
against the Company, the Company had sought and received a "no action" letter
from the Bureau of Securities Regulation, New Hampshire Department of State
(the "Bureau") finding that the Takeover Statute was inapplicable to the
proposed merger with LMRC. Following a request by the plaintiffs in the
lawsuit to reconsider the "no action" order, the Bureau reaffirmed its
decision. The two lawsuits have been combined and are currently pending in the
Superior Court in Grafton County, New Hampshire. The plaintiffs' initial
request for a preliminary injunction prohibiting the Company (or its
affiliates) form proceeding with the Loon Mountain Acquisition was denied on
October 28, 1997. Before the litigation proceeded further, both parties
amended the merger agreement. The Company then sought and obtained an
additional order by the Bureau that the Takeover Statue did not apply. On
January 30, 1998, the Company filed its answer to the plaintiffs' petition and
plans on filing a motion to dismiss the entire action based on procedural and
substantive grounds. If ultimately successful, the plaintiffs could seek money
damages or a rescission of the Loon Mountain Acquisition. While management of
the Company believes that its position will prevail, no assurance can be given
regarding the outcome of this litigation.
In 1995, an individual sued the Forest Service in the United States District
Court for the District of New Hampshire alleging that the Forest Service had
violated NEPA, the CWA, and an executive order in 1993 approving improvements
to facilities on Loon Mountain and an expansion of the Loon Mountain resort
onto South Mountain. LMRC and an environmental group intervened. The District
Court entered summary judgment for the Forest Service on all claims and the
plaintiffs appealed. In December 1996, the United States Court of Appeals for
the First Circuit reversed the District Court and ruled that the Forest Service
must reconsider certain environmental issues under NEPA and that LMRC must
obtain a discharge permit under the CWA for certain discharges from its
snowmaking system. On May 5, 1997, the District Court entered a stipulated
order that: enjoins LMRC from any further construction implementing the
project, with certain limited exceptions; imposes various restrictions on
LMRC's existing
21
<PAGE> 24
snowmaking operations and requires LMRC to apply for a CWA discharge permit for
discharges of water and any associated pollutants associated with its
snowmaking; allows existing construction to remain in place and existing uses
to continue; requires LMRC to undertake certain erosion control and monitoring
measures; requires the Forest Service to prepare supplemental NEPA
documentation on the improvements and expansion; and reserves the right to
require restoration of areas developed under the 1993 Forest Service decision
to their preexisting condition if not ultimately approved by the Forest
Service. This order will remain in effect until the supplemental NEPA process
is completed and the Forest Service issues a new special use permit. The
Company has applied for requisite permits under the CWA for its snowmaking
system and expects them to be issued upon acceptable terms. However, no
assurance can be provided on the timing or terms of the permit process.
Following the First Circuit's decision, the plaintiffs filed a motion with the
District Court asking it to impose a civil penalty under the CWA of $5,550,125
and attorney fees and costs against LMRC for unpermitted discharges into Loon
Pond without a discharge permit during its snowmaking operations in the 1996/97
ski season and preceding years. The discharge at issue involve water transfers
from the East Branch of the Pemigewasset River and drain back from the
snowmaking system into the Pond. In connection with the Loon Mountain
Acquisition, the Company has obtained environmental pollution insurance for
$4,500,000 of coverage above a $1.2 million deductible to cover any penalties,
fees, and costs that the Court assesses against LMRC. LMRC has asserted
various defenses to the merits and amount of penalty sought. However, no
assurances can be given regarding the outcome of this litigation.
On August 29, 1997, the plaintiffs filed a second lawsuit against the Forest
Service in the United States District Court for the District of New Hampshire
alleging that the Forest Service violated NEPA in authorizing LMRC to construct
and operate a snowmaking pipeline across permitted land. Another party
intervened as plaintiff, and LMRC intervened as defendant. The Forest Service
and LMRC asserted various defenses. On January 20, 1998, the District Court
held that the pipeline may be analyzed and approved by the Forest Service
separately from the South Mountain expansion, but that the Forest Service
violated NEPA by failing to consider the potential environmental effects of the
resulting increase in snowmaking capacity. In response, the Forest Service will
prepare additional NEPA documents which will be subject to challenge. Following
the preparation of this documentation and consideration of any resulting
challenge, the Court will determine whether to issue an injunction restricting
the use or requiring removal of the pipeline. The Company would expect the
pipeline to be reapproved following the further Forest Service proceeding.
However, no assurances can be given regarding the outcome or timing of this
proceeding or the litigation itself.
On August 1, 1997, two plaintiffs filed a lawsuit against the Town of Lincoln
Planning Board and LMRC in the Grafton County Superior Court in the State of
New Hampshire alleging that the Planning Board had improperly approved various
facilities associated with the snowmaking pipeline. On September 30, 1997,
LMRC moved to dismiss the claims against it, but sought to remain in the case
as in intervenor. Also on September 30, 1997, the Planning Board answered the
complaint, denying most of the allegations and raising various defenses. In
the event that the plaintiffs are successful, the Planning Board would be
requested to reconsider the facilities and issue a new decision. However, no
assurance can be given regarding the outcome or timing of this litigation or
any resulting Planning Board review.
22
<PAGE> 25
ITEM 2. CHANGES IN SECURITIES.
Prior to the consummation of the Loon Mountain Acquisition, the Company
solicited consents from the holders of its Series B Notes to, among other
things, (i) permit the Offering, (ii) permit the consummation of the Senior
Credit Facility Amendment, (iii) modify the definitions of "Change of Control"
and "Restricted Subsidiary" in the Indenture, and (iv) make minor modifications
to certain other Indenture provisions. On February 20, 1998, the Company
received sufficient consents to effect such actions and entered into a
supplemental indenture modifying the Indenture, which became effective on
February 26, 1998, upon the consummation of the Loon Mountain Acquisition and
Equity Financing.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a. Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
----------- ----------------------
<S> <C>
3.1 Amended and Restated Articles of Incorporation of Loon Mountain Recreation Corporation
3.2 Amended and Restated Bylaws of Loon Mountain Recreation Corporation
3.3 Amended and Restated Articles of Incorporation of Loon Realty Corp.
3.4 Amended and Restated Bylaws of Loon Realty Corp.
3.5 Articles of Incorporation of LMRC Holding Corp.
3.6 Bylaws of LMRC Holding Corp.
10 Form of Employment Agreement, by and between Booth Creek Ski Holdings, Inc. and Timothy H. Beck.
27 Financial Data Schedule
</TABLE>
b. Reports on Form 8-K
No reports on Form 8-K were filed during the three months ended
January 30, 1998. The Company filed a report on Form 8-K on March 9,
1998 in connection with the Loon Mountain Acquisition which includes
certain financial statements of Loon Mountain Recreation Corporation
and Unaudited Pro Forma Financial Information of Booth Creek Ski
Holdings, Inc.
23
<PAGE> 26
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
BOOTH CREEK SKI HOLDINGS, INC.
(Registrant)
March 13, 1998 /s/ NANCI N. NORTHWAY
- -------------- ---------------------
Date Nanci N. Northway
Vice President and Chief Financial Officer
(Principal financial and accounting officer)
24
<PAGE> 27
INDEX TO EXHIBITS
Exhibit No. Description of Exhibit
- ----------- ----------------------
3.1 Amended and Restated Articles of Incorporation
of Loon Mountain Recreation Corporation
3.2 Amended and Restated Bylaws of Loon Mountain
Recreation Corporation
3.3 Amended and Restated Articles of Incorporation
of Loon Realty Corp.
3.4 Amended and Restated Bylaws of Loon Realty Corp.
3.5 Articles of Incorporation of LMRC Holding Corp.
3.6 Bylaws of LMRC Holding Corp.
10 Form of Employment Agreement, by and Between Booth
Creek Ski Holdings, Inc. and Timothy H. Beck.
27 Financial Data Schedule
<PAGE> 1
EXHIBIT 3.1
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
LOON MOUNTAIN RECREATION CORPORATION
a New Hampshire corporation
FIRST. The name of the corporation is LOON MOUNTAIN RECREATION
CORPORATION (hereinafter, the "Corporation").
SECOND. The total number of shares of capital stock which the
Corporation shall have authority to issue is 1,000 shares of common stock, par
value $.01 per share.
THIRD. The address of the Corporation's registered office in the State
of New Hampshire is CT Corporation System, 9 Capitol Street, in the City of
Concord, County of Merrimack, State of New Hampshire 03301. The name of its
registered agent at such address is CT Corporation System.
FOURTH. The capital stock will be sold or offered for sale within the
meaning of RSA 421-B of the New Hampshire Securities Act.
FIFTH. The nature of the business of or purpose to be conducted or
promoted by the Corporation is to engage in any lawful act or activity for which
corporations may be organized under the New Hampshire Business Corporation Act.
SIXTH. The Board of Directors is authorized to make, alter or repeal
the By-Laws of the Corporation. Election of directors need not be by written
ballot unless the By-Laws so provide.
SEVENTH. A director of the Corporation shall not be liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except to the extent such exemption from liability or
limitation thereof is not permitted under the New Hampshire Business Corporation
Act as the same exists or may hereafter be amended. Any repeal or modification
of the first sentence of this Article SEVENTH shall not adversely affect any
right or protection of a director of the Corporation existing hereunder with
respect to any act or omission occurring prior to such repeal or modification.
EIGHTH. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in these Articles of Incorporation in the manner
now or hereafter prescribed herein and by the New Hampshire Business Corporation
Act, and all rights conferred upon stockholders herein are granted subject to
this reservation.
[signature page follows]
<PAGE> 2
IN WITNESS WHEREOF, the undersigned has executed this Amended and
Restated Articles of Incorporation this 26th day of February, 1998.
LOON MOUNTAIN RECREATION
CORPORATION
By: /s/ George N. Gillett, Jr.
--------------------------------
Name: George N. Gillett, Jr.
Title: Chairman
<PAGE> 1
EXHIBIT 3.2
AMENDED AND RESTATED BY-LAWS
OF
LOON MOUNTAIN RECREATION CORPORATION
A NEW HAMPSHIRE CORPORATION
(the "Corporation")
ARTICLE I
Offices
Section 1.1 Registered Office. The registered office of the Corporation in
the State of New Hampshire shall be located at 9 Capitol Street, Concord, New
Hampshire, County of Merrimack. The name of the Corporation's registered agent
at such address shall be CT Corporation System.
Section 1.2 Other Offices. The Corporation may also have offices at such
other places both within and without the State of New Hampshire as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
ARTICLE II
Shareholders
Section 2.1 Annual Meetings. An annual meeting of shareholders shall be
held each year for the election of directors at such date, time and place either
within or without the State of New Hampshire as shall be designated by the Board
of Directors. Any other proper business may be transacted at the annual meeting
of shareholders.
Section 2.2 Special Meetings. Special meetings of shareholders may be
called at any time by the Board of Directors, the Chairman (as hereinafter
defined), if any, the Vice Chairman, if any, or the President. Each special
meeting shall be held at such date, time and place either within or without the
State of New Hampshire as shall be designated by the person or persons calling
such meeting at least ten days prior to such meeting.
Section 2.3 Notice of Meeting. Unless otherwise provided by law, whenever
shareholders are required or permitted to take any action at a meeting, a
written notice of the meeting shall be given which shall state the date, time
and place of the meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called. Unless otherwise provided by law, the
written notice of any meeting shall be given not less than ten nor more than
sixty days before the date of the meeting to each stockholder entitled to vote
at the meeting. If mailed, notice is given when deposited in the United States
mail, postage prepaid, directed to the stockholder at his address as it appears
on the records of the Corporation.
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Section 2.4 Adjournments. Any meeting of shareholders, annual or special,
may adjourn from time to time to reconvene at the same or some other place, and
notice need not be given of any such adjourned meeting if the time and place
thereof are announced at the meeting at which the adjournment is taken. At the
adjourned meeting, the Corporation may transact any business which might have
been transacted at the original meeting. If the adjournment is for more than
thirty days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
Section 2.5 Quorum. Unless otherwise provided by law or the articles of
incorporation, at each meeting of shareholders, the presence in person or by
proxy of the holders of a majority in voting power of the outstanding shares of
stock entitled to vote at the meeting shall be necessary and sufficient to
constitute a quorum. For purposes of the foregoing, two or more classes or
series of capital stock shall be considered a single class if the holders
thereof are entitled to vote together as a single class at the meeting. In the
absence of a quorum, the shareholders so present and represented may, by vote of
the holders of a majority of the shares of capital stock of the Corporation so
present and represented, adjourn the meeting from time to time until a quorum
shall attend, and the provisions of Section 2.4 of these By-laws shall apply to
each such adjournment. Shares of its own capital stock belonging on the record
date for the meeting to the Corporation or to another corporation, if a majority
of the shares entitled to vote in the election of directors of such other
corporation is held, directly or indirectly, by the Corporation, shall neither
be entitled to vote nor be counted for quorum purposes; provided, however, that
the foregoing shall not limit the right of the Corporation to vote stock,
including but not limited to its own stock, held by it in a fiduciary capacity.
Section 2.6 Organization. Meetings of shareholders shall be presided over
by the Chairman, if any, or in his absence by the Vice Chairman, if any, or in
his absence by the President, or in the absence of the foregoing persons by a
chairman designated by the Board of Directors, or in the absence of such
designation by a chairman chosen at the meeting. The Secretary shall act as
secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting.
Section 2.7 Voting; Proxies. Unless otherwise provided by the articles of
incorporation, each stockholder entitled to vote at any meeting of shareholders
shall be entitled to one vote for each share of capital stock held by him which
has voting power on the subject matter submitted to a vote at the meeting. Each
stockholder entitled to vote at a meeting of shareholders or to express consent
or dissent to corporate action in writing without a meeting may authorize
another person or persons to act for him by proxy, but no such proxy shall be
voted or acted upon after eleven months from its date, unless the proxy provides
for a longer period. A duly executed proxy shall be irrevocable if it states
that it is irrevocable and if, and only as long as, it is coupled with an
interest sufficient in law to support an irrevocable power. A stockholder may
revoke any proxy which is not irrevocable by attending the meeting and voting in
person or by filing an instrument in writing revoking the proxy or another duly
executed proxy bearing a later date with the Secretary before the proxy is
voted. Unless otherwise required by law, voting of shareholders for the election
of directors need not be by written ballot. Voting of shareholders for all other
matters need not be by written ballot
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unless so determined at a shareholders meeting by the vote of the holders of a
majority of the outstanding shares of each class of capital sock present in
person or represented by proxy at the meeting and entitled to vote on the
subject matter submitted to a vote at the meeting. Unless otherwise provided by
law or the articles of incorporation, the vote of the holders of a majority of
the shares of capital stock of the Corporation present in person or represented
by proxy at a meeting at which a quorum is present and entitled to vote on the
subject matter submitted to a vote at the meeting shall be the act of the
shareholders.
Section 2.8 Fixing Date for Determination of Shareholders of Record. In
order that the Corporation may determine the shareholders entitled to notice of
or to vote at any meeting of shareholders or any adjournment thereof or to
express consent to corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change, conversion
or exchange of stock or for the purpose of any other lawful action, the Board of
Directors may fix, in advance, a record date, which shall not be more than sixty
nor less than ten days before the date of such meeting, more than ten days after
the date upon which the resolution fixing the record date with respect to the
taking of corporate action by written consent without a meeting is adopted by
the Board of Directors, nor more than sixty days prior to any other action. If
no record date is fixed: (a) the record date for determining shareholders
entitled to notice of or to vote at a meeting of shareholders shall be at the
close of business on the day next preceding the day on which notice is given or,
if notice is waived, at the close of business on the day next preceding the day
on which the meeting is held; (b) the record date for determining shareholders
entitled to express consent to corporate action in writing without a meeting,
when no prior action by the Board of Directors is required by law, shall be the
first date on which the first shareholder signs the written consent setting
forth the action taken or proposed to be taken and (c) the record date for
determining shareholders for any other purpose shall be at the close of business
on the day on which the Board of Directors adopts the resolution relating
thereto. A determination of shareholders of record entitled to notice of or to
vote at a meeting of shareholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
Section 2.9 List of Shareholders Entitled to Vote. The Secretary shall
make, at least ten days before every meeting of shareholders, a complete list of
the shareholders entitled to vote at the meeting, arranged in alphabetical
order, and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the meeting,
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall also be produced and kept
at the time and place of the meeting during the whole time thereof and may be
inspected by any stockholder who is present.
Section 2.10 Consent of Shareholders in Lieu of Meeting. Unless otherwise
provided by law or by the articles of incorporation, any action required by law
to be taken at any annual or special meeting of shareholders of the Corporation,
or any action which may be taken at any annual
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or special meeting of such shareholders, may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth the
action so taken, shall be signed by all of the holders of outstanding stock of
the Corporation.
ARTICLE III
Board of Directors
Section 3.1 Powers; Number; Qualifications. Unless otherwise provided by
law or the articles of incorporation, the business and affairs of the
Corporation shall be managed by or under the direction of the Board of
Directors. Unless otherwise provided by the articles of incorporation, the Board
of Directors shall initially consist of one (1) director and thereafter shall
consist of such number of directors as the Board of Directors shall from time to
time designate. Unless otherwise provided by the articles of incorporation,
directors need not be shareholders.
Section 3.2 Election; Term of Office; Resignation; Removal; Vacancies.
Each director shall hold office until his successor is elected and qualified or
until his earlier resignation or removal. Any director may resign at any time
upon written notice to the Corporation directed to the Board of Directors or the
Secretary. Such resignation shall take effect at the time specified therein, and
unless otherwise specified therein no acceptance of such resignation shall be
necessary to make it effective. Any director or the entire Board of Directors
may be removed, with or without cause, by the vote of the holders of a majority
of shares of capital stock then entitled to vote at an election of directors.
Whenever the holders of shares of any class or series of capital stock are
entitled to elect one or more directors by the provisions of the articles of
incorporation, the provisions of the preceding sentence shall apply, in respect
to the removal without cause of a director or directors so elected, to the vote
of the holders of the outstanding shares of that class or series of capital
stock and not to the vote of the holders of the outstanding shares of capital
stock as a whole. Unless otherwise provided by the articles of incorporation,
vacancies and newly created directorships resulting from any increase in the
authorized number of directors elected by all of the shareholders having a right
to vote as a single class may be filled by the vote of a majority of the
directors then in office, although less than a quorum, or by the vote of the
sole remaining director. Whenever the holders of shares of any class or classes
of capital stock or series thereof are entitled to elect one or more directors
by the provisions of the articles of incorporation, vacancies and newly created
directorships of such class or classes or series thereof may be filled by the
vote of a majority of the directors elected by such class or classes or series
thereof then in office, or by the vote of the sole remaining director so
elected.
Section 3.3 Regular Meetings. Regular meetings of the Board of Directors
shall be held at such dates, times and places either within or without the State
of New Hampshire as the Board of Directors shall from time to time determine.
Section 3.4 Special Meetings. Special meetings of the Board of Directors
may be called at any time by the Chairman, the President or by any member of the
Board of Directors. Each special meeting shall be held at such date, time and
place either within or without the State of New
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Hampshire as shall be fixed by the person or persons calling the meeting.
Section 3.5 Notice of Meetings. Written notice of each meeting of the
Board of Directors shall be given which shall state the date, time and place of
the meeting. The written notice of any special meeting shall be given at least
two days in advance of the meeting to each director. Notice may be given by
letter, telegram, telex or facsimile and shall be deemed to have been given
when deposited in the United States mail, delivered to the telegraph company or
transmitted by telex or facsimile, as the case may be.
Section 3.6 Telephonic Meetings Permitted. Members of the Board of
Directors or any committee designated by the Board of Directors may participate
in a meeting of the Board of Directors or of such committee by means of
conference telephone or similar communication equipment by means of which all
persons participating in the meeting can hear each other, and participation in
the meeting pursuant to this by-law shall constitute presence in person at such
meeting.
Section 3.7 Quorum; Vote Required for Action. Unless otherwise required by
law, at each meeting of the Board of Directors, the presence of a majority of
the total number of directors shall constitute a quorum for the transaction of
business. The vote of a majority of the directors present at a meeting at which
a quorum is present shall be the act of the Board of Directors, unless the vote
of a greater number is required by law or the articles of incorporation. In case
at any meeting of the Board of Directors a quorum shall not be present, the
members of the Board of Directors present may by majority vote to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall attend.
Section 3.8 Organization. Meetings of the Board of Directors shall be
presided over by the Chairman, or in his absence by the President, or in their
absence by a chairman chosen at the meeting. The Secretary shall act as
secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting.
Section 3.9 Action by Directors Without a Meeting. Unless otherwise
provided by the articles of incorporation, any action required or permitted to
be taken at any meeting of the Board of Directors or any committee designated by
the Board of Directors may be taken without a meeting if all members of the
Board of Directors or of such committee consent thereto in writing, and the
writing or writings are filed with the minutes of proceedings of the Board of
Directors or such committee.
Section 3.10 Compensation of Directors. Unless otherwise provided by the
articles of incorporation, the Board of Directors shall have the authority to
fix the compensation of directors, which compensation may include the
reimbursement of expenses incurred in connection with meetings of the Board of
Directors or a committee thereof.
ARTICLE IV
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Committees
Section 4.1 Committees. The Board of Directors may, by resolution passed by
a majority of the whole Board of Directors, designate one or more committees,
each committee to consist of two or more of the directors of the Corporation.
The Board of Directors may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member of such
committee at any meeting thereof.
Section 4.2 Power of Committees. Any committee designated by the Board of
Directors, to the extent provided in a resolution of the Board of Directors,
shall have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the Corporation and
may authorize the seal of the Corporation to be affixed to all papers which may
require it; but no such committee shall: authorize distributions; approve or
propose to shareholders any action that is required to be approved by
shareholders; fill vacancies on the Board of Directors or on any of its
committees; amend articles of incorporation pursuant to RSA 293-A:10:02 of the
New Hampshire Business Corporation Act; adopt, amend or repeal by-laws; approve
a plan of merger not requiring shareholder approval; authorize or approve
reacquisition of shares, except according to a formula or method prescribed by
the Board of Directors; or authorize or approve the issuance or sale or contract
for sale of shares, or determine the designation and relative rights,
preferences, and limitations of a class or series of shares, except that the
Board of Directors may authorize a committee, or a senior executive officer of
the Corporation, to do so within limits specifically prescribed by the Board of
Directors.
Section 4.3 Committee Rules. Unless the Board of Directors otherwise
provides, each committee designated by the Board of Directors may adopt, amend
and repeal rules for the conduct of its business. In the absence of a resolution
by the Board of Directors or a provision in the rules of such committee to the
contrary, the presence of a majority of the total number of members of such
committee shall constitute a quorum for the transaction of business, and the
vote of a majority of the members present at a meeting at which a quorum is
present shall be the act of such committee.
ARTICLE V
Officers
Section 5.1 Officers; Elections. As soon as practicable after the annual
meeting of shareholders in each year, the Board of Directors shall elect from
its membership or outside thereof a President and a Secretary. The Board of
Directors may also elect from its membership a Chairman and a Vice Chairman, and
from its membership or outside thereof one or more Vice Presidents, one or more
Assistant Vice Presidents, one or more Assistant Secretaries, a Treasurer and
one or more Assistant Treasurers and such other officers or agents as it may
determine. Unless otherwise provided by the articles of incorporation, any
number of offices may be held by the same person.
Section 5.2 Term of Office; Resignation; Removal; Vacancies. Except as
otherwise
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provided by the Board of Directors when electing any officer, each officer shall
hold office until the first meeting of the Board of Directors after the annual
meeting of shareholders next succeeding his election, or until his successor is
elected and qualified or until his earlier resignation or removal. Any officer
may resign at any time upon written notice to the Corporation directed to the
Board of Directors and the Secretary. Such resignation shall take effect at the
time specified therein, and unless otherwise specified therein no acceptance of
such resignation shall be necessary to make it effective. The Board of Directors
may remove any officer or agent with or without cause at any time. Any such
removal shall be without prejudice to the contractual rights of such officer or
agent, if any, with the Corporation, but the election of an officer or agent
shall not of itself create any contractual rights. Any vacancy occurring in any
office of the Corporation by death, resignation, removal or otherwise may be
filled for the unexpired portion of the term by the Board of Directors.
Section 5.3 Powers and Duties. The officers of the Corporation shall have
such powers and duties in the management of the Corporation as shall be stated
in these By-laws or in a resolution of the Board of Directors which is not
inconsistent with these By-laws and, to the extent not so stated, as generally
pertain to their respective offices, subject to the control of the Board of
Directors.
Section 5.4 Chairman of the Board and Chief Executive Officer. The Chairman
of the Board and Chief Executive Officer (the "Chairman") shall be the chief
executive officer of the Corporation and shall have the powers and perform the
duties incident to that position. Subject to the powers of the Board of
Directors, he or she shall be in the general and active charge of the entire
business and affairs of the Corporation and shall be its chief policy making
officer. He or she shall preside at all meetings of the Board of Directors and
shareholders and shall have such other powers and perform such other duties as
may be prescribed by the Board of Directors or provided in these By-laws.
Whenever the President is unable to serve, by reason of sickness, absence or
otherwise, the Chairman shall perform all the duties and responsibilities and
exercise all the powers of the President.
Section 5.5 The President. The President, subject to the powers of the
Board of Directors and the Chairman, shall have general charge of the business,
affairs and property of the Corporation and control over its officers, agents
and employees; and shall see that all orders and resolutions of the Board of
Directors are carried into effect. The President shall execute bonds, mortgages
and other contracts requiring a seal, under the seal of the Corporation, if any,
except where required or permitted by law to be otherwise signed and executed
and except where the signing and execution thereof shall be expressly delegated
by the Board of Directors to some other officer or agent of the Corporation. The
President shall have such other powers and perform such other duties as may be
prescribed by the Chairman or the Board of Directors or as may be provided in
these By-laws.
Section 5.6 Executive Vice-President. The Executive Vice-President in the
absence or disability of the President, perform the duties and exercise the
powers of the president and shall perform such other duties and have such other
powers as the Board of Directors may from time to time prescribe.
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SECTION 5.7 The Secretary and the Assistant Secretaries. The Secretary
shall attend all meetings of the Board of Directors, all meetings of the
committees thereof and all meetings of the shareholders and record all the
proceedings of the meetings in a book or books to be kept for that purpose.
Under the President's supervision, the Secretary shall give, or cause to be
given, all notices required to be given by these By-laws or by law; shall have
such powers and perform such duties as the Board of Directors, the Chairman, the
President or these By-laws may, from time to time, prescribe; and shall have
custody of the corporate seal, if any, of the Corporation. The Secretary, or an
Assistant Secretary, shall have authority to affix the corporate seal, if any,
to any instrument requiring it and when so affixed, it may be attested by his or
her signature or by the signature of such Assistant Secretary. The Board of
Directors may give general authority to any other officer to affix the corporate
seal, if any, and to attest the affixing by his or her signature. The Assistant
Secretary shall, in the absence or disability of the Secretary, perform the
duties and exercise the powers of the Secretary and shall perform such other
duties and have such other powers as the Board of Directors, the Chairman, the
President or Secretary may, from time to time, prescribe.
Section 5.8 The Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the corporation as may be
ordered by the Board of Directors, taking proper vouchers for such disbursements
and shall render to the President and the Board of Directors, at its regular
meetings, or when the Board of Directors so requires, an account of all the
treasurers transactions as treasurer and of the financial condition of the
corporation. If required by the Board of Directors, the treasurer shall give the
corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of the Treasurers office and for the restoration to the corporations in
case of the Treasurers death, resignation, retirement or removal from office, of
all books, papers, vouchers, money and other property of whatever kind in the
Treasurer's possession or under the Treasurer's control belonging to the
corporation.
Section 5.9 Other Officers; Security. The other officers, if any, of the
Corporation shall have such duties and powers as generally pertain to their
respective offices and such other duties and powers as the Board of Directors
shall from time to time delegate to each such officer. The Board of Directors
may require any officer, agent or employee to give security, by bond or
otherwise, for the faithful performance of his duties.
Section 5.10 Compensation of Officers. The compensation of each officer
shall be fixed by the Board of Directors and no officer shall be prevented from
receiving such compensation by virtue of his also being a director.
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ARTICLE VI
Stock
Section 6.1 Certificates. Every holder of one or more shares of capital
stock of the Corporation shall be entitled to have a certificate signed by or in
the name of the Corporation by the Chairman or Vice Chairman, if any, or the
President or a Vice President, and by the Treasurer or an Assistant Treasurer,
if any, or the Secretary or an Assistant Secretary, certifying the number of
shares owned by him in the Corporation. Any or all of the signatures on the
certificate may be a facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.
Section 6.2 Lost, Stolen or Destroyed Stock Certificates; Issuance of New
Certificates. The Corporation may issue a new certificate of stock in the place
of any certificate theretofore issued by it, alleged to have been lost, stolen
or destroyed, and the Corporation may require the owner of the lost, stolen or
destroyed certificate, or his legal representative, to give the Corporation a
bond sufficient to indemnify it against any claim that may be made against it on
account of the alleged loss, theft or destruction of any such certificate or the
issuance of such new certificate.
ARTICLE VII
Indemnification
Section 7.1 Right to Indemnification. Each person who was or is made a
party or is threatened to be made a party to or is otherwise involved in any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a "proceeding"), by
reason of the fact that he is or was a director or officer of the Corporation or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to an employee benefit
plan (hereinafter an "indemnitee"), whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee or agent
or in any other capacity while serving as a director, officer, employee or
agent, shall be indemnified and held harmless by the Corporation to the fullest
extent authorized by the New Hampshire Business Corporation Act, as the same
exists or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the Corporation to provide broader
indemnification rights than permitted prior thereto), against all reasonable
expense, liability and loss (including, without limitation, reasonable
attorneys' fees, judgments, fines and amounts paid in settlement) incurred or
suffered by such indemnitee in connection therewith and such indemnification
shall continue as to an indemnitee who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the indemnitee's heirs,
executors and administrators; provided, however, that, except as provided in
Section 7.2 below with respect to proceedings to enforce rights to
indemnification, the
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Corporation shall indemnify any such indemnitee in connection with a proceeding
(or part thereof) initiated by such indemnitee only if such proceeding (or part
thereof) was authorized by the Board of Directors of the Corporation. The right
to indemnification conferred in this ARTICLE VII shall be a contract right and
shall include the right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final disposition (hereinafter
an "advancement of expenses"); provided, however, that, if the New Hampshire
Business Corporation Act requires, an advancement of expenses incurred by an
indemnitee in his capacity as a director or officer (and not in any other
capacity in which service was or is rendered by such indemnitee) shall be made
only upon delivery to the corporation of an undertaking (hereinafter an
"undertaking"), by or on behalf of such indemnitee, to repay all amounts so
advanced if it shall ultimately be determined by final judicial decision from
which there is no further right to appeal (hereinafter a "final adjudication")
that such indemnitee is not entitled to be indemnified for such expenses under
this ARTICLE VII or otherwise.
Section 7.2 Right of Indemnitee to Bring Suit. If a claim under Section
7.1 above is not paid in full by the Corporation within sixty days after a
written claim has been received by the Corporation, except in the case of a
claim for an advancement of expenses, in which case the applicable period shall
be thirty days, the indemnitee may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim. If successful in whole or
in part in any such suit, or in a suit brought by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the indemnitee
shall be entitled to be paid also the expense of prosecuting or defending such
suit. In (a) any suit brought by the indemnitee to enforce a right to
indemnification hereunder (but not in a suit brought by the indemnitee to
enforce a right to an advancement of expenses) it shall be a defense that the
indemnitee has not met the applicable standard of conduct set forth in the New
Hampshire Business Corporation Act and (b) in any suit by the Corporation to
recover an advancement of expenses pursuant to the terms of an undertaking the
Corporation shall be entitled to recover such expenses upon a final adjudication
that the indemnitee has not met the applicable standard of conduct set forth in
the New Hampshire Business Corporation. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel or its
shareholders) to have made a determination prior to the commencement of such
suit that indemnification of the indemnitee is proper in the circumstances
because the indemnitee has met the applicable standard of conduct set forth in
the New Hampshire Business Corporation Act, nor an actual determination by the
Corporation (including its Board of Directors, independent counsel or its
shareholders) that the indemnitee has not met such applicable standard of
conduct, shall create a presumption that the indemnitee has not met the
applicable standard of conduct or, in the case of such a suit brought by the
indemnitee, be a defense to such suit. In any suit brought by the indemnitee to
enforce a right to indemnification or to an advancement of expenses hereunder,
or by the Corporation to recover an advancement of expenses pursuant to the
terms of an undertaking, the burden of proving that the indemnitee is not
entitled to be indemnified, or to such advancement of expenses, under this
ARTICLE VII or otherwise shall be on the Corporation.
Section 7.3 Insurance. The Corporation may purchase and maintain insurance
on its own behalf or on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee
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or agent of another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss asserted against him in any
such capacity, or arising out of his status as such, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the New Hampshire Business Corporation Act.
Section 7.4 Nonexclusivity of Rights. The rights conferred on any
person by this Article VII shall not be exclusive of any other rights which such
person may have or hereafter acquire under any statute, provision of the
articles of incorporation, these By-laws, agreement, vote of shareholders or
disinterested directors or otherwise.
Section 7.5 Other Indemnification. The Corporation's obligation, if any, to
indemnify or to advance expenses to any person who was or is serving at its
request as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, enterprise or nonprofit entity shall be
reduced by any amount such person may collect as indemnification or advancement
of expenses from such other corporation, partnership, joint venture, trust,
enterprise or nonprofit enterprise.
Section 7.6 Amendment or Repeal. Any repeal or modification of the
foregoing provisions of this Article VII shall not adversely affect any right or
protection hereunder of any person in respect of any act or omission occurring
prior to the time of such repeal or modification.
ARTICLE VIII
Miscellaneous
Section 8.1 Fiscal Year. The fiscal year of the Corporation shall be
determined by the Board of Directors.
Section 8.2 Seal. The Corporation may have a corporate seal which shall
have the name of the Corporation inscribed thereon and shall be in such form as
may be approved from time to time by the Board of Directors.
Section 8.3 Waiver of Notice of Meetings of Shareholders, Directors and
Committees. Whenever notice is required to be given by law, the articles of
incorporation or these By-laws, a written waiver thereof, signed by the person
entitled to notice, whether before or after the time stated therein, shall be
deemed equivalent to notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called or
convened. Unless otherwise provided by the articles of incorporation, neither
the business to be transacted at, nor the purpose of, any regular or special
meeting of the shareholders, directors or members of a committee of directors
need be specified in any written waiver of notice.
Section 8.4 Interested Directors, Officers, Quorum. No contract or
transaction between the Corporation and one or more of its directors or
officers, or between the Corporation and any other corporation, partnership,
association or other organization in which one or more of its directors
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or officers are directors or officers, or have a financial interest, shall be
void or voidable solely for this reason, or solely because the director or
officer is present at or participates in the meeting of the Board of Directors
or committee thereof which authorizes the contract or transaction, or solely
because his or their votes are counted for such purpose, if: (a) the material
facts as to his relationship or interest and as to the contract or transaction
are disclosed or are known to the Board of Directors or the committee, and the
Board of Directors or committee in good faith authorizes the contract or
transaction by the affirmative vote of a majority of the disinterested
directors, even though the disinterested directors constitute less than a quorum
so long as the number of disinterested directors so voting is greater than one;
or (b) the material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the shareholders entitled
to vote thereon, and the contract or transaction is specifically approved in
good faith by vote of the shareholders; or (c) the contract or transaction is
fair as to the Corporation as of the time it is authorized, approved or
ratified, by the Board of Directors, a committee thereof or the shareholders.
For purposes of this section, if a majority of the directors or members of a
committee entitled to vote authorize, approve or ratify the transaction, then
there shall be considered to be the presence of a quorum at a meeting of the
Board of Directors or such committee. A majority of the shares, whether or not
present, that are entitled to be counted in a vote on the transaction under this
section constitutes a quorum for the purpose of taking action by the
shareholders under this section.
Section 8.5 Books and Records. The books and records of the Corporation may
be kept within or without the State of New Hampshire at such place or places as
may be designated from time to time by the Board of Directors. Any records
maintained by the Corporation in the regular course of its business, including
its stock ledger, books of account and minute books, may be kept on, or be in
the form of, punch cards, magnetic tape, photographs, microphotographs or any
other information storage device provided that the records so kept can be
converted into clearly legible form within a reasonable time. The Corporation
shall so convert any records so kept upon the request of any person entitled to
inspect the same.
Section 8.6 Amendment of By-laws. The Board of Directors may amend or
repeal these By-laws unless (i) the articles of incorporation or the New
Hampshire Business Corporation Act reserve such power exclusively to the
shareholders in whole or in part, or (ii) the shareholders in amending or
repealing a particular by-law provide expressly that the Board of Directors
shall not amend or repeal that by-law. The shareholders may amend and repeal
these By-laws even though the By-laws may also be amended or repealed by the
Board of Directors.
* * * * * *
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EXHIBIT 3.3
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
LOON REALTY CORP.
a New Hampshire corporation
FIRST. The name of the corporation is LOON REALTY CORP. (hereinafter,
the "Corporation").
SECOND. The total number of shares of capital stock which the
Corporation shall have authority to issue is 300 shares of common stock, no par
value.
THIRD. The address of the Corporation's registered office in the State
of New Hampshire is CT Corporation System, 9 Capitol Street, in the City of
Concord, County of Merrimack, State of New Hampshire 03301. The name of its
registered agent at such address is CT Corporation System.
FOURTH. The capital stock will be sold or offered for sale within the
meaning of RSA 421-B of the New Hampshire Securities Act.
FIFTH. The nature of the business of or purpose to be conducted or
promoted by the Corporation is to engage in any lawful act or activity for which
corporations may be organized under the New Hampshire Business Corporation Act.
SIXTH. The Board of Directors is authorized to make, alter or repeal
the By-Laws of the Corporation. Election of directors need not be by written
ballot unless the By-Laws so provide.
SEVENTH. A director of the Corporation shall not be liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except to the extent such exemption from liability or
limitation thereof is not permitted under the New Hampshire Business Corporation
Act as the same exists or may hereafter be amended. Any repeal or modification
of the first sentence of this Article SEVENTH shall not adversely affect any
right or protection of a director of the Corporation existing hereunder with
respect to any act or omission occurring prior to such repeal or modification.
EIGHTH. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in these Articles of Incorporation in the manner
now or hereafter prescribed herein and by the New Hampshire Business Corporation
Act, and all rights conferred upon stockholders herein are granted subject to
this reservation.
[signature page follows]
<PAGE> 2
IN WITNESS WHEREOF, the undersigned has executed this Amended and
Restated Articles of Incorporation this 26th day of February, 1998.
LOON REALTY CORP.
By: /s/ George N. Gillett, Jr.
--------------------------
Name: George N. Gillett, Jr.
Title: Chairman
<PAGE> 1
EXHIBIT 3.4
AMENDED AND RESTATED BY-LAWS
OF
LOON REALTY CORP.
A NEW HAMPSHIRE CORPORATION
(the "Corporation")
ARTICLE I
Offices
Section 1.1 Registered Office. The registered office of the Corporation in
the State of New Hampshire shall be located at 9 Capitol Street, Concord, New
Hampshire, County of Merrimack. The name of the Corporation's registered agent
at such address shall be CT Corporation System.
Section 1.2 Other Offices. The Corporation may also have offices at such
other places both within and without the State of New Hampshire as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
ARTICLE II
Shareholders
Section 2.1 Annual Meetings. An annual meeting of shareholders shall be
held each year for the election of directors at such date, time and place either
within or without the State of New Hampshire as shall be designated by the Board
of Directors. Any other proper business may be transacted at the annual meeting
of shareholders.
Section 2.2 Special Meetings. Special meetings of shareholders may be
called at any time by the Board of Directors, the Chairman (as hereinafter
defined), if any, the Vice Chairman, if any, or the President. Each special
meeting shall be held at such date, time and place either within or without the
State of New Hampshire as shall be designated by the person or persons calling
such meeting at least ten days prior to such meeting.
Section 2.3 Notice of Meeting. Unless otherwise provided by law, whenever
shareholders are required or permitted to take any action at a meeting, a
written notice of the meeting shall be given which shall state the date, time
and place of the meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called. Unless otherwise provided by law, the
written notice of any meeting shall be given not less than ten nor more than
sixty days before the date of the meeting to each stockholder entitled to vote
at the meeting. If mailed, notice is given when deposited in the United States
mail, postage prepaid, directed to the stockholder at his address as it appears
on the records of the Corporation.
Section 2.4 Adjournments. Any meeting of shareholders, annual or special,
may adjourn
<PAGE> 2
from time to time to reconvene at the same or some other place, and notice need
not be given of any such adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken. At the adjourned
meeting, the Corporation may transact any business which might have been
transacted at the original meeting. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
Section 2.5 Quorum. Unless otherwise provided by law or the articles of
incorporation, at each meeting of shareholders, the presence in person or by
proxy of the holders of a majority in voting power of the outstanding shares of
stock entitled to vote at the meeting shall be necessary and sufficient to
constitute a quorum. For purposes of the foregoing, two or more classes or
series of capital stock shall be considered a single class if the holders
thereof are entitled to vote together as a single class at the meeting. In the
absence of a quorum, the shareholders so present and represented may, by vote of
the holders of a majority of the shares of capital stock of the Corporation so
present and represented, adjourn the meeting from time to time until a quorum
shall attend, and the provisions of Section 2.4 of these By-laws shall apply to
each such adjournment. Shares of its own capital stock belonging on the record
date for the meeting to the Corporation or to another corporation, if a majority
of the shares entitled to vote in the election of directors of such other
corporation is held, directly or indirectly, by the Corporation, shall neither
be entitled to vote nor be counted for quorum purposes; provided, however, that
the foregoing shall not limit the right of the Corporation to vote stock,
including but not limited to its own stock, held by it in a fiduciary capacity.
Section 2.6 Organization. Meetings of shareholders shall be presided over
by the Chairman, if any, or in his absence by the Vice Chairman, if any, or in
his absence by the President, or in the absence of the foregoing persons by a
chairman designated by the Board of Directors, or in the absence of such
designation by a chairman chosen at the meeting. The Secretary shall act as
secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting.
Section 2.7 Voting; Proxies. Unless otherwise provided by the articles
of incorporation, each stockholder entitled to vote at any meeting of
shareholders shall be entitled to one vote for each share of capital stock held
by him which has voting power on the subject matter submitted to a vote at the
meeting. Each stockholder entitled to vote at a meeting of shareholders or to
express consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for him by proxy, but no such proxy
shall be voted or acted upon after eleven months from its date, unless the proxy
provides for a longer period. A duly executed proxy shall be irrevocable if it
states that it is irrevocable and if, and only as long as, it is coupled with an
interest sufficient in law to support an irrevocable power. A stockholder may
revoke any proxy which is not irrevocable by attending the meeting and voting in
person or by filing an instrument in writing revoking the proxy or another duly
executed proxy bearing a later date with the Secretary before the proxy is
voted. Unless otherwise required by law, voting of shareholders for the election
of directors need not be by written ballot. Voting of shareholders for all other
matters need not be by written ballot unless so determined at a shareholders
meeting by the vote of the holders of a majority of the
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outstanding shares of each class of capital sock present in person or
represented by proxy at the meeting and entitled to vote on the subject matter
submitted to a vote at the meeting. Unless otherwise provided by law or the
articles of incorporation, the vote of the holders of a majority of the shares
of capital stock of the Corporation present in person or represented by proxy at
a meeting at which a quorum is present and entitled to vote on the subject
matter submitted to a vote at the meeting shall be the act of the shareholders.
Section 2.8 Fixing Date for Determination of Shareholders of Record. In
order that the Corporation may determine the shareholders entitled to notice of
or to vote at any meeting of shareholders or any adjournment thereof or to
express consent to corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change, conversion
or exchange of stock or for the purpose of any other lawful action, the Board of
Directors may fix, in advance, a record date, which shall not be more than sixty
nor less than ten days before the date of such meeting, more than ten days after
the date upon which the resolution fixing the record date with respect to the
taking of corporate action by written consent without a meeting is adopted by
the Board of Directors, nor more than sixty days prior to any other action. If
no record date is fixed: (a) the record date for determining shareholders
entitled to notice of or to vote at a meeting of shareholders shall be at the
close of business on the day next preceding the day on which notice is given or,
if notice is waived, at the close of business on the day next preceding the day
on which the meeting is held; (b) the record date for determining shareholders
entitled to express consent to corporate action in writing without a meeting,
when no prior action by the Board of Directors is required by law, shall be the
first date on which the first shareholder signs the written consent setting
forth the action taken or proposed to be taken and (c) the record date for
determining shareholders for any other purpose shall be at the close of business
on the day on which the Board of Directors adopts the resolution relating
thereto. A determination of shareholders of record entitled to notice of or to
vote at a meeting of shareholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
SECTION 2.9 List of Shareholders Entitled to Vote. The Secretary shall
make, at least ten days before every meeting of shareholders, a complete list of
the shareholders entitled to vote at the meeting, arranged in alphabetical
order, and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the meeting,
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall also be produced and kept
at the time and place of the meeting during the whole time thereof and may be
inspected by any stockholder who is present.
Section 2.10 Consent of Shareholders in Lieu of Meeting. Unless otherwise
provided by law or by the articles of incorporation, any action required by law
to be taken at any annual or special meeting of shareholders of the Corporation,
or any action which may be taken at any annual or special meeting of such
shareholders, may be taken without a meeting, without prior notice and
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without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by all of the holders of outstanding stock of the Corporation.
ARTICLE III
Board of Directors
Section 3.1 Powers; Number; Qualifications. Unless otherwise provided by
law or the articles of incorporation, the business and affairs of the
Corporation shall be managed by or under the direction of the Board of
Directors. Unless otherwise provided by the articles of incorporation, the Board
of Directors shall initially consist of one (1) director and thereafter shall
consist of such number of directors as the Board of Directors shall from time to
time designate. Unless otherwise provided by the articles of incorporation,
directors need not be shareholders.
Section 3.2 Election; Term of Office; Resignation; Removal; Vacancies. Each
director shall hold office until his successor is elected and qualified or until
his earlier resignation or removal. Any director may resign at any time upon
written notice to the Corporation directed to the Board of Directors or the
Secretary. Such resignation shall take effect at the time specified therein, and
unless otherwise specified therein no acceptance of such resignation shall be
necessary to make it effective. Any director or the entire Board of Directors
may be removed, with or without cause, by the vote of the holders of a majority
of shares of capital stock then entitled to vote at an election of directors.
Whenever the holders of shares of any class or series of capital stock are
entitled to elect one or more directors by the provisions of the articles of
incorporation, the provisions of the preceding sentence shall apply, in respect
to the removal without cause of a director or directors so elected, to the vote
of the holders of the outstanding shares of that class or series of capital
stock and not to the vote of the holders of the outstanding shares of capital
stock as a whole. Unless otherwise provided by the articles of incorporation,
vacancies and newly created directorships resulting from any increase in the
authorized number of directors elected by all of the shareholders having a right
to vote as a single class may be filled by the vote of a majority of the
directors then in office, although less than a quorum, or by the vote of the
sole remaining director. Whenever the holders of shares of any class or classes
of capital stock or series thereof are entitled to elect one or more directors
by the provisions of the articles of incorporation, vacancies and newly created
directorships of such class or classes or series thereof may be filled by the
vote of a majority of the directors elected by such class or classes or series
thereof then in office, or by the vote of the sole remaining director so
elected.
Section 3.3 Regular Meetings. Regular meetings of the Board of Directors
shall be held at such dates, times and places either within or without the State
of New Hampshire as the Board of Directors shall from time to time determine.
Section 3.4 Special Meetings. Special meetings of the Board of Directors
may be called at any time by the Chairman, the President or by any member of the
Board of Directors. Each special meeting shall be held at such date, time and
place either within or without the State of New Hampshire as shall be fixed by
the person or persons calling the meeting.
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Section 3.5 Notice of Meetings. Written notice of each meeting of the Board
of Directors shall be given which shall state the date, time and place of the
meeting. The written notice of any special meeting shall be given at least two
days in advance of the meeting to each director. Notice may be given by letter,
telegram, telex or facsimile and shall be deemed to have been given when
deposited in the United States mail, delivered to the telegraph company or
transmitted by telex or facsimile, as the case may be.
Section 3.6 Telephonic Meetings Permitted. Members of the Board of
Directors or any committee designated by the Board of Directors may participate
in a meeting of the Board of Directors or of such committee by means of
conference telephone or similar communication equipment by means of which all
persons participating in the meeting can hear each other, and participation in
the meeting pursuant to this by-law shall constitute presence in person at such
meeting.
Section 3.7 Quorum; Vote Required for Action. Unless otherwise required by
law, at each meeting of the Board of Directors, the presence of a majority of
the total number of directors shall constitute a quorum for the transaction of
business. The vote of a majority of the directors present at a meeting at which
a quorum is present shall be the act of the Board of Directors, unless the vote
of a greater number is required by law or the articles of incorporation. In case
at any meeting of the Board of Directors a quorum shall not be present, the
members of the Board of Directors present may by majority vote to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall attend.
Section 3.8 Organization. Meetings of the Board of Directors shall be
presided over by the Chairman, or in his absence by the President, or in their
absence by a chairman chosen at the meeting. The Secretary shall act as
secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting.
Section 3.9 Action by Directors Without a Meeting. Unless otherwise
provided by the articles of incorporation, any action required or permitted to
be taken at any meeting of the Board of Directors or any committee designated by
the Board of Directors may be taken without a meeting if all members of the
Board of Directors or of such committee consent thereto in writing, and the
writing or writings are filed with the minutes of proceedings of the Board of
Directors or such committee.
Section 3.10 Compensation of Directors. Unless otherwise provided by the
articles of incorporation, the Board of Directors shall have the authority to
fix the compensation of directors, which compensation may include the
reimbursement of expenses incurred in connection with meetings of the Board of
Directors or a committee thereof.
ARTICLE IV
Committees
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Section 4.1 Committees. The Board of Directors may, by resolution passed by
a majority of the whole Board of Directors, designate one or more committees,
each committee to consist of two or more of the directors of the Corporation.
The Board of Directors may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member of such
committee at any meeting thereof.
Section 4.2 Power of Committees. Any committee designated by the Board of
Directors, to the extent provided in a resolution of the Board of Directors,
shall have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the Corporation and
may authorize the seal of the Corporation to be affixed to all papers which may
require it; but no such committee shall: authorize distributions; approve or
propose to shareholders any action that is required to be approved by
shareholders; fill vacancies on the Board of Directors or on any of its
committees; amend articles of incorporation pursuant to RSA 293-A:10:02 of the
New Hampshire Business Corporation Act; adopt, amend or repeal by-laws; approve
a plan of merger not requiring shareholder approval; authorize or approve
reacquisition of shares, except according to a formula or method prescribed by
the Board of Directors; or authorize or approve the issuance or sale or contract
for sale of shares, or determine the designation and relative rights,
preferences, and limitations of a class or series of shares, except that the
Board of Directors may authorize a committee, or a senior executive officer of
the Corporation, to do so within limits specifically prescribed by the Board of
Directors.
Section 4.3 Committee Rules. Unless the Board of Directors otherwise
provides, each committee designated by the Board of Directors may adopt, amend
and repeal rules for the conduct of its business. In the absence of a resolution
by the Board of Directors or a provision in the rules of such committee to the
contrary, the presence of a majority of the total number of members of such
committee shall constitute a quorum for the transaction of business, and the
vote of a majority of the members present at a meeting at which a quorum is
present shall be the act of such committee.
ARTICLE V
Officers
Section 5.1 Officers; Elections. As soon as practicable after the annual
meeting of shareholders in each year, the Board of Directors shall elect from
its membership or outside thereof a President and a Secretary. The Board of
Directors may also elect from its membership a Chairman and a Vice Chairman, and
from its membership or outside thereof one or more Vice Presidents, one or more
Assistant Vice Presidents, one or more Assistant Secretaries, a Treasurer and
one or more Assistant Treasurers and such other officers or agents as it may
determine. Unless otherwise provided by the articles of incorporation, any
number of offices may be held by the same person.
Section 5.2 Term of Office; Resignation; Removal; Vacancies. Except as
otherwise provided by the Board of Directors when electing any officer, each
officer shall hold office until the
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first meeting of the Board of Directors after the annual meeting of shareholders
next succeeding his election, or until his successor is elected and qualified or
until his earlier resignation or removal. Any officer may resign at any time
upon written notice to the Corporation directed to the Board of Directors and
the Secretary. Such resignation shall take effect at the time specified therein,
and unless otherwise specified therein no acceptance of such resignation shall
be necessary to make it effective. The Board of Directors may remove any officer
or agent with or without cause at any time. Any such removal shall be without
prejudice to the contractual rights of such officer or agent, if any, with the
Corporation, but the election of an officer or agent shall not of itself create
any contractual rights. Any vacancy occurring in any office of the Corporation
by death, resignation, removal or otherwise may be filled for the unexpired
portion of the term by the Board of Directors.
Section 5.3 Powers and Duties. The officers of the Corporation shall have
such powers and duties in the management of the Corporation as shall be stated
in these By-laws or in a resolution of the Board of Directors which is not
inconsistent with these By-laws and, to the extent not so stated, as generally
pertain to their respective offices, subject to the control of the Board of
Directors.
Section 5.4 Chairman of the Board and Chief Executive Officer. The Chairman
of the Board and Chief Executive Officer (the "Chairman") shall be the chief
executive officer of the Corporation and shall have the powers and perform the
duties incident to that position. Subject to the powers of the Board of
Directors, he or she shall be in the general and active charge of the entire
business and affairs of the Corporation and shall be its chief policy making
officer. He or she shall preside at all meetings of the Board of Directors and
shareholders and shall have such other powers and perform such other duties as
may be prescribed by the Board of Directors or provided in these By-laws.
Whenever the President is unable to serve, by reason of sickness, absence or
otherwise, the Chairman shall perform all the duties and responsibilities and
exercise all the powers of the President.
Section 5.5 The President. The President, subject to the powers of the
Board of Directors and the Chairman, shall have general charge of the business,
affairs and property of the Corporation and control over its officers, agents
and employees; and shall see that all orders and resolutions of the Board of
Directors are carried into effect. The President shall execute bonds, mortgages
and other contracts requiring a seal, under the seal of the Corporation, if any,
except where required or permitted by law to be otherwise signed and executed
and except where the signing and execution thereof shall be expressly delegated
by the Board of Directors to some other officer or agent of the Corporation. The
President shall have such other powers and perform such other duties as may be
prescribed by the Chairman or the Board of Directors or as may be provided in
these By-laws.
Section 5.6 Executive Vice-President. The Executive Vice-President in the
absence or disability of the President, perform the duties and exercise the
powers of the president and shall perform such other duties and have such other
powers as the Board of Directors may from time to time prescribe.
Section 5.7 The Secretary and the Assistant Secretaries. The Secretary
shall attend all
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meetings of the Board of Directors, all meetings of the committees thereof and
all meetings of the shareholders and record all the proceedings of the meetings
in a book or books to be kept for that purpose. Under the President's
supervision, the Secretary shall give, or cause to be given, all notices
required to be given by these By-laws or by law; shall have such powers and
perform such duties as the Board of Directors, the Chairman, the President or
these By-laws may, from time to time, prescribe; and shall have custody of the
corporate seal, if any, of the Corporation. The Secretary, or an Assistant
Secretary, shall have authority to affix the corporate seal, if any, to any
instrument requiring it and when so affixed, it may be attested by his or her
signature or by the signature of such Assistant Secretary. The Board of
Directors may give general authority to any other officer to affix the corporate
seal, if any, and to attest the affixing by his or her signature. The Assistant
Secretary shall, in the absence or disability of the Secretary, perform the
duties and exercise the powers of the Secretary and shall perform such other
duties and have such other powers as the Board of Directors, the Chairman, the
President or Secretary may, from time to time, prescribe.
Section 5.8 The Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the corporation as may be
ordered by the Board of Directors, taking proper vouchers for such disbursements
and shall render to the President and the Board of Directors, at its regular
meetings, or when the Board of Directors so requires, an account of all the
treasurers transactions as treasurer and of the financial condition of the
corporation. If required by the Board of Directors, the treasurer shall give the
corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of the Treasurers office and for the restoration to the corporations in
case of the Treasurers death, resignation, retirement or removal from office, of
all books, papers, vouchers, money and other property of whatever kind in the
Treasurer's possession or under the Treasurer's control belonging to the
corporation.
Section 5.9 Other Officers; Security. The other officers, if any, of the
Corporation shall have such duties and powers as generally pertain to their
respective offices and such other duties and powers as the Board of Directors
shall from time to time delegate to each such officer. The Board of Directors
may require any officer, agent or employee to give security, by bond or
otherwise, for the faithful performance of his duties.
Section 5.10 Compensation of Officers. The compensation of each officer
shall be fixed by the Board of Directors and no officer shall be prevented from
receiving such compensation by virtue of his also being a director.
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ARTICLE VI
Stock
Section 6.1 Certificates. Every holder of one or more shares of capital
stock of the Corporation shall be entitled to have a certificate signed by or in
the name of the Corporation by the Chairman or Vice Chairman, if any, or the
President or a Vice President, and by the Treasurer or an Assistant Treasurer,
if any, or the Secretary or an Assistant Secretary, certifying the number of
shares owned by him in the Corporation. Any or all of the signatures on the
certificate may be a facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.
Section 6.2 Lost, Stolen or Destroyed Stock Certificates; Issuance of New
Certificates. The Corporation may issue a new certificate of stock in the place
of any certificate theretofore issued by it, alleged to have been lost, stolen
or destroyed, and the Corporation may require the owner of the lost, stolen or
destroyed certificate, or his legal representative, to give the Corporation a
bond sufficient to indemnify it against any claim that may be made against it on
account of the alleged loss, theft or destruction of any such certificate or the
issuance of such new certificate.
ARTICLE VII
Indemnification
Section 7.1 Right to Indemnification. Each person who was or is made a
party or is threatened to be made a party to or is otherwise involved in any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a "proceeding"), by
reason of the fact that he is or was a director or officer of the Corporation or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to an employee benefit
plan (hereinafter an "indemnitee"), whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee or agent
or in any other capacity while serving as a director, officer, employee or
agent, shall be indemnified and held harmless by the Corporation to the fullest
extent authorized by the New Hampshire Business Corporation Act, as the same
exists or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the Corporation to provide broader
indemnification rights than permitted prior thereto), against all reasonable
expense, liability and loss (including, without limitation, reasonable
attorneys' fees, judgments, fines and amounts paid in settlement) incurred or
suffered by such indemnitee in connection therewith and such indemnification
shall continue as to an indemnitee who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the indemnitee's heirs,
executors and administrators; provided, however, that, except as provided in
Section 7.2 below with respect to proceedings to enforce rights to
indemnification, the
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<PAGE> 10
Corporation shall indemnify any such indemnitee in connection with a proceeding
(or part thereof) initiated by such indemnitee only if such proceeding (or part
thereof) was authorized by the Board of Directors of the Corporation. The right
to indemnification conferred in this ARTICLE VII shall be a contract right and
shall include the right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final disposition (hereinafter
an "advancement of expenses"); provided, however, that, if the New Hampshire
Business Corporation Act requires, an advancement of expenses incurred by an
indemnitee in his capacity as a director or officer (and not in any other
capacity in which service was or is rendered by such indemnitee) shall be made
only upon delivery to the corporation of an undertaking (hereinafter an
"undertaking"), by or on behalf of such indemnitee, to repay all amounts so
advanced if it shall ultimately be determined by final judicial decision from
which there is no further right to appeal (hereinafter a "final adjudication")
that such indemnitee is not entitled to be indemnified for such expenses under
this ARTICLE VII or otherwise.
Section 7.2 Right of Indemnitee to Bring Suit. If a claim under Section 7.1
above is not paid in full by the Corporation within sixty days after a written
claim has been received by the Corporation, except in the case of a claim for an
advancement of expenses, in which case the applicable period shall be thirty
days, the indemnitee may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim. If successful in whole or
in part in any such suit, or in a suit brought by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the indemnitee
shall be entitled to be paid also the expense of prosecuting or defending such
suit. In (a) any suit brought by the indemnitee to enforce a right to
indemnification hereunder (but not in a suit brought by the indemnitee to
enforce a right to an advancement of expenses) it shall be a defense that the
indemnitee has not met the applicable standard of conduct set forth in the New
Hampshire Business Corporation Act and (b) in any suit by the Corporation to
recover an advancement of expenses pursuant to the terms of an undertaking the
Corporation shall be entitled to recover such expenses upon a final adjudication
that the indemnitee has not met the applicable standard of conduct set forth in
the New Hampshire Business Corporation. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel or its
shareholders) to have made a determination prior to the commencement of such
suit that indemnification of the indemnitee is proper in the circumstances
because the indemnitee has met the applicable standard of conduct set forth in
the New Hampshire Business Corporation Act, nor an actual determination by the
Corporation (including its Board of Directors, independent counsel or its
shareholders) that the indemnitee has not met such applicable standard of
conduct, shall create a presumption that the indemnitee has not met the
applicable standard of conduct or, in the case of such a suit brought by the
indemnitee, be a defense to such suit. In any suit brought by the indemnitee to
enforce a right to indemnification or to an advancement of expenses hereunder,
or by the Corporation to recover an advancement of expenses pursuant to the
terms of an undertaking, the burden of proving that the indemnitee is not
entitled to be indemnified, or to such advancement of expenses, under this
ARTICLE VII or otherwise shall be on the Corporation.
SECTION 7.3 Insurance. The Corporation may purchase and maintain insurance
on its own behalf or on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee
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<PAGE> 11
or agent of another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss asserted against him in any
such capacity, or arising out of his status as such, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the New Hampshire Business Corporation Act.
Section 7.4 Nonexclusivity of Rights. The rights conferred on any person by
this Article VII shall not be exclusive of any other rights which such person
may have or hereafter acquire under any statute, provision of the articles of
incorporation, these By-laws, agreement, vote of shareholders or disinterested
directors or otherwise.
Section 7.5 Other Indemnification. The Corporation's obligation, if any, to
indemnify or to advance expenses to any person who was or is serving at its
request as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, enterprise or nonprofit entity shall be
reduced by any amount such person may collect as indemnification or advancement
of expenses from such other corporation, partnership, joint venture, trust,
enterprise or nonprofit enterprise.
Section 7.6 Amendment or Repeal. Any repeal or modification of the
foregoing provisions of this Article VII shall not adversely affect any right or
protection hereunder of any person in respect of any act or omission occurring
prior to the time of such repeal or modification.
ARTICLE VIII
Miscellaneous
Section 8.1 Fiscal Year. The fiscal year of the Corporation shall be
determined by the Board of Directors.
Section 8.2 Seal. The Corporation may have a corporate seal which shall
have the name of the Corporation inscribed thereon and shall be in such form as
may be approved from time to time by the Board of Directors.
Section 8.3 Waiver of Notice of Meetings of Shareholders, Directors and
Committees. Whenever notice is required to be given by law, the articles of
incorporation or these By-laws, a written waiver thereof, signed by the person
entitled to notice, whether before or after the time stated therein, shall be
deemed equivalent to notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called or
convened. Unless otherwise provided by the articles of incorporation, neither
the business to be transacted at, nor the purpose of, any regular or special
meeting of the shareholders, directors or members of a committee of directors
need be specified in any written waiver of notice.
Section 8.4 Interested Directors, Officers, Quorum. No contract or
transaction between the Corporation and one or more of its directors or
officers, or between the Corporation and any other corporation, partnership,
association or other organization in which one or more of its directors
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<PAGE> 12
or officers are directors or officers, or have a financial interest, shall be
void or voidable solely for this reason, or solely because the director or
officer is present at or participates in the meeting of the Board of Directors
or committee thereof which authorizes the contract or transaction, or solely
because his or their votes are counted for such purpose, if: (a) the material
facts as to his relationship or interest and as to the contract or transaction
are disclosed or are known to the Board of Directors or the committee, and the
Board of Directors or committee in good faith authorizes the contract or
transaction by the affirmative vote of a majority of the disinterested
directors, even though the disinterested directors constitute less than a quorum
so long as the number of disinterested directors so voting is greater than one;
or (b) the material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the shareholders entitled
to vote thereon, and the contract or transaction is specifically approved in
good faith by vote of the shareholders; or (c) the contract or transaction is
fair as to the Corporation as of the time it is authorized, approved or
ratified, by the Board of Directors, a committee thereof or the shareholders.
For purposes of this section, if a majority of the directors or members of a
committee entitled to vote authorize, approve or ratify the transaction, then
there shall be considered to be the presence of a quorum at a meeting of the
Board of Directors or such committee. A majority of the shares, whether or not
present, that are entitled to be counted in a vote on the transaction under this
section constitutes a quorum for the purpose of taking action by the
shareholders under this section.
Section 8.5 Books and Records. The books and records of the Corporation may
be kept within or without the State of New Hampshire at such place or places as
may be designated from time to time by the Board of Directors. Any records
maintained by the Corporation in the regular course of its business, including
its stock ledger, books of account and minute books, may be kept on, or be in
the form of, punch cards, magnetic tape, photographs, microphotographs or any
other information storage device provided that the records so kept can be
converted into clearly legible form within a reasonable time. The Corporation
shall so convert any records so kept upon the request of any person entitled to
inspect the same.
Section 8.6 Amendment of By-laws. The Board of Directors may amend or
repeal these By-laws unless (i) the articles of incorporation or the New
Hampshire Business Corporation Act reserve such power exclusively to the
shareholders in whole or in part, or (ii) the shareholders in amending or
repealing a particular by-law provide expressly that the Board of Directors
shall not amend or repeal that by-law. The shareholders may amend and repeal
these By-laws even though the By-laws may also be amended or repealed by the
Board of Directors.
* * * * * *
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<PAGE> 1
EXHIBIT 3.5
CERTIFICATE OF INCORPORATION
OF
LMRC HOLDING CORP.,
a Delaware corporation
FIRST. The name of the corporation is LMRC HOLDING
CORP. (hereinafter, the "Corporation").
SECOND. The address of the Corporation's registered
office in the State of Delaware is Corporation Trust Center, 1209
Orange Street, in the City of Wilmington, County of New Castle, State
of Delaware 19801. The name of its registered agent at such address is
The Corporation Trust Company.
THIRD. The nature of the business of or purpose to be
conducted or promoted by the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware (the "General Corporation
Law").
FOURTH. The total number of shares of capital stock
which the Corporation shall have authority to issue is 1,000 shares of
common stock, par value $.01 per share.
FIFTH. The Board of Directors is authorized to make,
alter or repeal the By-Laws of the Corporation. Election of directors
need not be by written ballot unless the By-Laws so provide.
SIXTH. The name and mailing address of the sole
incorporator is:
Name Mailing Address
---- ---------------
Kenneth A. Fuchs Winston & Strawn
35 West Wacker Drive
Chicago, IL 60601
SEVENTH. A director of the Corporation shall not be
liable to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, except to the extent such
exemption from liability or limitation thereof is not permitted under
the General Corporation Law of the State of Delaware as the same exists
or may hereafter be amended. Any repeal or modification of the first
sentence of this Article SEVENTH shall not adversely affect any right
or protection of a director of the Corporation existing hereunder with
respect to any act or omission occurring prior to such repeal or
modification.
EIGHTH. The Corporation reserves the right to amend,
alter, change or repeal any provision contained in this Certificate of
Incorporation in the manner now or hereafter prescribed herein and by
the General Corporation Law, and all rights conferred upon stockholders
herein are granted subject to this reservation.
[signature page follows]
<PAGE> 2
IN WITNESS WHEREOF, the undersigned has executed this Certificate this
9th day of September, 1997.
/s/ Kenneth A. Fuchs
---------------------
Kenneth A. Fuchs
Sole Incorporator
<PAGE> 1
EXHIBIT 3.6
BY-LAWS
OF
LMRC HOLDING CORP.,
A DELAWARE CORPORATION
(the "Corporation")
ARTICLE I
Offices
Section 1.1 Registered Office. The registered office of the Corporation in
the State of Delaware shall be located at 1209 Orange Street, Wilmington,
Delaware, County of New Castle. The name of the Corporation's registered agent
at such address shall be CT Corporation System.
Section 1.2 Other Offices. The Corporation may also have offices at such
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
ARTICLE II
Stockholders
Section 2.1 Annual Meetings. An annual meeting of stockholders shall be
held each year for the election of directors at such date, time and place
either within or without the State of Delaware as shall be designated by the
Board of Directors. Any other proper business may be transacted at the annual
meeting of stockholders.
Section 2.2 Special Meetings. Special meetings of stockholders may be
called at any time by the Board of Directors, the Chairman (as hereinafter
defined), if any, the Vice Chairman, if any, or the President. Each special
meeting shall be held at such date, time and place either within or without the
State of Delaware as shall be designated by the person or persons calling such
meeting at least ten days prior to such meeting.
Section 2.3 Notice of Meeting. Unless otherwise provided by law, whenever
stockholders are required or permitted to take any action at a meeting, a
written notice of the meeting shall be given which shall state the date, time
and place of the meeting and, in the case of a special meeting,
the purpose or purposes for which the meeting is called. Unless otherwise
provided by law, the written notice of any meeting shall be given not less than
ten nor more than sixty days before the date of the meeting to each stockholder
entitled to vote at the meeting. If mailed, notice is given when deposited in
the United States mail, postage prepaid, directed to the stockholder at his
address as it appears on the records of the Corporation.
<PAGE> 2
Section 2.4 Adjournments. Any meeting of stockholders, annual or special,
may adjourn from time to time to reconvene at the same or some other place, and
notice need not be given of any such adjourned meeting if the time and place
thereof are announced at the meeting at which the adjournment is taken. At the
adjourned meeting, the Corporation may transact any business which might have
been transacted at the original meeting. If the adjournment is for more than
thirty days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
Section 2.5 Quorum. Unless otherwise provided by law or the certificate of
incorporation, at each meeting of stockholders, the presence in person or by
proxy of the holders of a majority in voting power of the outstanding shares of
stock entitled to vote at the meeting shall be necessary and sufficient to
constitute a quorum. For purposes of the foregoing, two or more classes or
series of capital stock shall be considered a single class if the holders
thereof are entitled to vote together as a single class at the meeting. In the
absence of a quorum, the stockholders so present and represented may, by vote of
the holders of a majority of the shares of capital stock of the Corporation so
present and represented, adjourn the meeting from time to time until a quorum
shall attend, and the provisions of Section 2.4 of these By-laws shall apply to
each such adjournment. Shares of its own capital stock belonging on the record
date for the meeting to the Corporation or to another corporation, if a majority
of the shares entitled to vote in the election of directors of such other
corporation is held, directly or indirectly, by the Corporation, shall neither
be entitled to vote nor be counted for quorum purposes; provided, however, that
the foregoing shall not limit the right of the Corporation to vote stock,
including but not limited to its own stock, held by it in a fiduciary capacity.
Section 2.6 Organization. Meetings of stockholders shall be presided over
by the Chairman, if any, or in his absence by the Vice Chairman, if any, or in
his absence by the President, or in the absence of the foregoing persons by a
chairman designated by the Board of Directors, or in the absence of such
designation by a chairman chosen at the meeting. The Secretary shall act as
secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting.
Section 2.7 Voting; Proxies. Unless otherwise provided by the certificate
of incorporation, each stockholder entitled to vote at any meeting of
stockholders shall be entitled to one vote for each share of capital stock held
by him which has voting power on the subject matter submitted to a vote at the
meeting. Each stockholder entitled to vote at a meeting of stockholders or to
express consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for him by proxy, but no such proxy
shall be voted or acted upon after three years from its date, unless the proxy
provides for a longer period. A duly executed proxy shall be irrevocable if it
states that it is irrevocable and if, and only as long as, it is coupled with an
interest sufficient in law to support an irrevocable power. A stockholder may
revoke any proxy which is not irrevocable by attending the meeting and voting in
person or by filing an instrument in writing revoking the proxy or another duly
executed proxy bearing a later date with the Secretary before the proxy is
voted. Unless otherwise required by law, voting of stockholders for the election
of directors need not be by written ballot. Voting of stockholders for all other
matters need not be by written ballot unless so
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<PAGE> 3
determined at a stockholders meeting by the vote of the holders of a majority of
the outstanding shares of each class of capital sock present in person or
represented by proxy at the meeting and entitled to vote on the subject matter
submitted to a vote at the meeting. Unless otherwise provided by law or the
certificate of incorporation, the vote of the holders of a majority of the
shares of capital stock of the Corporation present in person or represented by
proxy at a meeting at which a quorum is present and entitled to vote on the
subject matter submitted to a vote at the meeting shall be the act of the
stockholders.
Section 2.8 Fixing Date for Determination of Stockholders of Record. In
order that the Corporation may determine the stockholders entitled to notice of
or to vote at any meeting of stockholders or any adjournment thereof or to
express consent to corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change, conversion
or exchange of stock or for the purpose of any other lawful action, the Board of
Directors may fix, in advance, a record date, which shall not be more than sixty
nor less than ten days before the date of such meeting, more than ten days after
the date upon which the resolution fixing the record date with respect to the
taking of corporate action by written consent without a meeting is adopted by
the Board of Directors, nor more than sixty days prior to any other action. If
no record date is fixed: (a) the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice is given or,
if notice is waived, at the close of business on the day next preceding the day
on which the meeting is held; (b) the record date for determining stockholders
entitled to express consent to corporate action in writing without a meeting,
when no prior action by the Board of Directors is required by law, shall be the
first date on which a signed written consent setting forth the action taken or
proposed to be taken is delivered to the Corporation in accordance with
applicable law, or, if prior action by the Board of Directors is required by
law, shall be at the close of business on the day on which the Board of
Directors adopts the resolution taking such prior action; (c) the record date
for determining stockholders entitled to express consent to corporate action in
writing without a meeting, when prior action by the Board of Directors is
required, shall be at the close of business on the day on which the Board of
Directors adopts the resolution taking such prior action; and (d) the record
date for determining stockholders for any other purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating thereto. A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
Section 2.9 List of Stockholders Entitled to Vote. The Secretary shall
make, at least ten days before every meeting of stockholders, a complete list of
the stockholders entitled to vote at the meeting, arranged in alphabetical
order, and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the meeting,
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or, if not so specified, at the
place
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<PAGE> 4
where the meeting is to be held. The list shall also be produced and kept at the
time and place of the meeting during the whole time thereof and may be inspected
by any stockholder who is present.
Section 2.10 Consent of Stockholders in Lieu of Meeting. Unless otherwise
provided by law or by the certificate of incorporation, any action required by
law to be taken at any annual or special meeting of stockholders of the
Corporation, or any action which may be taken at any annual or special meeting
of such stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
ARTICLE III
Board of Directors
Section 3.1 Powers; Number; Qualifications. Unless otherwise provided by
law or the certificate of incorporation, the business and affairs of the
Corporation shall be managed by or under the direction of the Board of
Directors. Unless otherwise provided by the certificate of incorporation, the
Board of Directors shall initially consist of one (1) director and thereafter
shall consist of such number of directors as the Board of Directors shall from
time to time designate. Unless otherwise provided by the certificate of
incorporation, directors need not be stockholders.
Section 3.2 Election; Term of Office; Resignation; Removal; Vacancies.
Each director shall hold office until his successor is elected and qualified or
until his earlier resignation or removal. Any director may resign at any time
upon written notice to the Corporation directed to the Board of Directors or the
Secretary. Such resignation shall take effect at the time specified therein, and
unless otherwise specified therein no acceptance of such resignation shall be
necessary to make it effective. Any director or the entire Board of Directors
may be removed, with or without cause, by the vote of the holders of a majority
of shares of capital stock then entitled to vote at an election of directors.
Whenever the holders of shares of any class or series of capital stock are
entitled to elect one or more directors by the provisions of the certificate of
incorporation, the provisions of the preceding sentence shall apply, in respect
to the removal without cause of a director or directors so elected, to the vote
of the holders of the outstanding shares of that class or series of capital
stock and not to the vote of the holders of the outstanding shares of capital
stock as a whole. Unless otherwise provided by the certificate of incorporation,
vacancies and newly created directorships resulting from any increase in the
authorized number of directors elected by all of the stockholders having a right
to vote as a single class may be filled by the vote of a majority of the
directors then in office, although less than a quorum, or by the vote of the
sole remaining director. Whenever the holders of shares of any class or classes
of capital stock or series thereof are entitled to elect one or more directors
by the provisions of the certificate of incorporation, vacancies and newly
created directorships of such class
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<PAGE> 5
or classes or series thereof may be filled by the vote of a majority of the
directors elected by such class or classes or series thereof then in office, or
by the vote of the sole remaining director so elected.
Section 3.3 Regular Meetings. Regular meetings of the Board of Directors
shall be held at such dates, times and places either within or without the State
of Delaware as the Board of Directors shall from time to time determine.
Section 3.4 Special Meetings. Special meetings of the Board of Directors
may be called at any time by the Chairman, the President or by any member of the
Board of Directors. Each special meeting shall be held at such date, time and
place either within or without the State of Delaware as shall be fixed by the
person or persons calling the meeting.
Section 3.5 Notice of Meetings. Written notice of each meeting of the Board
of Directors shall be given which shall state the date, time and place of the
meeting. The written notice of any meeting shall be given at least twenty-four
hours in advance of the meeting to each director. Notice may be given by letter,
telegram, telex or facsimile and shall be deemed to have been given when
deposited in the United States mail, delivered to the telegraph company or
transmitted by telex or facsimile, as the case may be.
Section 3.6 Telephonic Meetings Permitted. Members of the Board of
Directors or any committee designated by the Board of Directors may participate
in a meeting of the Board of Directors or of such committee by means of
conference telephone or similar communication equipment by means of which all
persons participating in the meeting can hear each other, and participation in
the meeting pursuant to this by-law shall constitute presence in person at such
meeting.
Section 3.7 Quorum; Vote Required for Action. Unless otherwise required by
law, at each meeting of the Board of Directors, the presence of one-third of the
total number of directors shall constitute a quorum for the transaction of
business. The vote of a majority of the directors present at a meeting at which
a quorum is present shall be the act of the Board of Directors, unless the vote
of a greater number is required by law or the certificate of incorporation. In
case at any meeting of the Board of Directors a quorum shall not be present, the
members of the Board of Directors present may by majority vote to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall attend.
Section 3.8 Organization. Meetings of the Board of Directors shall be
presided over by the Chairman, or in his absence by the President, or in their
absence by a chairman chosen at the meeting. The Secretary shall act as
secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting.
Section 3.9 Action by Directors Without a Meeting. Unless otherwise
provided by the certificate of incorporation, any action required or permitted
to be taken at any meeting of the Board
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<PAGE> 6
of Directors or any committee designated by The Board of Directors may be taken
without a meeting if all members of the Board of Directors or of such committee
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board of Directors or such committee.
Section 3.10 Compensation of Directors. Unless otherwise provided by the
certificate of incorporation, the Board of Directors shall have the authority to
fix the compensation of directors, which compensation may include the
reimbursement of expenses incurred in connection with meetings of the Board of
Directors or a committee thereof.
ARTICLE IV
Committees
Section 4.1 Committees. The Board of Directors may, by resolution passed by
a majority of the whole Board of Directors, designate one or more committees,
each committee to consist of one or more of the directors of the Corporation.
The Board of Directors may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member of such
committee at any meeting thereof. In the absence or disqualification of a member
of a committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in place of any such absent or disqualified member.
Section 4.2 Power of Committees. Any committee designated by the Board of
Directors, to the extent provided in a resolution of the Board of Directors,
shall have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the Corporation and
may authorize the seal of the Corporation to be affixed to all papers which may
require it; but no such committee shall have the power or authority to take any
action which by law may only be taken by the Board of Directors or to take any
action with reference to: amending the certificate of incorporation (except that
a committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the Board of Directors,
fix the designation and any of the preferences or rights of such shares relating
to dividends, redemption, dissolution, any distribution of assets of the
Corporation or the conversion into, or the exchange of such shares for, shares
of any other class or classes or any other series of the same or any other class
or classes of stock of the Corporation or fix the number of shares of any series
of stock or authorize the increase or decrease of the shares of any series),
adopting an agreement of merger or consolidation, recommending to the
stockholders the sale, lease or exchange of all or substantially all of the
Corporation's property and assets, recommending to the stockholders a
dissolution of the Corporation or a revocation of dissolution, removing or
indemnifying directors or amending these By-laws; and, unless a resolution of
the Board of Directors expressly so provides, no such committee shall have the
power or authority to declare a dividend, to authorize the issuance of stock or
to adopt
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<PAGE> 7
a certificate of ownership and merger pursuant to the General Corporation Law of
the State of Delaware.
Section 4.3 Committee Rules. Unless the Board of Directors otherwise
provides, each committee designated by the Board of Directors may adopt, amend
and repeal rules for the conduct of its business. In the absence of a resolution
by the Board of Directors or a provision in the rules of such committee to the
contrary, the presence of a majority of the total number of members of such
committee shall constitute a quorum for the transaction of business, and the
vote of a majority of the members present at a meeting at which a quorum is
present shall be the act of such committee.
ARTICLE V
Officers
Section 5.1 Officers; Elections. As soon as practicable after the annual
meeting of stockholders in each year, the Board of Directors shall elect from
its membership or outside thereof a President and a Secretary. The Board of
Directors may also elect from its membership a Chairman and a Vice Chairman, and
from its membership or outside thereof one or more Vice Presidents, one or more
Assistant Vice Presidents, one or more Assistant Secretaries, a Treasurer and
one or more Assistant Treasurers and such other officers or agents as it may
determine. Unless otherwise provided by the certificate of incorporation, any
number of offices may be held by the same person.
Section 5.2 Term of Office; Resignation; Removal; Vacancies. Except as
otherwise provided by the Board of Directors when electing any officer, each
officer shall hold office until the first meeting of the Board of Directors
after the annual meeting of stockholders next succeeding his election, or until
his successor is elected and qualified or until his earlier resignation or
removal. Any officer may resign at any time upon written notice to the
Corporation directed to the Board of Directors and the Secretary. Such
resignation shall take effect at the time specified therein, and unless
otherwise specified therein no acceptance of such resignation shall be necessary
to make it effective. The Board of Directors may remove any officer or agent
with or without cause at any time. Any such removal shall be without prejudice
to the contractual rights of such officer or agent, if any, with the
Corporation, but the election of an officer or agent shall not of itself create
any contractual rights. Any vacancy occurring in any office of the Corporation
by death, resignation, removal or otherwise may be filled for the unexpired
portion of the term by the Board of Directors.
Section 5.3 Powers and Duties. The officers of the Corporation shall have
such powers and duties in the management of the Corporation as shall be stated
in these By-laws or in a resolution of the Board of Directors which is not
inconsistent with these By-laws and, to the extent not so stated, as generally
pertain to their respective offices, subject to the control of the Board of
Directors.
Section 5.4 Chairman of the Board and Chief Executive Officer. The Chairman
of the Board and Chief Executive Officer (the "Chairman") shall be the chief
executive officer of the
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<PAGE> 8
Corporation and shall have the powers and perform the duties incident to that
position. Subject to the powers of the Board of Directors, he or she shall be in
the general and active charge of the entire business and affairs of the
Corporation and shall be its chief policy making officer. He or she shall
preside at all meetings of the Board of Directors and stockholders and shall
have such other powers and perform such other duties as may be prescribed by the
Board of Directors or provided in these By-laws. Whenever the President is
unable to serve, by reason of sickness, absence or otherwise, the Chairman shall
perform all the duties and responsibilities and exercise all the powers of the
President.
Section 5.5 The President. The President, subject to the powers of the
Board of Directors and the Chairman, shall have general charge of the business,
affairs and property of the Corporation and control over its officers, agents
and employees; and shall see that all orders and resolutions of the Board of
Directors are carried into effect. The President shall execute bonds, mortgages
and other contracts requiring a seal, under the seal of the Corporation, if any,
except where required or permitted by law to be otherwise signed and executed
and except where the signing and execution thereof shall be expressly delegated
by the Board of Directors to some other officer or agent of the Corporation. The
President shall have such other powers and perform such other duties as may be
prescribed by the Chairman or the Board of Directors or as may be provided in
these By-laws.
Section 5.6 Executive Vice-President. The Executive Vice-President in the
absence or disability of the President, perform the duties and exercise the
powers of the president and shall perform such other duties and have such other
powers as the Board of Directors may from time to time prescribe.
Section 5.7 The Secretary and the Assistant Secretaries. The Secretary
shall attend all meetings of the Board of Directors, all meetings of the
committees thereof and all meetings of the stockholders and record all the
proceedings of the meetings in a book or books to be kept for that purpose.
Under the President's supervision, the Secretary shall give, or cause to be
given, all notices required to be given by these By-laws or by law; shall have
such powers and perform such duties as the Board of Directors, the Chairman, the
President or these By-laws may, from time to time, prescribe; and shall have
custody of the corporate seal, if any, of the Corporation. The Secretary, or an
Assistant Secretary, shall have authority to affix the corporate seal, if any,
to any instrument requiring it and when so affixed, it may be attested by his or
her signature or by the signature of such Assistant Secretary. The Board of
Directors may give general authority to any other officer to affix the corporate
seal, if any, and to attest the affixing by his or her signature. The Assistant
Secretary shall, in the absence or disability of the Secretary, perform the
duties and exercise the powers of the Secretary and shall perform such other
duties and have such other powers as the Board of Directors, the Chairman, the
President or Secretary may, from time to time, prescribe.
Section 5.8 The Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the corporation as may be
ordered by the Board of
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Directors, taking proper vouchers for such disbursements and shall render to the
President and the Board of Directors, at its regular meetings, or when the Board
of Directors so requires, an account of all the treasurers transactions as
treasurer and of the financial condition of the corporation. If required by the
Board of Directors, the treasurer shall give the corporation a bond in such sum
and with such surety or sureties as shall be satisfactory to the Board of
Directors for the faithful performance of the duties of the Treasurers office
and for the restoration to the corporations in case of the Treasurers death,
resignation, retirement or removal from office, of all books, papers, vouchers,
money and other property of whatever kind in the Treasurer's possession or under
the Treasurer's control belonging to the corporation.
Section 5.9 Other Officers; Security. The other officers, if any, of the
Corporation shall have such duties and powers as generally pertain to their
respective offices and such other duties and powers as the Board of Directors
shall from time to time delegate to each such officer. The Board of Directors
may require any officer, agent or employee to give security, by bond or
otherwise, for the faithful performance of his duties.
Section 5.10 Compensation of Officers. The compensation of each officer
shall be fixed by the Board of Directors and no officer shall be prevented from
receiving such compensation by virtue of his also being a director.
ARTICLE VI
Stock
Section 6.1 Certificates. Every holder of one or more shares of capital
stock of the Corporation shall be entitled to have a certificate signed by or in
the name of the Corporation by the Chairman or Vice Chairman, if any, or the
President or a Vice President, and by the Treasurer or an Assistant Treasurer,
if any, or the Secretary or an Assistant Secretary, certifying the number of
shares owned by him in the Corporation. Any or all of the signatures on the
certificate may be a facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.
Section 6.2 Lost, Stolen or Destroyed Stock Certificates; Issuance of New
Certificates. The Corporation may issue a new certificate of stock in the place
of any certificate theretofore issued by it, alleged to have been lost, stolen
or destroyed, and the Corporation may require the owner of the lost, stolen or
destroyed certificate, or his legal representative, to give the Corporation a
bond sufficient to indemnify it against any claim that may be made against it on
account of the alleged loss, theft or destruction of any such certificate or the
issuance of such new certificate.
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ARTICLE VII
Indemnification
Section 7.1 Right to Indemnification. Each person who was or is made a
party or is threatened to be made a party to or is otherwise involved in any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a "proceeding"), by
reason of the fact that he is or was a director or officer of the Corporation or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to an employee benefit
plan (hereinafter an "indemnitee"), whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee or agent
or in any other capacity while serving as a director, officer, employee or
agent, shall be indemnified and held harmless by the Corporation to the fullest
extent authorized by the General Corporation Law of the State of Delaware, as
the same exists or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than permitted prior thereto), against
all reasonable expense, liability and loss (including, without limitation,
reasonable attorneys' fees, judgments, fines and amounts paid in settlement)
incurred or suffered by such indemnitee in connection therewith and such
indemnification shall continue as to an indemnitee who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
indemnitee's heirs, executors and administrators; provided, however, that,
except as provided in Section 7.2 below with respect to proceedings to enforce
rights to indemnification, the Corporation shall indemnify any such indemnitee
in connection with a proceeding (or part thereof) initiated by such indemnitee
only if such proceeding (or part thereof) was authorized by the Board of
Directors of the Corporation. The right to indemnification conferred in this
ARTICLE VII shall be a contract right and shall include the right to be paid by
the Corporation the expenses incurred in defending any such proceeding in
advance of its final disposition (hereinafter an "advancement of expenses");
provided, however, that, if the General Corporation Law of the State of Delaware
requires, an advancement of expenses incurred by an indemnitee in his capacity
as a director or officer (and not in any other capacity in which service was or
is rendered by such indemnitee) shall be made only upon delivery to the
corporation of an undertaking (hereinafter an "undertaking"), by or on behalf of
such indemnitee, to repay all amounts so advanced if it shall ultimately be
determined by final judicial decision from which there is no further right to
appeal (hereinafter a "final adjudication") that such indemnitee is not entitled
to be indemnified for such expenses under this ARTICLE VII or otherwise.
Section 7.2 Right of Indemnitee to Bring Suit. If a claim under Section 7.1
above is not paid in full by the Corporation within sixty days after a written
claim has been received by the Corporation, except in the case of a claim for an
advancement of expenses, in which case the applicable period shall be thirty
days, the indemnitee may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim. If successful in whole or
in part in any such suit, or in a suit brought by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the indemnitee
shall be entitled to be paid also the expense of prosecuting
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<PAGE> 11
or defending such suit. In (a) any suit brought by the indemnitee to enforce a
right to indemnification hereunder (but not in a suit brought by the indemnitee
to enforce a right to an advancement of expenses) it shall be a defense that and
(b) in any suit by the Corporation to recover an advancement of expenses
pursuant to the terms of an undertaking the Corporation shall be entitled to
recover such expenses upon a final adjudication that, the indemnitee has not met
the applicable standard of conduct set forth in the General Corporation Law of
the State of Delaware. Neither the failure of the Corporation (including its
Board of Directors, independent legal counsel or its stockholders) to have made
a determination prior to the commencement of such suit that indemnification of
the indemnitee is proper in the circumstances because the indemnitee has met the
applicable standard of conduct set forth in the General Corporation Law of the
State of Delaware, nor an actual determination by the Corporation (including its
Board of Directors, independent counsel or its stockholders) that the indemnitee
has not met such applicable standard of conduct, shall create a presumption that
the indemnitee has not met the applicable standard of conduct or, in the case of
such a suit brought by the indemnitee, be a defense to such suit. In any suit
brought by the indemnitee to enforce a right to indemnification or to an
advancement of expenses hereunder, or by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the burden of
proving that the indemnitee is not entitled to be indemnified, or to such
advancement of expenses, under this ARTICLE VII or otherwise shall be on the
Corporation.
Section 7.3 Insurance. The Corporation may purchase and maintain insurance
on its own behalf or on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any expense,
liability or loss asserted against him in any such capacity, or arising out of
his status as such, whether or not the Corporation would have the power to
indemnify such person against such expense, liability or loss under the General
Corporation Law of the State of Delaware.
Section 7.4 Nonexclusivity of Rights. The rights conferred on any person by
this Article VII shall not be exclusive of any other rights which such person
may have or hereafter acquire under any statute, provision of the certificate of
incorporation, these By-laws, agreement, vote of stockholders or disinterested
directors or otherwise.
Section 7.5 Other Indemnification. The Corporation's obligation, if any, to
indemnify or to advance expenses to any person who was or is serving at its
request as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, enterprise or nonprofit entity shall be
reduced by any amount such person may collect as indemnification or advancement
of expenses from such other corporation, partnership, joint venture, trust,
enterprise or nonprofit enterprise.
Section 7.6 Amendment or Repeal. Any repeal or modification of the
foregoing provisions of this Article VII shall not adversely affect any right or
protection hereunder of any person in respect of any act or omission occurring
prior to the time of such repeal or modification.
ARTICLE VIII
Miscellaneous
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Section 8.1 Fiscal Year. The fiscal year of the Corporation shall be
determined by the Board of Directors.
Section 8.2 Seal. The Corporation may have a corporate seal which shall
have the name of the Corporation inscribed thereon and shall be in such form as
may be approved from time to time by the Board of Directors.
Section 8.3 Waiver of Notice of Meetings of Stockholders, Directors and
Committees. Whenever notice is required to be given by law, the certificate of
incorporation or these By-laws, a written waiver thereof, signed by the person
entitled to notice, whether before or after the time stated therein, shall be
deemed equivalent to notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called or
convened. Unless otherwise provided by the certificate of incorporation, neither
the business to be transacted at, nor the purpose of, any regular or special
meeting of the stockholders, directors or members of a committee of directors
need be specified in any written waiver of notice.
Section 8.4 Interested Directors, Officers, Quorum. No contract or
transaction between the Corporation and one or more of its directors or
officers, or between the Corporation and any other corporation, partnership,
association or other organization in which one or more of its directors or
officers are directors or officers, or have a financial interest, shall be void
or voidable solely for this reason, or solely because the director or officer is
present at or participates in the meeting of the Board of Directors or committee
thereof which authorizes the contract or transaction, or solely because his or
their votes are counted for such purpose, if: (a) the material facts as to his
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board of Directors or the committee, and the Board of Directors
or committee in good faith authorizes the contract or transaction by the
affirmative vote of a majority of the disinterested directors, even though the
disinterested directors constitute less than a quorum; or (b) the material facts
as to his relationship or interest and as to the contract or transaction are
disclosed or are known to the stockholders entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by vote of the
stockholders; or (c) the contract or transaction is fair as to the Corporation
as of the time it is authorized, approved or ratified, by the Board of
Directors, a committee thereof or the stockholders. Common or interested
directors may be counted in determining the presence of a quorum at a meeting of
the Board of Directors or of a committee which authorizes the contract or
transaction.
Section 8.5 Books and Records. The books and records of the Corporation may
be kept within or without the State of Delaware at such place or places as may
be designated from time to time by the Board of Directors. Any records
maintained by the Corporation in the regular course of its business, including
its stock ledger, books of account and minute books, may be kept on, or be in
the form of, punch cards, magnetic tape, photographs, microphotographs or any
other information storage device provided that the records so kept can be
converted into clearly legible form within a reasonable time. The Corporation
shall so convert any records so kept upon the request of any person entitled to
inspect the same.
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Section 8.6 Amendment of By-laws. These By-laws may be amended or repealed,
and new by-laws adopted, by the Board of Directors, but the stockholders
entitled to vote may adopt additional by-laws and may amend or repeal any by-law
whether or not adopted by them.
*******
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EXHIBIT 10
FORM OF AGREEMENT
This Agreement (the "Agreement") is entered into this ___ day of ____,
______ by and between Booth Creek Ski Holdings, Inc., a Delaware corporation
("Company"), and Timothy H. Beck ("Executive"), an individual residing at
Norwich, Vermont.
WHEREAS, Company desires to employ Executive in accordance with the
terms and conditions hereinafter set forth and Executive desires to be so
employed;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, Company and Executive agree as follows:
1. EMPLOYMENT. Company hereby employs Executive as President of Eastern
Operations and Executive Vice President - Planning for the Company. In this
position, Executive shall report to the Office of the President or such
individual as designated by the Company.
2. DUTIES. During the Term of Employment (as hereinafter defined),
Executive's duties shall be consistent with his position, along with such other
duties consistent therewith as may be assigned to Executive from time to time by
Company. Executive and Company acknowledge that a Related Entity, other than
Company, may be the entity that acquires a destination resort and, in such
event, Executive will perform duties on behalf of such entity in addition to
Company. Executive shall devote his entire productive time, abilities and
attention to these activities, shall perform his duties in a professional,
ethical and businesslike manner, and shall comply with all policies and
procedures of Company.
3. TERM OF EMPLOYMENT. Unless earlier terminated as provided herein,
the "Term of Employment," as that phrase is used in this Agreement, shall be a
period commencing July 1, 1997 and ending June 30, 2002; provided, however, that
the Term of Employment shall automatically be extended for successive one-year
periods on each June 30, commencing June 30, 2002, unless timely written notice
of termination of the Term of Employment is provided in accordance with the last
sentence of this Section. Company or Executive may choose not to renew the Term
of Employment, without cause or reason, upon written notice to the other at
least 90 days prior to June 30, 2002, or at least 90 days prior to any June 30
date thereafter that this Agreement may remain in effect.
4. COMPENSATION AND BENEFITS. During the Term of Employment, Company
shall provide to Executive and Executive shall accept from Company as full
compensation for Executive's services hereunder, compensation and benefits as
follows:
a. BASE SALARY. Executive shall be paid at an annual base
salary rate of One Hundred Thirty Seven Thousand Five Hundred Dollars ($137,500)
("Base Salary"). The Base Salary will be reviewed annually and may be increased
in Company's sole discretion. The Base Salary shall be provided in accordance
with payroll practices in effect for all salaried Executives of Company.
b. ANNUAL BONUS(ES). Executive shall be eligible to receive
annual bonus(es) as determined in the discretion of the Company. For the period
beginning on the date of this
<PAGE> 2
Agreement and ending on October 31, 1997, however, Executive will be entitled to
a minimum bonus equal to 35% of Executive's Base Salary (prorated for the
partial fiscal year) or such larger amount as Company may determine. Prior to
the beginning of each fiscal year thereafter, Executive and Company will
establish a set of financial, business, and personal goals, with a target bonus
of 50% of Executive's Base Salary if such goals are satisfied (and a lesser
bonus to the extent such goals are not satisfied but are approximated). The
bonus for any fiscal year will be payable not later than sixty (60) days after
the end of Company's fiscal year. Executive will be entitled to the full bonus
if Executive was employed through the end of the fiscal year as to which the
bonus is payable, and if Executive's employment during a fiscal year is
terminated pursuant to Paragraph 8(a), 8(b), 8(e) or 8(f) hereof (but not if the
Term of Employment is terminated under any other circumstances), Executive shall
be entitled to a prorated bonus for such fiscal year (through the last day of
Executive's employment).
c. INCREASE IN DUTIES. In the event Company or any Related
Entity acquires a destination resort and, as a result of such acquisition,
Executive's duties are materially increased, Executive's Base Salary will be
increased as the parties may agree.
d. BENEFIT PLANS. Executive shall be eligible to participate
in the health, disability, retirement, profit sharing, equity award and savings
plans offered generally to executives of Company, in accordance with the terms
of those plans and with participation levels and benefits to Executive that are
not less favorable than those that are provided to such other executives.
Executive shall be entitled to four weeks paid vacation during each calendar
year of the Term of Employment. Unused vacation will not carry over to
subsequent years.
e. LIFE INSURANCE. Provided Executive is insurable at a
reasonable rate, Company shall provide to Executive or a valid trust established
by Executive a term life insurance policy in the amount of One Million Dollars
($1,000,000), with at least a five year renewable term. Upon the end of the Term
of Employment, Executive may acquire the policy from Company by payment of the
unamortized portion of the premium for the then current policy year.
f. BUSINESS EXPENSES. Company shall reimburse Executive for
reasonable and necessary business expenses, in accordance with Company's
policies and upon presentation of appropriate documentation.
5. BONUS PAYMENT IN THE EVENT OF AN IPO. In the event Company conducts
an initial public offering, it shall thereafter establish, fund and distribute a
bonus pool of $1,000,000 for its management executives, which shall include
senior management level personnel at the Company and its subsidiaries. Provided
he is employed at the time such bonus pool is established, Executive shall be
entitled to a bonus out of such bonus pool, the amount of which shall be
determined by Company in its discretion.
6. LOCATION OF WORK/MOVING AND LIVING EXPENSES. Executive shall perform
services at the various properties owned by the Company and, at the request of
the Company, will be expected to reside in the general area of the community in
which the Company's executive offices
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are located. In the event the location of Company's executive offices causes
Executive to relocate his residence, Company shall reimburse Executive for
reasonable moving expenses (equal to the lower of two bids obtained by
Executive) related to such a move and shall reimburse Executive for any real
estate brokerage fee and mortgage points (up to 2%) incurred by Executive in
connection with a related residential purchase.
In the event Executive is required to spend a substantial amount of his
working time at the Company's executive offices before he is required to move to
the community in which such executive offices are located, Company shall
reimburse Executive for the reasonable cost of travel to such offices and of
temporary housing in the community in which such executive offices are located
until such time as Executive is required to relocate his residence. Such housing
for Executive shall either be provided by or approved by the Company, at the
Company's option.
7. RIGHT TO PURCHASE PROPERTY. Executive shall have the right to
purchase one residential parcel in the community where the Company's executive
offices are located (if the Company owns residential development land in such
community) at Company's cost, or if such cost is not readily ascertainable, at a
discounted price agreed to by Company and Executive. The residential parcel will
be selected by Executive, subject to the approval of Company, such approval not
to be unreasonably withheld.
8. TERMINATION. The Term of Employment shall terminate upon:
a. Executive's death;
b. Termination owing to Executive's disability or incapacity,
due to physical or mental illness that materially detracts from Executive's
ability to perform his duties hereunder for a period in excess of ninety (90)
consecutive days;
c. Termination by Company for "Cause." For purposes of this
Agreement, "Cause" means: (i) failure by Executive (other than by reason of
Executive's disability or incapacity as set forth in Paragraph 8(b) hereof) to
substantially perform his duties in any material respect, after notice and a
reasonable opportunity to cure is provided to Executive; (ii) commission by
Executive of a felony; or (iii) fraud, misappropriation or embezzlement
involving property of Company or other intentional wrongful acts that materially
impair the goodwill or business of Company or that cause material damage to its
property, goodwill or business;
d. Written agreement of Company and Executive;
e. Termination by Company without Cause;
f. Termination by Executive for "Good Reason." Good
Reason means (1) Company breaches its obligations hereunder in any material
respect and fails to cure such breach within 30 days after written notice of
such breach from Executive; (2) Company effects a material reduction in
Executive's reporting responsibilities, titles, authority, offices or duties as
in effect
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<PAGE> 4
immediately prior to such change and fails to cure such reduction within 30 days
after written notice of such reduction from Executive; (3) George N. Gillett,
Jr. ceases to be Chief Executive Officer of Company and Booth Creek Ski Group,
Inc.; or (4) George N. Gillett, Jr. and members of his immediate family cease to
own sufficient shares of stock of Booth Creek Ski Group, Inc. to be able to
elect a majority of the Board of Directors of Booth Creek Ski Group, Inc. (for
purposes of this Agreement, the event described in this subparagraph 8(f)(4)
shall constitute a "Change in Control"); or
g. Upon 60 days notice to Company by Executive. If
Executive does not give at least 60 days prior written notice of his intention
to terminate his employment hereunder, he will forfeit all earned but unused
vacation.
9. COMPENSATION UPON TERMINATION.
a. If the Term of Employment is terminated pursuant to
Paragraph 8(a), 8(b), 8(c), or 8(g), Executive shall not be entitled to receive
any compensation or benefits after the date of such termination except for any
unpaid Base Salary and benefits earned and/or accrued up to the effective date
of such termination notice and any health insurance benefits required by
applicable law.
b. If the Term of Employment is terminated by the parties
pursuant to Paragraph 8(d) hereof, Executive shall be entitled to receive such
compensation as may be specified in a written agreement, if any, between Company
and Executive regarding Executive's termination.
c. If, within six (6) months of a Change in Control (as
defined in subparagraph 8(f)(4) above), the Term of Employment is terminated
pursuant to subparagraph 8(e), Executive will receive salary continuation and
continuation of health insurance coverage and disability insurance coverage at
the same levels and at the same times provided to Executive prior to such
termination from the date of such termination until the earlier of (i) June 30,
2002 or (ii) the third anniversary of such termination but at least for a period
of 18 months from the date of such termination. Such salary continuation shall
be reduced by any compensation received by Executive as a result of services
rendered as an employee or independent contractor during such period. Benefit
continuation will cease prior to the conclusion of such period in the event
Executive is eligible for comparable benefits from another entity, in which case
benefit continuation shall cease on the date such comparable benefits become
available. Such salary continuation shall be provided at Executive's Base Salary
rate then in effect and shall be subject to required withholdings; provided,
however, that if the Executive would be subject to the excise tax imposed under
section 4999 of the Internal Revenue Code of 1986, as amended (the "Code") on
account of receiving the compensation provided for under this section 9(c), the
rate at which the Executive's salary shall be continued under this section 9(c)
shall be reduced to the maximum rate that will allow the Executive to receive
all of the compensation provided for under this section 9(c) without being
subject to the excise tax imposed under section 4999 of the Code.
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<PAGE> 5
d. If the Term of Employment is terminated by Company pursuant
to Paragraph 8(e) (other than under circumstances set forth in 9(c) hereof) or
by Executive pursuant to Paragraph 8(f), Company shall provide to Executive
salary continuation and continuation of health insurance coverage and disability
insurance coverage at the same levels and at the same times provided to
Executive prior to such termination for a period of eighteen (18) months. Such
salary continuation shall be reduced by any compensation received by Executive
as a result of services rendered as an employee or independent contractor during
such period. Benefit continuation shall cease prior to the conclusion of such
eighteen (18) month period in the event Executive is eligible for comparable
benefits from another entity, in which case benefit continuation shall cease on
the date such comparable benefits become available. Such salary continuation
shall be provided at Executive's Base Salary rate then in effect and shall be
subject to required withholdings.
10. RESTRICTIVE COVENANTS.
a. Confidential Information. Executive acknowledges that he
has had and will have access to confidential information (including, but not
limited to, current and prospective confidential know-how, inventions, trade
secrets, customer lists, marketing plans, business plans, information regarding
acquisitions, mergers and/or joint ventures) concerning the business, customers,
products, plans, finances, suppliers, and assets of Company and its parents,
subsidiaries, affiliates and other related entities (collectively, the "Related
Entities") that is not generally known outside Company and/or the Related
Entities ("Confidential Information"). Executive agrees that he shall not, at
any time, directly or indirectly use, divulge, furnish or make accessible to any
person any Confidential Information, but instead shall keep all Confidential
Information strictly and absolutely confidential. Executive agrees to deliver
promptly to Company, at the termination of his employment or at any other time
at Company's request, without retaining any copies, all documents and other
materials in his possession relating, directly or indirectly, to any
Confidential Information.
Notwithstanding the foregoing provisions, information will not
be considered Confidential Information if it (a) becomes a part of the public
domain without a breach by Executive of his duty of confidentiality; (b) was
made known to Executive by a source other than the Company prior to commencement
of his employment with Company; (c) is required to be disclosed by any court,
arbitrator or government authority, or by law (subject to Executive's obligation
to notify Company if he becomes obligated to disclose any such information so as
to provide Company with the opportunity, to the extent feasible, to contest such
disclosure); or (d) is disclosed in connection with any legal proceeding
regarding a breach of the terms of this Agreement by either party.
b. Non-Competition. Executive agrees that during the Term of
Employment and for a period of one year thereafter (the "Period"), he shall not,
without the prior written consent of the Company's Board of Directors ("Board"),
participate or engage in, directly or indirectly (as an owner, partner,
executive officer, director, independent contractor, consultant, advisor or in
any other capacity calling for the rendition of services, advice, or acts of
management, operation or control), any business that, during the Period (x) is
engaged in the business of operating a ski resort in the United States, or (y)
is engaged in any material respect in the real estate development business
within a 45-mile radius of any ski resort owned by Company or a Related Entity
at the end of the
5
<PAGE> 6
Employment Term; provided, however, that this provision shall not prevent
Executive from returning to or joining, after the end of the Term of Employment,
Sno.engineering or any other resort planning company, as long as no ski area
operator has any financial interest in such company.
c. Non-Solicitation of Executives. Executive agrees that,
during the Period, he shall not, without the prior written consent of the Board,
directly or indirectly solicit any current executive of Company or any of the
Related Entities or any individual who becomes an executive during the Period to
leave such employment and join or become affiliated with any other business.
d. No Diversion of Business Opportunities and Prospects.
During the Period, Executive shall not, without the written consent of the
Board, directly or indirectly seek to divert or dissuade from continuing to do
business with or entering into business with Company or any of the Related
Entities, any supplier, customer, or other person or entity that had a business
relationship with or with which Company was actively planning or pursuing a
business relationship at or before the date of termination of his employment.
e. Irreparable Harm. Executive acknowledges that: (i)
Executive's compliance with this Agreement is necessary to preserve and protect
the proprietary rights, Confidential Information and the goodwill of Company and
the Related Entities as going concerns; (ii) any failure by Executive to comply
with the provisions of this Agreement will result in irreparable and continuing
injury for which there will be no adequate remedy at law; and (iii) in the event
that Executive should fail to comply with the terms and conditions of this
Agreement, Company shall be entitled, in addition to such other relief as may be
proper, to all types of equitable relief (including, but not limited to, the
issuance of an injunction and/or temporary restraining order) as may be
necessary to cause Executive to comply with this Agreement, to restore to
Company its property, and to make Company whole.
f. The provisions set forth in this Paragraph 10 shall, as
noted, survive termination of this Agreement.
11. MISCELLANEOUS PROVISIONS.
a. No modification, amendment or waiver of this Agreement nor
consent to any departure by Executive from any of the terms or conditions
thereof, shall be effective unless in writing and signed by Executive and any
officer of the Company authorized by the Board to do so. Any such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given. This Agreement and the side agreement dated June 29, 1997 set forth
the entire agreement and understanding between Company and Executive and
supersedes all prior agreements and understandings, written or oral, relating to
the subject matter hereof.
b. This Agreement shall be binding upon and enforceable by
Executive and Company and shall inure to the benefit of Executive's executors,
administrators, heirs, successors, devisees and legal representatives and any
successor or assignee of Company, but neither this
6
<PAGE> 7
Agreement nor any rights or payments arising hereunder may be assigned, pledged,
transferred (except upon death) or hypothecated by Executive.
c. All notices required to be given under the terms of the
Agreement, or that either of the parties desires to give hereunder, shall be in
writing and delivered personally or be sent by registered mail or certified
mail, postage prepaid, return receipt requested, addressed as follows:
If to Company:
George N. Gillett, Jr.
6755 Granite Creek
Tetron Village, Wyoming 83025
With Copies to:
Booth Creek, Inc.
1000 S. Frontage Road West
Suite 100
Vail, Colorado 81657
(970) 476-4030
(970) 479-0291 (fax)
Rex L. Sessions
WINSTON & STRAWN
35 West Wacker Drive
Chicago, Illinois 60601
(312) 558-5600
(312) 558-5700 (fax)
If to Executive:
304 Route 132
Norwich, Vermont 05055
With a Copy to:
Hynrich W. Wieschnoft
Gouston & Storrs, P.C.
400 Atlantic Avenue
Boston, Massachusetts
Any party may change the address to which notice is to be sent to it or to her
by notice in writing to the other party as provided above.
7
<PAGE> 8
d. This Agreement shall be subject to and governed by the laws
of the State of Delaware.
e. If any provisions(s) of this Agreement shall be found
invalid or unenforceable, in whole or in part, then such provision(s) shall be
deemed to be modified or restricted to the extent and in the manner necessary to
render the same valid and enforceable, or shall be deemed excised from this
Agreement, as the case may require, and this Agreement shall be construed and
enforced to the maximum extent permitted by law, as if such provision(s) had
been originally incorporated herein as so modified or restricted, or as if such
provision(s) had not been originally incorporated herein, as the case may be.
f. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original.
g. Company will indemnify Executive to the maximum extent
permitted by Section 145 of the Delaware Corporation Laws. The foregoing
obligation will survive termination of this Agreement.
[signature page follows]
8
<PAGE> 9
IN WITNESS WHEREOF, the undersigned have executed this
Employment Agreement as of the date first above written.
BOOTH CREEK SKI HOLDINGS, INC.
By: ______________________________ ______________________________
Its: ______________________________
Dated: __________________________ 1997 Date: ______________________________
9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED UNAUDITED INTERIM FINANCIAL STATEMENTS OF BOOTH CREEK SKI HOLDINGS,
INC. AS OF JANUARY 30, 1998 AND FOR THE THREE MONTHS THEN ENDED, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-30-1998
<PERIOD-END> JAN-30-1998
<CASH> 1,511
<SECURITIES> 0
<RECEIVABLES> 1,638
<ALLOWANCES> 37
<INVENTORY> 3,965
<CURRENT-ASSETS> 10,178
<PP&E> 139,410
<DEPRECIATION> 12,285
<TOTAL-ASSETS> 192,838
<CURRENT-LIABILITIES> 35,458
<BONDS> 120,249
3,288
0
<COMMON> 0
<OTHER-SE> 33,592
<TOTAL-LIABILITY-AND-EQUITY> 192,838
<SALES> 0
<TOTAL-REVENUES> 39,016
<CGS> 0
<TOTAL-COSTS> 22,853
<OTHER-EXPENSES> 7,542
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,366
<INCOME-PRETAX> 4,255
<INCOME-TAX> 0
<INCOME-CONTINUING> 4,255
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,185
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
