<PAGE>
As filed with the Securities and Exchange Commission on May 7, 1999
Registration No. 333-
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Global Imaging Systems, Inc.
(Exact name of registrant as specified in its charter)
Delaware 5995 99-3247752
(State of (Primary S.I.C. Code Number) (IRS Employer
Incorporation) Identification No.)
GLOBAL IMAGING SYSTEMS, INC.
3820 Northdale Boulevard, Suite 200A
Tampa, Florida 33624
(813) 960-5508
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Thomas S. Johnson
President and Chief Executive Officer
GLOBAL IMAGING SYSTEMS, INC.
3820 Northdale Boulevard, Suite 200A
Tampa, Florida 33624
(813) 960-5508
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
For information regarding additional registrants, see "Information Regarding
Additional Registrants."
Copies to:
Alan L. Dye, Esq.
HOGAN & HARTSON L.L.P.
555 Thirteenth Street, N.W.
Washington, DC 20004-1109
(202) 637-5600
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
<CAPTION>
Proposed Proposed
Title of Each Class of Amount to be Maximum Offering Maximum Aggregate Amount of
Securities to be Registered Registered Price Per Unit(1) Offering Price(1) Registration Fee
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
10 3/4% Senior
Subordinated Notes
due 2007.............. $100,000,000 100.00% $100,000,000 $27,800
- ----------------------------------------------------------------------------------------------
Subsidiary Guarantees of
the Additional
Registrants........... $100,000,000 (2) (2) (2)
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 under the Securities Act of 1933, as amended.
(2) The additional registrants are registering guarantees of the payment
obligations of the primary registrant under the Senior Subordinated Notes
being offered hereby. Under Rule 457(n), no separate fee is payable with
respect to the guarantees.
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
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<PAGE>
INFORMATION REGARDING ADDITIONAL REGISTRANTS
The following additional registrants are wholly owned, direct and indirect
subsidiaries of Global Imaging Systems, Inc. and guarantors of the senior
subordinated notes.
<TABLE>
<CAPTION>
Jurisdiction IRS Employer
of Primary S.I.C. Identification
Name Organization Code Number Number
---- -------------- -------------- --------------
<S> <C> <C> <C>
American Photocopy Equipment Delaware 5995 25-1333970
Company of Pittsburgh
d/b/a AMCOM Office Systems
Berney, Inc. Alabama 5995 63-0872797
Business Equipment Unlimited Maine 5995 01-0332262
Cameron Office Products, Inc. Massachusetts 5995 04-2943281
Capitol Copy Products, Inc. Delaware 5995
Capitol Office Solutions, Inc. Delaware 5995 52-1058303
Carr Business Machines of Great New York 5995 11-2382276
Neck Inc. d/b/a Carr
Business Systems
Centre Business Products, Inc. Pennsylvania 5995 25-1402615
Connecticut Business Systems, Connecticut 5995 06-1164954
Inc.
Conway Office Products, Inc. New Hampshire 5995 02-0326832
Copy Service and Supply, Inc. North Carolina 5995 56-1405771
COS Financial, Inc. Maryland 5995
Distinctive Business Products, Illinois 5995 36-3206780
Inc.
Duplicating Specialties, Inc. Oregon 5995 93-0557407
d/b/a Copytronix
Eastern Copy Products, Inc. New York 5995 16-1060031
Electronic Systems, Inc. Virginia 5995 54-1145980
Electronic Systems of Richmond, Virginia 5995 54-1221626
Inc.
Felco Office Systems, Inc. Texas 5995 74-2355241
Global Imaging Finance Company Delaware 5995 59-3423296
Global Imaging Operations, Inc. Delaware 5995 04-3340313
ProView, Inc. North Carolina 5995 56-1879665
Quality Business Systems, Inc. Washington 5995 91-1332069
Southern Business Communications, Georgia 5995 58-1428621
Inc.
Southern Copy Systems, Inc. Alabama 5995 63-0895357
</TABLE>
The address and telephone number of the principal executive offices and the
agent for service for each of the additional registrants are the same as for
Global Imaging Systems, Inc., as set forth on the facing page of this
Registration Statement.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the SEC +
+is effective. This prospectus is not an offer to sell these securities and it +
+is not soliciting an offer to buy these securities in any state where the +
+offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS Subject to Completion, dated , 1999
[logo appears here] $100,000,000
Global Imaging Systems, Inc.
Offer To Exchange All Outstanding
$100,000,000 10 3/4% Senior Subordinated Notes Due 2007
For $100,000,000 10 3/4% Senior Subordinated Exchange Notes Due 2007
Interest Payable February 15 and August 15, Beginning on August 15, 1999
Material Terms of the Exchange Offer
. We are offering to exchange all validly tendered and not validly withdrawn
outstanding notes for an equal amount of a new series of notes that are
registered under the Securities Act of 1933.
. The exchange offer will expire at 5:00 P. M., New York City Time, on ,
1999, unless extended.
. You may withdraw tenders of outstanding notes at any time before the
expiration of the exchange offer.
. We will not receive any proceeds from the exchange offer.
. The terms of the exchange notes will be substantially identical to the terms
of the outstanding notes, except for special transfer restrictions and
registration rights relating to the outstanding notes.
. We do not intend to list the exchange notes on any national securities
exchange or Nasdaq.
. The exchange of notes should not be a taxable exchange for U.S. federal
income tax purposes.
. The exchange offer is subject to certain customary conditions, which we may
waive.
. Each broker-dealer that receives exchange notes for its own account in
exchange for outstanding notes that it acquired as a result of market-making
activities or other trading activities must acknowledge that it will deliver
a prospectus in connection with any resale of the exchange notes. See "Plan
of Distribution."
You should carefully consider the risk factors beginning on page 12 of this
prospectus before investing in the exchange notes issued in the exchange offer.
We are not making this exchange offer in any state or jurisdiction where it
is not permitted.
Neither the U.S. Securities and Exchange Commission nor any other federal or
state securities commission has approved or disapproved the notes to be
distributed in the exchange offer, nor have any of these organizations
determined that this prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.
The date of this prospectus is , 1999.
<PAGE>
WHERE YOU CAN GET MORE INFORMATION
This prospectus is part of a registration statement on Form S-4 that we have
filed with the SEC. This prospectus does not contain all of the information
set forth in the registration statement. For further information about us and
the exchange notes, you should refer to the registration statement. This
prospectus summarizes material provisions of contracts and other documents.
Since these summaries may not contain all of the information that you may find
important, you should review the full text of these documents. We have filed
certain of these documents as exhibits to our registration statement.
You should direct any request for information to our Chief Financial Officer
at least 10 business days before you tender your exchange notes in the
exchange offer. Our mailing address and telephone number are
Global Imaging Systems, Inc.
P.O. Box 273478
Tampa, Florida 33688-3478
(813) 960-5508
Since June 1998 Global has been subject to the information requirements of
the Securities Exchange Act of 1934, which means that we are required to file
annual, quarterly and special reports, proxy statements and other information
with the SEC. Investors may read and copy materials Global has filed with the
SEC at the SEC's public reference room at 450 Fifth Street, N.W., Washington,
DC 20549. Please call the SEC at 1-800-SEC-0330 for further information about
its public reference room. Global's SEC filings also are available without
charge on the SEC's internet site at http://www.sec.gov.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements, including statements
about our acquisition and business strategy, our expected financial position
and operating results, and our financing plans and similar matters. We have
based these forward-looking statements largely on our current expectations and
projections about future events and financial trends affecting the financial
condition of our business. These forward-looking statements are subject to
risks, uncertainties and assumptions about Global, including, among other
things:
. General economic and business conditions, both nationally and in our
markets.
. Our acquisition opportunities.
. Our expectations and estimates concerning future financial performance,
financing plans and the impact of competition.
. Anticipated trends in our business, including those described in
"Management's Discussion and Analysis of Financial Condition and Results
of Operations."
. Existing and future regulations affecting our business.
. Other risk factors set forth in "Risk Factors."
In addition, in those and other portions of this prospectus, the words
"believe," "may," "will," "estimate," "continue," "anticipate," "intend,"
"expect" and similar expressions, as they relate to Global or its management,
are intended to identify forward-looking statements. All forward-looking
statements attributable to us or to persons acting on our behalf are expressly
qualified in their entirety by this cautionary statement.
We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise. In light of these risks and uncertainties, the forward-looking
events and circumstances discussed in this prospectus might not transpire.
USE OF CERTAIN TERMS
Unless the context otherwise requires, as used in this prospectus, the terms
"Global," "Company," "our," or "we" refer to Global Imaging Systems, Inc. and
its subsidiaries. The term "exchange notes" refers to the 10 3/4% Senior
Subordinated Notes due 2007 that we have registered under the Securities Act
and that we are offering in exchange for the outstanding 10 3/4% Senior
Subordinated Notes due 2007 that we issued on March 8, 1999. The term "notes"
refers to the exchange notes and the outstanding notes.
(i)
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PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus.
This summary is not complete and may not contain all of the information that
you should consider before participating in the exchange offer or investing in
the exchange notes. To understand the exchange offer fully, you should read
this entire prospectus carefully.
Global Imaging Systems, Inc.
Global Imaging Systems, Inc. is a consolidator in the highly fragmented
office imaging solutions industry. Global provides a broad line of office
imaging solutions, including the sale and service of automated office
equipment, network integration services, electronic presentation systems and
document imaging management systems. Since its founding in June 1994, Global
has acquired 32 businesses in the United States. Twelve of these businesses are
"core" companies, where Global concentrates administrative functions within a
region. The remaining 20 acquired businesses are "satellite" companies, which
means their administrative functions have been transferred to, and their
operations have been integrated into, a core company. Global's operating
philosophy is to "think globally, act locally." Under its decentralized
management system, Global typically continues to operate its acquired companies
under their pre-acquisition names and management in order to preserve existing
client relationships and motivate local management.
Global believes its emphasis on superior customer service and the contractual
nature of its service business can generate significant recurring revenue.
Senior management largely attributes Global's solid historical operating
performance to: (1) employing a strict performance-based benchmarking model,
(2) pursuing a disciplined acquisition strategy and (3) integrating
acquisitions as they are made. For the nine months ended December 31, 1998,
Global had pro forma revenues of $267.1 million and pro forma EBITDA of
$38.1 million.
Global seeks to become the provider of choice for all of its customers'
office imaging needs by offering a full range of products and services and
superior customer service. While Global's clientele includes large, Fortune 500
companies, its growth has been, and is expected to be, largely driven by
serving middle market businesses. Global sells and services a variety of office
imaging solutions, including copiers, facsimile machines, printers, LCD
projectors, overhead projectors, video teleconferencing equipment, optical
scanning equipment, micrographics equipment, and the design and installation of
equipment related to computer networks. In addition, Global offers a variety of
ongoing services, including supply and service contracts, network management
contracts, technical support and training.
Global's strategic objective is to continue to grow profitably in existing
markets and new markets through internal growth and by acquiring additional
businesses. Global's strategy for stimulating internal growth is to offer new
products and services, to take advantage of cross-selling opportunities, and to
market aggressively to existing and new customers. Global enters new geographic
markets by acquiring additional core companies and expanding its core markets
through acquisitions of additional satellite companies.
Currently, Global's twelve core companies operate in 70 locations in 18
states, plus the District of Columbia. Global targets for acquisition as core
companies businesses that are leading competitors in the markets they serve.
Global's goal is to acquire core and satellite companies throughout the United
States and Canada.
1
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The Industry
The office imaging solutions industry is highly fragmented. Of an estimated
3,700 dealer and distributor outlets in the United States primarily engaged in
the sale of copiers and other automated office equipment and related service,
parts, and supplies, approximately 3,100 dealer outlets are unaffiliated,
according to Industry Analysts, Inc. The following table sets forth information
provided by industry experts regarding the current and projected size of the
office imaging markets Global serves:
<TABLE>
<CAPTION>
Domestic Sales
-----------------------
(in billions)
1997 2002
Market (estimated) (projected)
- ------ ----------- -----------
<S> <C> <C>
Analog black and white copier and related service and
supplies ............................................ $21.1 $17.1
Digital black and white copier and related service and
supplies............................................. 3.4 16.7
Digital color copier and related service and sup-
plies................................................ 1.9 5.9
Network consulting and integration services(1) ....... 6.5 13.9
Network management services(1)........................ 1.8 4.2
Electronic presentation systems(2).................... 1.0 1.8
Document technology systems(3) ....................... 6.4 18.6
----- -----
Total............................................... $42.1 $78.2
===== =====
</TABLE>
- --------
(1) According to information provided by International Data Corporation.
(2) According to information provided by Pacific Media Associates.
(3) According to information provided by AIIM International. Data shown is for
the entire North American market.
Growth Strategy
Global believes it is well positioned to benefit from industry trends and
continued consolidation in the office imaging solutions industry. Global's goal
is to become the provider of choice for all of its customers' office imaging
needs by offering a full range of products and services and superior customer
service. The key elements of Global's growth strategy include:
Serve as a Single Source Provider of Office Imaging Solutions. Global
believes that offering a full spectrum of products and services will give it a
competitive advantage and enable it to capitalize on its customer relationships
by cross-selling products and services. As the technology that drives copiers,
facsimiles, printers, electronic presentation equipment and document imaging
management ("DIM") equipment converges, customers increasingly need computers
and networks to use these products. Accordingly, customers are demanding more
integrated office imaging solutions. Global plans to expand its product lines
so that, within each geographic region it serves, Global can offer automated
office equipment, network integration services, electronic presentation systems
and DIM systems. As Global's operations in these last three markets expand,
Global expects an increasing percentage of its revenues and gross profits will
be generated by sales of equipment and supplies, which typically have lower
gross profit margins than sales of service and rentals. Global is also
considering leveraging its infrastructure, customer base, and expertise by
offering outsourced facilities management services.
Provide Timely and Reliable Service. Global seeks to achieve the highest
level of service. Effective and responsive service is essential to obtaining
repeat business and developing market recognition. Providing timely and high
quality service also allows Global to maintain its profit margins, engage in
cross-selling, and enjoy a source of recurring revenue.
Make Strategic Acquisitions. Global plans to continue acquiring core
companies in targeted geographic markets and to expand these core acquisitions
through internal growth and satellite acquisitions. Global looks
2
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for core acquisition candidates that are led by an experienced management team
that will continue to manage the company after Global acquires it, that have a
strong regional market share, and that can grow internally and through the
acquisition of satellite companies. Global's senior management team has
substantial experience in making acquisitions. Since its founding in June 1994,
Global has acquired twelve core companies in the United States and an
additional 20 satellite companies which have been integrated into the core
companies. Global's goal is to acquire core and satellite companies throughout
the United States and Canada.
A key component of Global's growth strategy is to acquire satellite companies
in or near its core companies' markets. Core company management frequently
identifies appropriate satellite acquisition candidates. In evaluating
potential satellite acquisitions Global considers, among other factors, the
potential satellite's proximity to a core company, the fit between its product
lines and those of the nearby core company, and the potential satellite's
management, employee base and service base under contract.
Stimulate Internal Growth. Global's strategy for stimulating internal growth
in its core companies is to increase sales force productivity through
performance benchmarks; expand product and service offerings; increase sales
force size; and aggressively cross-sell products and services.
Optimize Profitability Using Global's Benchmark Model. Global's senior
management has developed an industry management model composed of a
comprehensive set of performance benchmarks. These benchmarks, which are the
focus of internal reporting from the core companies to headquarters, allow
Global's senior and local management to monitor and improve the operations of
each core company. Using these criteria, Global trains its core and satellite
company managers to optimize their business mix and improve performance.
Global strives to reduce costs by consolidating the back-office functions of
its satellite acquisitions into core operations, enabling its core companies to
decrease technician driving time and increase the productivity of sales
personnel and administrators. Global also works to reduce costs by
standardizing financial reporting, cash and inventory management, payroll,
billing, collections, insurance and employee benefit programs, and by
negotiating advantageous relationships with equipment manufacturers, other
suppliers and lessors.
Operate with a Decentralized Management Structure. Global believes that its
core companies' experienced local management possess valuable understanding of
their markets and customers. Therefore, Global gives its core company managers
responsibility for day-to-day operating decisions. Core companies and, in some
cases, satellite companies retain their local name and management after Global
acquires them. This decentralized approach permits local management to maintain
focus and motivation and optimizes customer relationships. Local management is
supported by a senior management team that focuses on Global's growth strategy
as well as corporate planning and financial reporting and analysis.
Recent Developments. In March 1999 Global signed a non-binding letter of
intent to acquire a company with a total of approximately $70 million in annual
revenues that would serve as a core company for Global in the Front Range of
the Rocky Mountains. This proposed acquisition has not been included in any pro
forma financial information contained in this prospectus. Global is also
continually evaluating and having discussions with other acquisition candidates
as part of its growth strategy.
Mailing Address and Telephone Number
Our mailing address and telephone number are
Global Imaging Systems, Inc.
P.O. Box 273478
Tampa, Florida 33688-3478
(813) 960-5508
3
<PAGE>
Summary of the Exchange Offer
The Exchange Offer.......... We are offering to exchange $1,000 principal
amount of our 10 3/4% Senior Subordinated Notes
due 2007, which have been registered under the
Securities Act, for each $1,000 principal amount
of our outstanding unregistered 10 3/4% Senior
Subordinated Notes due 2007 which were issued by
us on March 8, 1999 in a private offering.
In order for your outstanding notes to be
exchanged, you must properly tender them prior to
the expiration of the exchange offer. All
outstanding notes that are validly tendered and
not validly withdrawn will be exchanged. We will
issue the exchange notes on or promptly after the
expiration of the exchange offer.
Outstanding notes may be tendered for exchange in
whole or in part in integral multiples of $1,000
principal amount.
Registration Rights
Agreement................... We sold the outstanding notes on March 8, 1999 to
the initial purchasers of the outstanding notes.
Simultaneously with that sale we signed a
registration rights agreement with the initial
purchasers which requires us to conduct this
exchange offer.
You have the right pursuant to the registration
rights agreement to exchange your outstanding
notes for exchange notes with substantially
identical terms. This exchange offer is intended
to satisfy these rights. After the exchange offer
is complete, you will no longer be entitled to
any exchange or registration rights with respect
to your outstanding notes.
For a description of the procedures for tendering
outstanding notes, see "The Exchange Offer--
Procedures for Tendering Outstanding Notes."
Consequences of Failure to
Exchange Your Outstanding
Notes...................... If you do not exchange your outstanding notes for
exchange notes pursuant to the exchange offer,
you will continue to be subject to the
restrictions on transfer provided in the
outstanding notes and the indenture. In general,
the outstanding notes may not be offered or sold
unless registered under the Securities Act,
except pursuant to an exemption from, or in a
transaction not subject to, the Securities Act
and applicable state securities laws. We do not
currently plan to register the outstanding notes
under the Securities Act. To the extent that
outstanding notes are tendered and accepted in
the exchange offer, the trading market for
untendered and tendered but unaccepted
outstanding notes will be adversely affected.
Expiration Date............. The exchange offer will expire at 5:00 p.m., New
York City time, on , 1999 unless
extended by us, in which case the
4
<PAGE>
term "expiration date" shall mean the latest date
and time to which the exchange offer is extended.
See "The Exchange Offer--Expiration Date;
Extensions; Amendments."
Conditions to the Exchange
Offer....................... The exchange offer is subject to certain
conditions which we may waive at our sole
discretion. The exchange offer is not conditioned
upon any minimum principal amount of outstanding
notes being tendered for exchange. See "The
Exchange Offer--Conditions to the Exchange
Offer."
We reserve the right in our sole and absolute
discretion, subject to applicable law, at any
time and from time to time:
. to delay the acceptance of the outstanding
notes;
. to terminate the exchange offer if certain
specified conditions have not been satisfied;
. to extend the expiration date of the exchange
offer and retain all tendered outstanding notes
subject, however, to the right of tendering
holders to withdraw their tender of outstanding
notes; and
. to waive any condition or otherwise amend the
terms of the exchange offer in any respect.
See "The Exchange Offer--Expiration Date;
Extensions; Amendments."
Procedures for Tendering
Outstanding Notes.......... If you wish to tender outstanding notes for
exchange, you must:
. complete and sign a Letter of Transmittal in
accordance with the instructions contained in
the Letter of Transmittal; and
. forward the Letter of Transmittal by mail,
facsimile transmission or hand delivery,
together with any other required documents, to
the exchange agent, either with the outstanding
notes to be tendered or in compliance with the
specified procedures for guaranteed delivery of
such outstanding notes.
Certain brokers, dealers, commercial banks, trust
companies and other nominees may also effect
tenders by book-entry transfer.
Please do not send your Letter of Transmittal or
certificates representing your outstanding notes
to us. Those documents should only be sent to the
exchange agent. Questions regarding how to tender
and requests for information should be directed
to the exchange agent. See "The Exchange Offer--
Exchange Agent."
Special Procedures for
Beneficial Owners.......... If your outstanding notes are registered in the
name of a broker, dealer, commercial bank, trust
company or other nominee, we urge you to contact
such person promptly if you wish to tender your
outstanding notes pursuant to the exchange offer.
See "The Exchange Offer--Procedures for Tendering
Outstanding Notes."
5
<PAGE>
Withdrawal Rights........... You may withdraw the tender of your outstanding
notes at any time prior to the expiration date by
delivering a written notice of your withdrawal to
the exchange agent in accordance with the
withdrawal procedures as described under the
heading "The Exchange Offer--Withdrawal Rights."
Consequences of Not
Complying with Exchange
Offer Procedures........... You are responsible for complying with all
exchange offer procedures. You will only receive
exchange notes in exchange for your outstanding
notes if, prior to the expiration date, you
(1) deliver to the exchange agent the Letter of
Transmittal, properly completed and duly
executed, along with any other documents or
signature guarantees required by the Letter of
Transmittal, as well as certificates for the
outstanding notes or a book-entry confirmation of
a book-entry transfer of the outstanding notes
into the exchange agent's account at the
Depository Trust Company (DTC) or (2) comply with
the guaranteed delivery procedures described in
"The Exchange Offer--Procedures for Tendering
Outstanding Notes."
Any outstanding notes you hold and do not tender,
or which you tender but which are not accepted
for exchange, will remain outstanding. You will
not have any appraisal or dissenters' rights in
connection with the exchange offer.
You should allow sufficient time to ensure that
the exchange agent receives all required
documents before the expiration of the exchange
offer. Neither we nor the exchange agent has any
duty to inform you of defects or irregularities
with respect to the tender of your outstanding
notes for exchange. See "The Exchange Offer."
Resales of Exchange Notes... We believe that you will be able to offer for
resale, resell or otherwise transfer exchange
notes issued in the exchange offer without
compliance with the registration and prospectus
delivery provisions of the Securities Act,
provided that:
. you are acquiring the exchange notes in the
ordinary course of your business;
. you are not participating, and have no
arrangement or understanding with any person to
participate, in the distribution of the
exchange notes; and
. you are not an affiliate of Global under the
definition of "affiliate" contained in Rule 405
under the Securities Act.
Our belief is based on interpretations by the
staff of the SEC, as set forth in no-action
letters issued to third parties unrelated to us.
The staff of the SEC has not considered the
exchange offer in the context of a no-action
letter, and we cannot assure you that the staff
of the SEC would make a similar determination
with respect to this exchange offer.
6
<PAGE>
If our belief is not accurate and you transfer an
exchange note without delivering a prospectus
meeting the requirements of the Securities Act or
without an exemption from such requirements, you
may incur liability under the Securities Act. We
do not and will not assume or indemnify you
against such liability.
Each broker-dealer that receives exchange notes
for its own account in the exchange offer must
acknowledge that it will deliver a prospectus
meeting the requirements of the Securities Act in
connection with any resale of those exchange
notes. The Letter of Transmittal states that by
so acknowledging and by delivering a prospectus,
a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the
Securities Act. This prospectus, as it may be
amended or supplemented from time to time, may be
used by a broker-dealer in connection with
resales of exchange notes received in exchange
for outstanding notes that the broker-dealer
acquired as a result of market-making activities
or other trading activities. We have agreed that
we will make this prospectus and any amendment or
supplement to this prospectus available to any
broker-dealer to use for resales for a period of
180 days beginning on the expiration date. See
"Plan of Distribution."
The exchange offer is not being made to, nor will
we accept surrenders for exchange from, holders
of outstanding notes in any jurisdiction in which
this exchange offer or the acceptance thereof
would not be in compliance with the securities or
blue sky laws of such jurisdiction.
Exchange Agent.............. The exchange agent for the exchange offer is
United States Trust Company of New York. The
address, telephone number and facsimile number of
the exchange agent are set forth in "The Exchange
Offer--Exchange Agent" and in the Letter of
Transmittal.
Use of Proceeds............. We will not receive any cash proceeds from the
issuance of the exchange notes offered hereby.
See "Use of Proceeds."
Certain United States
Federal Income Tax
Consequences............... Your acceptance of the exchange offer and the
related exchange of your outstanding notes for
exchange notes will not be a taxable exchange for
United States federal income tax purposes. You
should not recognize any taxable gain or loss or
any interest income as a result of the exchange.
See "The Exchange Offer--Certain United States
Federal Income Tax Consequences."
See "The Exchange Offer" for more detailed
information concerning the exchange offer.
7
<PAGE>
Summary of Terms of the Exchange Notes
The exchange offer relates to the exchange of up to $100 million principal
amount of exchange notes for an equal principal amount of outstanding notes.
The form and terms of the exchange notes are substantially identical to the
form and terms of the outstanding notes, except the exchange notes will be
registered under the Securities Act. Therefore, the exchange notes will not
bear legends restricting their transfer and will not be entitled to
registration under the Securities Act. The exchange notes will evidence the
same debt as the outstanding notes (which they replace) and both the
outstanding notes and the exchange notes are governed by the same indenture.
Securities Offered.......... $100 million principal amount of 10 3/4% senior
subordinated exchange notes due 2007.
Issuer...................... The exchange notes will be the obligations of
Global Imaging Systems, Inc.
Maturity Date............... February 15, 2007.
Interest Payment Dates...... February 15 and August 15, beginning on August
15, 1999.
Optional Redemption......... We may redeem:
. all or part of the notes beginning on February
15, 2003, at the redemption prices described in
the section "Description of Exchange Notes--
Redemption--Optional Redemption"; and
. up to 35% of the outstanding notes and exchange
notes originally issued at any time on or prior
to February 15, 2002 at the price of 110.750%
of their face amount, plus accrued and unpaid
interest, with money we raise in certain public
equity offerings.
Ranking..................... The notes are senior subordinated debts. They
rank behind all of our current and future
indebtedness (other than trade payables), except
indebtedness that expressly provides that it is
not senior to the notes. The notes will
effectively rank behind any of our future
indebtedness that is secured by any of our assets
to the extent of the value of such assets, even
if such indebtedness expressly provides that it
is not senior to the notes.
Exchange Note Guarantees.... Our current subsidiaries, as well as our future
domestic restricted subsidiaries, other than
certain financing subsidiaries, will guarantee
the exchange notes on an unsecured, senior
subordinated basis. The guarantee of each
subsidiary guarantor (1) will rank behind all of
such subsidiary's current and future indebtedness
(other than trade payables), except indebtedness
that expressly provides that it is not senior to
such guarantee and (2) will effectively rank
behind any indebtedness secured by any of such
subsidiary's assets to the extent of the value of
such assets, even if such indebtedness expressly
provides that it is not senior to such guarantee.
Mandatory Offer to
Purchase.................... If we sell certain assets or experience certain
changes of control, we must offer to purchase the
notes at the prices listed in "Description of
Exchange Notes."
Basic Covenants of
Indenture................... We will issue the exchange notes under the
indenture that governs the outstanding notes. The
indenture contains covenants for your
8
<PAGE>
benefit. Such covenants, among other things,
restrict our ability and the ability of certain
of our subsidiaries to:
. incur additional debt;
. pay dividends and make distributions;
. repurchase securities;
. make certain investments;
. create liens;
. transfer or sell assets;
. enter into transactions with affiliates;
. issue or sell stock of subsidiaries; or
. merge or consolidate.
However, these restrictions are subject to a
number of important qualifications and
exceptions. For more details, see "Description of
Exchange Notes--Certain Covenants."
Risk Factors
You should read the "Risk Factors" section of this prospectus as well as the
other cautionary statements throughout this prospectus before making an
investment in the exchange notes or tendering your outstanding notes for
exchange notes.
9
<PAGE>
Summary Consolidated Historical and Pro Forma Financial Information
The following table presents (1) summary consolidated historical financial
information of Global, as of the dates and for the periods indicated and (2)
summary consolidated pro forma financial information of Global, as of the dates
and for the periods indicated, after giving effect to Global's acquisition of
20 businesses on operations data during the period from April 1, 1997 to
March 31, 1999 as if such acquisitions had occurred on April 1, 1997. The
consolidated historical financial information for each of the three years in
the period ended March 31, 1998 and for the nine month period ended December
31, 1997 has been derived from Global's financial statements included elsewhere
in this prospectus, which have been audited by Ernst & Young LLP. The
consolidated historical financial information of Global for the nine month
period ended December 31, 1998 has been derived from unaudited financial
statements and, in the opinion of management, includes all adjustments
necessary for a fair presentation of results of operations for these periods.
The summary unaudited consolidated pro forma financial information does not
claim to represent what Global's financial position or results of operations
would actually have been had the transactions referred to above been completed
on April 1, 1997, or to project Global's financial position or results of
operations for any future period. The summary financial information should be
read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and Global's financial statements and the
notes thereto included elsewhere in this prospectus.
<TABLE>
<CAPTION>
Fiscal Year Ended March 31, Nine Months Ended December 31,
-------------------------------------- ------------------------------
Pro- Pro
Forma(1) Forma(1)
1996 1997 1998 1998 1997 1998 1998
-------- -------- -------- -------- -------- -------- --------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Revenues:
Equipment and supplies
sales................ $ 20,561 $ 41,200 $121,316 $232,942 $ 80,515 $153,320 $201,791
Service and rentals... 16,405 22,893 43,059 81,021 29,515 47,541 65,326
-------- -------- -------- -------- -------- -------- --------
Total revenues......... 36,966 64,093 164,375 313,963 110,030 200,861 267,117
Costs and operating
expenses:
Cost of equipment and
supplies sales....... 13,456 27,087 85,972 158,897 57,487 109,425 138,510
Service and rental
costs................ 8,303 11,467 21,594 42,239 14,493 23,495 33,541
Selling, general and
administrative ex-
penses............... 11,687 18,280 38,619 76,914 25,818 43,661 60,810
Intangible asset
amortization......... 1,396 1,939 3,076 7,194 2,160 3,039 4,954
-------- -------- -------- -------- -------- -------- --------
Total costs and operat-
ing expenses.......... 34,842 58,773 149,261 285,244 99,958 179,620 237,815
-------- -------- -------- -------- -------- -------- --------
Income from
operations............ $ 2,124 $ 5,320 $ 15,114 $ 28,719 $ 10,072 $ 21,241 $ 29,302
======== ======== ======== ======== ======== ======== ========
Interest expense....... $ 2,041 $ 3,190 $ 6,713 $ 18,702 $ 4,534 $ 5,443 $ 10,313
======== ======== ======== ======== ======== ======== ========
Net income (loss) ..... $ (192) $ 1,123 $ 4,453 $ 4,652 $ 2,789 $ 6,937(3) $ 10,300
======== ======== ======== ======== ======== ======== ========
Other Data:
EBITDA(2).............. $ 5,758 $ 9,799 $ 21,806 $ 40,969 $ 14,788 $ 27,609(3) $ 38,124
Depreciation &
amortization.......... 3,634 4,479 6,692 12,250 4,716 9,426 8,822
Ratio of earnings to
fixed charges(4)...... 1.04x 1.62x 2.13x 1.51x 2.12x 3.52x 2.67x
Cash interest
expense(4)............ 12,536
Ratio of total debt to
annualized EBITDA(5).. 3.4x
Ratio of EBITDA to cash
interest expense(5)... 3.0x
</TABLE>
<TABLE>
<CAPTION>
As of December 31, 1998
--------------------------
As
Actual Adjusted(6)
----------- --------------
(in thousands)
<S> <C> <C>
Balance Sheet Data:
Cash and cash equivalents........................... $ 4,247 $ 4,247
Working capital..................................... 38,167 38,167
Total assets........................................ 276,760 279,260
Total debt.......................................... 145,627 148,127
Total stockholders' equity.......................... 89,394 89,394
</TABLE>
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<PAGE>
- --------
(1) Gives effect to our acquisitions of twelve businesses during fiscal 1998
and eight businesses during the twelve months ended March 31, 1999 as if
they had been completed on April 1, 1997. See the Unaudited Pro Forma
Consolidated Statements of Income for the year ended March 31, 1998 and
the nine months ended December 31, 1998 for a description of the
adjustments. The pro forma results exclude adjustments relating to: (1)
certain identifiable personnel cost savings resulting from the elimination
of certain service, sales and administrative positions, net of additional
expenses related to positions added in connection with Global's
acquisition of the acquired businesses, (2) reduced expenses to reflect
the current compensation levels of former owners of the businesses Global
has acquired, (3) improved purchasing terms and (4) reduced administrative
expenses. Management believes that the cost efficiencies achieved are
sustainable and expects they will continue. Global's incremental costs to
assimilate the businesses it acquires are usually incurred within several
months of the acquisition date and are not significant.
(2) Represents earnings before interest, taxes, depreciation and amortization
("EBITDA"). We believe that EBITDA provides useful information regarding
our ability to service debt. Lenders use EBITDA as a criterion in
evaluating companies, and our financing arrangements contain covenants in
which EBITDA is used as a measure of financial performance. The EBITDA
measure for us may not be consistent with similarly titled measures for
other companies. EBITDA should not be considered as an alternative to
operating or net income (as determined in accordance with generally
accepted accounting principles) as an indicator of our performance or to
cash flow from operations (as determined in accordance with GAAP) as a
measure of liquidity.
(3) Includes an extraordinary charge of $3.1 million ($1.8 million net of
income taxes) to recognize a $0.2 million pre-payment penalty and the
write-off of deferred financing costs of $2.9 million related to the
retirement of Global's prior credit facility from Jackson National Life
Insurance Company.
(4) For purposes of computing the ratio of earnings to fixed charges, earnings
consist of income before taxes plus fixed charges. Fixed charges consist of
interest expense, amortization of debt issuance cost and that portion of
rental expenses representative of the interest factor.
(5) As adjusted for Global's acquisition of two businesses after December 31,
1998 and for the offering of the outstanding notes and the application of
approximately $97 million in estimated net proceeds to repay a portion of
the amount outstanding under our senior credit facility.
(6) As adjusted for the offering of the outstanding notes and the application
of approximately $97 million in estimated net proceeds to repay a portion
of the amount outstanding under our senior credit facility.
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<PAGE>
RISK FACTORS
Before you tender your outstanding notes for exchange notes or invest in the
exchange notes, you should be aware that there are various risks involved in
your investment, including those we identify below. You should consider these
risks carefully, together with all of the other information in this
prospectus.
Our Indebtedness Results in Significant Debt Service Obligations and
Limitations
Because we financed our acquisitions primarily with debt, we incurred
substantial debt and, as a result, we have significant debt service
obligations. As of December 31, 1998, on a pro forma basis after giving effect
to the offering of the outstanding notes and recent acquisitions, our total
indebtedness would have been $172.6 million, which would have represented
65.6% of our total capitalization. We also would have had $102.4 million of
additional borrowing availability under our senior credit facility. In
addition, our senior credit facility and the indenture governing the notes
allow us to incur additional indebtedness under certain circumstances. Our
indebtedness poses important consequences to you, including the risks that:
. we will use a substantial portion of our cash flow from operations to
pay principal and interest on our debt, thereby reducing the funds
available for acquisitions, working capital, capital expenditures and
other general corporate purposes;
. we may be unable to obtain additional financing on satisfactory terms or
to otherwise fund working capital, capital expenditures, acquisitions,
and other general corporate requirements;
. our borrowings under our senior credit facility will bear interest at
variable rates, which would create higher debt service requirements if
market interest rates increase; and
. our degree of leverage may hinder our ability to adjust rapidly to
changing market conditions and could make us more vulnerable to
downturns in the economy generally or in our industry.
If we cannot generate sufficient cash flow from operations to meet our
obligations, we may be forced to reduce or delay acquisitions and other
capital expenditures, sell assets, restructure or refinance our debt, or seek
additional equity capital. We cannot assure you that these remedies would be
available or satisfactory. Our ability to pay principal and interest on the
notes and to satisfy our other debt obligations will depend on our future
operating performance. Our operating performance will be affected by
prevailing economic conditions and financial, business and other factors which
may be beyond our control. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital
Resources," "Description of Senior Credit Facilities" and "Description of
Exchange Notes."
The Exchange Notes and Guarantees Will Be Unsecured and Subordinated to Our
Senior Debt
The exchange notes and the guarantees to be provided by our subsidiaries
will be unsecured, which means that you will have no recourse to specific
assets of Global or Global's subsidiaries if a default occurs under the
exchange notes and indenture. In addition, before we can pay principal and
interest on the exchange notes, we must first make payments on any of our
existing and future senior debt that is in default, including all senior debt
of our subsidiaries, if any, and all outstanding amounts under our senior
credit facility.
As of December 31, 1998, as adjusted for the offering of the outstanding
notes and our acquisition of two companies in February 1999, we would have had
$72.6 million of senior indebtedness outstanding. Substantially all of our
real and personal property used in our business operations secures our
obligations under our senior credit facility. If we default on any payments
required under any of our senior debt, or if we fail to comply with other
provisions governing our senior debt such as meeting required financial
ratios, the senior lenders could declare all amounts outstanding, together
with accrued and unpaid interest, immediately due and payable. If we are
unable to repay amounts due, the lenders could proceed against the collateral
securing the debt. If the lenders proceed against any of the collateral, we
may not have enough assets left to pay you or
12
<PAGE>
other noteholders. Moreover, if we become bankrupt or similarly reorganize, we
may not be able to use our assets to pay you or other noteholders until after
we pay all of our senior debt. In addition, the senior credit facility may
prohibit us from paying amounts due on the exchange notes, or from purchasing,
redeeming or otherwise acquiring the exchange notes if a default exists under
our senior debt. See "Description of Exchange Notes--Subordination of the Notes
and the Note Guarantees."
We May Be Unable to Integrate Our Acquired Businesses into Our Operations
Profitably
Integrating our acquired businesses may involve unanticipated delays, costs
or other operational or financial problems. Successful integration of the
businesses we acquire depends on a number of factors, including our ability to
transition acquired companies to our management information systems and the
ability of our core businesses to integrate acquired satellites into their
operations. In integrating our acquired businesses, we may not achieve expected
economies of scale or profitability or realize sufficient revenues to justify
our investment. For example, if we are unable to increase the sales force
productivity at our acquired businesses as quickly as we expect, our revenues
may not justify our investment. We also face the risk that an unexpected
problem at one of our acquired companies will require substantial time and
attention from senior management, distracting management's attention away from
other aspects of our business. We cannot be certain that our management and
financial reporting systems, procedures and controls will be able to support us
as we grow.
We Need Substantial Additional Funds to Finance Our Acquisitions
We intend to finance our future acquisitions primarily by incurring
additional indebtedness, which will be substantial in relation to our equity
capital. We cannot be certain that we will be able to borrow money for future
acquisitions on favorable terms. Also, the restrictions imposed on us under our
senior credit facility and the indenture governing the notes may limit our
ability to borrow additional funds to purchase acquisitions. See "Description
of Senior Credit Facilities" and "Description of Exchange Notes." We may also
pay some of the price of future acquisitions by issuing common stock or other
equity securities to the sellers of the businesses we acquire or in public or
private offerings. Depending on the market value of our common stock, either we
or the sellers of the businesses we acquire may not be willing to use common
stock for part of the consideration we pay. To the extent we do not have access
to additional debt and do not issue equity to pay for future acquisitions, we
would need to use more of our cash resources to continue our acquisition
program. We cannot be certain that we will be able to obtain debt or equity
financing or that we will have enough cash resources available to pay for
future acquisitions.
Our Combined Operating History is Limited
Although a number of the companies we have acquired have been in operation
for some time, Global itself has a limited history of operations and
profitability. Consequently, the financial information in this prospectus may
not be indicative of our financial condition and future performance. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
We Have Limited Operating Experience in Some of Our Target Markets
A key element of our expansion strategy is to acquire companies in each of
our geographic markets that sell and service electronic presentation systems or
document imaging management systems or that provide network integration or
facilities management services. Our limited experience in offering these
products and services may impair our ability to identify, acquire and integrate
appropriate companies. In addition, we may not be able to cross-sell these
products and services to our different customer bases. These markets also
present us with new challenges. For example, none of our companies currently
operates in the facilities management market. Success in this market would
require that we adapt our operations expertise to running labor-intensive
businesses.
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<PAGE>
We Depend on Our Chief Executive Officer
Our success substantially depends on the efforts and ability of Thomas S.
Johnson, Global's President and Chief Executive Officer. Mr. Johnson has
developed and implemented Global's industry management model, and has many
years of experience in the office imaging industry and in the acquisition and
integration of office imaging solutions dealers. Mr. Johnson is employed under
an executive agreement that renews automatically each July for a one-year
period unless otherwise terminated by either party upon 30 days notice. The
loss or interruption of his services could have an adverse effect on Global.
We Need to Attract and Retain Skilled Employees
Many of our markets are experiencing low levels of unemployment. As a result,
we must compete to attract, motivate and retain skilled employees, particularly
systems integrators, service technicians, sales personnel and managers. We need
qualified service technicians to fulfill our service contracts and enter into
new ones. We need talented sales personnel to generate both sales and service
revenues. We need effective managers to integrate and operate our acquired
businesses profitably. As a result, if we cannot hire and keep skilled
employees, our business could be adversely affected.
Technological Developments Will Affect Our Business
The office imaging solutions industry is moving toward digital technology in
a multi-functional office environment. We must be able to respond to this
rapidly changing environment. Our business will be adversely affected if (1) we
or our suppliers fail to anticipate which products or technologies will gain
market acceptance or (2) we cannot sell these products at competitive prices.
We cannot be certain that manufacturers of popular products will permit us to
market their newly developed equipment. In addition, new products containing
new technology may be sold through other channels of distribution.
Technological advancements may result in lowered per unit costs that may reduce
our sales revenues and reliability improvements that may reduce our service
revenues. We will also incur increased expenses to train our sales and service
personnel on any new technologies. See "Business--The Industry--Consolidation--
Technological Change."
We May Not Have Sufficient Funds to Repay the Notes Upon a Change of Control
If we experience certain changes of control, you will have the right to
require us to purchase your notes at a purchase price equal to 101% of the
principal amount of your notes plus accrued and unpaid interest. In such
circumstances, we may also be required to (1) repay our outstanding senior debt
or (2) obtain our lenders' consent to our purchase of the notes. If we cannot
repay our debt or cannot obtain the needed consents, we may be unable to
purchase the notes. Upon a change of control, we cannot guarantee that we will
have sufficient funds to make any debt payment, including purchases of the
notes. The failure to purchase the notes would be an event of default under the
indenture governing the notes. To avoid default, we may try to refinance our
debt. We cannot guarantee, however, that such refinancing would be available or
would be on favorable terms. See "Description of Exchange Notes--Change of
Control."
The events that qualify as a change of control under the indenture may also
be events of default under the senior credit facility or other indebtedness. An
event of default under the senior credit facility would permit our lenders to
accelerate our indebtedness. If we cannot repay such borrowings when due, the
lenders could proceed against the collateral securing the debt.
We Depend on Our Suppliers
A majority of our revenues come from the sale of equipment and from service
and supply contracts for this equipment. As a result, our success depends on
our access to reliable sources of equipment, parts and supplies at competitive
prices. During the nine month period ended December 31, 1998, on a pro forma
basis,
14
<PAGE>
Global purchased 19% of its equipment, parts and supplies from Konica Business
Technologies, Inc. and 11% from Sharp Electronics Corporation. No other
supplier represented in excess of 8% of such purchases, on a pro forma basis.
There is no guarantee that Konica, Sharp or any of our other suppliers will
continue to sell their products to us, or that they will do so at competitive
prices. Finally, other factors, including reduced access to credit resulting
from economic conditions in Asia, may impair our suppliers' ability to provide
products in a timely manner or at competitive prices. See "Business--
Suppliers."
Our Markets are Highly Competitive
We operate in highly competitive markets, which forces us to compete for
customers and sometimes for acquisition candidates. Competitors in the
automated office equipment market, the electronic presentation systems market
and the DIM systems market include Xerox Corporation, Danka Business Systems
PLC, IKON Office Solutions, Inc. and other large, independent dealers, as well
as manufacturers' sales and service divisions, office superstores and consumer
electronics chains. In the network integration services market we compete with
large providers, smaller competitors with regional or local operations, and the
in-house capabilities of our customers. See "Business--Competition."
Some competitors have greater financial and personnel resources than we do.
Competition from large, nationwide competitors is likely to increase as we seek
to attract additional customers, expand our markets geographically and broaden
our product and service offerings. Competition from large, nationwide
competitors will also increase if our industry continues to consolidate.
Finally, as digital and other new technologies develop, we may face competition
from new distribution channels, including computer distributors and value added
resellers, for products containing new technology.
Year 2000 Issues May Affect Our Operations
The year 2000 issue exists because many computer systems and applications use
two-digit fields to designate a year. Date-sensitive computer systems and
programs may fail to recognize or correctly process the year 2000 as the
century date change approaches or occurs. This inability to properly recognize
or treat the year 2000 may cause systems errors or failures that could
seriously disrupt or prevent our normal business operations or could result in
liability or unanticipated costs as a result of disruptions in our customers'
business operations. The full extent of any adverse impact is impossible to
determine.
We are evaluating all of our internal computers, computer equipment and other
equipment with embedded technology against year 2000 concerns. We have
identified five mission-critical aspects of our business: sales, billing,
service, delivery and accounting information systems. Should any of these
functions fail due to year 2000 issues, a material disruption in our business
could result. All of these systems except for sales may depend on the year 2000
readiness of software we purchase from the OMD Corporation. If this software is
not year 2000 ready on time, multiple mission-critical aspects of our business
could be disrupted. Our operations may also be negatively affected by the
inability of third parties with whom we deal to manage this problem in a timely
manner. In particular, if our equipment vendors' products are not year 2000
ready or if year 2000 problems impair our suppliers' ability to provide
products timely and at competitive prices, we could be adversely affected.
Finally, we may also face risks relating to potential costs or liability
resulting from the year 2000 issue. Given the breadth of different products and
services we offer, we could face expenses or claims arising from the effect of
the year 2000 issue on the products we sell and service. The year 2000
readiness of these products depends on the efforts of our suppliers. See
"Management's Discussion and Analysis of Results of Operations and Financial
Condition--Year 2000 Issues."
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<PAGE>
The Failure of a Market to Develop Could Affect the Liquidity and Price of
Your Exchange Notes
The exchange notes will be a new issue of securities for which there is no
existing trading market. We cannot assure you as to the liquidity of markets
that may develop for the exchange notes, your ability to sell the exchange
notes or the price at which you would be able to sell the exchange notes. If
such markets were to develop, the exchange notes could trade at prices that
may be lower than their principal amount or purchase price depending on many
factors, including prevailing interest rates and the markets for similar
securities. In addition, any market-making by the initial purchasers of the
outstanding notes may be limited during the exchange offer or the pendency of
any resale registration statement and may be discontinued at any time without
notice. We do not intend to apply for listing of the exchange notes on any
national securities exchange or on Nasdaq. The liquidity of, and trading
market for, the exchange notes also may be adversely affected by changes in
the market for high yield securities and by changes in our financial
performance or prospects or in the prospects for companies in our industry
generally. As a result, you cannot be sure that an active trading market will
develop for the exchange notes.
Issuance of the Exchange Notes and Any Subsidiary Guarantee May Be Subject to
Fraudulent Conveyance Laws
Under applicable provisions of the U.S. Bankruptcy Code or comparable
provisions of state fraudulent transfer or conveyance laws, if we, at the time
we issue the exchange notes:
(1) incur the indebtedness with the intent to hinder, delay or defraud
creditors; or
(2) receive less than reasonably equivalent value or fair consideration for
incurring such indebtedness, and
. are insolvent at the time of incurrence,
. are rendered insolvent by reason of such incurrence (and the
application of the proceeds thereof),
. are engaged or are about to engage in a business or transaction for
which our remaining assets constitute unreasonably small capital to
carry on our businesses, or
. intend to incur, or believe that we would incur, debts beyond our
ability to pay such debts as they matured,
then, in each case, a court could (1) void, in whole or in part, the exchange
notes, and direct the repayment of any amounts paid under the exchange notes
to our creditors, (2) subordinate the exchange notes to our obligations to our
existing and future creditors, or (3) take other actions detrimental to the
noteholders. The measure of insolvency for these purposes will vary depending
upon the law applied in such case. Generally, however, we would be considered
insolvent (1) if the sum of our debts, including contingent liabilities, was
greater than all of our assets at fair valuation or (2) if the present fair
saleable value of our assets was less than the amount that would be required
to pay the probable liability on our existing debts, including contingent
liabilities, as they become absolute and mature. A subsidiary guarantee, at
the time it is issued by one of our subsidiaries, would be subject to the same
fraudulent transfer or conveyance laws as the notes.
Golder, Thoma, Cressey, Rauner, Inc. is a Significant Stockholder
Golder, Thoma, Cressey, Rauner, Inc., through its affiliation with Golder,
Thoma, Cressey, Rauner Fund IV, L.P. owns and controls approximately 39.5% of
our outstanding common stock. In addition, two of our directors, Carl Thoma
and William Kessinger, are Principals of Golder, Thoma, Cressey, Rauner, Inc.
As a result, Golder, Thoma, Cressey, Rauner, Inc. has significant influence
over the election of our directors and over corporate actions, such as
mergers, acquisitions and asset sales, that require stockholder approval. In
some cases, Golder, Thoma, Cressey, Rauner, Inc.'s interests as a stockholder
could conflict with your interests as a noteholder. For example, Golder,
Thoma, Cressey, Rauner, Inc. may have an interest in pursuing acquisitions,
divestitures or other transactions that, in its judgment, could enhance its
equity investment, even though such transactions might involve risks to
holders of the notes. See "Principal Stockholders."
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<PAGE>
THE EXCHANGE OFFER
Purpose and Effect of the Exchange offer
In connection with the sale of the outstanding notes, we agreed to register
the exchange notes. The exchange offer is being made to satisfy this
contractual obligation.
By tendering outstanding notes in exchange for exchange notes, each holder
represents to us that
. any exchange notes to be received by such holder are being acquired in
the ordinary course of such holder's business;
. such holder has no arrangement or understanding with any person to
participate in a "distribution" of exchange notes under the Securities
Act;
. such holder is not an "affiliate" of Global, as defined in Rule 405
under the Securities Act, or, if such holder is an affiliate, that such
holder will comply with the registration and prospectus delivery
requirements of the Securities Act to the extent applicable;
. such holder has full power and authority to tender, exchange, sell,
assign and transfer the tendered outstanding notes;
. Global will acquire good, marketable and unencumbered title to the
tendered outstanding notes, free and clear of all liens, restrictions,
charges and encumbrances; and
. the outstanding notes tendered for exchange are not subject to any
adverse claims or proxies.
Each tendering holder also will warrant and agree that such holder will, upon
request, execute and deliver any additional documents that Global or the
exchange agent deems to be necessary or desirable to complete the exchange,
sale, assignment, and transfer of the outstanding notes tendered pursuant to
the exchange offer.
Each broker-dealer that receives exchange notes for its own account in
exchange for outstanding notes pursuant to the exchange offer, where such
outstanding notes were acquired by such broker-dealer as a result of market-
making or other trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of such exchange notes. See "Plan of
Distribution."
The exchange offer is not being made to, nor will Global accept tenders for
exchange from, holders of outstanding notes in any jurisdiction in which the
exchange offer or the acceptance of the exchange notes would be in violation of
the securities or blue sky laws of that jurisdiction.
Unless the context requires otherwise, the term "holder" with respect to the
exchange offer means any person in whose name the outstanding notes are
registered on the books of Global or any other person who has obtained a
properly completed bond power from the registered holder, or any participant in
DTC whose name appears on a security position listing as a holder of
outstanding notes (which, for purposes of the exchange offer, include
beneficial interests in the outstanding notes held by direct or indirect
participants in DTC and outstanding notes held in definitive form).
Terms of the Exchange Offer
Global hereby offers, upon the terms and subject to the conditions shown in
this prospectus and in the accompanying Letter of Transmittal, to exchange
$1,000 principal amount of 10 3/4% Senior Subordinated Exchange Notes due 2007
for each $1,000 principal amount of outstanding 10 3/4% Senior Subordinated
Notes due 2007 properly tendered before the expiration date and not properly
withdrawn according to the procedures described below. Holders may tender their
outstanding notes in whole or in part in integral multiples of $1,000 principal
amount.
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<PAGE>
The form and terms of the exchange notes are the same as the form and terms
of the outstanding notes except that (1) the exchange notes have been
registered under the Securities Act and therefore are not subject to the
restrictions on transfer applicable to the outstanding notes and (2) holders of
the exchange notes will not be
entitled to some of the rights of holders of the outstanding notes under the
registration rights agreement. The exchange notes evidence the same
indebtedness as the outstanding notes (which they replace) and will be issued
pursuant to and entitled to the benefits of the indenture that governs the
outstanding notes.
The exchange offer is not conditioned upon any minimum principal amount of
outstanding notes being tendered for exchange. Global reserves the right in its
sole discretion to purchase or make offers for any outstanding notes that
remain outstanding after the expiration date or, as shown under "--Conditions
to the Exchange Offer," to terminate the exchange offer and, to the extent
permitted by applicable law, purchase outstanding notes in the open market, in
privately negotiated transactions or otherwise. The terms of any such purchases
or offers could differ from the terms of the exchange offer. As of the date of
this prospectus, $100 million principal amount of 10 3/4% Senior Subordinated
Notes due 2007 is outstanding.
Holders of outstanding notes do not have any appraisal or dissenters' rights
in connection with the exchange offer. Outstanding notes which are not tendered
for, or are tendered but not accepted in connection with, the exchange offer
will remain outstanding. See "Summary of the Exchange Offer--Consequences of
Not Complying with Exchange Offer Procedures."
If any tendered outstanding notes are not accepted for exchange because of an
invalid tender, the occurrence of particular other events shown herein or
otherwise, certificates for any such unaccepted outstanding notes will be
returned, without expense, to the tendering holder thereof promptly after the
expiration date.
Holders who tender outstanding notes in connection with the exchange offer
will not be required to pay brokerage commissions or fees or, subject to the
instructions in the Letter of Transmittal, transfer taxes with respect to the
exchange of the outstanding notes in connection with the exchange offer. Global
will pay all charges and expenses, other than specified applicable taxes. See
"--Fees and Expenses"
NEITHER GLOBAL NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO HOLDERS
OF THE OUTSTANDING NOTES AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL
OR ANY PORTION OF THEIR OUTSTANDING NOTES IN THE EXCHANGE OFFER. IN ADDITION,
NO ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS OF THE
OUTSTANDING NOTES MUST MAKE THEIR OWN DECISION WHETHER TO TENDER PURSUANT TO
THE EXCHANGE OFFER, AND, IF SO, THE AGGREGATE AMOUNT OF OUTSTANDING NOTES TO
TENDER AFTER READING THIS PROSPECTUS AND THE LETTER OF TRANSMITTAL AND
CONSULTING WITH THEIR ADVISERS, IF ANY, BASED ON THEIR FINANCIAL POSITION AND
REQUIREMENTS.
Expiration Date; Extensions; Amendments
The expiration date for the exchange offer is 5:00 p.m., New York City time,
on , 1999 unless the exchange offer is extended by Global. If Global does
extend the exchange offer, the expiration date will be the latest date and time
to which the exchange offer is extended.
Global expressly reserves the right in its sole and absolute discretion,
subject to applicable law, at any time and from time to time, (1) to delay the
acceptance of the outstanding notes for exchange, (2) to terminate the exchange
offer, whether or not any outstanding notes have already been accepted for
exchange, if Global determines, in its sole and absolute discretion, that any
of the events or conditions referred to under "--Conditions to the Exchange
Offer" has occurred or exists or has not been satisfied with respect to the
exchange offer, (3) to extend the expiration date of the exchange offer and
retain all outstanding notes tendered pursuant to the exchange offer, subject,
however, to the right of holders of outstanding notes to withdraw their
18
<PAGE>
tendered outstanding notes as described under "--Withdrawal Rights," and (4) to
waive any condition or otherwise amend the terms of the exchange offer in any
respect. If the exchange offer is amended in a manner determined by Global to
constitute a material change, or if Global waives a material condition of the
exchange offer, Global will promptly disclose such amendment by means of a
prospectus supplement that will be distributed to the registered holders of the
affected outstanding notes, and Global will extend the exchange offer to the
extent required by Rule 14e-1 under the Exchange Act.
Any such delay in acceptance, termination, extension or amendment will be
followed promptly by oral or written notice thereof to the exchange agent for
the exchange offer (any such oral notice to be promptly confirmed in writing)
and by making a public announcement, and such announcement in the case of an
extension will be made no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled expiration date. Without limiting
the manner in which Global may choose to make any public announcement, and
subject to applicable laws, Global shall have no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
issuing a release to an appropriate news agency.
Acceptance for Exchange and Issuance of Exchange Notes
Upon the terms and subject to the conditions of the exchange offer, promptly
after the expiration date Global will exchange, and will issue to the exchange
agent, exchange notes for outstanding notes validly tendered and not withdrawn
pursuant to the withdrawal rights described under "--Withdrawal Rights."
In all cases, delivery of exchange notes in exchange for outstanding notes
tendered and accepted for exchange pursuant to the exchange offer will be made
only after timely receipt by the exchange agent of (1) outstanding notes or a
book-entry confirmation of a book-entry transfer of outstanding notes into the
exchange agent's account at DTC, (2) the Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, and (3) any other documents required by the Letter of Transmittal.
Accordingly, the delivery of exchange notes might not be made to all tendering
holders at the same time, and will depend upon when outstanding notes, book-
entry confirmations with respect to outstanding notes and other required
documents are received by the exchange agent.
The term "book-entry confirmation" means a timely confirmation of a book-
entry transfer of outstanding notes into the exchange agent's account at DTC.
Subject to the terms and conditions of the exchange offer, Global will be
deemed to have accepted for exchange, and thereby exchanged, outstanding notes
validly tendered and not withdrawn as, if and when Global gives oral or written
notice to the exchange agent (any such oral notice to be promptly confirmed in
writing) of Global's acceptance of such outstanding notes for exchange pursuant
to the exchange offer. Global's acceptance for exchange of outstanding notes
tendered pursuant to any of the procedures described above will constitute a
binding agreement between the tendering holder and Global upon the terms and
subject to the conditions of the exchange offer. The exchange agent will act as
agent for Global for the purpose of receiving tenders of outstanding notes,
Letters of Transmittal and related documents, and as agent for tendering
holders for the purpose of receiving outstanding notes, Letters of Transmittal
and related documents and transmitting exchange notes to holders who validly
tendered outstanding notes. Such exchange will be made promptly after the
expiration date of the exchange offer. If for any reason the acceptance for
exchange or the exchange of any outstanding notes tendered pursuant to the
exchange offer is delayed (whether before or after Global's acceptance for
exchange of outstanding notes), or Global extends the exchange offer or is
unable to accept for exchange or exchange outstanding notes tendered pursuant
to the exchange offer, then, without prejudice to Global's rights set forth
herein, the exchange agent may, nevertheless, on behalf of Global and subject
to Rule 14e-1(c) under the Exchange Act, retain tendered outstanding notes and
such outstanding notes may not be withdrawn except to the extent tendering
holders are entitled to withdrawal rights as described under "--Withdrawal
Rights."
19
<PAGE>
Procedures for Tendering Outstanding Notes
Valid Tender
Except as set forth below, in order for outstanding notes to be validly
tendered pursuant to the exchange offer, either (1) (a) a properly completed
and duly executed Letter of Transmittal (or facsimile thereof), with any
required signature guarantees and any other required documents, must be
received by the exchange agent at the address set forth under "--Exchange
Agent" prior to the expiration date and (b) tendered outstanding notes must be
received by the exchange agent, or such outstanding notes must be tendered
pursuant to the procedures for book-entry transfer set forth below and a book-
entry confirmation must be received by the exchange agent, in each case prior
to the expiration date, or (2) the guaranteed delivery procedures described
below must be complied with.
If less than all of the outstanding notes are tendered, a tendering holder
should fill in the amount of outstanding notes being tendered in the
appropriate box on the Letter of Transmittal. The entire amount of outstanding
notes delivered to the exchange agent will be deemed to have been tendered
unless otherwise indicated.
If any Letter of Transmittal, endorsement, bond power, power of attorney, or
any other document required by the Letter of Transmittal is signed by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing. Unless waived by Global, evidence
satisfactory to Global of such person's authority to so act must also be
submitted.
Any beneficial owner of outstanding notes that are held by or registered in
the name of a broker, dealer, commercial bank, trust company or other nominee
or custodian is urged to contact such entity promptly if such beneficial holder
wishes to participate in the exchange offer.
THE METHOD OF DELIVERY OF OUTSTANDING NOTES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING
HOLDER. DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE
AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE TIMELY DELIVERY AND PROPER INSURANCE SHOULD BE OBTAINED. NO
LETTER OF TRANSMITTAL OR OUTSTANDING NOTES SHOULD BE SENT TO GLOBAL. HOLDERS
MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST
COMPANIES OR NOMINEES TO EFFECT THESE TRANSACTIONS FOR THEM.
Book-Entry Transfer
The exchange agent will request to establish an account with respect to the
outstanding notes at DTC for purposes of the exchange offer within two business
days after the date of this prospectus. Any financial institution that is a
participant in DTC's book-entry transfer facility system may make a book-entry
delivery of the outstanding notes by causing DTC to transfer such outstanding
notes into the exchange agent's account at DTC in accordance with DTC's
procedures for transfers. However, although delivery of outstanding notes may
be effected through book-entry transfer into the exchange agent's account at
DTC, the Letter of Transmittal (or facsimile thereof), properly completed and
duly executed, with any required signature guarantees and any other required
documents, must in any case be delivered to and received by the exchange agent
at its address set forth under "--Exchange Agent" prior to the expiration date,
or the guaranteed delivery procedure set forth below must be complied with.
DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE
AGENT.
Signature Guarantees
Certificates for outstanding notes need not be endorsed and signature
guarantees on a Letter of Transmittal or a notice of withdrawal, as the case
may be, are unnecessary unless (a) a certificate for outstanding notes is
20
<PAGE>
registered in a name other than that of the person surrendering the certificate
or (b) a registered holder completes the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" in the Letter of Transmittal.
In the case of (a) or (b) above, such certificates for outstanding notes must
be duly endorsed or
accompanied by a properly executed bond power, with the endorsement or
signature on the bond power and on the Letter of Transmittal or the notice of
withdrawal, as the case may be, guaranteed by a firm or other entity identified
in Rule 17Ad-15 under the Exchange Act as an "eligible guarantor institution,"
including (as such terms are defined therein) (1) a bank, (2) a broker, dealer,
municipal securities broker or dealer or government securities broker or
dealer, (3) a credit union, (4) a national securities exchange, registered
securities association or clearing agency, or (5) a savings association that is
a participant in a Securities Transfer Association (each an "Eligible
Institution"), unless surrendered on behalf of such Eligible Institution. See
Instruction 1 to the Letter of Transmittal.
Guaranteed Delivery
If a holder desires to tender outstanding notes pursuant to the exchange
offer and the certificates for such outstanding notes are not immediately
available or time will not permit all required documents to reach the exchange
agent before the expiration date, or the procedures for book-entry transfer
cannot be completed on a timely basis, such outstanding notes may nevertheless
be tendered, provided that all of the following guaranteed delivery procedures
are complied with
(1) such tenders are made by or through an Eligible Institution;
(2) prior to the expiration date, the exchange agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form accompanying the Letter of
Transmittal, setting forth the name and address of the holder of
outstanding notes and the amount of outstanding notes tendered, stating
that the tender is being made thereby and guaranteeing that within three
New York Stock Exchange trading days after the date of execution of the
Notice of Guaranteed Delivery, the certificates for all physically tendered
outstanding notes, in proper form for transfer, or a book-entry
confirmation, as the case may be, and any other documents required by the
Letter of Transmittal will be deposited by the Eligible Institution with
the exchange agent. The Notice of Guaranteed Delivery may be delivered by
hand, or transmitted by facsimile or mail to the exchange agent and must
include a guarantee by an Eligible Institution in the form set forth in the
Notice of Guaranteed Delivery; and
(3) the certificates (or book-entry confirmation) representing all
tendered outstanding notes, in proper form for transfer, together with a
properly completed and duly executed Letter of Transmittal, with any
required signature guarantees and any other documents required by the
Letter of Transmittal, are received by the exchange agent within three New
York Stock Exchange trading days after the date of execution of the Notice
of Guaranteed Delivery.
Determination of Validity
All questions as to the form of documents, validity, eligibility (including
time of receipt) and acceptance for exchange of any tendered outstanding notes
will be determined by Global, in its sole discretion, which determination shall
be final and binding on all parties. Global reserves the absolute right, in its
sole and absolute discretion, to reject any and all tenders it determines not
to be in proper form or the acceptance for exchange of which may, in the view
of counsel to Global, be unlawful. Global also reserves the absolute right,
subject to applicable law, to waive any of the conditions of the exchange offer
as set forth under "--Conditions to the Exchange Offer" or any defect or
irregularity in any tender of outstanding notes of any particular holder
whether or not similar defects or irregularities are waived in the case of
other holders.
Global's interpretation of the terms and conditions of the exchange offer
(including the Letter of Transmittal and the instructions thereto) will be
final and binding on all parties. No tender of outstanding notes will be deemed
to have been validly made until all defects or irregularities with respect to
such tender have been cured or waived. None of Global, any affiliates of
Global, the exchange agent or any other person shall be
21
<PAGE>
under any duty to give any notification of any defects or irregularities in
tenders or incur any liability for failure to give any such notification.
Resales of Exchange Notes
Based on interpretations by the staff of the SEC, as set forth in no-action
letters issued to third parties unrelated to Global, Global believes that
holders of outstanding notes who exchange their outstanding notes for exchange
notes may offer for resale, resell and otherwise transfer such exchange notes
without compliance with the registration and prospectus delivery provisions of
the Securities Act. This would not apply, however, to any holder that is a
broker-dealer that acquired outstanding notes as a result of market-making
activities or other trading activities or directly from Global for resale under
an available exemption under the Securities Act. Also, resale would only be
permitted for exchange notes that are acquired in the ordinary course of a
holder's business, where such holder has no arrangement or understanding with
any person to participate in the distribution of such exchange notes and such
holder is not an "affiliate" of Global. The staff of the SEC has not considered
the exchange offer in the context of a no-action letter, and there can be no
assurance that the staff of the SEC would make a similar determination with
respect to the exchange offer. Each broker-dealer that receives exchange notes
for its own account in exchange for outstanding notes under the exchange offer,
where such outstanding notes were acquired by such broker-dealer as a result of
market-making or other trading activities, must acknowledge that it will
deliver a prospectus in connection with any resale of such exchange notes. See
"Plan of Distribution."
Withdrawal Rights
Except as otherwise provided herein, tenders of outstanding notes may be
withdrawn at any time prior to the expiration date of the exchange offer. In
order for a withdrawal to be effective, such withdrawal must be in writing and
timely received by the exchange agent at its address set forth under "--
Exchange Agent" prior to the expiration date. Any such notice of withdrawal
must specify the name of the person who tendered the outstanding notes to be
withdrawn, the principal amount of outstanding notes to be withdrawn, and (if
certificates for such outstanding notes have been tendered) the name of the
registered holder of the outstanding notes as set forth on the outstanding
notes, if different from that of the person who tendered such outstanding
notes. If certificates for outstanding notes have been delivered or otherwise
identified to the exchange agent, the notice of withdrawal must specify the
serial numbers on the particular certificates for the outstanding notes to be
withdrawn and the signature on the notice of withdrawal must be guaranteed by
an Eligible Institution, except in the case of outstanding notes tendered for
the account of an Eligible Institution. If outstanding notes have been tendered
pursuant to the procedures for book-entry transfer set forth in "--Procedures
for Tendering Outstanding Notes," the notice of withdrawal must specify the
name and number of the account at DTC to be credited with the withdrawal of
outstanding notes and must otherwise comply with the procedures of DTC.
Withdrawals of tenders of outstanding notes may not be rescinded. Outstanding
notes properly withdrawn will not be deemed validly tendered for purposes of
the exchange offer, but may be retendered at any subsequent time prior to the
expiration date of the exchange offer by following any of the procedures
described above under "--Procedures for Tendering Outstanding Notes."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by Global, in its sole
discretion, which determination shall be final and binding on all parties. None
of Global, any affiliates of Global, the exchange agent or any other person
shall be under any duty to give any notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure
to give any such notification. Any outstanding notes which have been tendered
but which are withdrawn will be returned to the holder promptly after
withdrawal.
Interest on the Exchange Notes
Interest on the exchange notes will be payable every six months on February
15 and August 15 of each year at a rate of 10 3/4% per annum, commencing August
15, 1999. The exchange notes will mature on February 15, 2007.
22
<PAGE>
Conditions to the Exchange Offer
If any of the following conditions has occurred or exists or has not been
satisfied prior to the expiration date, Global will not be required to accept
for exchange any outstanding notes and will not be required to issue exchange
notes in exchange for any outstanding notes. In addition, Global may, at any
time and from time to time, terminate or amend the exchange offer, whether or
not any outstanding notes have already been accepted for exchange, or may waive
any conditions to or amend the exchange offer.
. A change in the current interpretation by the staff of the SEC which
permits resales of exchange notes as described above under "--Resales of
Exchange Notes";
. The institution or threat of an action or proceeding in any court or by
or before any governmental agency or body with respect to the exchange
offer which, in Global's judgment, would reasonably be expected to
impair the ability of Global to proceed with the exchange offer;
. The adoption or enactment of any law, statute, rule or regulation which,
in Global's judgment, would reasonably be expected to impair the ability
of Global to proceed with the exchange offer;
. The issuance of a stop order by the SEC or any state securities
authority suspending the effectiveness of the registration statement
relating to the exchange offer, or proceedings for that purpose;
. Failure to obtain any governmental approval that Global considers
necessary for the consummation of the exchange offer as contemplated
hereby; or
. Any change or development involving a prospective change in the business
or financial affairs of Global which Global thinks might materially
impair its ability to proceed with the exchange offer.
If Global determines in its sole and absolute discretion that any of the
foregoing events or conditions has occurred or exists or has not been satisfied
at any time prior to the expiration date, Global may, subject to applicable
law, terminate the exchange offer, whether or not any outstanding notes have
already been accepted for exchange, or may waive any such condition or
otherwise amend the terms of the exchange offer in any respect. If such waiver
or amendment constitutes a material change to the exchange offer, Global will
promptly disclose such waiver or amendment by means of a prospectus supplement
that will be distributed to the registered holders of the outstanding notes. In
this case, Global will extend the exchange offer to the extent required by Rule
14e-1 under the Exchange Act.
Certain United States Federal Income Tax Consequences
The exchange of the outstanding notes for the exchange notes will not be a
taxable exchange for federal income tax purposes, and holders of outstanding
notes should not recognize any taxable gain or loss or any interest income as a
result of such exchange.
Exchange Agent
United States Trust Company of New York has been appointed as the exchange
agent for the exchange offer. Delivery of the Letters of Transmittal and any
other required documents, questions, requests for assistance, and requests for
additional copies of this prospectus or of the Letter of Transmittal should be
directed to the exchange agent as follows:
By Mail
United States Trust Company of New York
P.O. Box 843
Cooper Station
New York, New York 10276
Attention: Corporate Trust Services
By Hand before 4:30 p.m.
United States Trust Company of New York
111 Broadway
New York, New York 10006
Attention: Lower Level Corporate Trust Window
23
<PAGE>
By Overnight Courier and By Hand after 4:30 p.m.
United States Trust Company of New York
770 Broadway, 13th Floor
New York, New York 10003
By Facsimile
(212) 780-0592
Attention: Customer Service
Confirm by telephone: (800) 548-6565
DELIVERY TO OTHER THAN THE ABOVE ADDRESSES OR FACSIMILE NUMBER WILL NOT
CONSTITUTE A VALID DELIVERY.
Fees and Expenses
The expenses of soliciting tenders will be borne by Global. The principal
solicitation is being made by mail. Additional solicitation may be made
personally or by telephone or other means by officers, directors or employees
of Global.
Global has not retained any dealer-manager or similar agent in connection
with the exchange offer and will not make any payments to brokers, dealers or
others soliciting acceptances of the exchange offer. Global has agreed to pay
the exchange agent reasonable and customary fees for its services and will
reimburse it for its reasonable out-of-pocket expenses in connection therewith.
Global will also pay brokerage houses and other custodians, nominees and
fiduciaries the reasonable out-of-pocket expenses incurred by them in
forwarding copies of this prospectus and related documents to the beneficial
owners of outstanding notes, and in handling or tendering for their customers.
Holders who tender their outstanding notes for exchange will not be obligated
to pay any transfer taxes in connection therewith, except that if exchange
notes are to be delivered to, or are to be issued in the name of, any person
other than the registered holder of the outstanding notes tendered, or if a
transfer tax is imposed for any reason other than the exchange of outstanding
notes in connection with the exchange offer, then the amount of any such
transfer tax (whether imposed on the registered holder or any other persons)
will be payable by the tendering holder. If satisfactory evidence of payment of
such transfer tax or exemption therefrom is not submitted with the Letter of
Transmittal, the amount of such transfer tax will be billed directly to such
tendering holder.
24
<PAGE>
USE OF PROCEEDS
We are making the exchange offer to satisfy our obligation under the
registration rights agreement we entered into with the initial purchasers when
we first issued the outstanding notes. We will not receive any cash proceeds
from the issuance of the exchange notes. In consideration for issuing the
exchange notes, we will receive an equal principal amount of outstanding notes.
The outstanding notes surrendered in exchange for the exchange notes will be
retired and canceled. The proceeds from the offering of the outstanding notes
was used to repay a portion of the amount outstanding under our senior credit
facility.
CAPITALIZATION
The following table sets forth as of December 31, 1998 the capitalization of
Global (1) on an actual basis (2) on a pro forma basis to give effect to
Global's acquisition of two companies after December 31, 1998 and (3) on a pro
forma as adjusted basis to give effect to Global's acquisition of two
businesses after December 31, 1998 and to reflect the issuance and sale of the
outstanding notes and the application of the related net proceeds. This table
should be read in conjunction with "Summary Consolidated Historical and Pro
Forma Financial Information," "Use of Proceeds," "Selected Financial Data,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the financial statements and related notes included elsewhere
in this prospectus.
<TABLE>
<CAPTION>
As of December 31, 1998
-----------------------------------
Pro Forma
Actual Pro Forma As Adjusted
-------- -------------- -----------
(in thousands)
<S> <C> <C> <C>
Long-term debt (including current
portion):
Senior credit facility(1)........... $115,000 $168,552 $ 72,552
Notes offered hereby................ -- -- 100,000
Seller notes(1)..................... 30,627 -- --
-------- -------- --------
Total debt........................ 145,627 168,552 172,552
Total stockholders equity............. 89,394 90,590 90,590
-------- -------- --------
Total capitalization.............. $235,021 $259,142 $263,142
======== ======== ========
</TABLE>
- --------
(1) In January 1999, Global repaid two short-term seller notes with funds
borrowed under the senior credit facility, after which $145.6 million was
outstanding under Global's $175.0 million senior credit facility.
25
<PAGE>
SELECTED FINANCIAL DATA
The selected financial data as of and for the indicated periods ended March
31, 1995 through March 31, 1998 are derived from our audited consolidated
financial statements. The selected financial data as of and for the nine month
period ended December 31, 1998 are derived from unaudited financial statements
and, in the opinion of management, include all adjustments necessary for a fair
presentation of results of operations for this period. Since the information
presented below is only a summary and does not provide all of the information
in our financial statements, including the related notes, you should read
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and our financial statements.
<TABLE>
<CAPTION>
Inception
(June 3,
1994)
to Fiscal Year Nine Months
March 31, Ended March 31, Ended December 31,
--------- ---------------------------- --------------------
1995 1996 1997 1998 1997 1998
--------- -------- -------- -------- --------- ---------
(dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Revenues:
Equipment and supplies
sales................ $ 6,541 $ 20,561 $ 41,200 $121,316 $ 80,515 $ 153,320
Service and rentals... 3,735 16,405 22,893 43,059 29,515 47,541
-------- -------- -------- -------- --------- ---------
Total revenues......... 10,276 36,966 64,093 164,375 110,030 200,861
Costs and operating
expenses:
Cost of equipment and
supplies sales....... 4,193 13,456 27,087 85,972 57,487 109,425
Service and rental
costs................ 1,885 8,303 11,467 21,594 14,493 23,495
Selling, general and
administrative
expenses............. 4,123 11,687 18,280 38,619 25,818 43,661
Intangible asset
amortization......... 329 1,396 1,939 3,076 2,160 3,039
-------- -------- -------- -------- --------- ---------
Total costs and
operating expenses.... 10,530 34,842 58,773 149,261 99,958 179,620
-------- -------- -------- -------- --------- ---------
Income (loss) from
operations............ (254) 2,124 5,320 15,114 10,072 21,241
Interest expense....... 375 2,041 3,190 6,713 4,534 5,443
-------- -------- -------- -------- --------- ---------
Income (loss) before
income taxes and
extraordinary charge.. (629) 83 2,130 8,401 5,538 15,798
Income taxes........... -- 275 1,007 3,948 2,749 7,044
-------- -------- -------- -------- --------- ---------
Income (loss) before
extraordinary charge.. (629) (192) 1,123 4,453 2,789 8,754
Extraordinary charge
for early retirement
of debt............... -- -- -- -- -- (1,817)
-------- -------- -------- -------- --------- ---------
Net income (loss)...... (629) (192) 1,123 4,453 2,789 6,937
Yield adjustment on
Class A common
stock(1).............. (190) (1,023) (1,402) (2,442) (1,349) (901)
-------- -------- -------- -------- --------- ---------
Net income (loss)
available to holders
of common stock....... $ (819) $ (1,215) $ (279) $ 2,011 $ 1,440 $ 6,036
======== ======== ======== ======== ========= =========
Basic earnings (loss)
per share............. $ (0.15) $ (0.15) $ (0.03) $ 0.21 $ 0.15 $ 0.38
======== ======== ======== ======== ========= =========
Diluted earnings (loss)
per share............. $ (0.15) $ (0.15) $ (0.03) $ 0.21 $ 0.15 $ 0.37
======== ======== ======== ======== ========= =========
Basic weighted average
shares
outstanding(2)........ 5,331 8,018 8,729 9,805 9,523 15,756
======== ======== ======== ======== ========= =========
Diluted weighted
average shares
outstanding(2)........ 5,331 8,018 8,729 9,805 9,523 16,144
======== ======== ======== ======== ========= =========
Other Data:
EBITDA(3).............. $ 498 $ 5,758 $ 9,799 $ 21,806 $ 14,788 $ 27,609(4)
Depreciation &
amortization.......... 752 3,634 4,479 6,692 4,716 9,426
Ratio of earnings to
fixed charges(5)...... -- 1.04x 1.62x 2.13x 2.12x 3.52x
Balance Sheet Data (at
period end):
Working capital........ $ 2,901 $ 5,038 $ 9,655 $ 24,255 $ 22,205 $ 38,167
Total assets........... 32,229 43,675 68,990 164,342 155,913 276,760
Total debt............. 22,836 21,831 36,873 97,485 92,609 145,627
Total stockholders'
equity................ 4,344 15,232 19,796 38,248 35,215 89,394
</TABLE>
26
<PAGE>
- --------
(1) Reflects adjustments for amounts payable to holders of Global's Class A
common stock upon a sale of Global or its initial public offering. These
amounts equal 8.0% annual yield on the original cost per share of $90.00
and, for 1998, the accretion of the difference between the redemption value
of the Class A common stock and the value allocated to the stock, accreted
from January 1998 to June 1998.
(2) Assumes, for periods prior to the initial public offering, the conversion
of outstanding shares of Class C common stock into common stock.
(3) Represents earnings before interest, taxes, depreciation and amortization
("EBITDA"). Global believes that EBITDA provides useful information
regarding its ability to service debt. Lenders use EBITDA as a criterion in
evaluating companies, and Global's financing arrangements contain covenants
in which EBITDA is used as a measure of financial performance. The EBITDA
measure for Global may not be consistent with similarly titled measures for
other companies. EBITDA should not be considered as an alternative to
operating or net income (as determined in accordance with generally
accepted accounting principles) as an indicator of Global's performance or
to cash flow from operations (as determined in accordance with GAAP) as a
measure of liquidity.
(4) Includes an extraordinary charge of $3.1 million ($1.8 million net of
income taxes) to recognize a $0.2 million pre-payment penalty and the
write-off of deferred financing costs of $2.9 million related to the
retirement of Global's prior credit facility from Jackson National Life
Insurance Company.
(5) For purposes of computing the ratio of earnings to fixed charges, earnings
consist of income before income taxes plus fixed charges. Fixed charges
consist of interest expense, amortization of debt issuance cost and that
portion of rental expenses representative of the interest factor. For the
period ended March 31, 1995, earnings were insufficient to cover fixed
charges by $0.6 million.
27
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
accompanying financial statements and related notes included elsewhere in this
prospectus. Much of the discussion in this section involves forward-looking
information. Global's actual results may differ significantly from the results
suggested by these forward-looking statements.
Overview
Global was founded in June 1994 with the goal of becoming a leading
consolidator in the highly fragmented office imaging solutions industry. Global
provides a broad line of office imaging solutions. This includes the sale and
service of automated office equipment such as copiers, facsimile machines,
printers and duplicators, network integration services, electronic presentation
equipment and DIM systems. Since Global's founding, Global has acquired twelve
core companies in the United States, and 20 additional satellite businesses
that have been integrated into the core companies. The first acquisition was
completed in August 1994. Management believes that the businesses that have
been acquired by Global and other businesses that Global plans to acquire will
benefit from various Global programs and operating strategies. These benefits
include increased operating efficiencies, the support of experienced and
professional senior management, expansion of the types of office imaging
products and services offered, increased access to capital, and increased
emphasis on financial management.
Global's revenues come from two sources: (1) sales of equipment and supplies
and (2) sales of complementary services and equipment rentals. The growth of
equipment revenues and the complementary supplies, parts and service revenues
depends on several factors, including the demand for equipment, Global's
reputation for providing timely and reliable service, and general economic
conditions. Revenues generated from the sale of equipment and complementary
supplies, parts and services are affected by price, general economic
conditions, service reputation, and competitors' actions in the marketplace.
Revenues from the sale of complementary supplies, parts and services are also
affected by equipment sales and rental volumes.
Gross profit as a percentage of revenues varies from period to period
depending on a number of variables. Those variables include the mix of revenues
from equipment, supplies, service and rentals; the mix of revenues among the
markets served by Global; and the mix of revenues of the businesses acquired.
As Global acquires businesses, the percentage of its revenues that come from
sales of equipment and supplies, as opposed to service and rentals, fluctuates
according to whether the businesses acquired are automated office equipment
dealers or are network integrators or electronic presentation systems or DIM
systems dealers. Automated office equipment dealers typically derive a higher
percentage of their revenues from service and rentals, and a lower percentage
from sales of equipment and supplies, than do network integrators, electronic
presentation or DIM systems dealers. Generally, sales of equipment and supplies
have lower gross profit margins than sales of service and rentals. In addition,
equipment sales in the automated office equipment market generally have higher
gross profit margins than equipment sales in the network integration,
electronic presentation systems or DIM systems markets. Management expects
that, over time, Global will become more involved in the network integration,
electronic presentation systems and DIM systems markets, as these markets are
growing faster than the automated office equipment market. Therefore, over time
a larger percentage of Global's revenues and gross profits may be derived from
sales that have lower gross profit margins than Global's current gross profit
margins.
Cost of goods sold consists primarily of the cost of new equipment, cost of
supplies and parts, labor costs to provide services, rental equipment
depreciation and other direct operating costs. Global depreciates its rental
equipment primarily over a three-year period on a straight-line basis with no
residual value.
28
<PAGE>
Recent Developments
In March 1999, Global signed a non-binding letter of intent to acquire a
company with a total of approximately $70 million in annual revenues that would
serve as a core company for Global in the Front Range of the Rocky Mountains.
This proposed acquisition has not been included in any pro forma financial
information contained in this prospectus. Global is also continually evaluating
and having discussions with other acquisition candidates as part of its growth
strategy.
Results of Operations
The following table sets forth, for the periods indicated, information
derived from the consolidated statements of operations of Global expressed as a
percentage of total revenues.
<TABLE>
<CAPTION>
Nine Months
Fiscal Year Ended Ended
March 31, December 31,
-------------------- --------------
1996 1997 1998 1997 1998
----- ----- ----- ------ ------
<S> <C> <C> <C> <C> <C>
Revenues:
Equipment and supplies sales........... 55.6% 64.3% 73.8% 73.2% 76.3%
Service and rentals.................... 44.4 35.7 26.2 26.8 23.7
----- ----- ----- ------ ------
Total revenues.......................... 100.0 100.0 100.0 100.0 100.0
Cost of goods sold...................... 58.9 60.2 65.4 65.4 66.2
----- ----- ----- ------ ------
Gross profit............................ 41.1 39.8 34.6 34.6 33.8
Selling, general, and administrative
expenses............................... 31.6 28.5 23.5 23.5 21.7
Intangible asset amortization........... 3.8 3.0 1.9 2.0 1.5
----- ----- ----- ------ ------
Income from operations.................. 5.7 8.3 9.2 9.2 10.6
Interest expense........................ 5.5 5.0 4.1 4.1 2.7
----- ----- ----- ------ ------
Income (loss) before income taxes and
extraordinary charge................... 0.2 3.3 5.1 5.0 7.9
Income taxes............................ 0.7 1.5 2.4 2.5 3.5
----- ----- ----- ------ ------
Income (loss) before extraordinary
charge................................. (0.5) 1.8 2.7 2.5 4.4
Extraordinary charge for early
retirement of debt..................... -- -- -- -- (0.9)
----- ----- ----- ------ ------
Net income.............................. (0.5)% 1.8% 2.7% 2.5% 3.5%
===== ===== ===== ====== ======
</TABLE>
Nine Months Ended December 31, 1998 Compared to Nine Months Ended December 31,
1997
Revenues
Total revenues for the nine months ended December 31, 1998 were $200.9
million, an increase of 82.6% over the same period in 1997. The majority of
revenue growth was due to the acquisition of businesses during 1997 and 1998,
with the remainder coming from internal growth.
Sales of equipment and supplies increased to $153.3 million for the nine
months ended December 31, 1998, an increase of 90.4% over the same period in
1997. The equipment component of sales was a larger portion of the businesses
acquired in 1997 and 1998 than for Global's existing businesses.
Service and rental revenues for the nine months ended December 31, 1998
increased to $47.5 million, an increase of 61.1% from the same period in 1997.
Gross Profit
Gross profit of $67.9 million for the nine months ended December 31, 1998
reflected a 78.6% increase over the same period in 1997. Expressed as a percent
of total revenue, gross profit was 33.8% for the nine months ended December 31,
1998 compared to 34.6% for the same period in 1997. The change in total gross
profit margins was due to the change in the revenue mix. Office equipment
dealers typically receive a higher
29
<PAGE>
percentage of total revenues from service and rentals, while network
integration and electronic presentation systems and DIM systems dealers derive
a higher percentage of total revenues from sales of equipment and supplies. The
equipment component of sales of the businesses acquired in 1997 and 1998
accounted for a larger portion of total revenues than Global's existing
businesses. Sales of equipment and supplies generally generate lower gross
profit margins than service and rental revenues. Combined service and rental
gross profit margins were 50.6% for the nine months ended December 31, 1998 and
50.9% for the same period the previous year.
Selling, General and Administrative Expenses
Selling, general and administrative expenses were $43.7 million for the nine
months ended December 31, 1998, an increase of 69.1% from the same period in
1997. The increase in expenses was mostly due to the acquisition of businesses
in 1997 and 1998. The decline in expenses as a percentage of revenues was the
result of the acquisition of profitable businesses, the change in the
composition of Global's businesses, and revenues increasing by 82.6% without an
equal percentage increase in selling, general, and administrative expenses.
Intangible Asset Amortization
For the nine months ended December 31, 1998, asset amortization was $3.0
million. During the same period in 1997, asset amortization was $2.2 million.
Asset amortization includes the amortization of goodwill and non-compete
agreements from acquisitions.
Income From Operations
Income from operations was $21.2 million for the nine months ended December
31, 1998, an increase of 110.9% from the same period in 1997.
Interest Expense
Interest expense increased to $5.4 million for the nine months ended December
31, 1998, an increase of 20.0%. Interest expense for the same period in 1997
was $4.5 million. The increase was primarily due to the increase in Global's
borrowings. The proceeds from the additional borrowings were used to fund the
cost of the businesses acquired in 1998.
Income Taxes
The provision for income taxes was $7.0 million for the nine months ended
December 31, 1998 and $2.8 million for the nine months ended December 31, 1997.
The increase in income taxes was primarily due to increased pre-tax income
resulting from the inclusion of businesses acquired during 1997 and 1998. The
effective income tax rate decreased slightly to 44.6% for the nine months ended
December 31, 1998 from 49.7% for the nine months ended December 31, 1997. The
effective income tax rate for 1997 and 1998 was higher than the federal
statutory rate of 34.0% plus state and local taxes, primarily due to non-
deductible goodwill amortization relating to the businesses acquired during the
fiscal years ended March 31, 1998 and the nine months ended December 31, 1998.
Fiscal Year Ended March 31, 1998 Compared to Fiscal Year Ended March 31, 1997
Revenues
Total revenues for the fiscal year ended March 31, 1998, were $164.4 million,
an increase of 156.5% over the same period in 1997. The majority of the revenue
growth was due to the acquisition of businesses during 1997 and 1998, with the
remainder coming from internal growth.
Sales of equipment and supplies increased to $121.3 million in fiscal year
1998, an increase of 194.5% over 1997. This represented 73.8% of total revenues
compared to 64.3% for the prior year. Throughout 1997
30
<PAGE>
and 1998, Global acquired businesses that added more equipment sales than
Global had in its existing businesses.
Service and rental revenues for the fiscal year ended March 31, 1998
increased to $43.1 million, an increase of 88.1% from the same period the prior
year. This represented 26.2% of total revenues for the fiscal year ended 1998
compared to 35.7% for the same period in 1997.
Gross Profit
Gross profit of $56.8 million for the fiscal year ended March 31, 1998
reflected a 122.4% increase over the same period in 1997. Expressed as a
percent of total revenue, gross profit was 34.6% for fiscal year 1998 compared
to 39.8% for fiscal year 1997. The change in total gross profit margins was due
to the change in the revenue mix. Office equipment dealers typically receive a
higher percentage of total revenues from service and rentals, while network
integration and electronic presentation systems and DIM systems dealers derive
a higher percentage of total revenues from sales of equipment and supplies. The
equipment component of sales of the businesses acquired in 1997 and 1998
accounted for a larger portion of total revenues than Global's existing
businesses. Sales of equipment and supplies generally generate lower gross
profit margins than service and rental revenues. Combined service and rental
gross profit margins were 49.9% for the fiscal year ended March 31, 1997 and
for the fiscal year ended March 31, 1998.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased 111.3% to $38.6
million for the fiscal year ended March 31, 1998. This amount was 23.5% of
total revenues compared to 28.5% of total revenues for the same period in 1997.
These expenses increased due to the acquisitions Global made in 1997 and 1998.
The decline in expenses as a percentage of revenues was the result of the
acquisition of profitable businesses, the change in the composition of Global's
businesses, and revenues increasing by 156.5% without a proportionate increase
in selling, general, and administrative expenses.
Intangible Asset Amortization
Asset amortization was $3.1 million for the fiscal year ended March 31, 1998
compared to $1.9 million for the same period the prior year. Asset amortization
includes the amortization of goodwill and non-compete agreements from
acquisitions.
Income From Operations
Income from operations was $15.1 million, or 9.2% of total revenues for the
fiscal year ended March 31, 1998, which was a 184.1% increase over the same
period in 1997.
Interest Expense
Interest expense was $6.7 million for the fiscal year ended March 31, 1998,
an increase of 110.5% from the same period in 1997. The increase was primarily
due to the increase in Global's borrowings. The proceeds from the additional
borrowings were used to fund the cost of the businesses acquired in 1997 and
1998. Interest expense includes the amortization of financing fees incurred
concerning Global's prior credit facility with Jackson National Life Insurance
Company.
Income Taxes
The provision for income taxes was $3.9 million for the fiscal year ended
March 31, 1998 compared to $1.0 million for the same period in 1997. The
increase in income taxes was primarily due to increased pre-tax income because
of the businesses Global acquired in 1997 and 1998. The effective income tax
rate decreased slightly from 47.3% for the fiscal year ended March 31, 1997 to
47.0% for the same period in 1998. The
31
<PAGE>
effective income tax rate for 1997 and 1998 was higher than the federal
statutory rate of 34.0% plus state and local taxes, primarily due to non-
deductible goodwill amortization relating to the businesses acquired during the
fiscal years ended March 31, 1997 and March 31, 1998.
Fiscal Year Ended March 31, 1997 Compared to Fiscal Year Ended March 31, 1996
Revenues
Total revenues for the fiscal year ended March 31, 1997 were $64.1 million,
an increase of 73% over the same period in 1996. The majority of the revenue
growth was due to the acquisition of businesses during 1996 and 1997, with the
remainder coming from internal growth.
Sales of equipment and supplies increased to $41.2 million in the fiscal year
ended March 31, 1997, an increase of 100% for the same period in 1996.
Throughout 1996 and 1997, Global acquired businesses that added more equipment
sales than Global had in its existing businesses.
Service and rental revenues for the fiscal year ended March 31, 1997
increased to $22.9 million, an increase of 40% from the same period in 1996.
Gross Profit
Gross profit of $25.5 million for the fiscal year ended March 31, 1997
reflected a 68% increase over the same period in 1996. Total gross profit was
39.8% of total revenues for 1997 versus 41.1% of total revenues for 1996. The
change in total gross profit margins from year to year was due to the change in
the revenue mix as described in the Revenues section above. Combined service
and rental gross profit margins were 49.9% for the fiscal year ended March 31,
1997 and 49.4% for the same period during 1996.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased 56% to $18.3 million
in the fiscal year ending March 31, 1997. This amount was 28.5% of total
revenues. For the time-period ending March 31, 1996, selling, general and
administrative expenses were $11.7 million, or 31.6% of revenues. The increase
in expenses was primarily due to the acquisition of businesses in 1996 and
1997. The decline in expenses as a percentage of revenues was due to the
acquisition of profitable businesses, the change in the composition of Global's
businesses, and revenues increasing more rapidly than expenses.
Intangible Asset Amortization
For the fiscal years ended March 31, 1997, asset amortization was $1.9
million. For the same period in 1996, that amount was $1.4 million. Asset
amortization includes the amortization of goodwill and non-compete agreements
from acquisitions.
Income From Operations
Income from operations increased 150% from $2.1 million, or 5.7% of total
revenues, for the fiscal year ended March 31, 1996 to $5.3 million, or 8.3% of
total revenues, for the fiscal year ended March 31, 1997.
Interest Expense
Interest expense was $3.2 million for the fiscal year ended March 31, 1997,
an increase of 56% from $2.0 million for the same period in 1996. The increase
was primarily due to the increase in Global's borrowings. The proceeds from the
additional borrowings were used to fund the cost of the businesses acquired in
1996 and 1997. Interest expense includes the amortization of financing fees
incurred concerning the senior debt facility.
32
<PAGE>
Income Taxes
The provision for income taxes was $1.0 million for the fiscal year ended
March 31, 1997 and $275,000 for the fiscal year ended March 31, 1996. The
increase in income taxes was primarily due to increased pre-tax income because
of the inclusion of businesses acquired during 1996 and 1997. The effective
income tax rate decreased to 47.3% for the fiscal year ended March 31, 1997
from 332.8% for the fiscal year ended March 31, 1996. The effective income tax
rate for 1996 was higher than the federal statutory rate of 34.0% plus state
and local taxes, primarily due to non-deductible goodwill amortization relating
to the businesses acquired during the fiscal years ended March 31, 1995 and
March 31, 1996.
Quarterly Results of Operations
The following table presents selected consolidated financial information for
each of Global's last six fiscal quarters. The information has been derived
from unaudited consolidated financial statements that in the opinion of
management reflect all adjustments, consisting of normal recurring adjustments,
necessary for a fair presentation of such quarterly information.
<TABLE>
<CAPTION>
Quarters Ended
-------------------------------------------------------------------------
September 30, December 31, March 31, June 30, September 30, December 31,
1997 1997 1998 1998 1998 1998
------------- ------------ --------- -------- ------------- ------------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Equipment and supplies
sales................. $30,543 $34,790 $40,801 $43,334 $51,958 $58,028
Service and rentals.... 10,860 11,925 13,544 14,868 15,048 17,625
------- ------- ------- ------- ------- -------
Total revenues.......... 41,403 46,715 54,345 58,202 67,006 75,653
Costs and operating
expenses:
Cost of equipment and
supplies sales........ 22,363 24,851 28,485 30,887 37,922 40,616
Service and rental
costs................. 5,216 5,973 7,101 7,006 7,549 8,940
Selling, general and
administrative
expenses.............. 9,460 10,856 12,802 13,289 14,004 16,368
Intangible asset
amortization.......... 753 843 917 901 943 1,195
------- ------- ------- ------- ------- -------
Total costs and
operating expenses..... 37,792 42,523 49,305 52,083 60,418 67,119
------- ------- ------- ------- ------- -------
Income from operations.. 3,611 4,192 5,040 6,119 6,588 8,534
Interest expense........ 1,616 1,980 2,178 2,230 1,456 1,757
------- ------- ------- ------- ------- -------
Income before income
taxes and extraordinary
charge................. 1,995 2,212 2,862 3,889 5,132 6,777
Income taxes............ 990 1,099 1,198 1,801 2,295 2,948
------- ------- ------- ------- ------- -------
Income before
extraordinary charge... 1,005 1,113 1,664 2,088 2,837 3,829
Extraordinary charge for
early retirement of
debt................... -- -- -- (684) (1,133) --
------- ------- ------- ------- ------- -------
Net income.............. 1,005 1,113 1,664 1,404 1,704 3,829
Yield adjustment on
Class A common
stock(1)............... (434) (533) (1,093) (901) -- --
------- ------- ------- ------- ------- -------
Net income available to
holders of common
stock.................. $ 571 $ 580 $ 571 $ 503 $ 1,704 $ 3,829
======= ======= ======= ======= ======= =======
Basic earnings per
share.................. $ 0.06 $ 0.06 $ 0.06 $ 0.04 $ 0.10 $ 0.21
======= ======= ======= ======= ======= =======
Diluted earnings per
share.................. $ 0.06 $ 0.06 $ 0.06 $ 0.04 $ 0.10 $ 0.21
======= ======= ======= ======= ======= =======
Basic weighted average
number of shares....... 9,549 9,959 10,404 11,527 17,642 18,054
======= ======= ======= ======= ======= =======
Diluted weighted average
number of shares....... 9,549 9,959 10,404 12,511 17,700 18,176
======= ======= ======= ======= ======= =======
</TABLE>
- --------
(1) Reflects adjustments for amounts payable to holders of Global's Class A
common stock upon a sale of Global or its initial public offering. These
amounts equal 8.0% annual yield on the original cost per share of $90.00
and, for 1998, the accretion of the difference between the redemption value
of the Class A common stock and the value allocated to the stock, accreted
from January 1998 to June 1998.
33
<PAGE>
The following table sets forth selected consolidated financial information as
a percentage of total revenues for each of Global's last six fiscal quarters.
<TABLE>
<CAPTION>
Quarters Ended
------------------------------------------------------------------------
September 30, December 31, March 31, June 30, September 30, December 31,
1997 1997 1998 1998 1998 1998
------------- ------------ --------- -------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Equipment and supplies
sales................. 73.8% 74.5% 75.1% 74.5% 77.5% 76.7%
Service and rentals.... 26.2 25.5 24.9 25.5 22.5 23.3
----- ----- ----- ----- ----- -----
Total revenues.......... 100.0 100.0 100.0 100.0 100.0 100.0
Costs and operating
expenses:
Cost of equipment and
supplies sales........ 54.0 53.2 52.4 53.1 56.6 53.7
Service and rental
costs................. 12.6 12.8 13.1 12.1 11.3 11.8
Selling, general and
administration
expenses.............. 22.9 23.2 23.5 22.8 20.9 21.6
Intangible asset
amortization.......... 1.8 1.8 1.7 1.5 1.4 1.6
----- ----- ----- ----- ----- -----
Total costs and
operating expenses..... 91.3 91.0 90.7 89.5 90.2 88.7
----- ----- ----- ----- ----- -----
Income from operations.. 8.7 9.0 9.3 10.5 9.8 11.3
Interest expense........ 3.9 4.2 4.0 3.8 2.2 2.3
----- ----- ----- ----- ----- -----
Income before income
taxes and extraordinary
charge................. 4.8 4.8 5.3 6.7 7.6 9.0
Income taxes............ 2.4 2.4 2.2 3.1 3.4 3.9
----- ----- ----- ----- ----- -----
Income before
extraordinary charge... 2.4 2.4 3.1 3.6 4.2 5.1
Extraordinary charge for
early retirement
of debt................ -- -- -- (1.2) (1.7) --
----- ----- ----- ----- ----- -----
Net income.............. 2.4% 2.4% 3.1% 2.4% 2.5% 5.1%
===== ===== ===== ===== ===== =====
</TABLE>
Liquidity and Capital Resources
Historically, Global has financed its operations primarily through internal
cash flow, sales of stock and bank financing, including the financing
facilities described below. These sources of funds have been used to fund
Global's growth both internally and through acquisitions. Global is pursuing an
acquisition strategy and expects to acquire more businesses. As Global
continues to acquire more businesses it is likely that Global will incur
additional debt and seek additional equity capital.
Global's senior credit facility with First Union National Bank consists of a
$175.0 million senior secured revolving line of credit, including access to a
$5.0 million swingline line of credit. The senior credit facility is available
for acquisitions and for working capital purposes. At March 31, 1999, $68.0
million was outstanding under the senior credit facility. The senior credit
facility bears interest at rates ranging from 0.75% to 1.5% over LIBOR or from
0.0% to 0.5% over a base rate related to prime rate, and varies according to
Global's ratio of its total funded debt to earnings before interest, taxes,
depreciation and amortization. Amounts borrowed under the senior credit
facility may be repaid and reborrowed over the life of the senior credit
facility, with a final maturity date of July 29, 2003. The terms of the senior
credit facility require strict compliance with numerous affirmative, negative
and financial covenants. Amounts borrowed under the revolving line of credit
may be used to fund working capital and general corporate purposes, including
acquisitions, subject to First Union National Bank's approval in the case of
acquisitions with a cash purchase price of over $15.0 million or an aggregate
price (cash, stock or other consideration) of over $40.0 million.
Global plans to amend and increase the size of its senior credit facility.
Under the terms of a commitment letter Global expects to enter into with First
Union National Bank, First Union National Bank is expected to commit to arrange
and underwrite $250.0 million of senior secured credit facilities (the "Senior
Credit Facilities"). The Senior Credit Facilities are expected to be comprised
of a five year revolving credit facility (the "Revolver") and a seven year term
loan (the "Term Loan").
The annual interest rates applicable to the Senior Credit Facilities are
expected to be fluctuating rates of interest measured by reference to either
(1) LIBOR or (2) the greater of First Union National Bank's prime rate or the
overnight federal funds rate plus 0.50% (the "Base Rate"), plus, in either
case, an additional amount which will fluctuate based upon the leverage ratio
of the borrowers. This additional amount in the case of the
34
<PAGE>
Revolver is expected to range from 2.00% to 3.00% for LIBOR-based borrowings
and from 0.75% to 1.75% for Base Rate-based borrowings, and in the case of the
Term Loan is expected to range from 3.00% to 3.50% for LIBOR-based borrowings
and from 1.75% to 2.25% for Base Rate-based borrowings. The Senior Credit
Facilities are expected to provide for an unused commitment fee payable to the
lenders and certain other fees payable by the borrowers. First Union National
Bank and Global contemplate that amounts borrowed under the Revolver may be
repaid and reborrowed over the life of the Revolver, with a final maturity date
of five years after the consummation of the Senior Credit Facilities. The terms
of the Senior Credit Facilities are expected to require strict compliance with
numerous affirmative, negative and financial covenants. Amounts borrowed under
the Senior Credit Facilities may be used to fund working capital and general
corporate purposes, including acquisitions, subject to First Union National
Bank's approval in the case of certain acquisitions. See "Description of Senior
Credit Facilities."
Under the terms of three of its purchase agreements, Global may be required
to make payments of up to $3.8 million over the next one to three years to
certain former owners of the businesses it has acquired based on the
profitability of those businesses during such time period.
For the nine months ended December 31, 1998 the net cash provided by
operations was $7.3 million and for the nine months ended December 31, 1997 the
net cash provided by operations was $2.1 million. For the nine months ended
December 31, 1998 and for the nine months ended December 31, 1997 Global's net
cash used in investing activities was $84.7 million and $65.0 million,
respectively, primarily for the purchase of businesses. For the nine months
ended December 31, 1998 and the nine months ended December 31, 1997, Global's
net cash provided by financing activities was $77.2 million and $65.7 million,
respectively. Net cash provided by financing activities consists of equity
capital provided by the initial public offering, Golder, Thoma, Cressey, Rauner
Fund IV, L.P., Jackson National Life Insurance Company, First Union National
Bank, and certain members of management of Global and its acquired businesses,
and net borrowings.
Year 2000 Issues
With the exception of historical information such as Global's costs and
efforts to date relating to year 2000 issues, the discussion in this section
consists of forward-looking statements that involve risks and uncertainties.
Global's success in addressing year 2000 issues, and the impact of year 2000
issues on Global's business, results of operations or financial condition,
could differ materially from the description that follows. Factors that could
cause or contribute to such differences include, but are not limited to, those
discussed below.
In 1998, Global began formulating a plan to address risks associated with the
"year 2000 issue," which relates to the possible inability of computer systems
and equipment to function properly as a result of their inability to recognize
or process dates occurring after 1999. Global's year 2000 plan addresses the
following areas: (1) information technology systems, or IT systems, used in
Global's internal operations, including accounting, data processing and
telephone systems, (2) non-IT systems used in Global's internal operations,
including alarm systems and fax machines, (3) the state and impact of year 2000
readiness of products sold by Global (which Global primarily purchases from
third party vendors) and (4) certain operational systems of Global's critical
suppliers and customers that may affect Global. As discussed below, Global's
year 2000 plan involves identifying and assessing the potential year 2000 risks
faced by Global; remediating any year 2000 noncompliance identified by Global's
assessment; testing the year 2000 readiness of Global's systems; and planning
for year 2000 contingencies.
State of Year 2000 Readiness
Global is reviewing its overall exposure to year 2000 risks. Global's plan to
address the impact of the year 2000 issue on its IT and non-IT systems involves
(1) making an inventory of potentially date sensitive devices and software, (2)
assessing the systems affected by these devices and software, (3) remediating
or replacing these systems as necessary and (4) testing its systems to confirm
year 2000 readiness. Both IT and non-IT
35
<PAGE>
systems contain embedded technology, which complicates Global's year 2000
assessment and remediation efforts.
Global estimates that it has completed approximately 94% (in terms of time
spent) of the inventory and assessment phases of this process for its existing
companies. Global expects to complete these phases for its existing companies
by June 1999. Due to Global's acquisition activity, Global expects to be
continually modifying its year 2000 remediation efforts to address the year
2000 readiness of businesses Global may acquire throughout the coming year and
beyond January 1, 2000. Although Global has a preliminary indication of the
scale of affected systems and software in its existing companies, future
acquisitions could present additional year 2000 problems. Global began
remediating its systems in November 1998 and expects to complete this phase by
July 1999. Global began the testing phase of its year 2000 plan in January 1999
and expects to complete testing of existing systems by September 1999. The
expected timing of these phases is based on management's best estimates, which
were derived using numerous assumptions regarding future events, including the
results of Global's year 2000 assessment, the continued availability of certain
resources and the implementation and success of third party remediation plans.
There can be no assurance that these estimates will prove to be accurate, and
actual results could differ materially as a result of many factors, including
Global's ability to identify, assess, remediate and test all relevant systems
and technology embedded in those systems.
To the extent that Global has completed its year 2000 assessment of its IT
systems, Global's assessment has not revealed substantial year 2000
noncompliance. Specifically, for most of Global's functions, Global utilizes
Optimizing Management Decisions ("OMD") software. The OMD Corporation has
released its year 2000 compliant software and Global began testing it in April
1999. Global uses nationally known software providers for both its general
accounting and industry-specific systems and has been assured by the
manufacturers or vendors of such products that these applications will be year
2000 compliant by July 1999. Global's assessment of its non-IT systems is still
at a preliminary stage.
The risk to Global's business, results of operations or financial condition
that third parties and their products will not be year 2000 ready is difficult
to quantify, but could potentially be significant. Global has analyzed its
existing product line and identified potential year 2000 issues with the
products Global sells (which are, for the most part, manufactured by third
parties), as well as risks associated with year 2000 unreadiness of its
critical suppliers and customers. Global is not aware of any potentially major
disruptions in connection with the equipment and services currently or
previously sold. Global has sent questionnaires to its critical suppliers and
customers to determine their year 2000 readiness, and is reviewing responses
received to date to assess the impact of the year 2000 readiness of Global's
suppliers and customers.
Global derives a majority of its revenues from the sale of equipment and from
service and supply contracts for such equipment. Accordingly, Global's success
depends on its access to reliable sources of equipment, parts and supplies at
competitive prices. If year 2000 issues impair the ability of Global's
suppliers to provide products timely and at competitive prices, Global's
business, results of operations and financial condition could be materially and
adversely affected. Global does not rely upon any one customer for the majority
of its sales, or one product vendor for the bulk of its purchases. No
individual supplier represents more than 20% of equipment purchases and
Global's top ten customers combined represent less than 8% of Global's total
sales for the twelve month period ending March 31, 1999. Global believes that
its large customer base will minimize the effect on Global of any year 2000
business disruption experienced by any of its customers.
Costs to Address Year 2000 Issue
Global has not incurred material historical costs associated with year 2000
remediation. Global operates most of its systems on third party software that
it believes or has been informed is already year 2000 compliant. Global
estimates its costs of remediation will be approximately $500,000 (not
including costs to remediate systems of businesses that may be acquired in the
future) and does not expect these costs to be
36
<PAGE>
material in any year to Global's consolidated financial condition, results of
operations or cash flows. All modification costs relating to the year 2000
issue are expensed as incurred and are expected to be paid for out of
internally generated funds.
Global's estimate of remediation costs is based on numerous assumptions
regarding future events, including the results of Global's year 2000
assessment, continued availability of certain resources and the implementation
and success of third party remediation plans. There can be no assurance that
this estimate will prove to be accurate, and actual costs could differ
materially as a result of many factors, including those discussed in this
section.
Risks Related to the Year 2000 Issue
In evaluating year 2000 risks to Global, Global has identified and evaluated
five mission-critical aspects of the business: sales, billing, service,
delivery and accounting information systems. Should any of these functions fail
due to year 2000 issues, a material disruption in business could result.
Sales: Should Global's telecommunications system fail as a result of year
2000 issues, Global's sales could be adversely affected. Global is currently in
the process of confirming year 2000 compliance by its third party
telecommunications providers. Global believes its sales division could remain
fully operational if it experienced a disruption in telecommunications service.
Although Global expects confirmation of year 2000 compliance from its third
party telecommunications providers, Global is preparing a contingency plan to
continue sales operations without telecommunication support.
Billing: Global is dependent upon computerized billing systems. A breakdown
in IT billing systems could result in delayed or missed customer payments. By
the end of June 1999, Global expects to have completed the inventory and
assessment of all potentially affected IT systems. Based upon the level of
impairment, duplicate manual billing systems will be set in place to facilitate
uninterrupted service where Global anticipates a possible problem.
Service: Global utilizes a combination of manual and computerized service
dispatch systems. A disruption in Global's computerized dispatch system could
result in delayed customer service. By the end of June 1999, Global will have
completed the inventory and assessment of all potentially affected existing IT
systems. Based upon the level of impairments, duplicate dispatch systems will
be set in place to facilitate uninterrupted service with regard to the
uncertain systems.
Delivery: Global is heavily dependent upon timely delivery of products from
its product vendors as well as delivery to its customers. Any disruption in
product supply could result in low customer service and ultimately lost sales.
Global is making every effort to ensure its suppliers and delivery channels are
adequately prepared to transition to the year 2000. If Global determines there
is a likely possibility of untimely deliveries by its suppliers, it will take
appropriate steps to increase inventory of the affected products.
Accounting Information Systems: The majority of Global's accounting
information systems are computerized and susceptible to year 2000 problems.
Failure to convert all affected systems could result in delayed or lost
financial data. Global is evaluating these systems and expects to make
remediations to affected systems by the second quarter of 1999.
Liability or Litigation Relating to Year 2000 Issues
In addition to the risk of failure of a function critical to Global's
operations, Global faces risks that are difficult to quantify relating to
potential liability resulting from the year 2000 issue. The breadth of
different products and services offered by Global and uncertainty relating to
the meaning of the term "year 2000 compliant" could result in Global facing
claims arising from the effect of the year 2000 issue on the products it sells
and services. The year 2000 readiness of the products Global sells depends on
the implementation and
37
<PAGE>
success of efforts by the suppliers from whom Global purchases these products
in making them year 2000 compliant. Global cannot currently estimate the risks
it faces from such potential liability or litigation.
Although Global's year 2000 efforts and the contingency plans described above
are intended to minimize the adverse effects of the year 2000 issue on Global's
business and operations, the actual effects of the issue and the success or
failure of Global's efforts described above cannot be known until the year
2000. Failure by Global, major suppliers of computer systems and equipment used
in Global's operations, and major vendors and customers of products or services
sold by Global to address adequately their respective year 2000 issues in a
timely manner could have a material adverse effect on Global's business,
results of operations and financial condition.
Contingency Plans
Global is in the process of forming contingency plans to address the year
2000 issue, and expects this planning stage to continue to be an active process
through 1999. As Global's identification and evaluation of the risks it faces
progresses, Global will develop plans to handle these scenarios. Global expects
to continually revise its contingency planning as it receives information
regarding third party year 2000 readiness, and as it integrates future
acquisitions.
38
<PAGE>
BUSINESS
Global Imaging Systems is a consolidator in the highly fragmented office
imaging solutions industry. Global provides a broad line of office imaging
solutions, including the sale and service of automated office equipment,
network integration services, electronic presentation systems and document
imaging management systems. Since its founding in June 1994, Global has
acquired 32 businesses in the United States. Twelve of these businesses are
"core" companies, where Global concentrates administrative functions within a
region. The remaining 20 acquired businesses are "satellite" companies, which
means their administrative functions have been transferred to, and their
operations have been integrated into, a core company. Global's operating
philosophy is to "think globally, act locally." Under its decentralized
management system, Global typically continues to operate its acquired companies
under their pre-acquisition names and management in order to preserve client
relationships and motivate management.
Global believes its emphasis on superior customer service and the contractual
nature of its service business can generate significant recurring revenue.
Senior management largely attributes Global's solid historical operating
performance to: (1) employing a strict performance-based benchmarking model,
(2) pursuing a disciplined acquisition strategy and (3) integrating
acquisitions as they are made. For the nine months ended December 31, 1998,
Global had pro forma revenues of $267.1 million and pro forma EBITDA of
$38.1 million.
Global seeks to become the provider of choice for all of its customers'
office imaging needs by offering a full range of products and services and
superior customer service. While Global's clientele includes large, Fortune 500
companies, its growth has been, and is expected to be, largely driven by
serving middle market businesses. Global sells and services a variety of office
imaging solutions, including copiers, facsimile machines, printers, LCD
projectors, overhead projectors, video teleconferencing equipment, optical
scanning equipment, micrographics equipment, and the design and installation of
equipment related to computer networks. In addition, Global offers a variety of
ongoing services, including supply and service contracts, network management
contracts, technical support and training.
Global's strategic objective is to continue to grow profitably in existing
markets and new markets through internal growth and by acquiring additional
businesses. Global's strategy for stimulating internal growth is to offer new
products and services, to take advantage of cross-selling opportunities, and to
market aggressively to existing and new customers. Global enters new geographic
markets by acquiring additional core companies and expanding its core markets
through acquisitions of additional satellite companies.
Currently, Global's twelve core companies operate in 70 locations in 18
states, plus the District of Columbia. Global targets for acquisition as core
companies businesses that are leading competitors in the markets they serve.
Global's goal is to acquire core and satellite companies throughout the United
States and Canada.
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<PAGE>
Certain information regarding Global's core and satellite companies,
including pro forma revenues for the nine months ended December 31, 1998, is
summarized in the following table. The pro forma revenues in this table give
effect to acquisitions made during the twelve months ended March 31, 1999 as if
such acquisitions had occurred on April 1, 1998.
<TABLE>
<CAPTION>
Pro Forma No. of Years in Date
Core Company Region Revenues Satellites Business Acquired
(in millions)
<S> <C> <C> <C> <C> <C>
Felco Office Systems Texas $25.5 2 14 Jul. 1994
Conway Office Products Northeast 33.3 4 22 Jan. 1995
Berney Southeast 11.7 3 34 Feb. 1995
Amcom Office Systems Western Pennsylvania 10.6 2 21 Feb. 1996
Copy Service & Supply Southeast 5.5 -- 15 Jul. 1996
Southern Business
Communications Southeast 37.5 3 18 Nov. 1996
Electronic Systems Mid-Atlantic 58.4 2 18 Jul. 1997
Quality Business Systems Pacific Northwest 16.6 3 13 Sep. 1997
Connecticut Business
Systems Northeast 16.9 1 10 Jan. 1998
Carr Business Systems Northeast 15.9 -- 52 Sep. 1998
Distinctive Business
Products Chicago Metro Area 12.7 -- 22 Dec. 1998
Capitol Office Solutions Mid-Atlantic 22.5 -- 17 Dec. 1998
</TABLE>
The Industry
The office imaging solutions industry is highly fragmented. Of an estimated
3,700 dealer and distributor outlets in the United States primarily engaged in
the sale of copiers and other automated office equipment and related service,
parts, and supplies, approximately 3,100 dealer outlets are unaffiliated,
according to Industry Analysts, Inc. The following table sets forth information
provided by industry experts regarding the current and projected size of the
office imaging markets Global serves:
<TABLE>
<CAPTION>
Domestic Sales
-----------------------
(in billions)
1997 2002
Market (estimated) (projected)
- ------ ----------- -----------
<S> <C> <C>
Analog black and white copier and related service and
supplies............................................. $21.1 $17.1
Digital black and white copier and related service and
supplies............................................. 3.4 16.7
Digital color copier and related service and
supplies............................................. 1.9 5.9
Network consulting and integration services(1)........ 6.5 13.9
Network management services(1)........................ 1.8 4.2
Electronic presentation systems(2).................... 1.0 1.8
Document technology systems(3)........................ 6.4 18.6
----- -----
Total............................................... $42.1 $78.2
===== =====
</TABLE>
- --------
(1)According to information provided by International Data Corporation.
(2)According to information provided by Pacific Media Associates.
(3)According to information provided by AIIM International. Data shown is for
the entire North American market.
Consolidation
Independent distributors and service providers are consolidating throughout
the office imaging solutions industry. A number of factors are driving this
consolidation, including the following:
Technological Change. The technology of office imaging solutions is changing
rapidly. Digital technology, which allows images to be captured, transmitted,
reproduced and stored over wide geographic areas through networks of personal
computers, has in recent years been incorporated into copiers, electronic
presentation equipment and document imaging management ("DIM") technology. As a
result, copiers, facsimile machines
40
<PAGE>
and printers are gradually converging in function and computers and networks
are becoming an increasingly important component of office imaging systems.
This has led larger companies to demand more centralized network integration
services over a broader geographic area. The rapid pace of technological
change, including the resulting expansion of product offerings and increase in
product support costs, have outpaced the technical, managerial and financial
resources of many smaller distributors and service providers, causing them to
seek larger partners. Further, the blurring of the distinction among office
imaging technologies and the increased role for computers has led dealers
without network integration expertise to partner with companies that have such
expertise.
Dealer Consolidation by Suppliers. The cost of new product development and
fierce competition among equipment manufacturers have led manufacturers to seek
efficiencies. As a result, manufacturers are consolidating their dealer
networks, concentrating their business with a smaller number of dealers that
possess leading service capabilities, wide geographic coverage and sufficient
financial resources.
Distribution Channel Changes. Changes in distribution channels are also
leading to consolidation in the automated office equipment market. Office
superstores and consumer electronics chains now sell lower-end office products
at prices that are forcing smaller dealers out of the market. Smaller dealers
also face difficulty competing in the market for mid- and high-range office
equipment, because they are not well equipped to provide the sophisticated
support services required by businesses that purchase these products.
Typically, office superstores and consumer electronics chains also do not offer
the support services required by purchasers of mid- and high-range office
equipment.
Office Imaging Products and Services
Automated Office Equipment. Dealers in the automated office equipment market
sell and service some or all of the following: black and white copiers (digital
and analog), color copiers, duplicators, facsimile equipment, printers and
multi-function equipment.
Network Integration Services. With the rise of digital technology, customers
increasingly need network integration services as part of their office imaging
solutions. Network integrators provide outsourced management and support to
organizations' computer network infrastructures. As organizations seek to take
advantage of productivity-enhancing computer network technology, they face
complex and costly issues relating to network design, selection, implementation
and management. Among other challenges, organizations must (1) select from an
expanding number of product options with shortening life cycles, (2) integrate
diverse and often incompatible hardware and software environments and (3) deal
with a shortage of qualified information technology service personnel. As a
result, many smaller businesses seek to outsource installation, upgrade and
support and many large organizations seek to outsource network improvement
functions and the evaluation of new products.
Electronic Presentation Systems. Dealers in the electronic presentation
systems market sell and service LCD projectors and panels, smartboards,
overhead projectors and video conferencing equipment. As in the automated
office equipment market, products in this market increasingly use digital
technology, and many customers for these products have designated a single
buyer to address their needs in both markets. Competition among manufacturers
in this market is strong, leading manufacturers to introduce new products
frequently.
DIM Systems. Like automated office equipment and electronic presentation
systems, DIM systems also involve digital technology and are ultimately used by
the same end-users as other types of office imaging equipment. Dealers in this
market sell and service optical disk storage equipment, write once read many
("WORM") disks and CD-ROM optical storage products, as well as micrographic
equipment (microfilm and microfiche). DIM systems capture and store large
volumes of visual data. Key customers for these products include banks,
educational institutions, government institutions, libraries and insurance
companies.
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<PAGE>
Growth Strategy
Global believes it is well positioned to benefit from industry trends and
continued consolidation in the office imaging solutions industry. Global's goal
is to become the provider of choice for all of its customers' office imaging
needs by offering a full range of products and services and superior customer
service. The key elements of Global's strategy include:
Serve as a Single Source Provider of Office Imaging Solutions. Global
believes that offering a full spectrum of products and services will give it a
competitive advantage and enable it to capitalize on its customer relationships
by cross-selling products and services. As the technology that drives copiers,
facsimiles, printers, electronic presentation equipment and DIM equipment
converges, customers increasingly need computers and networks to use these
products. Accordingly, customers are demanding more integrated office imaging
solutions. Global plans to expand its product lines so that, within each
geographic region it serves, Global can offer automated office equipment,
network integration services, electronic presentation systems and DIM systems.
As Global's operations in these last three markets expand, Global expects an
increasing percentage of its revenues and gross profits will be generated by
sales of equipment and supplies, which typically have lower gross profit
margins than sales of service and rentals. Global is also considering
leveraging its infrastructure, customer base, and expertise by offering
outsourced facilities management services.
Provide Timely and Reliable Service. Global seeks to achieve the highest
level of service. Effective and responsive service is essential to obtaining
repeat business and developing market recognition. Providing timely and high
quality service also allows Global to maintain its profit margins, engage in
cross-selling, and enjoy a source of recurring revenue.
Make Strategic Acquisitions. Global plans to continue acquiring core
companies in targeted geographic markets and to expand these core acquisitions
through internal growth and satellite acquisitions. Global looks for core
acquisition candidates that are led by an experienced management team that will
continue to manage the company after Global acquires it, that have a strong
regional market share, and that can grow internally and through the acquisition
of satellite companies. Global's senior management team has substantial
experience in making acquisitions. Since its founding in June 1994, Global has
acquired twelve core companies in the United States, and an additional 20
satellite companies which have been integrated into the core companies.
Global's goal is to acquire core and satellite companies throughout the United
States and Canada.
A key component of Global's growth strategy is to acquire satellite companies
in or near its core companies' markets. Core company management frequently
identifies appropriate satellite acquisition candidates. In evaluating
potential satellite acquisitions Global considers, among other factors, the
potential satellite's proximity to a core company, the fit between its product
lines and those of the nearby core company, and the potential satellite's
management, employee base and service base under contract.
Stimulate Internal Growth. Global's strategy for stimulating internal growth
in its core companies is to increase sales force productivity through
performance benchmarks; expand product and service offerings; increase sales
force size; and aggressively cross-sell products and services.
Optimize Profitability Using Global's Benchmark Model. Global's senior
management has developed an industry management model composed of a
comprehensive set of performance benchmarks. These benchmarks, which are the
focus of internal reporting from the core companies to headquarters, allow
Global's senior and local management to monitor and improve the operations of
each core company. Using these criteria, Global trains its core and satellite
company managers to optimize their business mix and improve performance.
Global strives to reduce costs by consolidating the back-office functions of
its satellite acquisitions into core operations, enabling its core companies to
decrease technician driving time and increase the productivity of sales
personnel and administrators. Global also works to reduce costs by
standardizing financial reporting, cash and inventory management, payroll,
billing, collections, insurance and employee benefit programs, and by
negotiating advantageous relationships with equipment manufacturers, other
suppliers and lessors.
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<PAGE>
Operate with a Decentralized Management Structure. Global believes that its
core companies' experienced local management possess valuable understanding of
their markets and customers. Therefore, Global gives its core company managers
responsibility for day-to-day operating decisions. Core companies and, in some
cases, satellite companies retain their local name and management after Global
acquires them. This decentralized approach permits local management to maintain
focus and motivation and optimizes customer relationships. Local management is
supported by a senior management team that focuses on Global's growth strategy
as well as corporate planning and financial reporting and analysis.
Products and Services
Global currently sells and services the following: (1) automated office
equipment, (2) network integration services, (3) electronic presentation
systems and (4) document imaging management systems ("DIM" systems). In each of
these markets, Global provides a number of office imaging solutions, including
the following:
Automated Network Electronic DIM Systems
Office Equipment Integration ServicesPresentation Systems
. Microfiche and
microfilm
equipment
- --------------------------------------------------------------------------------
. Network design . LCD projectors
and and panels,
. Black and white installation, smartboards and
copiers and related overhead
(digital and software and projectors
analog) hardware
. CD-ROM optical
storage
products
. Video
. Color copiers . Technical conferencing . Write once read
(digital) support equipment many ("WORM")
contracts disks and
related
equipment
. Duplicators
(digital and
analog)
. Color printers
. Network
maintenance
contracts
. Audio visual
equipment
. Related
. Facsimile supplies
machines
. Training and
support
. Related
supplies
. Related service
. Printers contracts
(including
color)
. Internet
services
. Related service
contracts . Training and
support
. Multi-function . Training and
equipment support
. Related supply
and service
contracts
Set forth below are Global's pro forma revenues from each of these markets as
a percentage of total pro forma revenues for the fiscal year ended March 31,
1998 and the nine months ended December 31, 1998.
<TABLE>
<CAPTION>
Fiscal Nine Months
Year Ended Ended
March 31, December 31,
Markets Served 1998 1998
-------------- ---------- ------------
<S> <C> <C>
Automated Office Equipment........................... 62% 66%
Network Integration Services......................... 28% 21%
Electronic Presentation Systems...................... 9% 12%
DIM Systems.......................................... 1% 1%
</TABLE>
Taking advantage of the "after market" opportunities generated by its sales
of office imaging equipment, Global derives a substantial amount of its
revenues from service activities. Service activities generally provide Global
with a recurring source of revenue. Global's copier service and supply
contracts, for example, provide it with a predictable source of revenue, since
payment is typically based on the number of copies customers make. In the
network integration market, Global focuses on contracts to provide ongoing
maintenance and technical support, since these types of contracts generate a
more steady revenue stream than project-based contracts.
Global believes effective and responsive service is essential for it to
obtain repeat business and to develop the market recognition it needs in order
to grow. Most of Global's copier sales, on a pro forma basis and as
43
<PAGE>
measured by revenue generated, are accompanied by service and supply contracts.
These generally continue for a one year term but, in some cases, continue from
month to month. As part of Global's commitment to quality customer service,
Global works to provide its customers with speedy, reliable service. For
example, Global tries to respond to service calls from its automated office
equipment customers within two to four hours if the call comes in during
business hours. For network integration customers, Global offers a 24 hour
technical assistance "hotline." In addition, Global's service technicians are
generally manufacturer- or vendor-certified to service the equipment Global
sells.
Customers, Sales and Marketing
Global believes its customers decide to purchase products and services from
Global based on a variety of factors, the most important of which are the
strength of the relationship with Global, quality of service provided, and
price.
Global's growth has been largely driven by serving middle market businesses.
Global also serves a number of large, Fortune 500 companies, as well as
educational institutions, government entities and other non-profit groups.
Global estimates that over 60,000 customers purchased equipment or services
from Global in the past twelve months, on a pro forma basis. During the nine
months ended December 31, 1998, on a pro forma basis, none of Global's
customers accounted for more than 3% of total revenues and its top five
customers collectively accounted for less than 6% of total revenues.
Because the management teams at Global's core companies understand their
markets and customer relationships, Global's core company managers make local
marketing decisions, including decisions regarding product offering mix,
promotional programs, advertising, and trade show attendance. Global employs
approximately 590 people in sales and marketing. All of Global's sales
personnel are compensated at least partly on a commission basis, with local
management determining the structure of sales compensation and commissions
within the parameters of Global's industry management model. Global generates
sales from within its existing customer base by tracking lease expirations,
cross-selling its products and services, and giving incentives to service
personnel for creating sales leads. Each of Global's core companies also
generates sales leads through telemarketing and door-to-door marketing.
Training
Global provides its sales and service employees extensive, ongoing training.
Each core company has its own technical trainer and training is scheduled on a
regular basis. Core company technical trainers are typically certified by
Global's suppliers, which makes Global's service technicians manufacturer- or
vendor-certified technicians. Global also provides formalized product and
general sales training to its sales and marketing personnel.
44
<PAGE>
Suppliers
The following table lists the products Global sells and their manufacturers
in each of the office imaging markets Global serves:
Automated Office Equipment
- --------------------------------------------------------------------------------
<TABLE>
<C> <S>
Copiers: Canon Inc., Konica, Mita Copystar
America, Ricoh Corporation, Savin
Corporation, Sharp, Toshiba America, Inc.
Facsimile machines: Muratec America, Inc., Panasonic
Communications and Systems Company,
Savin, Toshiba
Duplicators: Riso, Inc.
Printers: Hewlett-Packard Company, Tektronix, Inc.
Network Integration Services
- -------------------------------------------------------------------------------
Personal and laptop computers: AST Research, Inc., Compaq Computer
Corporation, Dell Computer Corporation,
IBM, Intel Corporation, NEC America,
Inc., Toshiba
Networking software: Banyan Systems Incorporated, Microsoft
Corporation, Novell, Inc., Raptor
Systems, Inc.
Electronic Presentation Systems
- -------------------------------------------------------------------------------
Overhead projectors: Apollo International of Delaware, Inc.,
DuKane Corporation, 3M
LCD projectors: Epson America, Inc., In Focus Systems,
Inc., Lightware, Inc., Proxima
Corporation, Sharp, Sony Electronics Inc.
Video conferencing equipment: Intel
Smart Boards: Smart Technologies, Inc.
DIM Systems
- -------------------------------------------------------------------------------
Microfilm and microfiche equipment: Canon
Optical data storage equipment: Canon, Compaq
Document management software: Westbrook Technologies, Inc.
</TABLE>
During the nine month period ended December 31, 1998, on a pro forma basis,
Global purchased 19% of its equipment, parts and supplies from Konica and 11%
from Sharp. No other supplier represented in excess of 8% of such purchases, on
a pro forma basis.
Global's agreements with suppliers generally permit Global to sell particular
products on a nonexclusive basis in particular geographic areas. In most cases,
Global's agreements extend for one-year renewable terms, which the supplier can
choose not to renew with 30 days' notice. In addition, Global's suppliers can
terminate Global's agreements upon notice (1) if Global does not meet minimum
purchase quotas or other requirements or (2) under certain other conditions,
including a change in Global's ownership.
Leasing and Rentals
A majority of the copiers Global sells are financed by third-party leasing
companies. Under Global's "Preferred Vendor Leasing Program," Global has
granted three nationwide equipment lease vendors-General Electric Capital
Corporation, Copelco Capital, Inc., and Tokai Financial Services, Inc.-
preferential rights to
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<PAGE>
lease copiers to Global's customers in exchange for their agreement to (1)
offer Global's customers better leasing rates and terms than are generally
available through individual copier dealers, (2) provide Global with control
over what happens to leased equipment at the end of the lease term and (3) use
a standardized leasing application. Under these arrangements, Global has the
option to purchase the leased equipment, under already negotiated terms, at the
end of the lease term. This gives Global the flexibility to sell the equipment
to its customers at the end of the lease term or to provide for such a sale at
the time of original purchase. Global plans to increase the use of third party
leases in the electronic presentation and DIM systems markets where, Global
believes, high equipment costs make leasing an attractive financing alternative
for many customers.
In some cases, Global's automated office equipment dealers also rent
equipment. Rental arrangements provide Global with a steady, monthly revenue
stream and, like its leasing arrangements, give Global control over disposition
of the equipment at the end of the rental term.
Competition
Global operates in highly competitive markets, which forces it to compete for
customers and sometimes for acquisition candidates. Competitors in the
automated office equipment market, the electronic presentation systems market
and the DIM systems market include large dealers, including Danka, IKON and
independent dealers, as well as manufacturers' sales and service divisions,
including those of Canon, Eastman Kodak Company, Konica, Minolta Co., Ltd.,
Pitney Bowes, Inc., Wang Laboratories, Inc. and Xerox. Global also competes
with office superstores and consumer electronics chains in these markets.
Principal areas of competition in these markets include price and product
capabilities; quality and speed of post-sales service support; availability of
equipment, parts and supplies; speed of delivery; financing terms and
availability of financing, leasing, or rental programs.
Competition from large, nationwide competitors is likely to increase as
Global seeks to attract additional customers, expand its markets geographically
and broaden its product and service offerings. Competition from large,
nationwide competitors will also increase if Global's industry continues to
consolidate. Finally, as digital and other new technologies develop, Global may
face competition from new distribution channels, including computer
distributors and value added resellers, for products containing new technology.
Some competitors have greater financial and personnel resources than Global.
In the network integration services market Global competes with the large
providers, including GE Capital Information Technology Solutions, Inacom Corp.
and Vanstar Corporation; smaller competitors with regional or local operations;
and the in-house capabilities of its customers. Principal areas of competition
in this market include reputation, quality and speed of support, and price.
Global also faces competition for core and satellite acquisitions from
consolidators such as IKON, Danka, and a number of other independent dealers.
Employees
Global employs approximately 1,700 people, most of whom work at Global's core
companies. Of these, approximately 590 employees work in sales and marketing,
715 in service, and 360 in operations and administration. Twenty-nine employees
work at Global's corporate headquarters in Tampa, Florida. None of Global's
employees is covered by collective bargaining agreements. Global believes it
has good relations with its employees.
Government and Environmental Regulation
Global is subject to regulation under various federal, state and local laws
relating to employee safety and health and environmental protection. Global is
not aware of any material non-compliance with any of these laws.
Legal Proceedings
Global is not currently involved in any legal proceeding or investigation
that it expects to have a material adverse effect on it.
46
<PAGE>
MANAGEMENT
Directors and Executive Officers
The directors and executive officers of Global are as follows:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Carl D. Thoma........... 50 Chairman of the Board of Directors
Thomas S. Johnson....... 53 Director, President and Chief Executive Officer
L. Neal Berney.......... 46 Director
Bruce D. Gorchow........ 41 Director
William C. Kessinger.... 33 Director
Edward N. Patrone....... 64 Director
Raymond Schilling....... 44 Senior Vice President, Chief Financial Officer, Secretary and Treasurer
Michael Mueller......... 47 Senior Vice President, Chief Operating Officer
Alfred N. Vieira........ 51 Vice President--Service
Todd S. Johnson......... 32 Vice President--Acquisitions
</TABLE>
Carl D. Thoma has served as a director since Global's founding in June 1994.
Mr. Thoma is the Managing Partner of Thoma Cressey Equity Partners, a private
equity investment company in Chicago, Illinois, Denver, Colorado and San
Francisco, California formed in December 1997 as a successor entity to Golder,
Thoma, Cressey, Rauner, Inc. Mr. Thoma co-founded and has been a Principal and
General Partner with Golder, Thoma, Cressey, Rauner, Inc. in Chicago, Illinois,
since 1980 and has been a Managing Partner of Golder, Thoma, Cressey, Rauner,
Inc. since 1993. Mr. Thoma is also a director of National Equipment Services,
Inc., Paging Network, Inc. and several private companies.
Thomas S. Johnson has served as a director and as President and Chief
Executive Officer since Global's founding in June 1994. From 1991 to 1994, Mr.
Johnson was an office imaging industry consultant. From 1989 to 1990, Mr.
Johnson served as Chief Operating Officer for Danka. From 1975 to 1989, Mr.
Johnson worked at IKON (formerly known as Alco Standard Corporation) in various
staff and operating roles. When he left there in 1989, he was Vice President--
Operations of the Office Products group and was responsible for acquisitions
and turning around under-performing operations. Mr. Johnson has been involved
in the acquisition of over 60 office equipment dealers since 1985, and has over
23 years of experience in acquiring and integrating businesses. Mr. Johnson
graduated with a B.S. degree from the University of Florida in 1972, and
received his MBA from Harvard Business School in 1976.
L. Neal Berney has served as a director since October 1996. Since 1980, Mr.
Berney has served as President of Berney, Inc., which Global acquired in
February 1995. Mr. Berney has been active in the office products industry for
over 28 years.
Bruce D. Gorchow has served as a director since October 1996. Since 1991, Mr.
Gorchow has served as Executive Vice President and head of the Private Finance
Group of PPM America, Inc. Prior to joining PPM America, Inc., Mr. Gorchow was
a Vice President at Equitable Capital Management, Inc. Mr. Gorchow received his
B.A. in Economics from Haverford College in 1980 and received his MBA in
Finance from the Wharton School of the University of Pennsylvania in 1982. Mr.
Gorchow is also a director of Leiner Health Products, Inc., Tomah Products,
Inc., Burke Industries, Inc., Elgar Electronics, Inc., Applied Process
Solutions Inc., Corvest, Inc. and EMSI Holdings, Inc.
William C. Kessinger has served as a director of Global since December 1995.
Mr. Kessinger is a Principal in GTCR Golder Rauner, LLC, a private equity
investment company in Chicago, Illinois formed in January 1998 as a successor
entity to Golder, Thoma, Cressey, Rauner, Inc. Mr. Kessinger joined Golder,
Thoma, Cressey, Rauner, Inc. in May 1995 and became a Principal in September
1997. From July 1994 to May 1995, Mr. Kessinger was a Principal with The
Parthenon Group. From August 1992 to June 1994, Mr. Kessinger attended Harvard
Business School, where he received his MBA. Prior to that time, Mr. Kessinger
served as an Associate with Prudential Asset Management Asia from August 1988
to June 1992. Mr. Kessinger is also a director of AnswerThink Consulting Group,
Inc. and National Equipment Services, Inc.
47
<PAGE>
Edward N. Patrone has served as a director since August 1998. Currently
retired, Mr. Patrone served as senior consultant to IKON from 1991 to 1997, and
in various executive positions with IKON prior to that time, including as
President and Chief Executive Officer of Paper Corporation of America, a
subsidiary of IKON, from 1988 to 1991, and as Executive Vice President from
1983 to 1988. Mr. Patrone has been active in the office products industry for
over 17 years. Mr. Patrone is also a director of Primesource Corporation and
CompuCom Systems, Inc.
Raymond Schilling has served as Senior Vice President of Global since April
1999 and as Vice President, Chief Financial Officer, Secretary and Treasurer of
Global since its inception in June 1994. From 1988 to 1994, Mr. Schilling was
Vice President--Finance of the California/Nevada region of McCaw Communications
and responsible for all of its finance and administrative functions. From 1980
to 1988, Mr. Schilling worked with Mr. Johnson at IKON in various accounting
and financial reporting functions, including as controller of Alco Office
Products, where his responsibilities included acquisitions and evaluation,
integration, development and installation of financial systems. From 1986 to
1988, Mr. Schilling also was Vice President of Finance and Administration of
San Sierra Business Systems (an Alco Office Products dealer). From 1976 to
1980, Mr. Schilling was employed by Price Waterhouse as a CPA. In total, Mr.
Schilling has been involved in the acquisition of over 35 businesses and has
over 16 years of experience in acquiring and integrating businesses. Mr.
Schilling graduated with a B.A. in Economics and Accounting from Muhlenberg
College in 1976.
Michael Mueller has served as Senior Vice President of Global since April
1999 and as Vice President and Chief Operating Officer of Global since January
1, 1995. From 1986 to December 1994, Mr. Mueller was employed as Vice President
by Global Services Inc., a copier and office product sales and service company
in Houston, Texas, and served as its Chief Financial Officer from 1988 to 1994.
Mr. Mueller obtained his B.B.A. from the University of Houston in 1974.
Alfred N. Vieira has served as a Vice President--Service of Global since
March 1997. From May 1996 to March 1997, Mr. Vieira served as Vice President
and General Manager of Felco Office Systems, Inc.'s four branch locations in
South Texas. From 1979 to May 1996, Mr. Vieira was employed by Global Services
Inc., and served as its Vice President of Operations from May 1988 to May 1996.
Mr. Vieira studied electrical engineering at City University of New York.
Todd S. Johnson has served as Vice President--Acquisitions since May 1999 and
has been employed by Global since July 1994 in various roles, including as
Acquisition Team Manager. From 1993 to 1994, Mr. Johnson was employed as an
office imaging industry consultant. From 1989 to 1993, Mr. Johnson was an
officer in the United States Marine Corps. Mr Johnson graduated from the
Pennsylvania State University with a B.S. in business management in 1989.
Board Composition
Global's board of directors is currently composed of six directors. Global's
directors are divided into three classes: Class I directors, whose term will
expire at the 1999 annual meeting of stockholders, Class II directors, whose
term will expire at the 2000 annual meeting of stockholders, and Class III
directors, whose term will expire at the 2001 annual meeting of stockholders.
The current Class I directors are Neal Berney and Edward Patrone; the Class II
directors are Bruce Gorchow and William Kessinger; and the Class III directors
are Thomas Johnson and Carl Thoma. At each annual meeting, the successors to
the directors whose terms expire will be elected to serve until the third
annual meeting following their election. Global's authorized number of
directors may be changed only by resolution of the board. Global's directors
may be removed without cause only upon the affirmative vote of the holders of
75% of the outstanding common stock, or for cause only upon the affirmative
vote of the holders of a majority of the outstanding common stock.
It is Global's policy to nominate for election to the board, for rotating
terms, one of the presidents of Global's core companies. Mr. Berney, who is the
president of Berney, Inc., is currently serving as a director pursuant to this
policy. Prior to Global's initial public offering, Global's stockholders
entered into a stockholders agreement with Global which provided that Global's
stockholders would vote for the following
48
<PAGE>
nominees in board elections: Thomas Johnson, three people to be designated by
Golder, Thoma, Cressey, Rauner Fund IV, L.P., and one person to be designated
by Jackson National Life Insurance Company. The Stockholders Agreement
terminated at the time of Global's initial public offering. Carl Thoma, William
Kessinger and Neal Berney were elected to Global's board as the designees of
Golder, Thoma, Cressey, Rauner Fund IV, L.P. and Bruce Gorchow as the designee
of Jackson National Life Insurance Company. See "Certain Transactions."
All officers serve at the discretion of the board. Todd S. Johnson, Global's
Vice President--Acquisitions, is the son of Thomas S. Johnson, Global's
President and Chief Executive Officer. There are no other family relationships
among any of Global's directors or executive officers.
Committees of the Board
Global's board of directors has established two committees, a compensation
committee and an audit committee. The compensation committee is responsible for
determining executive officers' compensation and for administering Global's
1998 Stock Option and Incentive Plan. The audit committee is responsible for
(1) making recommendations about Global's independent public accountants, (2)
reviewing audit plans and results with Global's independent public accountants,
(3) reviewing the independence of the independent public accountants, (4)
considering the range of audit and non-audit fees and (5) reviewing Global's
internal accounting controls. Carl Thoma, William Kessinger, Bruce Gorchow and
Edward Patrone, all of whom are non-employee directors, are the members of both
the compensation committee and the audit committee.
Compensation of Directors
All of Global's directors are entitled to be reimbursed for certain expenses
in connection with their attendance at board and committee meetings. Except for
Carl Thoma, William Kessinger, and Bruce Gorchow, directors who are not Global
employees also receive a $1,500 fee for each board meeting they attend. In
addition, directors are eligible to receive awards under Global's stock option
plan. Upon the closing of Global's initial public offering, Thomas Johnson
received an option to purchase 250 shares of Global's common stock and Neal
Berney received an option to purchase 20,250 shares of Global's common stock.
Upon joining Global's board of directors, Ed Patrone received an option to
purchase 10,000 shares of common stock. All of these options are exercisable at
a per share price of $12.00, Global's initial public offering price, have a
term of ten years and vest in five equal annual installments. Global
anticipates that future directors who are not employees will each receive an
option to purchase 10,000 shares of common stock when they are first elected to
the board, and that each non-employee director other than Carl Thoma, William
Kessinger and Bruce Gorchow will receive an option to purchase 2,000 shares of
common stock for each of the following years during which he or she serves as a
director. Each of these option is expected to be exercisable for a purchase
price equal to the market value of the underlying stock on the date of grant,
to have a term of ten years and to vest in five equal annual installments
beginning on the first anniversary of the date of grant. See "Management--1998
Stock Option and Incentive Plan."
49
<PAGE>
Executive Compensation
Summary Compensation Table. The following table sets forth the compensation
paid to or earned by Global's Chief Executive Officer and all other executive
officers of Global whose salary and bonus for services rendered in all
capacities to Global during the year ended March 31, 1999 exceeded $100,000
(the "named executive officers"):
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Long-Term
Compensation Compensation Awards
----------------- ---------------------
Restricted Securities
Stock Underlying All Other
Name and Principal Fiscal Salary Bonus Awards Options Compensation
Position Year ($) ($) ($)(1) (#) ($)(2)
- ------------------ ------ -------- -------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Thomas S. Johnson
President and Chief
Executive Officer..... 1999 $250,000 $112,500 $ -- 250 $4,563
1998 225,000 105,060 34,465 -- 4,125
1997 210,120 51,000 -- -- 1,831
Raymond Schilling
Senior Vice President,
Chief
Financial Officer,
Secretary and
Treasurer............. 1999 135,000 47,585 -- 10,250 2,739
1998 118,962 45,320 -- -- 1,168
1997 113,550 30,250 -- -- 336
Michael Mueller
Senior Vice President,
Chief Operating
Officer............... 1999 135,000 47,585 -- 10,250 5,120
1998 118,962 45,320 -- -- 3,505
1997 113,300 48,250 -- -- 1,332
Alfred N. Vieira
Vice President
of Service............ 1999 115,000 42,000 -- 5,250 2,499
1998 105,000 33,333 -- -- 984
</TABLE>
- --------
(1) At March 31, 1999, Mr. Johnson held 104,975 shares of restricted stock
worth $1,340,304; Mr. Schilling held 43,138 shares of restricted stock
worth $571,320; Mr. Mueller held 34,510 shares of restricted stock worth
$457,053 and Mr. Vieira held 103,529 shares of restricted stock worth
$1,375,171. Valuations are based on the difference between the price paid
by the named executive officer for the restricted shares and the closing
price per share of $13.3125 on March 31, 1999.
(2) Consists of matching contributions to Global's 401(k) plan.
Option Grants Table. The following table shows information relating to
options to purchase common stock granted to the named executive officers during
the year ended March 31, 1999:
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
-----------------------------------------------
Potential
Realizable Value
at Assumed
Number of Annual Rates of
Securities Share Price
Underlying Percent of Total Appreciation for
Options Options Granted Exercise Option Term
Granted to Employees in Price Expiration ----------------
Name (#) Fiscal Year ($/Sh) Date 5% 10%
- ---- ---------- ---------------- -------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Thomas S. Johnson....... 250 0.04% $12 6/21/08 $ 1,887 $ 4,781
Raymond Schilling....... 10,250 1.78% 12 6/21/08 77,354 196,030
Michael Mueller......... 10,250 1.78% 12 6/21/08 77,354 196,030
Alfred N. Vieira........ 5,250 0.91% 12 6/21/08 39,620 100,406
</TABLE>
50
<PAGE>
The options described in the table above become exercisable in five equal
annual installments beginning on June 22, 1999 and have a term of ten years.
These options were approved for grant prior to completion of Global's initial
public offering. The value of the common stock underlying these options at the
date of grant is based on the initial public offering price of $12 per share.
Aggregated Option Exercises and Fiscal Year-End Option Values Table. The
following table shows information concerning options held by the named
executive officers at March 31, 1999:
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
<TABLE>
<CAPTION>
Shares Number of Securities Value of Unexercised In-
Acquired Underlying Unexercised the-Money Options at
on Value Options at March 31, 1998 (#) March 31, 1998 ($)(1)
Exercise Realized ---------------------------------- -------------------------
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- -------- -------- ------------- ---------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Thomas S. Johnson....... -- -- -- 250 -- $ 328
Raymond Schilling....... -- -- -- 10,250 -- 13,453
Michael Mueller......... -- -- -- 10,250 -- 13,453
Alfred N. Vieira........ -- -- -- 5,250 -- 6,891
</TABLE>
- --------
(1) Based on the closing price of $13.3125 per share of common stock on March
31, 1999, as reported by the Nasdaq National Market.
Executive Employment Agreements
Mr. Johnson, Mr. Schilling, Mr. Mueller and Mr. Vieira have each entered into
an executive employment agreement with Global and Golder, Thoma, Cressey,
Rauner Fund IV, L.P. Under these agreements, each executive receives an annual
base salary. These annual base salaries are currently set at $300,000 for
Mr. Johnson, $180,000 for Mr. Schilling, $180,000 for Mr. Mueller and $130,000
for Mr. Vieira. The executives' annual base salaries are subject to periodic
increases at the discretion of the board. Each executive officer is also
eligible for an annual bonus of up to 50% of his annual base salary upon
attaining certain defined objectives. Each of the executives is entitled to all
other benefits approved by the board and made available to Global's senior
management. Mr. Johnson is also entitled to receive reimbursement of up to
$12,000 annually for certain perquisites. Mr. Johnson's employment under his
executive employment agreement renews each year automatically for a one-year
period unless otherwise terminated by either party upon 30 days notice. The
term of employment under Mr. Schilling, Mr. Mueller, and Mr. Vieira's executive
agreements continues at the pleasure of the board or until resignation,
removal, death or disability. In the event Global terminates Mr. Johnson's
employment without cause, or Mr. Johnson terminates his employment for good
reason (including as a result of a change in control of Global), Mr. Johnson is
entitled to receive severance pay equal to his current base salary plus all
fringe benefits to which he otherwise would be entitled for approximately one
year. Each of Mr. Johnson, Mr. Schilling, Mr. Mueller, and Mr. Vieira is
entitled to a pro rata share of his annual bonus if Global terminates his
employment without cause or if he voluntarily terminates his employment. The
executive employment agreements contain confidentiality covenants and a
covenant not to compete with Global for a period of one year following
termination of employment.
Global expects to enter into new executive employment agreements with each of
Mr. Johnson, Mr. Schilling, Mr. Mueller and Mr. Vieira. These agreements are
expected to provide for a three-year term, severance payments to Mr. Johnson,
Mr. Schilling and Mr. Mueller equal to approximately two years' salary and to
Mr. Vieira equal to approximately one year's salary and a covenant not to
compete for a two year period following termination of employment. In addition,
Mr. Johnson's executive agreement is expected to provide for annual grants to
purchase 100,000 shares of Global's common stock at a price equal to the
stock's fair market value on the date of grant. These options are expected to
vest in five equal annual installments beginning one year after the date of
grant. Global also expects to enter into an executive agreement with Mr. Todd
Johnson.
51
<PAGE>
Under their executive employment agreements, Mr. Johnson, Mr. Schilling, Mr.
Mueller and Mr. Vieira each received the right to purchase shares of Global's
common stock at a price of $0.07 per share. Accordingly, at the time of
entering into their executive employment agreements, Mr. Johnson purchased
647,059 shares of common stock; Mr. Schilling purchased 215,685 shares; Mr.
Mueller purchased 172,548 shares; and Mr. Vieira purchased 172,548 shares of
common stock. Under his executive employment agreement, Mr. Johnson also
received the right to purchase, for $0.07 per share, certain shares of common
stock that were reserved for issuance to senior management in June 1994 and
that remained unissued at the time of Global's initial public offering. In
March 1998, Mr. Johnson exercised this right in full and purchased 9,026 shares
of Global's common stock. Each executive employment agreement gives Global the
right to repurchase some of the Global common stock purchased by the executive
under the agreement under certain circumstances relating to the
termination of his employment. The repurchase price Global would pay equals the
executive's purchase price . Global's right of repurchase under the executive
agreements generally terminates with respect to 20% of the shares subject to
vesting for each year of service since the date of the agreement.
Compensation Committee Interlocks and Insider Participation
None of the four members of the compensation committee is an employee of
Global. Each member of the compensation committee other than Mr. Patrone is
affiliated with an entity that has purchased Global's securities. See "Certain
Transactions" and "Principal Stockholders."
Savings Plan
Global maintains a 401(k) savings plan that is intended to be a qualified
retirement plan under the Internal Revenue Code. Generally, all of Global's
employees who are at least 21 years old are eligible to participate in the
savings plan after they complete twelve consecutive months of employment with
Global. Participants may make salary deferral contributions to the savings
plan, subject to limitations imposed by the Internal Revenue Code.
Participants' contributions may be invested in any of several investment
alternatives including a fund that invests solely in shares of Global's common
stock. The savings plan allows Global to make discretionary matching
contributions to each participant's account. Employees become vested in
Global's contributions according to a graduated vesting schedule based upon the
length of their service with Global.
1998 Stock Option and Incentive Plan
Global has adopted the 1998 Stock Option and Incentive Plan, which authorizes
the issuance of up to 1,820,000 shares of Global's common stock pursuant to
stock options, restricted stock or restricted stock units granted to directors,
officers and employees of and consultants and advisors to Global. No more than
600,000 shares may be issued under the stock plan as restricted stock or as
restricted stock units, and the maximum number of options that may be granted,
and the maximum number of shares of restricted stock or shares represented by
restricted stock units that may be awarded, under the stock plan to any
eligible employee or consultant during any calendar year is 400,000.
The stock option and incentive plan is administered by the compensation
committee of the board of directors. Subject to limitations set forth in the
plan, the compensation committee determines to whom options, restricted stock
and restricted stock units are granted, the term, exercise price (which may not
be less than the fair market value of underlying shares on the date of grant),
and vesting schedules of options, the rate at which options may be exercised,
and the conditions to vesting of awards of restricted stock and restricted
stock units. The maximum term of options granted under the stock plan is ten
years and the exercise price may be payable in cash or, if permitted by the
applicable option agreement, in common stock or a combination of cash and
common stock or by cashless exercise using a broker acceptable to Global.
As of the date of this prospectus 1,283,900 shares of Global's common stock
are subject to options outstanding under the stock option and incentive plan,
at exercise prices ranging from $12.00 to $15.25 per share. All of these
options are subject to vesting requirements based on continued employment, at a
rate of
52
<PAGE>
20% per year. In addition to options outstanding under the plan, 10,000 shares
of Global's common stock are issuable upon the exercise of an option granted to
Mr. Patrone outside the plan. This option is exercisable at a price of $12.00
per share and vests at a rate of 20% per year.
Limitation of Liability and Indemnification Matters
As permitted by the Delaware General Corporation Law, Global's certificate of
incorporation provides that Global's directors shall not be personally liable
to Global or its stockholders for monetary damages for breach of their
fiduciary duty as a director, unless they are liable (1) for breach of their
duty of loyalty, (2) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (3) for dividends,
distributions or stock repurchases or redemptions prohibited by Delaware law or
(4) for any transaction from which the director derives an improper personal
benefit. As a result, Global and its stockholders may be unable to obtain
monetary damages from a director for breach of his or her duty of care.
Additionally, Global's certificate of incorporation and bylaws provide for
Global to indemnify its directors and officers to the fullest extent permitted
by law. Global has entered into indemnification agreements with its directors
and executive officers which may, in certain cases, be broader than the
specific indemnification provisions of applicable law. The indemnification
agreements may require Global, among other things, to indemnify its directors
or executive officers against liabilities that arise because of their status or
service as directors or executive officers, to advance the expenses they
incurred as a result of threatened claims or proceedings brought against them,
and to cover them under Global's directors' and officers' liability insurance
policies to the maximum extent that insurance coverage is maintained.
There is no pending litigation or proceeding involving any director, officer
or employee of Global as to which indemnification is being sought, nor is
Global aware of any pending or threatened litigation that may result in claims
for indemnification by any such person.
53
<PAGE>
CERTAIN TRANSACTIONS
Acquisition of Capitol Office Solutions, Inc.
On December 21, 1998 and effective as of December 1, 1998, Global purchased
all of the issued and outstanding stock of Capitol Office Solutions, Inc., a
dealer in the office imaging solutions industry in the metropolitan Washington,
D.C. area. As described below, prior to its acquisition by Global, Capitol was
two-thirds owned by Global's principal stockholders and members of Global's
management. Global paid the sellers a total purchase price of $46.4 million in
cash, plus 612,455 shares of Global's common stock. The terms of the
acquisition and purchase price were reviewed by outside financial and legal
advisors retained by Mr. Patrone, Global's sole disinterested director. The
board of directors approved the transaction after receiving a fairness opinion
on the purchase price issued by the outside financial advisor.
The table below sets forth the cash and common stock that certain Global
directors, officers and principal stockholders received in connection with the
acquisition.
<TABLE>
<CAPTION>
Cash
Name Affiliation with Global Payment Shares
---- ----------------------- ----------- -------
<C> <S> <C> <C>
Golder, Thoma, Cressey, Principal stockholder and $13,335,478 537,611
Rauner Fund IV majority holder prior to the
initial public offering
Jackson National Life Principal stockholder 2,448,889 --
Insurance Company
Thomas Johnson President, Chief Executive 560,509 22,596
Officer and Director
Raymond Schilling Senior Vice President, Chief 323,207 13,029
Financial Officer, Secretary and
Treasurer
Michael Mueller Senior Vice President, Chief 261,115 10,526
Operating Officer
Alfred Vieira Vice President--Service 256,461 10,338
Todd S. Johnson Vice President--Acquisitions 4,552 --
Neal Berney Director 104,732 4,222
</TABLE>
Carl Thoma, William Kessinger and Bruce Gorchow did not participate directly
in the Capitol acquisition, but they are associated with the two principal
stockholders. Carl Thoma and William Kessinger are Principals of Golder, Thoma,
Cressey, Rauner, Inc., the general partner of Golder, Thoma, Cressey, Rauner
Fund IV's general partner. Bruce Gorchow is Executive Vice President of PPM
America, Inc., the exclusive investment advisor to Jackson National Life
Insurance Company.
Golder, Thoma, Cressey, Rauner Fund IV, certain other Global stockholders and
other members of Global's management initially acquired two thirds of the
outstanding stock of Capitol in June 1997. Golder, Thoma, Cressey, Rauner, Inc.
paid $4,758,393 for its share of Capitol stock; Jackson National Life Insurance
Company paid $495,486 for its Capital stock and Mr. Berney, a director of
Global, paid $37,370 for his share of Capital stock. In addition, Mr. Thomas
Johnson, Global's President and Chief Executive Officer and a director of
Global, and Raymond Schilling, Michael Mueller, and Alfred Vieira, executive
officers of Global borrowed from Global on competitive terms $200,000,
$115,324, $93,169 and $91,507, respectively, to finance their acquisition of
Capitol stock. The loans were evidenced by promissory notes, which bore
interest at an annual rate of 8.0% payable at maturity and were designated to
mature on June 30, 2000. All of the Global executives subsequently repaid their
promissory notes with proceeds from Global's acquisition of Capitol. Jackson
National Life Insurance Company also extended a $30.0 million line of credit in
connection with the purchase of Capitol stock by Golder, Thoma, Cressey, Rauner
Fund IV, which Capitol redeemed as part of Global's subsequent acquisition of
Capitol stock.
Global and Capitol entered into a consulting agreement dated as of June 30,
1997 pursuant to which Global provided management consulting and advisory
services to Capitol. Under the Capitol consulting agreement, Global received an
annual management fee of $150,000, plus reimbursement of reasonable out-of-
pocket expenses and interest on accrued but unpaid fees. From July 1, 1997
through March 31, 1998, $112,500 in management fees had accrued pursuant to the
Capitol consulting agreement. Global also received a one-time
54
<PAGE>
fee of $270,000 for Global's assistance in arranging the Capitol transaction
and the Jackson National Life Insurance Company loan to Capitol. By agreement
of Global and Capitol, this agreement terminated upon Global's acquisition of
Capitol.
Founding Agreements
Global was founded in June 1994 by Thomas Johnson and Golder, Thoma, Cressey,
Rauner Fund IV. In connection with the formation of Global, Thomas Johnson,
Raymond Schilling, the Golder, Thoma, Cressey, Rauner Fund IV and Global
entered into various agreements relating to the management and ownership of
Global. These agreements include an equity purchase agreement, a registration
agreement, a stockholders agreement, and a consulting agreement. A number of
these agreements were amended subsequent to June 1994 to, among other things,
add additional stockholders as parties and to reflect the transactions
described below. Substantially all of the provisions of these agreements, with
the exception of the registration agreement, terminated upon completion of
Global's initial public offering. In connection with Global's formation, Global
and Golder, Thoma, Cressey, Rauner Fund IV also entered into executive
employment agreements with Thomas Johnson and Raymond Schilling and,
subsequently, with Michael Mueller and Alfred Vieira. See "Management--
Executive Employment Agreements."
Under the equity purchase agreement among Global, Golder, Thoma, Cressey,
Rauner Fund IV, Mr. Johnson, and certain additional purchasers dated as of June
9, 1994, as subsequently amended, Global sold 6,312,766 shares of common stock
to Golder, Thoma, Cressey, Rauner Fund IV and 157,819 shares of common stock to
Mr. Johnson at a per share purchase price of $0.08. In addition, Golder, Thoma,
Cressey, Rauner Fund IV and Mr. Johnson agreed to purchase, upon Global's
meeting certain criteria, and subsequently purchased, 216,666.674 and 5,416.697
shares of Global's Class A common stock, respectively, at a per share purchase
price of $90.00. Mr. Johnson paid for his purchases with the proceeds of a loan
from Golder, Thoma, Cressey, Rauner, Inc.
Global and its pre-initial public offering stockholders entered into a
stockholders agreement, dated as of June 9, 1994, which, as amended, (1)
provided for the designation of three directors of Global by Golder, Thoma,
Cressey, Rauner Fund IV, one director by Jackson National Life Insurance
Company and for the remainder of the board to consist of Global's chief
executive officer, (2) imposed certain restrictions on the transfer of Global's
stock, (3) required Global's stockholders to take all necessary or desirable
actions in connection with an initial public offering of Global approved by
Golder, Thoma, Cressey, Rauner Fund IV, including approving any amendment to
Global's certificate of incorporation to provide for conversion of shares of
Class A common stock into common stock in the event that not all shares of
Class A common stock would be redeemed for cash, or any other recapitalization
advised by the underwriters and consistent with the terms of Global's
certificate of incorporation, (4) required Global to offer to sell shares to
the stockholders under certain circumstances upon authorization of an issuance
or sale of additional shares and (5) granted certain stockholders certain
participation rights in connection with a sale of shares by other stockholders.
The stockholders agreement terminated prior to the closing of Global's initial
public offering.
Global and its stockholders entered into a registration rights agreement,
dated as of June 9, 1994, pursuant to which, as amended, the stockholders have
the right in certain circumstances, subject to certain conditions, to require
Global to register their shares of Global's common stock for resale under the
Securities Act of 1933. Under this agreement, except in limited circumstances,
Global is obligated to pay all expenses in connection with such registration.
Global and Golder, Thoma, Cressey, Rauner, Inc. entered into a consulting
agreement, dated as of June 9, 1994, pursuant to which Golder, Thoma, Cressey,
Rauner, Inc. provided financial and management consulting services to Global.
Under the Consulting Agreement, Golder, Thoma, Cressey, Rauner, Inc. received
an annual management fee of $200,000, plus reimbursement of reasonable out-of-
pocket expenses and interest on accrued but unpaid fees, and a placement fee of
1% of the amount of debt or equity capital raised by Global, excluding the net
proceeds of the initial public offering, for Golder, Thoma, Cressey, Rauner,
Inc.'s assistance in obtaining such capital. In fiscal years 1995, 1996, 1997
and 1998, Global paid Golder, Thoma, Cressey,
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Rauner, Inc. management fees of $130,000, $200,000, $200,000 and $200,000, and
placement fees of $75,000, $390,000, $0 and $0, respectively. The Consulting
Agreement terminated upon the closing of Global's initial public offering.
Transactions with Jackson National Life Insurance Company
In August 1996, Global and its subsidiaries entered into a secured credit
agreement with Jackson National Life Insurance Company and its affiliate PPM
America, Inc. pursuant to which Global had a $6.0 million revolving credit
facility and a term credit facility under which it could borrow up to $114.0
million. The term and revolving loans bore interest at 3.25% and 3.00% over
LIBOR, respectively. Principal under the term loan component of this credit
facility was repayable in installments over the life of the credit facility,
with the final payment due and payable on August 14, 2004. In connection with
Global's obtaining the credit facility in August 1996, Jackson National Life
Insurance Company received a financing fee of $1.6 million. Golder, Thoma,
Cressey, Rauner, Inc. agreed to waive its 1.0% placement fee on the August 1996
debt capital raised by Global, because the majority of the work to obtain the
financing was performed by another party, which charged a 1.0% placement fee.
In November 1997 this credit agreement was amended and restated to increase the
amount of funds available under the credit facility to $120.0 million. In
connection with the amendment, Global paid Jackson National Life Insurance
Company a financing fee of $800,000. Global believes that the terms of the
November 1997 Credit Agreement amendment and placement fee it paid were on
terms no less favorable to it than it could have obtained from unaffiliated
third parties.
In July 1998, Global replaced the credit facility from Jackson National Life
Insurance Company with its current senior credit facility from First Union
National Bank. Global paid off the outstanding balance of $65.8 million under
the Jackson National Life Insurance credit facility with a combination of
proceeds from its initial public offering and amounts borrowed under its senior
credit facility.
In connection with the Jackson National Life credit facility, Global and
Jackson National Life Insurance Company entered into an investor purchase
agreement, dated as of August 14, 1996, pursuant to which Global sold to
Jackson National Life Insurance Company 27,083.33 shares of Class A common
stock at a per share price of $90.00, and 633,933 shares of Class C common
stock at a per share price of $0.10. As a result of its purchase, Jackson
National Life Insurance Company became a holder of more than 5% of Global's
outstanding stock. Jackson National Life Insurance Company, Global, Golder,
Thoma, Cressey, Rauner Fund IV and certain other stockholders of Global also
entered into amendments to Global's equity purchase agreement, stockholders
agreement and registration rights agreement which, as amended (1) added Jackson
National Life Insurance Company as a party thereto, (2) granted Global certain
rights to redeem shares of common stock held by Mr. Johnson and Golder, Thoma,
Cressey, Rauner Fund IV in the event that Mr. Johnson and Golder, Thoma,
Cressey, Rauner Fund IV failed to purchase certain shares of Class A common
stock pursuant to the equity purchase agreement, (3) granted Jackson National
Life Insurance Company certain rights to require Global to register under the
Securities Act shares of common stock held by Jackson National Life Insurance
Company, (4) granted Jackson National Life Insurance Company the right to
designate one director of Global and one observer with rights to attend all
meetings of Global's board of directors, (5) required Global to amend its
certificate of incorporation to provide for conversion of Class A common stock
into common stock at a discount to market rates under certain circumstances and
(6) granted Jackson National Life Insurance Company preemptive rights to
purchase additional shares of Class A common stock and Class C common stock
under certain circumstances. Of these rights, only Jackson National Life
Insurance Company's rights to require the registration of shares held by it
under the Securities Act survived Global's initial public offering. Bruce
Gorchow, an executive vice president of PPM America and a director of Global,
was elected to Global's board of directors pursuant to Jackson National Life
Insurance Company's board designation rights under the stockholders agreement.
In November 1997, pursuant to Jackson National Life Insurance Company's
rights under the stockholders agreement, Global sold Jackson National Life
Insurance Company an additional 11,136.268 shares of Class A common stock at a
per share price of $90.00, and an additional 260,663 shares of Class C common
stock at a per share price of $0.10. Shares of Class C common stock, which were
non-voting, converted into shares of
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common stock upon the closing of Global's initial public offering at a rate of
one share of common stock for each share of Class C common stock.
Additional Loans to Management
In connection with Mr. Schilling's relocation to Tampa, Global loaned Mr.
Schilling $35,000 pursuant to a promissory note, dated September 28, 1995,
which replaced a promissory note dated October 18, 1994 for $30,000, which
bears interest at 6.28% per annum. Interest and principal on Mr. Schilling's
note would become due upon Mr. Schilling's voluntary resignation from
employment with Global prior to three years from the date of the note, or will
be forgiven on such date if he has not so resigned. Global also loaned to Mr.
Mueller $11,793 in connection with his relocation to Tampa. Mr. Mueller's loan
is evidenced by a promissory note dated April 17, 1995 which contains terms
similar to those of Mr. Schilling's note.
Acquisition of Berney, Inc.
In connection with Global's acquisition of Berney, Inc. in February 1995,
Global entered into a lease with an entity partly owned by Mr. Berney pursuant
to which Global rents space from the entity at rates Global believes are
commercially competitive. This lease expires on February 29, 2000 and may be
extended at the option of Global for an additional five year term. In fiscal
years 1996, 1997 and 1998, Berney, Inc. paid $134,000, $141,000 and $169,000,
respectively, in rent pursuant to this lease. In addition, Global has reached a
tentative agreement to lease space in an additional building from the entity
that Mr. Berney partly owns.
Other Transactions
In April 1996, Global facilitated the sale of 2,210 shares of Class A common
stock and 64,390 shares of common stock by a departing employee, at per share
purchase prices of $102.13 and $0.08, respectively, to certain investors, all
of whom were employees of Global. In connection with their participation in the
transaction, Neal Berney, Raymond Schilling, Michael Mueller and Todd Johnson
paid approximately $99,000, $5,600, $10,000 and $5,000, respectively, and
received 946.381, 54.167, 95.749 and 47.875 shares of Class A common stock and
27,573, 1,578, 2,789 and 1,394 shares of common stock, respectively.
In November 1997, Global facilitated the sale of 1,083.333 shares of Class A
common stock and 31,563 shares of common stock by a departing employee, at a
per share purchase price of $102.17 and $0.08, respectively, to certain
investors, all of whom were employees of or service providers to Global. As
part of Global's termination agreement with the departing employee, Global paid
the employee an aggregate of approximately $1,400 to compensate for the
difference between the sale price for the common stock and the then-determined
fair market value of such common stock. In connection with the transaction,
Raymond Schilling paid approximately $5,700 and received 54.167 shares of Class
A common stock and 1,578 shares of common stock, and Michael Mueller, Alfred
Vieira, Todd Johnson each paid approximately $11,300 and received 108.333
shares of Class A common stock and 3,156 shares of common stock.
Todd S. Johnson, Thomas S. Johnson's son, is employed by Global. Todd S.
Johnson received approximately $69,000 in salary and bonus for the fiscal year
ended March 31, 1998 and approximately $75,000 in salary and bonus for the
fiscal year ended March 31, 1999.
In March 1998, Global sold 67,594 shares of common stock to Golder, Thoma,
Cressey, Rauner Fund IV, and 9,656 shares of common stock to Jackson National
Life Insurance Company, for a per share purchase price of $0.07 in accordance
with the terms of Thomas Johnson's executive agreement and the stockholders
agreement.
Global has entered into indemnification agreements with its directors and
executive officers for the indemnification of and advancement of expenses to
such persons to the full extent permitted by law. See "Management--Limitation
of Liability and Indemnification Matters."
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PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of Global's common stock as of March 31, 1999 by (1) each of Global's
directors and executive officers, (2) all directors and executive officers of
Global as a group and (3) each person (or group of affiliated persons) known by
Global to beneficially own more than 5% of Global's outstanding common stock.
<TABLE>
<CAPTION>
Shares
Beneficially
Owned(1)
------------------
Name and Address of Beneficial Owner(1) Number Percent
- --------------------------------------- ---------- -------
<S> <C> <C>
Golder, Thoma, Cressey, Rauner Fund IV, L.P.(2)............ 7,404,525 39.5%
Jackson National Life Insurance Company(3)................. 1,006,898 5.4%
Thomas S. Johnson(4)....................................... 803,664 4.3%
Raymond Schilling(5)....................................... 233,158 1.2%
Michael Mueller(6)......................................... 196,164 1.0%
Alfred N. Vieira(7)........................................ 191,126 1.0%
Carl D. Thoma(2)........................................... 7,404,525 39.5%
Bruce D. Gorchow(3)........................................ 1,006,898 5.4%
William C. Kessinger(2).................................... 7,404,525 39.5%
Neal Berney(8)............................................. 153,404 *
Todd S. Johnson(9)......................................... 39,371 *
Edward N. Patrone(10)...................................... -- *
All directors and executive officers as a group (10
persons)(11).............................................. 10,028,310 53.5%
</TABLE>
- --------
* Less than 1%.
(1) Unless otherwise indicated, each person has sole voting and investment
power with respect to shares shown as beneficially owned by such person.
For purposes of calculating the number and percentage of shares
beneficially owned, the number of shares of common stock deemed outstanding
consists of 18,727,436 shares outstanding on March 31, 1999 plus the number
of shares of common stock underlying stock options held by the named person
that are exercisable within 60 days. Except as otherwise specified below,
the address of each of the beneficial owners identified is 3820 Northdale
Boulevard, Suite 200A, Tampa, Florida 33624.
(2) Golder, Thoma, Cressey, Rauner, Inc. is the general partner of GTCR IV,
L.P., which in turn is the general partner of Golder, Thoma, Cressey,
Rauner Fund IV, L.P. As a result, all three of these entities may be deemed
to share voting and investment power over, and therefore to be the
beneficial owners of, the shares held by Golder, Thoma, Cressey, Rauner
Fund IV, L.P. Their address is 233 South Wacker Drive, Suite 6100, Chicago,
Illinois 60606. Carl Thoma and William Kessinger, both of whom are
directors of Global, are each Principals of Golder, Thoma, Cressey, Rauner,
Inc. and may therefore also be deemed to beneficially own these shares by
virtue of their shared voting and investment power over them. Mr. Thoma's
address is c/o Thoma Cressey Equity Partners, 233 South Wacker Drive, Suite
4460, Chicago, Illinois 60606. Mr. Kessinger's address is c/o GTCR Golder,
Rauner, LLC, 233 South Wacker Drive, Suite 6100, Chicago, Illinois 60606.
(3) As the exclusive investment advisor to Jackson National Life Insurance
Company, PPM America, Inc. shares voting and investment power over, and
therefore may be deemed to be the beneficial owner of, the shares held by
Jackson National Life Insurance Company. Bruce Gorchow, a director of
Global, is Executive Vice President of PPM America, Inc. and a member of
its underwriting committee. Accordingly, Mr. Gorchow may be deemed to share
voting and investment power over, and therefore beneficial ownership of,
Jackson National Life Insurance Company's shares. The address for Jackson
National Life Insurance Company, PPM America, Inc. and Mr. Gorchow is c/o
PPM America, Inc., 225 West Wacker Drive, Suite 1200, Chicago, Illinois
60606.
(4) Includes 27,600 shares of common stock held of record by members of Mr.
Johnson's immediate family over which Mr. Johnson has shared dispositive
and sole voting power and 50 shares of common stock subject to options
exercisable within 60 days.
(5) Includes 2,050 shares of common stock subject to options exercisable within
60 days.
(6) Includes 2,050 shares of common stock subject to options exercisable within
60 days.
(7) Includes 2,765 shares held by Mr. Vieira's wife over which Mr. Vieira may
be deemed to share voting and investment power. Also includes 1,050 shares
of common stock subject to options exercisable within 60 days.
(8) Includes 28,306 shares held by a trustee for the benefit of members of Mr.
Berney's immediate family over which Mr. Berney, as co-trustee with his
wife, shares voting and investing power and 8,500 shares held by the estate
of Mr. Berney's father, over which Mr. Berney, as executor, has sole voting
and investing power. Also includes 4,050 shares of common stock subject to
options exercisable within 60 days.
(9) Includes 5,200 shares of common stock held of record by members of Mr. Todd
Johnson's immediate family and 1,250 shares of common stock subject to
options exercisable within 60 days.
(10) Mr. Patrone's address is 101 South Nineteenth Avenue, Longport, New Jersey
08403.
(11) See notes (2) through (9).
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DESCRIPTION OF SENIOR CREDIT FACILITIES
Global is currently negotiating with First Union National Bank regarding an
amendment to increase the size of Global's senior credit facility. Under the
terms of a commitment letter Global expects to enter into with First Union
National Bank, First Union National Bank is expected to commit to arrange and
underwrite $250.0 million of senior secured credit facilities (the "Senior
Credit Facilities"). The Senior Credit Facilities are expected to be comprised
of a five year revolving credit facility (the "Revolver") and a seven year term
loan (the "Term Loan"). If the commitment letter is executed, the consummation
of the $250.0 million Senior Credit Facilities will be subject to a number of
customary conditions. In the event the Senior Credit Facilities are not
consummated, Global will continue to utilize its existing $175.0 million senior
credit facility with First Union National Bank and a syndicate of lenders.
Security
The Senior Credit Facilities, like the current senior credit facility, will
be secured by a first priority lien on substantially all of the properties and
assets of the borrowers, now owned or acquired thereafter, including, without
limitation, a pledge of the stock of each of Global's subsidiaries.
Interest and Fees
The annual interest rates applicable to the Senior Credit Facilities are
expected to be fluctuating rates of interest measured by reference to either
(1) LIBOR or (2) the greater of First Union National Bank's prime rate or the
overnight federal funds rate plus 0.50% (the "Base Rate"), plus, in either
case, an additional amount which will fluctuate based upon the leverage ratio
of the borrowers. This additional amount in the case of the Revolver is
expected to range from 2.00% to 3.00% for LIBOR-based borrowings and from 0.75%
to 1.75% for Base Rate-based borrowings, and in the case of the Term Loan is
expected to range from 3.00% to 3.50% for LIBOR-based borrowings and from 1.75%
to 2.25% for Base Rate-based borrowings. The Senior Credit Facilities are
expected to provide for an unused commitment fee payable to the lenders and
certain other fees payable by the borrowers.
Events of Default and Covenants
The Senior Credit Facilities, like the current senior credit facility, are
expected to continue to contain affirmative and negative covenants customary
for agreements of this type, including, among others, covenants restricting the
borrowers with respect to the incurrence of debt (including guarantees); the
creation of liens; substantially changing the nature of Global's or its
subsidiaries' business; the consummation of certain transactions such as
disposition of substantial assets, mergers, acquisitions, reorganizations and
recapitalizations; the making of certain investments and loans, non-ordinary
assets sales and capital expenditures; the paying of dividends and other
distributions; the upstream transfer or distribution of assets from
subsidiaries of Global to Global or other subsidiaries of Global, other than in
the context of the transferring subsidiary's liquidation; transactions with
affiliates; and the borrowers' ability to repay certain debt. The Senior Credit
Facilities, like the current senior credit facility, will also require the
borrowers to comply with certain financial tests and maintain certain financial
ratios. Under these financial ratios the borrowers shall (1) not exceed a
maximum leverage ratio, (2) not exceed a maximum debt to capitalization ratio,
(3) maintain a minimum interest coverage ratio, (4) maintain a minimum EBITDA
and (5) not exceed annual capital expenditure limitations.
The Senior Credit Facilities, like the current senior credit facility, will
contain customary events of default. An event of default under the Senior
Credit Facilities will also allow the lenders to accelerate, or, in certain
cases, will automatically cause the acceleration of, the maturity of the debt
under the Senior Credit Facilities and will also restrict the ability of the
borrowers to meet their obligations to the holders of the notes.
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DESCRIPTION OF EXCHANGE NOTES
We issued the outstanding notes and will issue the exchange notes under the
Indenture, dated March 8, 1999, among Global, its subsidiaries (the "Note
Guarantors") and United States Trust Company of New York, as Trustee (the
"Trustee"). The terms of the exchange notes include those stated in the
Indenture and those made a part of the Indenture by reference to the Trust
Indenture Act of 1939 (the "TIA").
We summarize below certain provisions of the Indenture, but do not restate
the Indenture in its entirety. We urge you to read the Indenture because it,
and not this description, defines your rights as a Holder of the Notes. You can
obtain a copy of the Indenture from the Company.
Key terms used in this section are defined under "--Certain Definitions."
When we refer to the "Company" in this section, we mean Global Imaging Systems,
Inc. and not its subsidiaries. When we refer to "Notes" in this section, we
mean the exchange notes and also the outstanding notes and Additional Notes.
General
The exchange notes will be issued solely in exchange for an equal principal
amount of outstanding notes pursuant to the exchange offer. The form and terms
of the exchange notes will be identical in all material respects to the form
and terms of the outstanding notes except that (i) the exchange notes will have
been registered under the Securities Act and (ii) the registration rights and
contingent liquidated damages provisions applicable to the outstanding notes
are not applicable to the exchange notes. The Notes are general unsecured
senior subordinated obligations of the Company. This means that the Notes are
subordinate to Senior Indebtedness of the Company and rank equal or prior to
other Indebtedness of the Company. In addition, the Notes are effectively
subordinated to secured Indebtedness of the Company and its Subsidiaries, in
each case, to the extent of the assets securing such Indebtedness.
The Notes are unconditionally guaranteed on a general unsecured senior
subordinated basis by all of the Company's existing Subsidiaries. This means
that the Note Guarantee of each Note Guarantor is subordinated to Senior
Indebtedness of that Note Guarantor and ranks equal or prior to other
Indebtedness of that Note Guarantor. In addition, the Note Guarantee of each
Note Guarantor is effectively subordinated to secured Indebtedness of such Note
Guarantor to the extent of the assets securing such Indebtedness. All future
direct and indirect Domestic Restricted Subsidiaries of the Company, other than
special purpose financing vehicles, will also guarantee the Notes on the same
basis.
Additional Notes
Subject to the limitations set forth under "Certain Covenants--Limitation on
Incurrence of Additional Indebtedness," the Company may incur additional
Indebtedness. At the Company's option, this additional Indebtedness may consist
of additional Notes ("Additional Notes"), in one or more transactions, which
have the same terms as outstanding notes and exchange notes. Holders of
Additional Notes would have the right to vote together with holders of the
outstanding notes and the exchange notes as one class.
Principal, Maturity and Interest
The Company will issue exchange notes in denominations of $1,000 and integral
multiples of $1,000. The Notes will mature on February 15, 2007. The Notes will
not be entitled to the benefit of any mandatory sinking fund.
Interest on the Notes will accrue at the rate of 10 3/4% per annum and will
be payable semi-annually in arrears on each February 15 and August 15,
commencing on August 15, 1999. Payments will be made to the persons who are
registered Holders at the close of business on the February 1 and August 1,
respectively, immediately preceding the applicable interest payment date.
Interest on the Notes will accrue from the most
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recent date to which interest has been paid or, if no interest has been paid,
from and including the date of issuance. The redemption of Notes with unpaid
and accrued interest to the date of redemption will not affect the right of
Holders of record on a record date to receive interest due on an interest
payment date.
Initially, the Trustee will act as Paying Agent and Registrar for the Notes.
The Company may change the Paying Agent and Registrar without notice to
holders. If a holder has given wire transfer instructions to the Paying Agent,
the Paying Agent will make all principal, premium and interest payments on
those Notes in accordance with those instructions. All other payments on the
Notes will be made at the office or agency of the Paying Agent and Registrar in
New York City unless the Company elects to cause the Paying Agent to make
interest payments by check mailed to the registered holders at their registered
addresses.
Book-Entry; Delivery And Form
The exchange notes will be issued in the form of a global note (the "Global
Note"). The Global Note will be deposited with, or on behalf of, DTC and
registered in the name of DTC or its nominee. Except as set forth below, the
Global Note may be transferred in whole and not in part, only to DTC or another
nominee of DTC. Investors may hold their beneficial interests in the Global
Note directly through DTC if they have an account with DTC or indirectly
through organizations which have accounts with DTC.
Exchange notes that are issued as described below under "--Certificated
Exchange Notes" will be issued in definitive form. Upon the transfer of an
exchange note in definitive form, such exchange note will, unless the Global
Note has previously been exchanged for exchange notes in definitive form, be
exchanged for an interest in the Global Note representing the principal amount
of exchange notes being transferred.
Certain Book-Entry Procedures for the Global Note
The descriptions of the operations and procedures of DTC, Euroclear and Cedel
Bank set forth below are provided solely as a matter of convenience. These
operations and procedures are solely within the control of the respective
settlement systems and are subject to change by them from time to time. The
Company takes no responsibility for these operations or procedures, and
investors are urged to contact the relevant system or its participants directly
to discuss these matters.
DTC has advised the Company that it is:
. a limited purpose trust company organized under the laws of the State of
New York,
. a "banking organization" within the meaning of the New York Banking Law,
. a member of the Federal Reserve System,
. a "clearing corporation" within the meaning of the Uniform Commercial
Code, as amended and
. a "clearing agency" registered pursuant to Section 17A of the Exchange
Act.
DTC was created to hold securities for its participants (collectively, the
"Participants") and facilitates the clearance and settlement of securities
transactions between Participants through electronic book-entry changes to the
accounts of its Participants, thereby eliminating the need for physical
transfer and delivery of certificates. DTC's Participants include securities
brokers and dealers (including the initial purchasers of the outstanding
notes), banks and trust companies, clearing corporations and certain other
organizations. Indirect access to DTC's system is also available to other
entities such as banks, brokers, dealers and trust companies (collectively, the
"Indirect Participants") that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly. Investors who
are not Participants may beneficially own securities held by or on behalf of
DTC only through Participants or Indirect Participants.
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The Company expects that pursuant to procedures established by DTC
. upon deposit of the Global Note, DTC will credit the accounts of
Participants with an interest in the Global Note, and
. ownership of the exchange notes will be shown on, and the transfer of
ownership thereof will be effected only through, records maintained by
DTC (with respect to the interests of Participants) and the records of
Participants and the Indirect Participants (with respect to the
interests of persons other than Participants).
The laws of some jurisdictions may require that certain purchasers of
securities take physical delivery of such securities in definitive form.
Accordingly, the ability to transfer interests in the Notes represented by a
Global Note to such persons may be limited. In addition, because DTC can act
only on behalf of its Participants, who in turn act on behalf of persons who
hold interests through Participants, the ability of a person having an interest
in exchange notes represented by a Global Note to pledge or transfer such
interest to persons or entities that do not participate in DTC's system, or to
otherwise take actions in respect of such interest, may be affected by the lack
of a physical definitive security in respect of such interest.
So long as DTC or its nominee is the registered owner of the Global Note, DTC
or such nominee, as the case may be, will be considered the sole owner or
holder of the exchange notes represented by the Global Note for all purposes
under the Indenture. Except as provided below, owners of beneficial interests
in the Global Note will not be entitled to have exchange notes represented by
such Global Note registered in their names, will not receive or be entitled to
receive physical delivery of certificated notes, and will not be considered the
owners or holders thereof under the Indenture for any purpose, including with
respect to the giving of any direction, instruction or approval to the Trustee
thereunder. Accordingly, each holder owning a beneficial interest in the Global
Note must rely on the procedures of DTC and, if such holder is not a
Participant or an Indirect Participant, on the procedures of the Participant
through which such holder owns its interest, to exercise any rights of a holder
of exchange notes under the Indenture or such Global Note. The Company
understands that under existing industry practice, in the event that the
Company requests any action of holders of exchange notes, or a holder that is
an owner of a beneficial interest in the Global Note desires to take any action
that DTC, as the holder of such Global Note, is entitled to take, DTC would
authorize the Participants to take such action and the Participants would
authorize holders owning through such Participants to take such action or would
otherwise act upon the instruction of such holders. Neither the Company nor the
Trustee will have any responsibility or liability for any aspect of the records
relating to or payments made on account of exchange notes by DTC, or for
maintaining, supervising or reviewing any records of DTC relating to such
exchange notes.
The Company expects that DTC or its nominee, upon receipt of any payment of
principal of or interest on the Global Note, will credit participants' accounts
with payments in amounts proportionate to their respective beneficial interests
in the principal amount of the Global Note as shown on the records of DTC or
its nominee. The Company also expects that payments by participants to owners
of beneficial interests in the Global Note held through such participants will
be governed by standing instructions and customary practices and will be the
responsibility of such participants. The Company will not have any
responsibility or liability for any aspect of the records relating to, or
payments made on account of, beneficial ownership interests in the Global Note
for any Note or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests or for any other aspect of the
relationship between DTC and its participants or the relationship between such
participants and the owners of beneficial interests in the Global Note owning
through such participants.
Transfers between Participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same-day funds. Transfers between
participants in Euroclear or Cedel Bank will be effected in the ordinary way in
accordance with their respective rules and operating procedures.
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Cross-market transfers between the Participants in DTC, on the one hand, and
Euroclear or Cedel Bank participants, on the other hand, will be effected
through DTC in accordance with DTC's rules on behalf of Euroclear or Cedel
Bank, as the case may be, by its respective depositary; however, such cross-
market transactions will require delivery of instructions to Euroclear or Cedel
Bank, as the case may be, by the counterparty in such system in accordance with
the rules and procedures and within the established deadlines (Brussels time)
of such system. Euroclear or Cedel Bank, as the case may be, will, if the
transaction meets its settlement requirements, deliver instructions to its
respective depositary to take action to effect final settlement on its behalf
by delivering or receiving interests in the relevant Global Notes in DTC, and
making or receiving payment in accordance with normal procedures for same-day
funds settlement applicable to DTC. Euroclear participants and Cedel Bank
participants may not deliver instructions directly to the depositaries for
Euroclear or Cedel Bank.
Because of time zone differences, the securities account of a Euroclear or
Cedel Bank participant purchasing an interest in a Global Note from a
Participant in DTC will be credited, and any such crediting will be reported to
the relevant Euroclear or Cedel Bank participant, during the securities
settlement processing day (which must be a business day for Euroclear and Cedel
Bank) immediately following the settlement date of DTC. Cash received in
Euroclear or Cedel Bank as a result of sales of interest in a Global Security
by or through a Euroclear or Cedel Bank participant to a Participant in DTC
will be received with value on the settlement date of DTC but will be available
in the relevant Euroclear or Cedel Bank cash account only as of the business
day for Euroclear or Cedel Bank following DTC's settlement date.
DTC, Euroclear and Cedel Bank are under no obligation to perform or to
continue to perform the foregoing procedures to facilitate transfers of
interests in the Global Note among participants in DTC, Euroclear and Cedel,
and such procedures may be discontinued at any time. Neither the Company nor
the Trustee will have any responsibility for the performance by DTC, Euroclear
or Cedel Bank or their respective participants or indirect participants of
their respective obligations under the rules and procedures governing their
operations.
The information in this prospectus concerning DTC, Euroclear and Cedel and
their book-entry systems has been obtained from sources that the Company
believes to be reliable, but the Company takes no responsibility for the
accuracy thereof.
Certificated Exchange Notes
If
. the Company notifies the Trustee in writing that DTC is no longer
willing or able to act as a depositary or DTC ceases to be registered as
a clearing agency under the Exchange Act and a successor depositary is
not appointed within 90 days of such notice or cessation,
. the Company, at its option, notifies the Trustee in writing that it
elects to cause the issuance of exchange notes in definitive form under
the Indenture, or
. upon the occurrence of certain other events as provided in the
Indenture,
then, upon surrender by DTC of the Global Note, certificated exchange notes
in definitive form in denominations of U.S. $1,000 and integral multiples
thereof will be issued to each person that DTC identifies as the beneficial
owner of the Notes represented by the Global Note. Upon any such issuance,
the Trustee is required to register such certificated exchange notes in the
name of such person or persons (or the nominee of any thereof) and cause
the same to be delivered thereto. Subject to the foregoing, the Global Note
is not exchangeable, except for a Global Note of the same aggregate
denomination to be registered in the name of DTC or its nominee.
Neither the Company nor the Trustee shall be liable for any delay by DTC or
any Participant or Indirect Participant in identifying the beneficial owners of
the related exchange notes and the Company and the Trustee may conclusively
rely on, and shall be protected in relying on, instructions from DTC for all
purposes, including with respect to the registration and delivery, and the
respective principal amounts, of the exchange notes to be issued.
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Note Guarantees
Each Note Guarantor will unconditionally guarantee the performance of all
obligations of the Company under the Indenture and the Notes. Each Note
Guarantee will be subordinate to the payment in full of all Senior Indebtedness
of the relevant Note Guarantor. The Guaranteed Obligations of each Note
Guarantor will be limited to the maximum amount as will result in the
Guaranteed Obligations of that Note Guarantor not constituting a fraudulent
conveyance or fraudulent transfer under federal or state law. See "Risk
Factors--Issuance of the Exchange Notes and Any Subsidiary Guarantee May Be
Subject to Fraudulent Conveyance Laws."
A Note Guarantor will be released and relieved of its obligations under its
Note Guarantee in the event:
(1) there is a Legal Defeasance of the Notes as described under "Legal
Defeasance and Covenant Defeasance";
(2) the Note Guarantor ceases to exist as a result of its merger into
the Company or another Note Guarantor or as a result of its liquidation in
a manner not giving rise to a Default or Event of Default;
(3) there is a sale or other disposition of all or a portion of the
Capital Stock of such Note Guarantor to a Person other than the Company or
one of its Subsidiaries such that such Note Guarantor is no longer a
Subsidiary of the Company; or
(4) a Note Guarantor is designated as an Unrestricted Subsidiary in
accordance with "Certain Covenants--Designation of Unrestricted
Subsidiaries";
provided that, in each case, the transaction is carried out pursuant to and in
accordance with, as applicable, "Certain Covenants--Limitation on Asset Sales",
"--Merger, Consolidation and Sale of Assets" and "--Limitation on Restricted
Payments".
If any Person becomes a Domestic Restricted Subsidiary (including, without
limitation, upon a Revocation of the Designation of a Subsidiary as an
Unrestricted Subsidiary), other than a special purpose financing vehicle, the
Company will cause that Domestic Restricted Subsidiary concurrently to become a
Note Guarantor by executing a supplemental indenture and providing the Trustee
with an Officers' Certificate and Opinion of Counsel.
Subordination of the Notes and the Note Guarantees
The payment of principal, premium and interest, if any, on the Notes and the
Note Guarantees will be subordinated to the prior payment in full of all Senior
Indebtedness of the Company and/or the Note Guarantors, as the case may be.
The holders of Senior Indebtedness will be entitled to receive payment in
full in cash of all Obligations due in respect thereof before the Holders of
Notes will be entitled to receive any payment with respect to the Notes or any
Note Guarantee, as the case may be (except that Holders of Notes may receive
and retain Permitted Junior Securities and payments made from the trust
described under "--Legal Defeasance and Covenant Defeasance"), in the event of
any distribution to creditors of the Company or the relevant Note Guarantor, as
the case may be:
(1) in a liquidation or dissolution of the Company or such Note
Guarantor;
(2) in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to the Company or such Note Guarantor or its property;
(3) in an assignment for the benefit of its creditors; or
(4) in any marshalling of the assets and liabilities of the Company or
such Note Guarantor.
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The Company also may not make any payment in respect of the Notes, and any
Note Guarantor may not make any payment in respect of its Note Guarantee
(except in Permitted Junior Securities or from the trust described under "--
Legal Defeasance and Covenant Defeasance"), if:
(1) a payment default on Designated Senior Indebtedness of the Company
or such Note Guarantor, as the case may be, occurs and is continuing beyond
any applicable grace period; or
(2) any other default occurs and is continuing on Designated Senior
Indebtedness of the Company or such Note Guarantor, as the case may be,
that permits holders of the Designated Senior Indebtedness to accelerate
its maturity and the Trustee receives a notice of that default (a "Payment
Blockage Notice") from the Company or the holders of any Designated Senior
Indebtedness.
Payments on the Notes or any Note Guarantee, as the case may be, may and
shall be resumed:
(1) in the case of a payment default, upon the date on which it is cured
or waived; and
(2) in case of a nonpayment default, the earlier of the date on which it
is cured or waived or 179 days after the date on which the applicable
Payment Blockage Notice is received, unless the maturity of any Designated
Senior Indebtedness of the Company or such Note Guarantor, as the case may
be, has been accelerated.
No new Payment Blockage Notice may be delivered unless and until:
(1) 360 days have elapsed since the effectiveness of the immediately
prior Payment Blockage Notice; and
(2) all scheduled payments of principal, premium and interest on the
Notes that have come due have been paid in full in cash.
No nonpayment default that existed or was continuing on the date of delivery
of any Payment Blockage Notice to the Trustee shall be, or be made, the basis
for a subsequent Payment Blockage Notice unless that default shall have been
cured or waived for a period of not less than 180 days.
The Company must promptly notify holders of Senior Indebtedness if payment of
the Notes is accelerated because of an Event of Default.
As a result of the subordination provisions described above, in the event of
a bankruptcy, liquidation or reorganization of the Company or any Note
Guarantor, Holders of these Notes may recover less than creditors of the
Company or a Note Guarantor that are holders of Senior Indebtedness. See "Risk
Factors--The Notes and Guarantees Will Be Unsecured and Subordinated to Our
Senior Debt." Assuming we had completed the offering of the outstanding notes
and applied the net proceeds as intended, as of December 31, 1998, the Company
and the Note Guarantors would have had approximately $72.6 in Senior
Indebtedness outstanding on a pro forma basis, after giving effect to Global's
acquisition of two businesses in February 1999. The Indenture will permit us
and the Note Guarantors to incur Senior Indebtedness.
Redemption
Optional Redemption. The Notes will be redeemable, at the Company's option,
in whole at any time or in part from time to time, on and after February 15,
2003, upon not less than 30 nor more than 60 days' notice, at the following
redemption prices (expressed as percentages of the principal amount thereof),
plus, in each case, accrued interest to the date of redemption if redeemed
during the twelve-month period commencing on February 15 of any year set forth
below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2003............................................................ 105.375%
2004............................................................ 102.688%
2005 and thereafter............................................. 100.000%
</TABLE>
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Optional Redemption upon Public Equity Offerings. At any time, or from time
to time, on or prior to February 15, 2002, the Company may, at its option, use
the net cash proceeds of one or more Public Equity Offerings (as defined below)
to redeem in the aggregate up to 35% of the aggregate principal amount of the
Notes originally issued at a redemption price equal to 110.750% of the
principal amount thereof, plus accrued and unpaid interest thereon to the date
of redemption; provided, that:
(1) after giving effect to any such redemption at least 65% of the
aggregate principal amount of the Notes originally issued remains
outstanding; and
(2) the Company shall make such redemption not more than 60 days after
the consummation of such Public Equity Offering.
As used in the preceding paragraph, "Public Equity Offering" means an
underwritten public offering of Qualified Capital Stock of the Company pursuant
to a registration statement filed with the Commission in accordance with the
Securities Act.
In the event that less than all of the Notes are to be redeemed at any time,
selection of Notes for redemption will be made by the Trustee in compliance
with the requirements of the principal national securities exchange, if any, on
which Notes are listed or, if Notes are not then listed on a national
securities exchange, on a pro rata basis, by lot or by any method as the
Trustee shall deem fair and appropriate. No Notes of a principal amount of
$1,000 or less shall be redeemed in part and Notes of a principal amount in
excess of $1,000 may be redeemed in part in multiples of $1,000 only. If a
partial redemption is made with the proceeds of a Public Equity Offering,
selection of the Notes or portions thereof for redemption shall, subject to the
preceding proviso, be made by the Trustee only on a pro rata basis or on as
nearly a pro rata basis as is practicable (subject to the procedures of DTC),
unless the method is otherwise prohibited.
Notice of redemption shall be mailed by first-class mail at least 30 but not
more than 60 days before the redemption date to each holder of Notes to be
redeemed at its registered address. If Notes are to be redeemed in part only,
the notice of redemption shall state the portion of the principal amount
thereof to be redeemed. A new Note in a principal amount equal to the
unredeemed portion thereof will be issued in the name of the holder thereof
upon cancellation of the original Note. On and after the redemption date,
interest will cease to accrue on Notes or portions thereof called for
redemption as long as the Company had deposited with the Paying Agent funds in
satisfaction of the applicable redemption price pursuant to the Indenture.
Change of Control
Upon the occurrence of a Change of Control, each holder will have the right
to require that the Company purchase all or a portion (in integral multiples of
$1,000) of the holder's Notes pursuant to the Change of Control Offer described
below, at a purchase price equal to 101% of the principal amount thereof plus
accrued and unpaid interest thereon to the date of purchase.
Within 30 days following the date upon which the Change of Control occurred,
the Company must send, by first-class mail, a notice to each holder, with a
copy to the Trustee, which notice shall govern the terms of the Change of
Control Offer. The notice shall state, among other things, the purchase date,
which must be no earlier than 30 days nor later than 60 days from the date the
notice is mailed, other than as may be required by law (the "Change of Control
Payment Date").
On the Change of Control Payment Date, the Company will, to the extent
lawful:
(1) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer;
(2) deposit with the Paying Agent an amount equal to the Change of
Control Payment in respect of all Notes or portions thereof so tendered;
and
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(3) deliver or cause to be delivered to the Trustee the Notes so
accepted together with an Officers' Certificate stating the aggregate
principal amount of Notes or portions thereof being purchased by the
Company.
The Paying Agent will promptly mail to each Holder of Notes so tendered the
Change of Control Payment for the holder's Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each holder
a new Note equal in principal amount to any unpurchased portion of the Notes
surrendered, if any; provided that each new Note will be in principal amount of
$1,000 or an integral multiple thereof.
The Senior Credit Facility contains, and future Senior Indebtedness of the
Company may contain, prohibitions on the occurrence of certain events that
would constitute a Change of Control or require that Senior Indebtedness be
repurchased upon a Change of Control. Moreover, the exercise by the Holders of
their right to require the Company to repurchase the Notes would cause a
default under the Senior Credit Facility and could cause a default under other
Senior Indebtedness even if the Change of Control itself does not. Any failure
to purchase tendered Notes would constitute an Event of Default under the
Indenture which would, in turn, constitute an Event of Default under Senior
Indebtedness.
If a Change of Control Offer is made, there can be no assurance that the
Company will have available funds sufficient to pay the Change of Control
purchase price for all the Notes that might be delivered by holders seeking to
accept the Change of Control Offer. In the event the Company is required to
purchase outstanding Notes pursuant to a Change of Control Offer, the Company
expects that it would seek third-party financing to the extent it does not have
available funds to meet its purchase obligations and any other obligations in
respect of Senior Indebtedness. However, there can be no assurance that the
Company would be able to obtain necessary financing.
The Company will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set
forth in the Indenture applicable to a Change of Control Offer made by the
Company and purchases all Notes validly tendered and not withdrawn under such
Change of Control Offer.
Holders will not be entitled to require the Company to repurchase Notes in
the event of a takeover, recapitalization, leveraged buyout or similar
transaction which is not a Change of Control.
The Company will comply with the requirements of Rule 14e-1 and any other
applicable securities laws and regulations under the Exchange Act in connection
with the purchase of Notes pursuant to a Change of Control Offer. To the extent
that the provisions of any securities laws or regulations conflict with the
"Change of Control" provisions of the Indenture, the Company will comply with
the applicable securities laws and regulations and will not be deemed to have
breached its obligations under these provisions of the Indenture by virtue
thereof.
Certain Covenants
The Indenture will contain, among others, the following covenants:
Limitation on Incurrence of Additional Indebtedness.
(1) The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, Incur any Indebtedness
(including Acquired Indebtedness) other than Permitted Indebtedness;
provided, that the Company and any Note Guarantor may Incur Indebtedness
(including Acquired Indebtedness) if, at the time of and immediately after
giving pro forma effect to the Incurrence thereof and the application of
the proceeds therefrom, the Consolidated Fixed Charge Coverage Ratio of the
Company is greater than 2.0 to 1.0.
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(2) For purposes of determining compliance with, and the outstanding
principal amount of any particular Indebtedness Incurred pursuant to and in
compliance with, this covenant, the amount of Indebtedness issued at a
price that is less than the principal amount thereof will be equal to the
amount of the liability in respect thereof determined in accordance with
GAAP. Accrual of interest, the accretion or amortization of original issue
discount, the payment of regularly scheduled interest in the form of
additional Indebtedness of the same instrument or the payment of regularly
scheduled dividends on Disqualified Stock in the form of additional
Disqualified Stock with the same terms will not be deemed to be an
Incurrence of Indebtedness for purposes of this covenant.
Limitation on Restricted Payments.
The Company will not, and will not cause or permit any of its Restricted
Subsidiaries to, directly or indirectly, take any of the following actions
(each, a "Restricted Payment"):
(a) declare or pay any dividend or return of capital or make any
distribution on or in respect of shares of Capital Stock of the Company or
any Restricted Subsidiary to holders of such Capital Stock, other than:
. dividends or distributions payable in Qualified Capital Stock of
the Company or in warrants, rights or options to purchase or
acquire shares of Qualified Capital Stock of the Company,
. dividends or distributions payable to the Company and/or a
Restricted Subsidiary, or
. pro rata dividends or distributions to the Company and/or a
Restricted Subsidiary and minority holders of Capital Stock of a
Restricted Subsidiary;
(b) purchase, redeem or otherwise acquire or retire for value any
Capital Stock of the Company or any Restricted Subsidiary (except for
Permitted Investments) or any warrants, rights or options to purchase or
acquire shares of any class of such Capital Stock, other than purchases,
redemptions, acquisitions or retirements for value of any such Capital
Stock, warrants, rights or options owned by the Company and/or any
Restricted Subsidiary or on a pro rata basis from the Company and/or any
Restricted Subsidiaries, on the one hand, and minority holders of Capital
Stock of a Restricted Subsidiary, on the other hand;
(c) make any principal payment on, purchase, defease, redeem, prepay,
decrease or otherwise acquire or retire for value, prior to any scheduled
final maturity, scheduled repayment or scheduled sinking fund payment, as
the case may be, any Subordinated Indebtedness; or
(d) make any Investment (other than Permitted Investments);
if at the time of the Restricted Payment immediately after giving effect
thereto:
(1) a Default or an Event of Default shall have occurred and be
continuing;
(2) the Company is not able to Incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with "--
Limitation on Incurrence of Additional Indebtedness"; or
(3) the aggregate amount (the amount expended for these purposes, if
other than in cash, being the Fair Market Value of the relevant property)
of Restricted Payments, including the proposed Restricted Payment, made
subsequent to the Issue Date to the date of such proposed Restricted
Payment shall exceed the sum of:
(A) 50% of cumulative Consolidated Net Income or, if cumulative
Consolidated Net Income shall be a loss, minus 100% of the loss, accrued
during the period, treated as one accounting period, beginning on the first
day of the fiscal quarter that includes the Issue Date to the end of the
most recent fiscal quarter for which consolidated financial information of
the Company is available; plus
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(B) 100% of the aggregate net cash proceeds received by the Company or
any Restricted Subsidiary from any Person from any:
. contribution to the equity capital of the Company not representing
an interest in Disqualified Capital Stock or issuance and sale
(other than to a Restricted Subsidiary) of Qualified Capital Stock
of the company, in each case, subsequent to the Issue Date, and
. issuance and sale (other than to a Restricted Subsidiary) subsequent
to the Issue Date of any Indebtedness for borrowed money of the
Company or any Restricted Subsidiary that has been converted into or
exchanged for Qualified Capital Stock of the Company (excluding any
net cash proceeds applied in accordance with clause (3) of the
following paragraph); plus
(C) without duplication of any amounts included in clause (A) above or
(D) or (E) below, in the case of any of the following Investments made
after the Issue Date:
. the disposition of such Investment by, or repayment of such
Investment to, the Company or a Restricted Subsidiary, or
. the receipt by the Company or any Restricted Subsidiary of any
dividends, distributions or interest payments from such Investment,
or
. if such Investment was a guaranty, the release of the guaranty,
an amount equal to the lesser of:
. the amount of such Investment treated as a Restricted Payment
pursuant to clause (d) above, and
. the amount in cash received by the Company or any Restricted
Subsidiary upon such disposition, repayment, dividend or
distribution or, in the case of a released guaranty, the amount of
such guaranty less any payments made in respect thereof; plus
(D) without duplication of any amounts included in clause (C) above and
excluding any amounts covered by (E) below, in the event the Company or any
Restricted Subsidiary makes any Investment in a Person that, as a result of
or in connection with such Investment, becomes a Restricted Subsidiary, an
amount equal to the Company's or any Restricted Subsidiary's existing
Investment in such Person that was previously treated as a Restricted
Payment pursuant to clause (d) above; plus
(E) so long as the Designation of such Unrestricted Subsidiary was
treated as a Restricted Payment made after the Issue Date, in the case of a
Revocation with respect to any Unrestricted Subsidiary after the Issue Date
in accordance with "--Limitation on Designation of Unrestricted
Subsidiaries," an amount equal to the lesser of:
. the Company's Investment in such Unrestricted Subsidiary at the time
of such Revocation; and
. that portion of the Fair Market Value of the net assets of such
Unrestricted Subsidiary at the time of such Revocation that is
proportionate to the Company's equity interest in such Unrestricted
Subsidiary; and
. the Designation Amount with respect to such Unrestricted Subsidiary
upon its Designation which was treated as a Restricted Payment plus
any Investment made after Designation and prior to Revocation that
was treated as a Restricted Payment, in each case less any amounts
included in clause (A) or (C) above; plus
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(F) $15 million.
Notwithstanding the preceding, this covenant does not prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration of such dividend if the dividend would have been permitted on
the date of declaration;
(2) if no Default or Event of Default shall have occurred and be
continuing, the acquisition of any shares of Capital Stock of the Company
or any warrants, rights or options to purchase or acquire shares of Capital
Stock of the Company,
(a) in exchange for Qualified Capital Stock of the Company or
(b) through the application of the net cash proceeds received by the
Company from a substantially concurrent sale of Qualified Capital Stock of
the Company or a contribution to the equity capital of the Company not
representing an interest in Disqualified Capital Stock, in each case not
received from a Restricted Subsidiary; provided, that the value of any such
Qualified Capital Stock, issued in exchange for such acquired Capital
Stock, warrants, rights or options and any such net cash proceeds shall be
excluded from clause (3)(B) of the first paragraph of this covenant (and
were not included therein at any time);
(3) if no Default or Event of Default shall have occurred and be
continuing, the voluntary prepayment, purchase, defeasance, redemption or
other acquisition or retirement for value of any Subordinated Indebtedness:
(a) solely in exchange for shares of Qualified Capital Stock of the
Company, or
(b) through the application of net cash proceeds of a substantially
concurrent sale, other than to a Restricted Subsidiary of the Company, of:
. Qualified Capital Stock of the Company or
. Refinancing Indebtedness for such Subordinated Indebtedness;
provided, that the value of such Capital Stock or warrants, rights or
options issued in exchange for such Subordinated Indebtedness and any
such net case proceeds shall be excluded from clause (3)(B) of the
first paragraph of this covenant (and were not included therein at any
time);
(4) if no Default or Event of Default shall have occurred and be
continuing, repurchases by the Company of Common Stock of the Company or
options, warrants or other securities exercisable or convertible in Common
Stock of the Company from employees or directors of the Company or any of
its Subsidiaries or their authorized representatives upon the death,
disability or termination of employment or directorship of such employees
or directors, in an aggregate amount not to exceed $2.5 million in any
calendar year and $7 million in the aggregate; and
(5) making payments to dissenting shareholders pursuant to applicable
law in connection with a consolidation, merger or transfer of assets
permitted under "--Merger, Consolidation or Sale of Assets."
In determining the aggregate amount of Restricted Payments made subsequent
to the Issue Date, amounts expended pursuant to clauses (1) (without
duplication for the declaration of the relevant dividend), (4) and (5)
shall be included in such calculation and amounts expended pursuant to
clauses (2) and (3) shall not be included in such calculation.
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Limitation on Asset Sales.
The Company will not, and will not permit any of its Restricted Subsidiaries
to, consummate an Asset Sale unless:
(a) the Company or the applicable Restricted Subsidiary, as the case may
be, receives consideration at the time of such Asset Sale at least equal to
the Fair Market Value of the assets sold or otherwise disposed of, and
(b) at least 75% of the consideration received for the assets sold by
the Company or the Restricted Subsidiary, as the case may be, in such Asset
Sale shall be in the form of:
(1) cash or Cash Equivalents or
(2) (A) tangible assets to be used by the Company or any Restricted
Subsidiary in a Permitted Business or
(B) Capital Stock of a Person principally engaged in a Permitted
Business that will become, upon such purchase, a Restricted
Subsidiary (collectively, "Replacement Assets"), in each
case, received at the time of such Asset Sale.
The amount of any (a) Indebtedness for borrowed money (other than Subordinated
Indebtedness) of the Company or such Restricted Subsidiary (other than
Subordinated Indebtedness) that is actually assumed by the transferee in such
Asset Sale and from which the Company or such Restricted Subsidiary is fully
and unconditionally released and (b) any securities, notes or other obligations
received by the Company or such Restricted Subsidiary from a transferee that
are converted by the Company or such Restricted Subsidiary into cash (to the
extent of cash received) within 30 days of receipt thereof, shall be deemed to
be cash for purposes of determining the percentage of cash consideration
received by the Company or such Restricted Subsidiary.
The Company or such Restricted Subsidiary, as the case may be, may apply the
Net Cash Proceeds of any such Asset Sale within 270 days thereof to:
(a) repay any Indebtedness that is not Subordinated Indebtedness and
permanently reduce the commitments, if any, with respect thereto;
(b) to purchase Replacement Assets from a Person other than the Company
and its Restricted Subsidiaries; or
(c) any combination of (a) and (b).
To the extent all or a portion of the Net Cash Proceeds of any Asset Sale are
not applied within 270 days of the Asset Sale as described in clause (a) or (b)
of the immediately preceding paragraph, the Company will make an offer to
purchase (the "Net Proceeds Offer"), at a price equal to 100% of the principal
amount of the Notes to be purchased, plus accrued and unpaid interest thereon,
to the date of purchase. Pursuant to a Net Proceeds Offer, the Company shall
purchase from all tendering holders on a pro rata basis (and on a pro rata
basis with the holders of any other Senior Subordinated Indebtedness with
similar provisions requiring the Company to offer to purchase such Senior
Subordinated Indebtedness with the proceeds of Asset Sales), that principal
amount of Notes and such other Senior Subordinated Indebtedness to be purchased
equal to such unapplied Net Cash Proceeds. The purchase of Notes pursuant to a
Net Proceeds Offer shall occur not less than 20 business days following the
date thereof (or any longer period as may be required by law) nor more than 60
days following the 270th day following the Asset Sale. The Company may,
however, defer a Net Proceeds Offer until there is an aggregate amount of
unapplied Net Cash Proceeds equal to or in excess of $10 million resulting from
one or more Asset Sales (at which time, the entire amount of unapplied Net Cash
Proceeds, and not just the amount in excess of $10 million, shall be applied as
required pursuant to this paragraph).
Each Net Proceeds Offer will be mailed to the record holders as shown on the
register of Holders within 20 days following such 270th day, with a copy to the
Trustee. It shall comply with the procedures set forth in
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the Indenture. Upon receiving notice of the Net Proceeds Offer, holders may
elect to tender their Notes in whole or in part in integral multiples of
$1,000 in exchange for cash. To the extent holders of Notes and holders of
other Senior Subordinated Indebtedness, if any, which are the subject of a Net
Proceeds Offer properly tender Notes or such other Senior Subordinated
Indebtedness in an aggregate amount exceeding the amount of unapplied Net Cash
Proceeds, the Company will purchase the Notes and such other Senior
Subordinated Indebtedness on a pro rata basis (based on amounts tendered).
The Company will comply with the requirements of Rule 14e-1 and any other
applicable securities laws and regulations under the Exchange Act in
connection with the purchase of Notes pursuant to a Net Proceeds Offer. To the
extent that the provisions of any securities laws, or regulations conflict
with the "Asset Sale" provisions of the Indenture, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under the "Asset Sale" provisions of the
Indenture by virtue thereof.
Upon completion of a Net Proceeds Offer, the amount of Net Cash Proceeds
will be reset at zero. Accordingly, to the extent that the aggregate amount of
Notes and other Indebtedness tendered pursuant to a Net Proceeds Offer is less
than the aggregate amount of unapplied Net Cash Proceeds, the Company may use
any remaining Net Cash Proceeds for any purpose not otherwise prohibited by
the Indenture.
In the event of the transfer of substantially all (but not all) of the
property and assets of the Company and its Restricted Subsidiaries as an
entirety to a Person in a transaction permitted under "--Merger, Consolidation
and Sale of Assets," the Surviving Entity shall be deemed to have sold the
properties and assets of the Company and its Restricted Subsidiaries not so
transferred for purposes of this covenant, and shall comply with the
provisions of this covenant with respect to the deemed sale as if it were an
Asset Sale. In addition, the Fair Market Value of properties and assets of the
Company or its Restricted Subsidiaries so deemed to be sold shall be deemed to
be Net Cash Proceeds for purposes of this covenant.
If at any time any non-cash consideration received by the Company or any
Restricted Subsidiary, as the case may be, in connection with any Asset Sale
is converted into or sold or otherwise disposed of for cash (other than
interest received with respect to any non-cash consideration), the conversion
or disposition shall be deemed to constitute an Asset Sale hereunder and the
Net Cash Proceeds thereof shall be applied in accordance with this covenant.
Limitation on Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries.
(a) Except as provided in clause (b) below, the Company will not, and will
not cause or permit any of its Restricted Subsidiaries to, directly or
indirectly, create or otherwise cause or permit to exist or become
effective any encumbrance or restriction on the ability of any Restricted
Subsidiary to:
(1) pay dividends or make any other distributions on or in respect of
its Capital Stock to the Company or any other Restricted Subsidiary or pay
any Indebtedness owed to the Company or any other Restricted Subsidiary;
(2) make loans or advances to, or guarantee any Indebtedness or other
obligations of, or make any Investment in, the Company or any other
Restricted Subsidiary; or
(3) transfer any of its property or assets to the Company or any other
Restricted Subsidiary.
(b) Clause (a) will not apply to encumbrances or restrictions existing
under or by reason of:
(1) applicable law;
(2) the Indenture;
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(3) any encumbrances or restrictions existing as of the Issue Date or
pursuant to any agreement governing Indebtedness in existence on the Issue
Date, in each case as in effect on the Issue Date;
(4) the Senior Credit Facility as in effect on the Issue Date, and any
amendments, restatements, renewals, replacements or refinancings thereof,
including to increase the availability thereunder; provided, that any
amendment, restatement, renewal, replacement or refinancing is not
materially more restrictive with respect to such encumbrances or
restrictions than those in existence on the Issue Date;
(5) customary non-assignment provisions of any contract and customary
provisions restricting assignment or subletting in any lease governing a
leasehold interest of any Restricted Subsidiary, or any customary
restriction on the ability of a Restricted Subsidiary to dividend,
distribute or otherwise transfer any asset which secures Indebtedness
secured by a Lien permitted to be Incurred under the Indenture of such
Restricted Subsidiary;
(6) Liens filed in favor of trade vendors;
(7) any instrument governing Acquired Indebtedness, which encumbrance or
restriction is not applicable to any Person, or the properties or assets of
any Person, other than the Person or the properties or assets of the Person
so acquired;
(8) restrictions with respect to a Restricted Subsidiary of the Company
imposed pursuant to a binding agreement which has been entered into for the
sale or disposition of Capital Stock or assets of such Restricted
Subsidiary; provided, that such restrictions apply solely to the Capital
Stock or assets of such Restricted Subsidiary being sold;
(9) customary restrictions imposed on the transfer of copyrighted or
patented materials, including as a result of the Royalty Agreement; or
(10) an agreement governing Indebtedness Incurred to Refinance
Indebtedness issued, assumed or Incurred pursuant to an agreement referred
to in clause (3), (4) or (5) above; provided, that such refinancing
agreement is not materially more restrictive with respect to such
encumbrances or restrictions than those contained in the agreement referred
to in such clause (3), (4) or (5).
Limitation on the Ownership of Capital Stock of Restricted Subsidiaries.
(a) The Company will not sell or dispose of any Capital Stock of any
Restricted Subsidiary and will not permit any Restricted Subsidiary to issue
any Capital Stock;
(b) Clause (a) will not apply to:
(1) Capital Stock held by the Company or a Restricted Subsidiary or
directors' qualifying shares or shares held by foreign Persons pursuant to
local laws governing the formation and ownership of foreign Persons;
(2) the sale of 100% of the shares of the Capital Stock of any
Restricted Subsidiary owned by the Company or any Restricted Subsidiary to
any Person other than the Company or effected in accordance with the
covenants described under "--Limitation on Asset Sales" and "--Merger,
Consolidation and Sale of Assets";
(3) Preferred Stock, other than Disqualified Capital Stock, of a special
purpose financing vehicle;
(4) in the case of Restricted Subsidiaries other than Wholly Owned
Restricted Subsidiaries, issuance of Capital Stock on a pro rata basis to
the Company and its Restricted Subsidiaries and minority
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shareholders of such Restricted Subsidiary (or on less than a pro rata
basis to any such minority holder if such minority holder does not acquire
its pro rata amount); and
(5) the sale of Capital Stock of a Restricted Subsidiary or issuance by
a Restricted Subsidiary of Capital Stock if following such sale or
issuance:
(A) such Restricted Subsidiary is no longer a Subsidiary,
(B) the Company's continuing Investment in such former Restricted
Subsidiary is in compliance with "--Limitations on Restricted Payments" and
(C) any sale of Capital Stock by the Company or any Restricted
Subsidiary is made in compliance with the covenant described under "--
Limitation of Asset Sales".
Limitation on Designation of Unrestricted Subsidiaries.
The Company may designate after the Issue Date any Subsidiary of the Company
as an "Unrestricted Subsidiary" under the Indenture (a "Designation") only if:
(1) no Default or Event of Default shall have occurred and be continuing
at the time of or after giving effect to such Designation;
(2) at the time of and after giving effect to such Designation, the
Company could Incur $1.00 of additional Indebtedness (other than Permitted
Indebtedness) pursuant to the covenant described under "-- Limitation on
Incurrence of Additional Indebtedness"; and
(3) the Company would be permitted to make an Investment at the time of
Designation (assuming the effectiveness of such Designation and treating
such Designation as an Investment at the time of Designation) pursuant to
the first paragraph of "--Limitation on Restricted Payments" in an amount
(the "Designation Amount") equal to the amount of the Company's Investment
in such Subsidiary on such date.
Neither the Company nor any Restricted Subsidiary will at any time:
(1) provide credit support for, subject any of its property or assets
(other than the Capital Stock of any Unrestricted Subsidiary) to the
satisfaction of, or guarantee, any Indebtedness of any Unrestricted
Subsidiary (including any undertaking, agreement or instrument evidencing
such Indebtedness); or
(2) be directly or indirectly liable for any Indebtedness of any
Unrestricted Subsidiary,
except, in the case of (1) or (2), to the extent treated and permitted as a
Restricted Payment or Permitted Investment in accordance with "--Limitation on
Restricted Payments" and permitted under "--Limitation on Indebtedness".
The Company may revoke any Designation of a Subsidiary as an Unrestricted
Subsidiary (a "Revocation") only if:
(1) No Default or Event of Default shall have occurred and be continuing
at the time of and after giving effect to such Revocation; and
(2) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately following such Revocation would, if Incurred at
such time, have been permitted to be Incurred for all purposes of the
Indenture.
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The Designation of a Subsidiary of the Company as an Unrestricted Subsidiary
shall be deemed to include the Designation of all of the Subsidiaries of such
Subsidiary. All Designations and Revocations must be evidenced by resolutions
of the Board of Directors of the Company, delivered to the Trustee certifying
compliance with the preceding provisions.
Limitation on Layered Indebtedness.
The Company will not, and will not permit any Note Guarantor to, directly or
indirectly, Incur any Indebtedness that is subordinate in right of payment to
any other Indebtedness, unless such Indebtedness is subordinate in right of
payment to, or ranks equally with, the Notes or, in the case of a Note
Guarantor, its Note Guarantee.
Limitation on Liens.
The Company will not, and will not cause or permit any of its Restricted
Subsidiaries to, directly or indirectly, Incur any Liens of any kind (except
for Liens securing Senior Indebtedness and Permitted Liens) against or upon any
of their respective properties or assets, whether owned on the Issue Date or
acquired after the Issue Date, or any proceeds therefrom, to secure any
Indebtedness unless contemporaneously therewith effective provision is made:
(1) in the case of the Company to secure the Notes and all other amounts
due under the Indenture; and
(2) in the case of a Note Guarantor, to secure such Note Guarantor's
Note Guarantee and all other amounts due under the Indenture,
in each case, equally and ratably with such Indebtedness (or, in the event that
such Indebtedness is subordinated in right of payment to the Notes or such Note
Guarantee, as the case may be, prior to such Indebtedness) with a Lien on the
same properties and assets securing such Indebtedness for so long as such
Indebtedness is secured by such Lien.
Merger, Consolidation and Sale of Assets.
The Company will not, in a single transaction or series of related
transactions, consolidate or merge with or into any Person (whether or not the
Company is the surviving Person), or sell, assign, transfer, lease, convey or
otherwise dispose of (or cause or permit any Restricted Subsidiary to sell,
assign, transfer, lease, convey or otherwise dispose of) all or substantially
all of the Company's and its Restricted Subsidiaries' properties and assets
(determined on a consolidated basis for the Company and its Restricted
Subsidiaries) to any Person unless:
(a) either:
(1) the Company shall be the surviving or continuing corporation or
(2) the Person (if other than the Company) formed by such
consolidation or into which the Company is merged or the Person which
acquires by sale, assignment, transfer, lease, conveyance or other
disposition the properties and assets of the Company and of the
Company's Restricted Subsidiaries substantially as an entirety (the
"Surviving Entity"):
(A) shall be a corporation, limited liability company,
partnership, trust or similar entity organized and validly existing
under the laws of the United States or any State thereof or the
District of Columbia and
(B) shall expressly assume, by supplemental indenture (in form
and substance satisfactory to the Trustee), executed and delivered
to the Trustee, the due and punctual payment of the
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principal of, and premium, if any, and interest on all of the Notes
and the performance and observance of every covenant of the Notes
and the Indenture on the part of the Company to be performed or
observed;
(b) immediately after giving effect to such transaction and the assumption
contemplated by clause (a)(2)(B) above (including giving effect on a pro forma
basis to any Indebtedness, including any Acquired Indebtedness, Incurred or
anticipated to be Incurred in connection with or in respect of such
transaction), the Company or such Surviving Entity, as the case may be:
(1) shall have a Consolidated Net Worth equal to or greater than the
Consolidated Net Worth of the Company immediately prior to such
transaction; and
(2) shall be able to Incur at least $1.00 of additional Indebtedness
(other than Permitted Indebtedness) pursuant to "--Limitation on Incurrence
of Additional Indebtedness";
(c) immediately before and immediately after giving effect to such
transaction and the assumption contemplated by clause (a)(2)(B) above
(including, without limitation, giving effect on a pro forma basis to any
Indebtedness, including any Acquired Indebtedness, Incurred or anticipated to
be Incurred and any Lien granted in connection with or in respect of the
transaction), no Default or Event of Default shall have occurred or be
continuing;
(d) each Note Guarantor (including Persons which become Note Guarantors as a
result of the transaction) shall have confirmed by Supplemental Indenture that
its Note Guarantee shall apply for such Person's Obligations in respect of the
Indenture and the Notes; and
(e) the Company or the Surviving Entity shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each stating that the
consolidation, merger, sale, assignment, transfer, lease, conveyance or other
disposition and, if required in connection with such transaction, the
supplemental indenture, comply with the applicable provisions of the Indenture
and that all conditions precedent in the Indenture relating to the transaction
have been satisfied.
For purposes of the preceding, the transfer (by lease, assignment, sale or
otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties or assets of one or more Restricted
Subsidiaries of the Company, the Capital Stock of which constitutes all or
substantially all of the properties and assets of the Company, shall be deemed
to be the transfer of all or substantially all of the properties and assets of
the Company.
The provisions of clauses (a) through (d) above shall not apply to:
(1) any transfer of the properties or assets of a Restricted Subsidiary
of the Company to the Company or to a Restricted Subsidiary, or
(2) any merger of a Restricted Subsidiary into the Company.
The provisions of clause (b) above shall not apply to any merger of the
Company into a Restricted Subsidiary.
Upon any consolidation, combination or merger or any transfer of all or
substantially all of the properties and assets of the Company and its
Restricted Subsidiaries in accordance with the preceding, in which the Company
is not the continuing corporation, the Surviving Entity formed by such
consolidation or into which the Company is merged or to which such conveyance,
lease or transfer is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under the Indenture and the
Notes with the same effect as if such Surviving Entity had been named as such.
For the avoidance of doubt, compliance with this covenant shall not affect the
obligation of the Company (including a Surviving Entity, if applicable) under
"--Change of Control," if applicable.
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Limitations on Transactions with Affiliates.
(1) The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into any transaction or series
of related transactions (including, without limitation, the purchase, sale,
lease or exchange of any property or the rendering of any service) with, or for
the benefit of, any of its Affiliates (each an "Affiliate Transaction"),
unless:
(a) the terms of such Affiliate Transaction are no less favorable than
those that could reasonably be expected to be obtained in a comparable
transaction at such time on an arm's-length basis from a Person that is not
an Affiliate of the Company;
(b) in the event that such Affiliate Transaction involves aggregate
payments, or transfers of property or services with a Fair Market Value in
excess of $5 million, the terms of such Affiliate Transaction shall be
approved by a majority of the members of the Board of Directors of the
Company (including a majority of the disinterested members thereof), the
approval to be evidenced by a Board Resolution stating that the Board of
Directors has determined that such transaction complies with the preceding
provisions; and
(c) in the event that such Affiliate Transaction involves aggregate
payments, or transfer of property or services with a fair market value, in
excess of $10 million, the Company shall, prior to the consummation
thereof, obtain a favorable opinion as to the fairness of such transaction
or series of related transactions to the Company and the relevant
Restricted Subsidiary (if any) from a financial point of view from an
Independent Financial Advisor and file the same with the Trustee.
(2) Clause (1) shall not apply to:
(a) transactions with or among the Company and any Restricted Subsidiary
or between or among Restricted Subsidiaries;
(b) reasonable fees and compensation paid to, and any indemnity provided
on behalf of, and any customary employment arrangement with, officers,
directors, employees, consultants or agents of the Company or any
Restricted Subsidiary as approved in good faith by the Company's Board of
Directors;
(c) any transactions undertaken pursuant to any contractual obligations
or rights as in existence on the Issue Date and as they may be modified or
extended so long as any such modification is not materially adverse to the
Holders;
(d) any Restricted Payments or Permitted Investments made in compliance
with "Limitation on Restricted Payments";
(e) loans and advances to officers, directors and employees of the
Company or any Restricted Subsidiary for travel, entertainment, moving and
other relocation expenses, in each case made in the ordinary course of
business and not exceeding $5 million outstanding at any one time;
(f) leasing transactions with Unrestricted Subsidiaries entered into in
the ordinary course of business; and
(g) transactions between the Company and any Unrestricted Subsidiary all
of the Voting Stock of which is owned by the Company and substantially all
of the assets of which consist of Indebtedness of the Company Incurred in
accordance with "--Limitation on Incurrence of Additional Indebtedness".
Reports to Holders.
Notwithstanding that the Company may not be subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, so long as any Notes
remain outstanding, the Company will:
(1) provide the Trustee and the noteholders with the annual reports and
information, documents and other reports as are specified in Sections 13
and 15(d) of the Exchange Act and applicable to a U.S.
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corporation subject to such Sections within 15 days after the times
specified for the filing of the information, documents and reports under
such Sections; and
(2) file with the Commission, to the extent permitted, the information,
documents and reports referred to in clause (1) within the periods
specified under such Sections.
In addition, at any time when the Company is subject to or is not current in
its reporting obligations under clause (2) of the preceding sentence, the
Company will make available, upon request, to any holder and any prospective
purchaser of Notes the information required pursuant to Rule 144A(d)(4) under
the Securities Act.
Events of Default
The following are "Events of Default":
(1) default in the payment when due of the principal of or premium, if
any, on any Notes, including the failure to make a required payment to
purchase Notes tendered pursuant to an optional redemption, Change of
Control Offer or a Net Proceeds Offer and whether or not prohibited by the
provisions of the Indenture described under "Subordination of the Notes and
the Note Guarantees";
(2) default for 30 days or more in the payment when due of interest on
any Notes when due, whether or not prohibited by the provisions of the
Indenture described under "Subordination of the Notes and the Note
Guarantees";
(3) the failure to perform or comply with any of the provisions
described under "Certain Covenants--Merger, Consolidation and Sales of
Assets";
(4) the failure by the Company or any Restricted Subsidiary to comply
with any other covenant or agreement contained in the Indenture or in the
Notes for 45 days or more after written notice to the Company from the
Trustee or the Holders of at least 25% in aggregate principal amount of the
outstanding Notes;
(5) default by the Company or any Restricted Subsidiary under any
Indebtedness which:
(a) is caused by a failure to pay principal of or premium, if any, or
interest on such Indebtedness prior to the expiration of any applicable
grace period provided in such Indebtedness on the date of such default; or
(b) results in the acceleration of such Indebtedness prior to its stated
maturity;
and the principal amount of any Indebtedness covered by (a) or (b) at the
relevant time aggregates $10 million or more.
(6) failure by the Company or any of its Restricted Subsidiaries to pay
final nonappealable judgments against any of them (to the extent not
covered by third-party insurance as to which the insurer has not disclaimed
coverage or to the extent not adequately reserved for in accordance with
GAAP) aggregating $10 million or more, which judgments are not paid,
discharged, waived, bonded or stayed for a period of 60 days or more;
(7) certain events of bankruptcy affecting the Company or any of its
Significant Subsidiaries or group of Subsidiaries that, taken together,
would constitute a Significant Subsidiary; or
(8) except as permitted by the Indenture, the Note Guarantee of a Note
Guarantor constituting a Significant Subsidiary, or the Note Guarantees of
a group of Note Guarantors that, taken together, would constitute a
Significant Subsidiary, are held to be unenforceable or invalid in a
judicial proceeding or ceases for any reason to be in full force and effect
or any Note Guarantor, or any Person acting on behalf of any Note
Guarantor, denies or disaffirms such Note Guarantor's obligations under its
Note.
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If an Event of Default (other than an Event of Default specified in clause
(7) above) shall occur and be continuing, the Trustee or the Holders of at
least 25% in principal amount of outstanding Notes may declare the principal of
(and premium, if any) and accrued and unpaid interest on all the Notes to be
immediately due and payable by notice in writing to the Company and the Trustee
specifying the Event of Default and that it is a "notice of acceleration" (the
"Acceleration Notice"). If an Event of Default specified in clause (7) above
occurs and is continuing, then all unpaid principal of, and premium, if any,
and accrued and unpaid interest on all of the outstanding Notes will become
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holder.
At any time after a declaration of acceleration with respect to the Notes as
described in the preceding paragraph, the holders of a majority in principal
amount of the Notes may rescind and cancel such declaration and its
consequences:
(1) if the rescission would not conflict with any judgment or decree;
(2) if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of
the acceleration;
(3) to the extent the payment of such interest is lawful, interest on
overdue installments of interest and overdue principal, which has become
due otherwise than by such declaration of acceleration, has been paid; and
(4) if the Company has paid the Trustee its reasonable compensation and
reimbursed the Trustee for its reasonable expenses, disbursements and
advances.
No rescission shall affect any subsequent Default or impair any rights relating
thereto.
The holders of a majority in principal amount of the Notes may waive any
existing Default or Event of Default under the Indenture, and its consequences,
except a default in the payment of the principal of, premium, if any, or
interest on any Notes.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, the Trustee is under no obligation to exercise any of its rights or
powers under the Indenture at the request, order or direction of any of the
holders, unless such holders have offered to the Trustee reasonable indemnity.
Subject to all provisions of the Indenture and applicable law, the holders of a
majority in aggregate principal amount of the then outstanding Notes have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred on
the Trustee.
No holder of any Notes will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless:
(1) such holder gives to the Trustee written notice of a continuing
Event of Default;
(2) holders of at least 25% in principal amount of the then outstanding
Notes make a written request to pursue the remedy;
(3) such holders of the Notes provide to the Trustee satisfactory
indemnity;
(4) the Trustee does not comply within 60 days; and
(5) during such 60 day period the holders of a majority in principal
amount of the outstanding Notes do not give the Trustee a written direction
which, in the opinion of the Trustee, is inconsistent with the request.
Otherwise, no holder of any Note will have any right to institute any
proceeding with respect to the Indenture or for any remedy thereunder, except:
(1) a holder of a Note may institute suit for enforcement of payment of
the principal of andpremium, if any, or interest on such Note on or after
the respective due dates expressed in such Note or
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(2) the institution of any proceeding with respect to the Indenture or
any remedy thereunder, including, without limitation, acceleration, by the
holders of a majority in principal amount of the outstanding Notes;
provided, that upon institution of any proceeding or exercise of any
remedy, such holder or holders provide the Trustee with prompt notice
thereof.
The Company is required to deliver to the Trustee written notice of any event
which would constitute certain Defaults, their status and what action the
Company is taking or proposes to take in respect thereof. In addition, the
Company is required to deliver to the Trustee, within 120 days after the end of
each fiscal year, a certificate indicating whether the signers thereof know of
any Default that occurred during the previous fiscal year. The Indenture
provides that if a Default occurs, is continuing and is known to the Trustee,
the Trustee must mail to each holder notice of the Default within five days
after it is known to a trust officer or written notice of it is received by the
Trustee. Except in the case of a Default in the payment of principal of,
premium, if any, or interest on any Note, the Trustee may withhold notice if
and so long as it in good faith determines that withholding notice is not
opposed to the interest of the noteholders.
Legal Defeasance and Covenant Defeasance
The Company may, at its option and at any time, elect to have its obligations
discharged with respect to the outstanding Notes ("Legal Defeasance"). Such
Legal Defeasance means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by the outstanding Notes, except
for:
(1) the rights of holders to receive payments in respect of the
principal of, premium, if any, and interest on the Notes when such payments
are due;
(2) the Company's obligations with respect to the Notes concerning
issuing temporary Notes, registration of Notes, mutilated, destroyed, lost
or stolen Notes and the maintenance of an office or agency for payments;
(3) the rights, powers, trust, duties and immunities of the Trustee and
the Company's obligations in connection therewith; and
(4) the Legal Defeasance provisions of the Indenture.
In addition, the Company may, at its option and at any time, elect to have
the obligations of the Company released with respect to certain covenants that
are described in the Indenture ("Covenant Defeasance") and thereafter any
omission to comply with such obligations shall not constitute a Default or
Event of Default with respect to the Notes. In the event Covenant Defeasance
occurs, certain events (not including non-payment, bankruptcy, receivership,
reorganization and insolvency events) described under "Events of Default" will
no longer constitute an Event of Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(1) the Company must irrevocably deposit with the Trustee, in trust, for
the benefit of the Holders cash in U.S. dollars, certain direct non-
callable obligations of, or guaranteed by, the United States, or a
combination thereof, in such amounts as will be sufficient, in the opinion
of a nationally recognized firm of independent public accountants, to pay
the principal of, premium, if any, and interest on the Notes on the stated
date for payment thereof or on the applicable redemption date, as the case
may be;
(2) in the case of Legal Defeasance, the Company shall have delivered to
the Trustee an Opinion of Counsel in the United States reasonably
acceptable to the Trustee to the effect that:
(a) the Company has received from, or there has been published by,
the Internal Revenue Service a ruling; or
(b) since the Issue Date, there has been a change in the applicable
federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall state that, the Holders will not
recognize income, gain or loss for federal income tax purposes as a
result of such Legal
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Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such Legal Defeasance had not occurred;
(3) in the case of Covenant Defeasance, the Company shall have delivered
to the Trustee an Opinion of Counsel in the United States reasonably
acceptable to the Trustee to the effect that the Holders will not recognize
income, gain or loss for federal income tax purposes as a result of such
Covenant Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the
case if such Covenant Defeasance had not occurred;
(4) no Default or Event of Default shall have occurred and be continuing
on the date of such deposit, other than a Default or Event of Default
resulting from the borrowing of funds to be applied to such deposit;
(5) the Trustee shall have received an Officers' Certificate stating
that such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under the Indenture or any
other material agreement or instrument to which the Company or any of its
Restricted Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound;
(6) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders over any other creditors of the Company or
any Subsidiary of the Company or with the intent of defeating, hindering,
delaying or defrauding any other creditors of the Company or others;
(7) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that after the 91st day following the deposit, the
trust funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally;
(8) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for, in the case of the Officers' Certificate, in
clauses (1) through (7) and, in the case of the Opinion of Counsel, in
clauses (1) (with respect to the validity and perfection of a security
interest), (2), (3) and (5) of this paragraph relating to the Legal
Defeasance or the Covenant Defeasance, as applicable, have been complied
with; and
(9) certain other customary conditions precedent are satisfied.
Satisfaction and Discharge
The Indenture will be discharged and will cease to be of further effect
(except as to surviving rights or registration of transfer or exchange of the
Notes, as expressly provided for in the Indenture) as to all outstanding Notes
when:
(1) either:
(a) all the Notes theretofor authenticated and delivered (except
lost, stolen or destroyed Notes which have been replaced or paid and
Notes for whose payment money has theretofor been deposited in trust or
segregated and held in trust by the Company and thereafter repaid to
the Company or discharged from such trust) have been delivered to the
Trustee for cancellation; or
(b) all Notes not theretofor delivered to the Trustee for
cancellation have become due and payable, or will be due and payable
within one year or are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving of notice
of redemption, and the Company has irrevocably deposited or caused to
be deposited with the Trustee funds or certain direct, non-callable
obligations of, or guaranteed by, the United States sufficient to pay
and discharge the entire Indebtedness on the Notes not theretofor
delivered to the Trustee for cancellation, for principal of, premium,
if any, and interest on the Notes to the earlier of the Stated Maturity
or the redemption date together with irrevocable instructions from the
Company directing the Trustee to apply such
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funds and/or the proceeds of such direct, non-callable obligations to
the payment thereof at maturity or redemption, as the case may be;
(2) the Company has paid all other sums payable under the Indenture by
the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel stating that all conditions precedent under the
Indenture relating to the satisfaction and discharge of the Indenture have
been complied with.
Modification of the Indenture
From time to time, the Company, the Note Guarantors and the Trustee, without
the consent of the holders, may amend the Indenture or the Notes for certain
specified purposes, including curing ambiguities, defects or inconsistencies,
adding Note Guarantees and making other changes which do not, in the opinion of
the Trustee, adversely affect the rights of any of the holders in any material
respect. In formulating its opinion on such matters, the Trustee will be
entitled to rely on such evidence as it deems appropriate, including, without
limitation, solely on an Opinion of Counsel. Other modifications and amendments
of the Indenture or the Notes may be made with the consent of the holders of a
majority in principal amount of the then outstanding Notes issued under the
Indenture, except that,
(1) any modification of the subordination provisions of the Indenture with
respect to the Company or any Note Guarantor in a manner that materially
adversely affects the rights of any holder will require the consent of at least
75% in principal amount of the then outstanding Notes issued under the
Indenture, and
(2) without the consent of each holder affected thereby, no amendment may:
(a) reduce the amount of Notes whose Holders must consent to an
amendment or waiver;
(b) reduce the rate of or change or have the effect of changing the time
for payment of interest, including defaulted interest, on any Notes;
(c) reduce the principal of or change or have the effect of changing the
fixed maturity of any Notes, or change the date on which any Notes may be
subject to redemption, or reduce the redemption price therefor;
(d) make any Notes payable in money other than that stated in the Notes;
(e) make any change in provisions of the Indenture entitling each holder
to receive payment of principal of, premium, if any, and interest on such
Note on or after the due date thereof or to bring suit to enforce such
payment, or permitting holders of a majority in principal amount of Notes
to waive Defaults or Events of Default;
(f) amend, change or modify in any material respect the obligation of
the Company to make and consummate a Change of Control Offer in respect of
a Change of Control that has occurred or make and consummate a Net Proceeds
Offer with respect to any Asset Sale that has been consummated; or
(g) eliminate or modify in any manner a Note Guarantor's obligations
with respect to its Note Guarantee which adversely affects holders in any
material respect (except as contemplated in the Indenture).
Governing Law
The Indenture will provide that the Indenture and the Notes will be governed
by, and construed in accordance with, the laws of the State of New York but
without giving effect to applicable principles of conflicts of law to the
extent that the application of the law of another jurisdiction would be
required thereby.
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The Trustee
The Indenture will provide that, except during the continuance of an Event of
Default, the Trustee will perform only such duties as are specifically set
forth in the Indenture. During the existence of an Event of Default, the
Trustee will exercise such rights and powers vested in it by the Indenture, and
use the same degree of care and skill in its exercise as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
The Indenture and the provisions of the TIA contain certain limitations on
the rights of the Trustee, should it become a creditor of the Company, to
obtain payments of claims in certain cases or to realize on certain property
received in respect of any such claim as security or otherwise. Subject to the
TIA, the Trustee will be permitted to engage in other transactions; provided,
that if the Trustee acquires any conflicting interest as described in the TIA,
it must eliminate such conflict or resign.
Certain Definitions
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for a full definition of all such
terms, as well as any other terms used herein for which no definition is
provided.
"Acquired Indebtedness" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Restricted Subsidiary
or at the time it merges or consolidates with the Company or any of its
Restricted Subsidiaries or is assumed in connection with the acquisition of
assets from such Person.
"Affiliate" means, with respect to any specified Person, any other Person who
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise; provided,
that beneficial ownership of 10% or more of the Voting Stock of a Person shall
be deemed to be control. For purposes of this definition, the terms
"controlling", "controlled by" and "under common control with" have correlative
meanings.
"Asset Acquisition" means:
(1) an Investment by the Company or any Restricted Subsidiary in any
other Person pursuant to which such Person shall become a Restricted
Subsidiary, or shall be merged with or into the Company or any Restricted
Subsidiary; or
(2) the acquisition by the Company or any Restricted Subsidiary of the
assets of any Person (other than a Subsidiary of the Company) which
constitute all or substantially all of the assets of such Person or
comprise any division or line of business of such Person or any other
properties or assets of such Person other than in the ordinary course of
business.
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
transfer, lease, assignment or other transfer for value by the Company or any
of its Restricted Subsidiaries (including any Sale and Leaseback Transaction)
to any Person other than the Company or a Restricted Subsidiary (including a
Person that is or will become a Restricted Subsidiary immediately after such
sale, issuance, conveyance, transfer, lease, assignment or other transfer for
value) of:
(a) any Capital Stock of any Restricted Subsidiary; or
(b) any property or assets (other than cash, Cash Equivalents or Capital
Stock) of the Company or any Restricted Subsidiary;
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Notwithstanding the preceding, the following items shall not be deemed to be
Asset Sales:
(1) the sale, lease, conveyance, disposition or other transfer of all or
substantially all of the assets of the Company and its Restricted
Subsidiaries as permitted under "Certain Covenant--Merger, Consolidation
and Sale of Assets";
(2) a disposition of inventory, receivables or other current assets in
the ordinary course of business;
(3) dispositions of assets in any fiscal year with a Fair Market Value
not to exceed $5 million in the aggregate;
(4) for purposes of "Certain Covenants--Limitation on Asset Sales" only,
the making of a Permitted Investment or Restricted Payment;
(5) a disposition in the ordinary course of business of obsolete or
worn-out equipment;
(6) rental equipment sales made in the ordinary course of business; and
(7) any sale of Capital Stock or other securities or Indebtedness of an
Unrestricted Subsidiary.
"Asset Sale Transaction" means Asset Sales and, whether or not constituting
an Asset Sale, (1) any sale or other disposition of Capital Stock and (2) any
sale or other disposition of property or assets excluded from the definition
of Asset Sale by clause (1) or (4) of such definition.
"Blockage Notice" has the meaning set forth under "--Subordination of the
Notes and the Note Guarantees."
"Board of Directors" means, (i) in the case of a Person that is a
corporation, the board of directors of such Person or any committee authorized
to act therefor and (ii) in the case of any other Person, the board of
directors, management committee or similar governing body or any authorized
committee thereof responsible for the management of the business and affairs
of such Person.
"Board Resolution" means, with respect to any Person, a copy of a resolution
certified by the Secretary or an Assistant Secretary of such Person to have
been duly adopted by the Board of Directors of such Person and to be in full
force and effect on the date of such certification, and delivered to the
Trustee.
"Capitalized Lease Obligations" means, as to any Person, the obligations of
such Person under a lease that are required to be classified and accounted for
as capital lease obligations under GAAP. For purposes of this definition, the
amount of such obligations at any date shall be the capitalized amount of such
obligations at such date, determined in accordance with GAAP.
"Capital Stock" means:
(1) with respect to any Person that is a corporation, any and all
shares, interests, participations or other equivalents (however designated
and whether or not voting) of corporate stock, including each class of
Common Stock and Preferred Stock of such Person; and
(2) with respect to any Person that is not a corporation, any and all
partnership, membership or other equity or ownership interests of such
Person.
"Cash Equivalents" means:
(1) marketable direct obligations issued by, or unconditionally
guaranteed by, the United States government or issued by any agency thereof
and backed by the full faith and credit of the United States, in each case
maturing within one year from the date of acquisition thereof;
(2) marketable direct obligations issued by any state of the United
States of America or any political subdivision of any such state or any
public instrumentality thereof maturing within one year from the date
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of acquisition thereof and, at the time of acquisition, having one of the
two highest ratings obtainable from either S&P or Moody's;
(3) commercial paper maturing no more than one year from the date of
creation thereof and, at the time of acquisition, having a rating of at
least A-1 from S&P or at least P-1 from Moody's;
(4) certificates of deposit or bankers' acceptances maturing within one
year from the date of acquisition thereof issued by any bank organized
under the laws of the United States of America or any state thereof or the
District of Columbia or any U.S. branch of a foreign bank having at the
date of acquisition thereof combined capital and surplus of not less than
$500 million;
(5) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clause (1) above entered
into with any bank meeting the qualifications specified in clause (4)
above; and
(6) investments in money market funds which invest substantially all
their assets in securities of the types described in clauses (1) through
(5) above.
"Change of Control" means the occurrence of one or more of the following
events:
(1) (A) any "person" (as such term is used in Sections 13(d) and 14(d)
of the Exchange Act), other than one or more Permitted Holders, is or
becomes the beneficial owner (as defined in Rule 13d-3 and 13d-5 under the
Exchange Act, except that for purposes of this clause (1) such person shall
be deemed to have "beneficial ownership" of all shares that any such person
has the right to acquire, whether such right is exercisable immediately or
only after the passage of time), directly or indirectly, of more than 35%
of the total voting power of the Voting Stock of the Company and (B) the
Permitted Holders "beneficially own" (as so defined), directly or
indirectly, in the aggregate a lesser percentage of the total voting power
of the Voting Stock of the Company than such other person (for the purposes
of this clause (1), such other person shall be deemed to beneficially own
any Voting Stock of a specified corporation held by a parent corporation,
if such other person is the beneficial owner (as defined in this clause
(1)), directly or indirectly, of more than 35% of the voting power of the
Voting Stock of such parent corporation and the Permitted Holders
"beneficially own" (as defined in this clause (1)), directly or indirectly,
in the aggregate a lesser percentage of the voting power of the Voting
Stock of such parent corporation);
(2) during any period of two consecutive years (or, in the case this
event occurs within the first two years after the Issue Date, such shorter
period as shall have begun on the Issue Date), individuals who at the
beginning of such period constituted the Board of Directors of the Company
(together with any new directors whose election by such Board of Directors
or whose nomination for election by the shareholders of the Company was
approved by a vote of a majority of the directors of the Company then still
in office who were either directors at the beginning of such period or
whose election or nomination for election was previously so approved) cease
for any reason to constitute a majority of the Board of Directors of the
Company then in office; or
(3) the Company consolidates with, or merges with or into, another
Person (other than the Company or a Wholly Owned Restricted Subsidiary) or
the Company or any of its Restricted Subsidiaries sells, conveys, assigns,
transfers, leases or otherwise disposes of all or substantially all of the
assets of the Company and its Restricted Subsidiaries (determined on a
consolidated basis for the Company and its Restricted Subsidiaries) to any
Person (other than the Company or any Wholly Owned Restricted Subsidiary),
other than any such transaction where immediately after such transaction
the Person or Persons that "beneficially owned" (as defined in Rules 13d-3
and 13d-5 under the Exchange Act, except that a Person shall be deemed to
have "beneficial ownership" of all securities that such Person has the
right to acquire, whether such right is exercisable immediately or only
after the passage of time) immediately prior to such transaction, directly
or indirectly, all of the total voting power of the then outstanding Voting
Stock of the Company "beneficially own" (as so determined), directly or
indirectly, a majority of the total voting power of the then outstanding
Voting Stock of the surviving or transferee Person.
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"Change of Control Offer" has the meaning set forth under "Change of
Control."
"Change of Control Payment Date" has the meaning set forth under "Change of
Control."
"Commission" means the Securities and Exchange Commission, or any successor
agency thereto with respect to the regulation or registration of securities.
"Common Stock" of any Person means any and all shares, interests or other
participations in, and other equivalents (however designated and whether voting
or non-voting) of such Person's common stock, whether outstanding on the Issue
Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common stock.
"Consolidated EBITDA" means, for any period, Consolidated Net Income for such
period, plus the following to the extent deducted in calculating such
Consolidated Net Income:
(1) Consolidated Income Tax Expense for such period; plus
(2) Consolidated Interest Expense for such period; plus
(3) Consolidated Non-cash Charges for such period; plus
(4) net after-tax losses from Asset Sale Transactions or abandonments or
reserves relating thereto, less
(5) to the extent that the aggregate of all such items exceeds $1.0
million (a) all non-cash credits and gains increasing Consolidated Net
Income for such period and (b) all cash payments during such period
relating to non-cash charges that were added back in determining
Consolidated EBITDA in any prior period.
"Consolidated Fixed Charge Coverage Ratio" means, as of any date of
determination, the ratio of the aggregate amount of Consolidated EBITDA for the
four most recent full fiscal quarters for which financial statements are
available ending prior to the date of such determination (the "Four Quarter
Period") to Consolidated Fixed Charges for such Four Quarter Period. For
purposes of this definition, "Consolidated EBITDA" and "Consolidated Fixed
Charges" shall be calculated after giving effect on a pro forma basis for the
period of such calculation to:
(1) the Incurrence or repayment (excluding revolving credit borrowings
Incurred or repaid in the ordinary course of business for working capital
purposes) of any Indebtedness or Preferred Stock of the Company or any of its
Restricted Subsidiaries (and the application of the proceeds thereof),
including the Incurrence of any Indebtedness or Preferred Stock (and the
application of the proceeds thereof) giving rise to the need to make such
determination, occurring during such Four Quarter Period or at any time
subsequent to the last day of such Four Quarter Period and on or prior to
such date of determination, as if such Incurrence or repayment, as the case
may be (and the application of the proceeds thereof), occurred on the first
day of such Four Quarter Period; and
(2) any Asset Sale Transactions or Asset Acquisitions (including, without
limitation, any Asset Acquisition giving rise to the need to make such
determination as a result of the Company or one of its Restricted
Subsidiaries (including any Person who becomes a Restricted Subsidiary as a
result of the Asset Acquisition) Incurring Acquired Indebtedness and
including, without limitation, by giving pro forma effect to any Consolidated
EBITDA (provided that such pro forma Consolidated EBITDA shall be calculated
in a manner consistent with the exclusions in the definition of "Consolidated
Net Income") attributable to the assets which are the subject of the Asset
Sale Transaction or Asset Acquisition during the Four Quarter Period)
occurring during the Four Quarter Period or at any time subsequent to the
last day of the Four Quarter Period and on or prior to such date of
determination, as if such Asset Sale Transaction or Asset Acquisition
(including the Incurrence of any such Acquired Indebtedness) occurred on the
first day of the Four Quarter Period.
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Furthermore, in calculating "Consolidated Fixed Charges" for purposes of
determining the denominator (but not the numerator) of this "Consolidated Fixed
Charge Coverage Ratio,"
(a) interest on outstanding Indebtedness determined on a fluctuating basis
as of the date of determination and which will continue to be so determined
thereafter shall be deemed to have accrued at a fixed rate per annum equal to
the rate of interest on such Indebtedness in effect on such date of
determination;
(b) if interest on any Indebtedness actually Incurred on such date of
determination may optionally be determined at an interest rate based upon a
factor of a prime or similar rate, a eurocurrency interbank offered rate, or
other rates, then the interest rate in effect on such date of determination
will be deemed to have been in effect during the Four Quarter Period; and
(c) notwithstanding clause (a) above, interest on Indebtedness determined
on a fluctuating basis, to the extent such interest is covered by Hedging
Obligations, shall be deemed to accrue at the rate per annum resulting after
giving effect to the operation of such agreements.
"Consolidated Fixed Charges" means, for any period, the sum, without
duplication, of:
(1) Consolidated Interest Expense, plus
(2) the product of:
(a) the amount of all cash and non-cash dividend payments on any series
of Preferred Stock or Disqualified Capital Stock of the Company (other than
dividends paid in Qualified Capital Stock) paid, accrued or scheduled to be
paid or accrued during such period times
(b) a fraction, the numerator of which is one and the denominator of
which is one minus the then current effective consolidated federal, state
and local tax rate of the Company, expressed as a decimal.
"Consolidated Income Tax Expense" means, with respect to the Company for any
period, the provision for Federal, state, local and foreign income taxes
payable by the Company and its Restricted Subsidiaries for such period as
determined on a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means, for any period, the sum of, without
duplication determined on a consolidated basis in accordance with GAAP:
(1) the aggregate of cash and non-cash interest expense of the Company and
its Restricted Subsidiaries for such period determined on a consolidated
basis in accordance with GAAP, including, without limitation (whether or not
interest expense in accordance with GAAP):
(a) any amortization or accretion of debt discount or any interest paid
on Indebtedness of the Company in the form of additional Indebtedness,
(b) any amortization of deferred financing costs,
(c) the net costs under Currency Agreements related to Indebtedness and
Interest Rate Agreements (including amortization of fees),
(d) all capitalized interest,
(e) the interest portion of any deferred payment obligation,
(f) commissions, discounts and other fees and charges Incurred in
respect of letters of credit or bankers' acceptances, and
(g) any interest expense on Indebtedness of another Person that is
guaranteed by the Company or one of its Restricted Subsidiaries or secured
by a Lien on the assets of the Company or one of its Restricted
Subsidiaries (whether or not such guarantee or Lien is called upon); and
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(2) the interest component of Capitalized Lease Obligations paid, accrued
and/or scheduled to be paid or accrued by the Company and its Restricted
Subsidiaries during such period.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate net income (or loss) of the Company and its Restricted
Subsidiaries for such period on a consolidated basis, determined in accordance
with GAAP; provided, that there shall be excluded therefrom:
(1) net after-tax gains from Asset Sale Transactions or abandonments or
reserves relating thereto;
(2) net after-tax items classified as extraordinary gains or losses;
(3) for purposes of calculating Consolidated Net Income pursuant to clause
(3) of the first paragraph of "Certain Covenants--Limitation on Restricted
Payments" only, the net income of any Person acquired in a "pooling of
interests" transaction accrued prior to the date it becomes a Restricted
Subsidiary or is merged or consolidated with the Company or any Restricted
Subsidiary;
(4) the net income (but not loss) of any Restricted Subsidiary to the
extent that the declaration of dividends or similar distributions by that
Restricted Subsidiary of that income is restricted by contract, operation of
law or otherwise;
(5) the net income of any Person, other than a Restricted Subsidiary,
except to the extent of cash dividends or distributions paid to the Company
or to a Restricted Subsidiary by such Person;
(6) any increase (but not decrease) in net income attributable to minority
interests in any Restricted Subsidiary;
(7) any restoration to income of any contingency reserve in excess of $1.0
million, except to the extent that provision for such reserve was made out of
Consolidated Net Income accrued at any time following the Issue Date; and
(8) the cumulative effect of changes in accounting principles.
"Consolidated Net Worth" of any Person means the consolidated stockholders'
equity of such Person, determined on a consolidated basis in accordance with
GAAP, less (without duplication) amounts attributable to Disqualified Capital
Stock of such Person.
"Consolidated Non-cash Charges" means, for any period, the aggregate
depreciation, amortization and other non-cash expenses or losses of the Company
and its Restricted Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP (excluding any such charge which constitutes an
accrual of or a reserve for cash charges for any future period).
"Covenant Defeasance" has the meaning set forth under "Legal Defeasance and
Covenant Defeasance."
"Currency Agreement" means, in respect of any Person, any foreign exchange
contract, currency swap agreement or other similar agreement as to which such
Person is a party.
"Debt Rating" shall mean the rating assigned to the Notes by Moody's or S&P,
as the case may be.
"Default" means an event or condition the occurrence of which is, or with the
lapse of time or the giving of notice or both would be, an Event of Default.
"Designated Senior Indebtedness" means:
(1) in respect of the Company, the Senior Credit Facility and any other
Senior Indebtedness of the Company which, at the date of determination, has
an aggregate principal amount outstanding of, or under which, at the date
of determination, the holders thereof are committed to lend up to, at least
$15 million and is specifically designated by the Company in the instrument
evidencing or governing such Senior Indebtedness as "Designated Senior
Indebtedness;" and
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(2) in respect of any Note Guarantor, the Senior Credit Facility and any
other Senior Indebtedness of any Note Guarantor which, at the date of
determination, has an aggregate principal amount outstanding of, or under
which, at the date of determination, the holders thereof are committed to
lend up to, at least $15 million and is specifically designated by such
Note Guarantor in the instrument evidencing or governing such Senior
Indebtedness as "Designated Senior Indebtedness."
"Designation" and "Designation Amount" have the meanings set forth under
"Certain Covenants--Designation of Unrestricted Subsidiaries" above.
"Disqualified Capital Stock" means that portion of any Capital Stock which,
by its terms (or by the terms of any security into which it is convertible or
for which it is exchangeable at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or is redeemable at the sole option of
the holder thereof, in any case, on or prior to the 91st day after the final
maturity date of the Notes; provided, however, that any Capital Stock that
would not constitute Disqualified Capital Stock but for provisions thereof
giving holders thereof the right to require such Person to repurchase or redeem
such Capital Stock upon the occurrence of an "asset sale" or "change of
control" occurring prior to the 91st day following the Stated Maturity of the
Notes shall not constitute Disqualified Capital Stock if (x) the "asset sale"
or "change of control" provisions applicable to such Capital Stock are not more
favorable to the holders of such Capital Stock than the provisions described
under "--Change of Control" and "--Certain Covenants--Limitation on Asset
Sales" and (y) any such requirement only becomes operative after compliance
with such terms applicable to the Notes, including the purchase of any Notes
tendered pursuant thereto.
"Domestic Restricted Subsidiary" means any direct or indirect Restricted
Subsidiary that is organized under the laws of the United States, any state
thereof or the District of Columbia.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or any
successor statute or statutes thereto.
"Exchange Notes" has the meaning set forth under "Exchange Offer;
Registration Rights."
"Fair Market Value" means, with respect to any asset, the price (after taking
into account any liabilities relating to such assets) which could be negotiated
in an arm's-length free market transaction, for cash, between a willing seller
and a willing and able buyer, neither of which is under any compulsion to
complete the transaction; provided, that the Fair Market Value of any such
asset or assets shall be determined conclusively by the Board of Directors of
the Company acting in good faith, and shall be evidenced by a Board Resolution.
"Four Quarter Period" has the meaning set forth in the definition of
"Consolidated Fixed Charge Coverage Ratio" above.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, which are in effect as of the date of
determination; provided, however, that all calculations made for purposes of
determining compliance with the financial covenants contained herein shall
utilize GAAP as in effect on the Issue Date.
"Hedging obligations" means the obligations of any Person pursuant to any
Interest Rate Agreement or Currency Agreement.
"Incur" means, with respect to any Indebtedness or other obligation of any
Person, to create, issue, incur (including by conversion, exchange or
otherwise), assume, guarantee or otherwise become liable in respect of such
Indebtedness or other obligation on the balance sheet of such Person (and
"Incurrence," "Incurred" and "Incurring" shall have meanings correlative to the
preceding). Indebtedness of any Person or any of its
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Subsidiaries existing at the time such Person becomes a Restricted Subsidiary
or at the time it merges or consolidates with the Company or any of its
Restricted Subsidiaries or at the time its assets are acquired and Indebtedness
assumed in connection therewith by the Company or any of its Restricted
Subsidiaries, whether or not such Indebtedness was Incurred in connection with,
as a result of, or in contemplation of, such Person becoming a Restricted
Subsidiary or being merged or consolidated with the Company or any of its
Restricted Subsidiaries or the acquisition of such Person's assets, shall be
deemed Incurred at that time.
"Indebtedness" means with respect to any Person, without duplication:
(1) the principal amount (or, if less, the accreted value) of all
obligations of such Person for borrowed money;
(2) the principal amount (or, if less, the accreted value) of all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments;
(3) all Capitalized Lease Obligations of such Person;
(4) all obligations of such Person issued or assumed as the deferred
purchase price of property, all conditional sale obligations and all
obligations under any title retention agreement (but excluding trade
accounts payable and other accrued liabilities arising in the ordinary
course of business that are not overdue by 90 days or more or are being
contested in good faith by appropriate proceedings promptly instituted and
diligently conducted);
(5) all obligations of such Person for the reimbursement of any obligor
on any letter of credit, banker's acceptance or similar credit transaction;
(6) guarantees and other contingent obligations of such Person in
respect of Indebtedness referred to in clauses (1) through (5) above and
clause (8) below;
(7) all Indebtedness of any other Person of the type referred to in
clauses (1) through (6) which are secured by any lien on any property or
asset of such Person, the amount of such Indebtedness being deemed to be
the lesser of the fair market value of such property or asset or the amount
of the Indebtedness so secured;
(8) all obligations under Hedging Obligations of such Person; and
(9) all Disqualified Capital Stock issued by such Person with the amount
of Indebtedness represented by such Disqualified Capital Stock being equal
to the greater of its voluntary or involuntary liquidation preference and
its maximum fixed repurchase price, but excluding accrued dividends, if
any; provided that if the "maximum fixed repurchase price" of any
Disqualified Capital Stock:
(a) does not have a fixed repurchase price, such price shall be
calculated in accordance with the terms of such Disqualified Capital
Stock as if such Disqualified Capital Stock were purchased on any date
on which Indebtedness shall be required to be determined pursuant to
the Indenture, and
(b) is based upon, or measured by, the fair market value of such
Disqualified Capital Stock, such fair market value shall be the Fair
Market Value thereof.
"Independent Financial Advisor" means an accounting firm, appraisal firm,
investment banking firm or consultant to Persons engaged in a Permitted
Business, in each case, of nationally recognized standing that is, in the
judgement of the Company's Board of Directors, qualified to perform the task
for which it has been engaged and which is independent in connection with the
relevant transaction.
"Interest Rate Agreement" of any Person means any interest rate protection
agreement (including, without limitation, interest rate swaps, caps, floors,
collars, derivative instruments and similar agreements) and/or other types of
interest hedging agreements.
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"Investment" means, with respect to any Person, any:
(1) direct or indirect loan or other extension of credit (including,
without limitation, a guarantee),
(2) capital contribution to (by means of any transfer of cash or other
property to others or any payment for property or services for the account
or use of others), or
(3) any purchase or acquisition by such Person of any Capital Stock,
bonds, notes, debentures or other securities or evidences of Indebtedness
issued by, any other Person.
"Investment" shall exclude accounts receivable or deposits arising in the
ordinary course of business. For purposes of the "Limitation on Restricted
Payments" covenant, the Company shall be deemed to have made an "Investment"
in an Unrestricted Subsidiary at the time of its Designation, which shall be
valued at the Fair Market Value of the sum of the net assets of any such
Unrestricted Subsidiary at the time of its Designation and the amount of any
Indebtedness of such Unrestricted Subsidiary guaranteed by the Company or any
Restricted Subsidiary or owed to the Company or any Restricted Subsidiary
immediately following such Designation.
Any property transferred to or from an Unrestricted Subsidiary will be
valued at its Fair Market Value at the time of such transfer. If the Company
or any Restricted Subsidiary sells or otherwise disposes of any Capital Stock
of a Restricted Subsidiary (including any issuance and sale of Capital Stock
by a Restricted Subsidiary) such that, after giving effect to any such sale or
disposition, such Restricted Subsidiary would cease to be a Subsidiary of the
Company, the Company shall be deemed to have made an Investment on the date of
any such sale or disposition equal to the sum of the Fair Market Value of the
Capital Stock of such former Restricted Subsidiary held by the Company or any
Restricted Subsidiary immediately following such sale or other disposition and
the amount of any Indebtedness of such former Restricted Subsidiary guaranteed
by the Company or any Restricted Subsidiary or owed to the Company or any
Restricted Subsidiary immediately following such sale or other disposition.
"Investment Grade Status" exists as of any date on which (i) the Debt Rating
of Moody's is at least Baa3 (or the equivalent) or higher and (ii) the Debt
Rating of S&P is at least BBB- (or the equivalent) or higher.
"Issue Date" means the first date of issuance of Notes under the Indenture.
"Legal Defeasance" has the meaning set forth under "Legal Defeasance and
Covenant Defeasance."
"Lien" means any lien, mortgage, deed of trust, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale or other
title retention agreement, any lease in the nature thereof and any agreement
to give any security interest).
"Moody's" means Moody's Investors Service, Inc. or any successor to the
business of such corporation.
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds in
the form of cash or Cash Equivalents, including payments in respect of
deferred payment obligations when received in the form of cash or Cash
Equivalents received by the Company or any of its Restricted Subsidiaries from
such Asset Sale, net of the direct costs relating to such Asset Sale,
including:
(1) out-of-pocket expenses and fees relating to such Asset Sale
(including, without limitation, legal, accounting and investment banking
fees and sales commissions);
(2) taxes paid or payable after taking into account any reduction in
consolidated tax liability due to available tax credits or deductions and
any tax sharing arrangements;
(3) repayment or Indebtedness secured by a Lien permitted under the
Indenture that is required to be repaid in connection with such Asset Sale;
and
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(4) appropriate amounts to be provided by the Company or any Restricted
Subsidiary, as the case may be, as a reserve, in accordance with GAAP,
against any liabilities associated with such Asset Sale and retained by the
Company or any Restricted Subsidiary, as the case may be, after such Asset
Sale, including, without limitation, pension and other post-employment
benefit liabilities, liabilities related to environmental matters and
liabilities under any indemnification obligations associated with such
Asset Sale.
"Net Proceeds Offer" has the meaning set forth under "Certain Covenants--
Limitation on Asset Sales."
"Obligations" means, with respect to any Indebtedness, any principal,
interest (including, without limitation, Post-Petition Interest), penalties,
fees, indemnifications, reimbursements, including, in the case of the Notes and
the Note Guarantees in respect thereof, damages, and other liabilities payable
under the documentation governing such Indebtedness.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.
"Payment Blockage Period" has the meaning set forth under "Subordination of
the Notes and the Note Guarantees."
"Permitted Business" means the business or businesses conducted by the
Company and its Restricted Subsidiaries as of the Issue Date and any business
ancillary, complementary or related thereto.
"Permitted Holders" means
(1) Thoma Cressey Equity Partners LLC and its Affiliates and
(2) (a) Thomas S. Johnson; (b) the spouse, parents, siblings,
descendants of Thomas S. Johnson or of such spouse or siblings; (c) in the
event of incompetence or death of Thomas S. Johnson or any of the Persons
described in (b) above, such Person's estate, executor, administrator,
committee or other personal representative in each case who at any
particular date shall beneficially own or have the right to acquire,
directly or indirectly, Voting Stock of the Company; (d) any trusts created
for the sole benefit of Thomas S. Johnson or any of the Persons described
in clauses (b) or (c) above; (e) any Person of which Thomas S. Johnson or
any of the Persons described in clauses (b) or (c) above (x) "beneficially
owns" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) on a
fully diluted basis at least 51% of the voting power of the Voting Stock of
such Person or (y) is the sole trustee or general partner, or otherwise has
the sole power to manage the business and affairs of such Person.
"Permitted Indebtedness" means, without duplication, each of the following:
(1) Indebtedness in respect of the Notes issued on the Issue Date and
Exchange Notes and replacement Notes issued therefor pursuant to the
Indenture;
(2) guarantees by the Company of Indebtedness of any Note Guarantor
permitted under the Indenture and guarantees by any Note Guarantor of
Indebtedness of the Company or any other Note Guarantor permitted under the
Indenture provided, that if any such guarantee is of Subordinated
Indebtedness, then the Notes, in the case of guarantee by the Company, or
the Note Guarantee, in the case of a guarantee by a Note Guarantor, shall
be senior to the Company's or such Note Guarantor's guarantee of such
Subordinated Indebtedness;
(3) Indebtedness Incurred pursuant to the Senior Credit Facility in an
aggregate principal amount at any time outstanding not to exceed
$250,000,000, less the amount of any permanent prepayments or reductions of
commitments in respect of such Indebtedness made with the Net Cash Proceeds
of an Asset Sale in order to comply with "Certain Covenants--Limitation on
Asset Sales";
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(4) other Indebtedness of the Company and its Restricted Subsidiaries
outstanding on the Issue Date other than Indebtedness specified under any
of the other clauses of this definition of Permitted Indebtedness;
(5) Hedging Obligations Incurred for the purpose of fixing or hedging
interest rate risk and not for speculative purposes;
(6) intercompany Indebtedness among the Company and any of its
Restricted Subsidiaries; provided that:
(a) if the Company or any Note Guarantor is the obligor on such
Indebtedness, such Indebtedness must be expressly subordinated to the
prior payment in full of all obligations under the Notes and the
Indenture, in the case of the Company, or such Subsidiary's Note
Guarantee, in the case of any such Subsidiary Guarantor, and
(b) in the event that at any time any such Indebtedness ceases to be
held by the Company or a Restricted Subsidiary, such Indebtedness shall
be deemed to be Incurred and not permitted by this clause (6) at the
time such event occurs;
(7) Indebtedness of the Company or any of its Restricted Subsidiaries
arising from the honoring by a bank or other financial institution of a
check, draft or similar instrument inadvertently (except in the case of
daylight overdrafts) drawn against insufficient funds in the ordinary
course of business; provided, that such Indebtedness is extinguished within
five business days of Incurrence;
(8) Indebtedness of the Company or any of its Restricted Subsidiaries
represented by letters of credit for the account of the Company or any
Restricted Subsidiary, as the case may be, in order to provide security for
workers' compensation claims, payment obligations in connection with self-
insurance or similar requirements in the ordinary course of business;
(9) Refinancing Indebtedness in respect of:
(a) Indebtedness (other than Permitted Indebtedness and Indebtedness
owed to the Company or any Subsidiary) Incurred pursuant to paragraph
(1) of "Certain Covenants--Limitation on Incurrence of Additional
Indebtedness" or
(b) Indebtedness Incurred pursuant to clause (1) or (4) of this
definition of Permitted Indebtedness;
(10) Capitalized Lease Obligations and Purchase Money Indebtedness that
do not exceed $10 million in the aggregate at any one time outstanding; and
(11) Additional Indebtedness of the Company or any Note Guarantor in an
aggregate principal amount not to exceed $25 million at any one time
outstanding (which amount may, but need not, be Incurred in whole or in
part under the Senior Credit Facility).
For purposes of determining compliance with the covenant "Limitation on
Incurrence of Additional Indebtedness", in the event that an item of
Indebtedness meets the criteria of more than one of the categories described
above in this definition or is entitled to be Incurred pursuant to such
covenant, the Company shall, in its sole discretion, classify such item of
Indebtedness in any manner that complies with such covenant.
"Permitted Investments" means:
(1) Investments by the Company or any Restricted Subsidiary in any
Person that is, or that result in any Person becoming, immediately after
such Investment, a Restricted Subsidiary or constituting a merger or
consolidation of such Person into the Company or with or into a Restricted
Subsidiary;
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(2) Investments by any Restricted Subsidiary in the Company;
(3) Investments in cash and Cash Equivalents;
(4) any extension, modification or renewal of any Investments existing
as of the Issue Date (but not Investments involving additional advances,
contributions or other investments of cash or property or other increases
thereof, other than as a result of the accrual or accretion of interest or
original issue discount or payment-in-kind pursuant to the terms of such
Investment as of the Issue Date);
(5) Investments permitted pursuant to clause (2)(b) or (e) of "Certain
Covenants--Limitations on Transactions with Affiliates";
(6) Investments received as a result of the bankruptcy or reorganization
of any Person or taken in settlement of or other resolution of claims or
disputes, and, in each case, extensions, modifications and renewals
thereof;
(7) Investments made by the Company or its Restricted Subsidiaries as a
result of non-cash consideration permitted to be received in connection
with an Asset Sale made in compliance with the covenant described under
"Certain Covenants--Limitation on Asset Sales";
(8) Investments made solely in the form of common shares of the Company
constituting Qualified Capital Stock;
(9) Investments received by the Company in the form of promissory notes
received from employees of the Company as consideration for the issuance of
Capital Stock, other than Disqualified Capital Stock;
(10) Investments, including guarantees, by the Company in any special
purpose financing vehicle; and
(11) other Investments not to exceed $20 million at any one time
outstanding.
"Permitted Junior Securities" means any securities of the Company or any
other Person that are:
(1) equity securities without special covenants; or
(2) debt securities expressly subordinated in right of payment to all
Senior Indebtedness that may at the time be outstanding, to substantially
the same extent as, or to a greater extent than, the Notes are subordinated
as provided in the Indenture, in any event pursuant to a court order so
providing and as to which
(a) the rate of interest on such securities shall not exceed the
effective rate of interest on the Notes on the Issue Date,
(b) such securities shall not be entitled to the benefits of
covenants or defaults materially more beneficial to the holders of such
securities than those in effect with respect to the Notes on the Issue
Date and
(c) such securities shall not provide for amortization (including
sinking fund and mandatory prepayment provisions) commencing prior to
the date six months following the final scheduled maturity date of the
Senior Indebtedness (as modified by the plan of reorganization pursuant
to which such securities are issued).
"Permitted Liens" means any of the following:
(1) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen and other Liens imposed by law
incurred in the ordinary course of business for
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sums not yet delinquent or being contested in good faith, if such reserve
or other appropriate provision, if any, as shall be required by GAAP shall
have been made in respect thereof;
(2) Liens Incurred or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other
types of social security, including any Lien securing letters of credit
issued in the ordinary course of business consistent with past practice in
connection therewith, or to secure the performance of tenders, statutory
obligations, regulatory obligations, surety and appeal bonds, bids, leases,
warranties, government performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the payment of borrowed
money);
(3) any interest or title of a lessor under any Capitalized Lease
Obligation; provided, that such Liens do not extend to any property which
is not leased property subject to such Capitalized Lease Obligation;
(4) purchase money Liens to finance property of the Company or a
Restricted Subsidiary acquired in the ordinary course of business;
provided, that:
(a) the related purchase money Indebtedness shall not exceed the
cost of such property and shall not be secured by any property of the
Company or any Restricted Subsidiary other than the property so
acquired and
(b) the Lien securing such Indebtedness shall be created within 90
days of such acquisition;
(5) Liens upon specific items of inventory or other goods and proceeds
of any Person securing such Person's obligations in respect of bankers'
acceptances issued or created for the account of such Person to facilitate
the purchase, shipment or storage of such inventory or other goods;
(6) Liens securing reimbursement obligations with respect to commercial
letters of credit which encumber documents and other property relating to
such letters of credit and products and proceeds thereof;
(7) Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual, or warranty requirements of the Company
or a Restricted Subsidiary, including rights of offset and set-off;
(8) Liens securing Hedging Obligations that relate to Indebtedness that
is Incurred in accordance with "Certain Covenants--Limitation on Incurrence
of Additional Indebtedness" and that are secured by the same assets as
secure such Hedging Obligations;
(9) Liens existing on the Issue Date and Liens to secure any Refinancing
Indebtedness which is Incurred to Refinance any Indebtedness which has been
secured by a Lien permitted under "Certain Covenants--Limitation on Liens"
and which Indebtedness has been Incurred in accordance with "Certain
Covenants--Limitation on Incurrence of Additional Indebtedness"; provided,
that such new Liens:
(a) are no less favorable to the Holders of Notes and are not more
favorable to the lienholders with respect to such Liens than the Liens in
respect of the Indebtedness being Refinanced and
(b) do not extend to any property or assets other than the property or
assets securing the Indebtedness Refinanced by such Refinancing
Indebtedness;
(10) Liens securing Acquired Indebtedness Incurred in accordance with
"Certain Covenants--Limitation on Incurrence of Additional Indebtedness",
provided, that
(a) such Liens secured such Acquired Indebtedness at the time of and
prior to the Incurrence of such Acquired Indebtedness by the Company or
a Restricted Subsidiary and were not granted in
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connection with, or in anticipation or contemplation of the Incurrence
of such Acquired Indebtedness by the Company or a Restricted Subsidiary
and
(b) such Liens do not extend to or cover any property of the Company
or any Restricted Subsidiary other than the property that secured the
Acquired Indebtedness prior to the time such Indebtedness became
Acquired Indebtedness of the Company or a Restricted Subsidiary and are
no more favorable to the lienholders than the Liens securing the
Acquired Indebtedness prior to the Incurrence of such Acquired
Indebtedness by the Company or a Restricted Subsidiary;
(11) Liens in favor of the Company or the Note Guarantors; and
(12) Liens not otherwise permitted by clauses (1) through (11) with
respect to obligations that do not, in the aggregate, exceed $5 million at
any one time outstanding.
"Person" means an individual, partnership, corporation, limited liability
company, unincorporated organization, trust or joint venture, or a governmental
agency or political subdivision thereof.
"Post-Petition Interest" means all interest accrued or accruing after the
commencement of any insolvency or liquidation proceeding (and interest that
would accrue but for the commencement of any insolvency or liquidation
proceeding) in accordance with and at the contract rate (including, without
limitation, any rate applicable upon default) specified in the agreement or
instrument creating, evidencing or governing any Indebtedness, whether or not,
pursuant to applicable law or otherwise, the claim for such interest is allowed
as a claim in such insolvency or liquidation proceeding.
"Preferred Stock" of any Person means any Capital Stock of such Person that
has preferential rights over any other Capital Stock of such Person with
respect to dividends or redemptions or upon liquidation.
"Public Equity Offering" has the meaning set forth under "--Redemption."
"Purchase Money Indebtedness" means Indebtedness of the Company or any
Restricted Subsidiary Incurred for the purpose of financing all or any part of
the purchase price, or other cost of construction or improvement of any
property; provided, that the aggregate principal amount of such Indebtedness
does not exceed the lesser of the Fair Market Value of such property or such
purchase price or cost, including any Refinancing of such Indebtedness that
does not increase the aggregate principal amount (or accreted amount, if less)
thereof as of the date of Refinancing.
"Qualified Capital Stock" means any Capital Stock that is not Disqualified
Capital Stock and any warrants, rights or options to purchase or acquire
Capital Stock that is not Disqualified Capital Stock that are not convertible
into or exchangeable into Disqualified Capital Stock.
"Refinance" means, in respect of any security or Indebtedness, to refinance,
extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue a
security or Indebtedness in exchange or replacement for, such security or
Indebtedness in whole or in part "Refinanced" and "Refinancing" shall have
correlative meanings.
"Refinancing Indebtedness" means any Refinancing by the Company or any
Restricted Subsidiary, to the extent that such Refinancing does not:
(1) result in an increase in the aggregate principal amount of the
Indebtedness of such Person as of the date of such proposed Refinancing
(plus the amount of any premium required to be paid under the terms of the
instrument governing such Indebtedness and plus the amount of reasonable
expenses incurred by the Company in connection with such Refinancing); or
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(2) create Indebtedness with:
(a) a Weighted Average Life to Maturity that is less than the
Weighted Average Life to Maturity of the indebtedness being Refinanced
or
(b) a final maturity earlier than the final maturity of the
Indebtedness being Refinanced;
provided, that:
. if such Indebtedness being Refinanced is Indebtedness of the
Company, then such Refinancing Indebtedness shall be Indebtedness
of the Company;
. if such Indebtedness being Refinanced is Indebtedness of a Note
Guarantor, then such Indebtedness shall be Indebtedness of the
Company and/or such Note Guarantor;
. if such Indebtedness being Refinanced is subordinate or junior to
the Notes or any Note Guarantee, then such Refinancing
Indebtedness shall be subordinate to the Notes or such Note
Guarantee at least to the same extent and in the same manner as
the Indebtedness being Refinanced; and
. if such Indebtedness being Refinanced has an original maturity
date after the Stated Maturity of the Notes, then such
Refinancing Indebtedness need only have a maturity date that is
after the Stated Maturity of the Notes.
"Replacement Assets" has the meaning set forth under "Certain Covenants--
Limitation on Asset Sales."
"Representative" means any trustee, agent or representative (if any) for an
issue of Senior Indebtedness of the Company.
"Restricted Payment" has the meaning set forth under "Certain Covenants--
Limitation on Restricted Payments."
"Restricted Subsidiary" of the Company means any Subsidiary of the Company
which at the time of determination is not an Unrestricted Subsidiary.
"Revocation" has the meaning set forth under "Certain Covenants--Limitation
on the Designation of Unrestricted Subsidiaries."
"Royalty Agreement" means the Royalty Agreement dated March 29, 1996, as
amended, among Global Imaging Operations, Inc. and each of the Subsidiaries of
the Company.
"Sale and Leaseback Transaction" means any direct or indirect arrangement
with any Person or to which any such Person is a party providing for the
leasing to the Company or a Restricted Subsidiary of any property, whether
owned by the Company or any Restricted Subsidiary at the Issue Date or later
acquired, which has been or is to be sold or transferred by the Company or
such Restricted Subsidiary to such Person or to any other Person by whom funds
have been or are to be advanced on the security of such Property.
"S&P" means Standard & Poor's Corporation or any successor to the business
of such corporation.
"Senior Credit Facility" means the credit agreement dated as of July 31,
1998 among the Company and the Subsidiaries thereof party thereto as
Borrowers, First Union National Bank, as Administrative Agent and as Lender,
and the other agents and lenders from time to time named therein and all
amendments thereto, together with the related documents thereto (including,
without limitation, any guarantee agreements and security documents), in each
case as such agreements may be amended (including any amendment and
restatement thereof), supplemented or otherwise modified from time to time by
one or more credit agreements, including any agreement adding or deleting
Subsidiaries of the Company as additional borrowers or guarantors
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thereunder or extending the maturity of, refinancing, replacing, increasing or
otherwise restructuring all or any portion of the Indebtedness under such
agreement(s) or any successor or replacement agreement(s) and whether by the
same or any other agent, lender or group of lenders.
"Senior Indebtedness" means, at any date, with respect to any Company or any
Note Guarantor, as the case may be:
(1) all Obligations of the Company or such Note Guarantor, as the case
may be, under the Senior Credit Facility, including all Hedging Obligations
with respect thereto;
(2) all Obligations in respect of Indebtedness of the Company or such
Note Guarantor, as the case may be, for borrowed money.
Notwithstanding the preceding, Senior Indebtedness shall not include:
(1) any liability for Federal, state, local or other taxes owing by the
Company or such Note Guarantor, as the case may be;
(2) any Indebtedness among or between the Company and any Subsidiary or
Affiliate of the Company;
(3) that portion of any Indebtedness that is Incurred in violation of
the Indenture;
(4) any Indebtedness represented by Disqualified Capital Stock;
(5) any Indebtedness that, when Incurred and without respect to any
election under Section 1111(b) of Title 11, United States Code, is without
recourse to the Company or such Note Guarantor, as the case may be;
(6) any Indebtedness that is, by its express terms, not senior in right
of payment to the Notes or the Exchange Notes, in the case of the Company,
or the relevant Note Guarantee, in the case of such Note Guarantor; or
(7) any Indebtedness that is, by its express terms, subordinated in
right of payment to any other Indebtedness of the Company or such Note
Guarantor, as the case may be.
"Senior Subordinated Indebtedness" means, with respect to the Company, the
Notes and, with respect to any Note Guarantor, such Note Guarantor's Note
Guarantee and any other Indebtedness of the Company or such Note Guarantor that
specifically provides that such Indebtedness is to rank equal in right of
payment with the Notes or such Note Guarantee, as the case may be, and is not
subordinated by its terms in right of payment to any Indebtedness or other
obligation of the Company or such Note Guarantor which is not Senior
Indebtedness.
"Significant Subsidiary" shall mean a Subsidiary of the Company constituting
a "Significant Subsidiary" in accordance with Rule 1-02(w) of Regulation S-X
under the Securities Act.
"Stated Maturity" means, with respect to any security, the date specified in
such security as the fixed date on which the final payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency unless such contingency has occurred).
"Subordinated Indebtedness" means, with respect to the Company or any Note
Guarantor, any Indebtedness of the Company or such Note Guarantor, as the case
may be, which is expressly subordinated in right of payment to the Notes or
such Note Guarantor's Note Guarantee, as the case may be.
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"Subsidiary," with respect to any Person, means:
(1) any corporation of which the outstanding Capital Stock having at
least a majority of the votes entitled to be cast in the election of
directors under ordinary circumstances shall at the time be owned, directly
or indirectly, by such Person; or
(2) any other Person of which at least a majority of the voting interest
under ordinary circumstances is at the time, directly or indirectly, owned
by such Person.
"Surviving Entity" has the meaning set forth under "Certain Covenants--
Merger, Consolidation and Sale of Assets."
"Unrestricted Subsidiary" means any Subsidiary of the Company designated as
such pursuant to "Certain Covenants--Designation of Unrestricted Subsidiaries."
Any such designation may be revoked by a Board Resolution of the Company,
subject to the provisions of such covenant.
"Voting Stock" with respect to any Person, means securities of any class of
Capital Stock of such Person entitling the holders thereof (whether at all
times or only so long as no senior class of stock has voting power by reason of
any contingency) to vote in the election of members of the Board of Directors
(or equivalent governing body) of such Person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing
(1) the then outstanding aggregate principal amount of such Indebtedness
into
(2) the sum of the total of the products obtained by multiplying:
(a) the amount of each then remaining installment, sinking fund,
serial maturity or other required payment of principal, including
payment at final maturity, in respect thereof, by
(b) the number of years (calculated to the nearest one-twelfth) that
will elapse between such date and the making of such payment.
"Wholly Owned Restricted Subsidiary" of the Company means any Restricted
Subsidiary of which all the outstanding Capital Stock (other than in the case
of a foreign Restricted Subsidiary, directors' qualifying shares or an
immaterial amount of shares required to be owned by other Persons pursuant to
applicable law) are owned by the Company or any Wholly Owned Restricted
Subsidiary.
99
<PAGE>
PLAN OF DISTRIBUTION
Each broker-dealer that receives exchange notes for its own account pursuant
to the exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of such exchange notes. This prospectus, as it may
be amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of exchange notes received in exchange for outstanding
notes where such outstanding notes were acquired as a result of market-making
activities or other trading activities. Global has agreed that, starting on the
expiration date and ending on the close of business 180 days after the
expiration date, it will make this prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale. In
addition, until , 1999, all dealers effecting transactions in the
exchange notes may be required to deliver a prospectus.
Global will not receive any proceeds from the issuance of the exchange notes
offered hereby or any sale of exchange notes by broker-dealers. Exchange notes
received by broker-dealers for their own account pursuant to the exchange offer
may be sold from time to time in one or more transactions in the over-the-
counter market, in negotiated transactions, through the writing of options on
the exchange notes or a combination of such methods of resale, at market prices
prevailing at the time of resale, at prices related to such prevailing market
prices or negotiated prices. Any such resale may be made directly to purchasers
or to or through brokers or dealers who may receive compensation in the form of
commissions or concessions from any such broker-dealer and/or the purchasers of
any such exchange notes. Any broker-dealer that resells exchange notes that
were received by it for its own account pursuant to the exchange offer and any
broker or dealer that participates in a distribution of such exchange notes may
be deemed to be an "underwriter" within the meaning of the Securities Act and
any profit from any such resale of exchange notes and any commissions or
concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that by
acknowledging that it will deliver and by delivering a prospectus, a broker-
dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
For a period of 180 days after the expiration date, Global will promptly send
additional copies of this prospectus and any amendment or supplement to this
prospectus to any broker-dealer that requests such documents in the Letter of
Transmittal. Global has agreed to pay all expenses incident to the exchange
offer (including the expenses of one counsel for the holders of the outstanding
notes) other than dealers' and brokers' discounts, commissions and counsel fees
and will indemnify the holders of the outstanding notes (including any broker-
dealers) against certain liabilities, including liabilities under the
Securities Act.
100
<PAGE>
LEGAL MATTERS
Hogan & Hartson, L.L.P. of Washington, D.C. will pass upon the legality of
the exchange notes for Global. Tidewater Partners, LLC ("Tidewater"), a limited
liability company whose managing members are J. Hovey Kemp and Christopher J.
Hagan, partners of Hogan & Hartson L.L.P., and whose additional members consist
of two attorneys and one legal assistant of Hogan & Hartson L.L.P., owns 18,048
shares of Global's common stock. J. Hovey Kemp and Christopher J. Hagan each
serve as Assistant Secretary to Global.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and schedule at March 31, 1996, 1997, and 1998, and for
each of the three years in the period ended March 31, 1998, as set forth in
their report. We've included our financial statements and schedule in the
prospectus and elsewhere in the registration statement in reliance on Ernst &
Young LLP's report, given on their authority as experts in accounting and
auditing.
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements at December 31, 1997 and for the nine month period ended
December 31, 1997, as set forth in their report. We've included our financial
statements in the prospectus and elsewhere in the registration statement in
reliance on Ernst & Young LLP's report, given on their authority as experts in
accounting and auditing.
Ernst & Young LLP, independent auditors, have audited the financial
statements of Electronics Systems, Inc. for each of the two years in the period
ended December 31, 1996, and for the six month period ended June 30, 1997, as
set forth in their report. We've included these financial statements in the
prospectus and elsewhere in the registration statement in reliance on Ernst &
Young LLP's report, given on their authority as experts in accounting and
auditing.
The financial statements of Eastern Copy Products, Inc. and Subsidiaries for
each of the three years in the period ended July 31, 1997, appearing in this
prospectus and registration statement have been audited by Pasquale & Bowers,
LLP, independent auditors, as indicated in their report, and are included in
this prospectus and registration statement in reliance on their authority as
experts in giving their report.
The financial statements of Duplicating Specialties, Inc. d/b/a Copytronix
for the ten-month period ended August 31, 1997, appearing in this prospectus
and registration statement have been audited by Moss Adams LLP, independent
auditors, as indicated in their report, and are included in this prospectus and
registration statement in reliance on their authority as experts in giving
their report.
The financial statements of Electronic Systems of Richmond, Inc. for the year
ended December 31, 1996 and for the eleven-month period ended November 30,
1997, appearing in this prospectus and registration statement have been audited
by Edmondson, LedBetter & Ballard, L.L.P., independent auditors, as indicated
in their report, and are included in this prospectus and registration statement
in reliance on their authority as experts in giving their report.
The financial statements of Connecticut Business Systems, Inc. for each of
the two years in the period ended September 30, 1997, and for the three-month
period ended December 31, 1997, appearing in this prospectus and registration
statement have been audited by Arthur Andersen LLP, independent auditors, as
indicated in their report, and are included in this prospectus and registration
statement in reliance on their authority as experts in giving their report.
101
<PAGE>
The financial statements of the Business Systems Division of Bloom's Inc.,
for the year ended January 31, 1997, and for the eleven-month period ended
December 31, 1997, appearing in this prospectus and registration statement have
been audited by Joseph D. Kalicka & Company, LLP, independent auditors, as
indicated in their report, and are included in this prospectus and registration
statement in reliance on their authority as experts in giving their report.
The financial statements of Carr Business Machines of Great Neck, Inc. d/b/a
Carr Business Systems, for the year ended December 31, 1997, appearing in this
prospectus and registration statement have been audited by Margolin, Winer &
Evens LLP, independent auditors, as indicated in their report, and are included
in this prospectus and registration statement in reliance on their authority as
experts in giving their report.
The consolidated financial statements of Capital Office Solutions, Inc. as of
June 30, 1998 and 1997 and for each of the three years in the period ended June
30, 1998, included in this Prospectus, have been audited by Deloitte & Touche
LLP, independent auditors, as stated in their report appearing herein, and have
been so included in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
102
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Financial Statements of Global Imaging Systems, Inc.
<TABLE>
<S> <C>
Consolidated Balance Sheet at December 31, 1998 (unaudited)............... F-3
Consolidated Statements of Operations for the Nine Months Ended December
31, 1998 (unaudited) and December 31, 1997............................... F-4
Consolidated Statements of Cash Flows for the Nine Months Ended December
31, 1998 (unaudited) and December 31, 1997............................... F-5
Consolidated Statement of Stockholders' Equity for the Nine Months Ended
December 31, 1998 (unaudited)............................................ F-6
Notes to Consolidated Financial Statements (unaudited).................... F-7
Report of Independent Auditors............................................ F-10
Consolidated Balance Sheet as of December 31, 1997........................ F-11
Consolidated Statement of Operations for the Nine Month Period Ended De-
cember 31, 1997.......................................................... F-12
Consolidated Statement of Stockholders' Equity for the Nine Month Period
Ended
December 31, 1997........................................................ F-13
Consolidated Statement of Cash Flows for the Nine Month Period Ended De-
cember 31, 1997.......................................................... F-14
Notes to Consolidated Financial Statements................................ F-15
Report of Independent Auditors............................................ F-24
Consolidated Balance Sheets as of March 31, 1996, 1997 and 1998........... F-25
Consolidated Statements of Operations for the Years Ended March 31, 1996,
1997 and 1998............................................................ F-27
Consolidated Statements of Stockholders' Equity for the Years Ended March
31, 1996,
1997 and 1998............................................................ F-28
Consolidated Statements of Cash Flows for the Years Ended March 31, 1996,
1997 and 1998............................................................ F-29
Notes to Consolidated Financial Statements................................ F-30
Unaudited Pro Forma Consolidated Financial Data
Basis of Presentation..................................................... F-41
Unaudited Pro Forma Consolidated Statement of Operations for the Nine
Months Ended December 31, 1998........................................... F-42
Notes to Unaudited Pro Forma Consolidated Statement of Operations for the
Nine Months Ended December 31, 1998...................................... F-43
Unaudited Pro Forma Consolidated Statement of Operations for the Year
Ended March 31, 1998..................................................... F-44
Notes to Unaudited Pro Forma Consolidated Statement of Operations for the
Year Ended March 31, 1998................................................ F-45
Financial Statements of Electronic Systems, Inc.
Report of Independent Auditors............................................ F-46
Statements of Income and Retained Earnings for the Years Ended December
31, 1995 and 1996 and the Six-Months Ended June 30, 1997................. F-47
Statements of Cash Flows for the Years Ended December 31, 1995 and 1996
and the Six-Months Ended June 30, 1997................................... F-48
Notes to Financial Statements............................................. F-49
Financial Statements of Eastern Copy Products, Inc. and Subsidiaries
Independent Auditors' Report.............................................. F-52
Consolidated Statements of Income and Retained Earnings for the Years
Ended July 31, 1997, 1996 and 1995....................................... F-53
Consolidated Statements of Cash Flows for the Years Ended July 31, 1997,
1996 and 1995............................................................ F-54
Notes to the Consolidated Financial Statements............................ F-55
</TABLE>
F-1
<PAGE>
Financial Statements of Duplicating Specialties, Inc. (Copytronix)
<TABLE>
<S> <C>
Independent Auditor's Report............................................. F-59
Statement of Income and Retained Earnings for the Ten Months Ended August
31, 1997................................................................ F-60
Statement of Cash Flows for the Ten Months Ended August 31, 1997......... F-61
Notes to Financial Statements............................................ F-62
Financial Statements of Electronic Systems of Richmond, Inc.
Independent Auditor's Report............................................. F-65
Statements of Income and Retained Earnings for the Eleven-Month and
Twelve-Month Periods Ended
November 30, 1997 and December 31, 1996................................. F-66
Statements of Cash Flows for the Eleven-Month Period and Twelve-Month Pe-
riod Ended November 30, 1997 and December 31, 1996...................... F-67
Notes to Financial Statements............................................ F-68
Financial Statements of Connecticut Business Systems, Inc.
Report of Independent Public Accountants................................. F-70
Statements of Income (Loss) and Retained Earnings (Deficit) for the Years
Ended September 30, 1996 and 1997 and Three Months Ended December 31,
1997.................................................................... F-71
Statements of Cash Flows for the Years Ended September 30, 1996 and 1997
and the Three Months Ended December 31, 1997............................ F-72
Notes to Financial Statements............................................ F-73
Financial Statements of Business Systems Division (Blooms)
Report of Independent Certified Public Accountants....................... F-77
Statements of Divisional Net Assets for the Eleven Months Ended December
31, 1997 and the Year Ended January 31, 1997............................ F-78
Statements of Divisional Operations for the Eleven Months Ended December
31, 1997 and the Year Ended January 31, 1997............................ F-79
Statements of Changes in Divisional Net Assets for the Eleven Months
Ended December 31, 1997 and the Year Ended January 31, 1997............. F-80
Statements of Divisional Cash Flows for the Eleven Months Ended December
31, 1997 and the Year Ended January 31, 1997............................ F-81
Notes to Financial Statements............................................ F-82
Financial Statements of Carr Business Machines of Great Neck Inc.
Report of Independent Certified Public Accountants....................... F-87
Balance Sheet as of December 31, 1997.................................... F-88
Statement of Operations for the Year Ended December 31, 1997............. F-90
Statement of Retained Earnings for the Year Ended December 31, 1997...... F-91
Statement of Cash Flows for the Year Ended December 31, 1997............. F-92
Notes to Financial Statements............................................ F-94
Financial Statements of Capitol Office Solutions, Inc.
Report of Independent Certified Public Accountants....................... F-98
Consolidated Balance Sheets as of June 30, 1998 and 1997................. F-99
Consolidated Statements of Earnings for the Years Ended June 30, 1998,
1997 and 1996........................................................... F-101
Consolidated Statements of Stockholders Equity (Deficit) for the Years
Ended June 30, 1998, 1997 and 1996...................................... F-102
Consolidated Statements of Cash Flows for the Years Ended June 30, 1998,
1997 and 1996........................................................... F-103
Notes to Consolidated Financial Statements............................... F-104
</TABLE>
F-2
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
CONSOLIDATED BALANCE SHEET
(In Thousands Except For Share Amounts)
December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
------
<S> <C>
Current assets:
Cash and cash equivalents........................................... $ 4,247
Accounts receivable, net of allowance for doubtful accounts of
$1,296............................................................. 44,903
Inventories......................................................... 27,193
Deferred income taxes............................................... 1,834
Prepaid expenses and other current assets........................... 1,729
--------
Total current assets.............................................. 79,906
Rental equipment, net................................................. 4,641
Property and equipment, net........................................... 5,231
Other assets.......................................................... 642
Deferred income taxes................................................. 107
Related party notes receivable........................................ 47
Intangible assets, net:
Goodwill............................................................ 183,742
Noncompete agreements............................................... 1,229
Financing fees...................................................... 1,215
--------
Total assets...................................................... $276,760
========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable.................................................... $ 15,229
Accrued liabilities................................................. 5,960
Accrued compensation and benefits................................... 4,458
Current maturities of long-term debt................................ 137
Deferred revenue.................................................... 15,461
Income taxes payable................................................ 494
--------
Total current liabilities......................................... 41,739
Long-term debt, less current maturities............................... 145,627
--------
Total liabilities................................................. 187,366
Stockholders equity:
Common Stock, $.01 par value:50,000,000 shares authorized:
18,657,376 shares issued and outstanding........................... 187
Additional paid-in capital.......................................... 82,624
Retained earnings................................................... 6,583
--------
Total stockholders' equity........................................ 89,394
--------
Total liabilities and stockholders' equity........................ $276,760
========
</TABLE>
See accompanying notes.
F-3
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands Except Per-share Amounts)
<TABLE>
<CAPTION>
Nine Months Ended
December 31,
-------------------
1998 1997
----------- -------
(Unaudited)
<S> <C> <C>
Revenues:
Equipment and supplies sales........................... $153,320 $80,515
Service and rentals.................................... 47,541 29,515
-------- -------
Total revenues....................................... 200,861 110,030
Costs and operating expenses:
Cost of equipment and supplies sales................... 109,425 57,487
Service and rental costs............................... 23,495 14,493
Selling, general and administrative expenses........... 43,661 25,818
Intangible asset amortization.......................... 3,039 2,160
-------- -------
Total costs and operating expenses................... 179,620 99,958
-------- -------
Income from operations................................... 21,241 10,072
Interest expense......................................... 5,443 4,534
-------- -------
Income before income taxes and extraordinary item........ 15,798 5,538
Income taxes............................................. 7,044 2,749
-------- -------
Income before extraordinary item......................... 8,754 2,789
Extraordinary charge for early retirement of debt, net of
tax benefit of $1,241................................... (1,817) --
-------- -------
Net income............................................... 6,937 2,789
Yield adjustment on Class A common stock and accretions.. (901) (1,349)
-------- -------
Net Income available to common stockholders.............. $ 6,036 $ 1,440
======== =======
Basic earnings per share:
Income before extraordinary item, including yield
adjustment and accretions............................... $ 0.50 $ 0.15
Extraordinary charge for early retirement of debt, net of
tax benefit of $1,241................................... (0.12) --
-------- -------
Net income per share..................................... $ 0.38 $ 0.15
======== =======
Diluted earnings per share:
Income before extraordinary item, including yield
adjustment and accretions............................... $ 0.48 $ 0.15
Extraordinary charge for early retirement of debt, net of
tax benefit of $1,241................................... (0.11) --
-------- -------
Net income per share..................................... $ 0.37 $ 0.15
======== =======
Weighted average number of shares outstanding (in
thousands):
Basic.................................................. 15,756 9,523
Diluted................................................ 16,144 9,523
</TABLE>
See accompanying notes.
F-4
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
Nine Months Ended
December 31,
-------------------
1998 1997
----------- -------
(Unaudited)
<S> <C> <C>
Operating activities
Net income............................................... $ 6,937 $ 2,789
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation........................................... 3,324 2,539
Amortization........................................... 6,326 2,581
Deferred income taxes.................................. 173 (98)
Changes in operating assets and liabilities, net of
amounts acquired in
purchase business combinations:
Accounts receivable.................................... (8,930) (3,072)
Inventory.............................................. (1,857) (283)
Prepaid expenses and other current assets.............. (1,179) (304)
Other assets........................................... 95 (150)
Accounts payable....................................... 3,004 (1,247)
Accrued liabilities.................................... (207) (584)
Deferred revenue....................................... (94) 417
Income taxes........................................... (292) (439)
------- -------
Net cash provided by operating activities................ 7,300 2,149
Investing activities
Related party notes receivable........................... 500 (500)
Purchase of property, equipment and rental equipment..... (3,255) (2,671)
Payment for purchase of businesses, net of cash
acquired................................................ (81,955) (61,779)
------- -------
Net cash used in investing activities.................... (84,710) (64,950)
Financing activities
Net draws under line of credit........................... 48,279 55,685
Financing fees........................................... (1,611) (854)
Common stock redemption and retirement................... (35,339) --
Common stock issued for cash............................. 65,832 10,907
------- -------
Net cash provided by financing activities................ 77,161 65,738
------- -------
Net increase (decrease) in cash and cash equivalents..... (249) 2,937
Cash and cash equivalents, beginning of period........... 4,496 961
------- -------
Cash and cash equivalents, end of period................. $ 4,247 $ 3,898
======= =======
</TABLE>
See accompanying notes.
F-5
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited)
(In Thousands Except For Share Amounts)
<TABLE>
<CAPTION>
Class A Class B Class C
Common Stock Common Stock Common Stock Common Stock
--------------- ----------------- --------------- ---------------- Additional
Par Par Par Par Paid-In Stockholder Retained
Shares Value Shares Value Shares Value Shares Value Capital Receivables Earnings Total
-------- ----- ---------- ----- -------- ----- ---------- ----- ---------- ----------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at March
31, 1998........ 339,945 $ 3 9,521,058 $95 904,252 $ 9 -- $ -- $33,618 $(231) $ 4,754 $38,248
Common stock
issued in
Initial Public
Offering........ 6,000,000 60 66,900 66,960
Common stock
issued in
conjunction with
Acquisitions.... 1,073,737 11 15,181 15,192
Common stock
retired......... (339,945) (3) (30,459) 231 (133) (30,364)
Dividend--
Class A common
stock.......... (4,975) (4,975)
Common stock
converted....... (9,521,058) (95) (904,252) (9) 11,583,639 116 (12) --
Cost of Initial
Public
Offering........ (2,604) (2,604)
Net Income....... 6,937 6,937
-------- --- ---------- --- -------- --- ---------- ---- ------- ----- ------- -------
Balances at
December 31,
1998............ -- $-- -- $-- -- $-- 18,657,376 $187 $82,624 $ -- $ 6,583 $89,394
======== === ========== === ======== === ========== ==== ======= ===== ======= =======
</TABLE>
See accompanying notes.
F-6
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BASIS OF PRESENTATION
The accompanying consolidated balance sheet as of December 31, 1998 and the
consolidated statements of operations, cash flows and stockholders' equity for
the nine months ended December 31, 1998 are unaudited. In the opinion of
management, all adjustments, consisting of normal recurring accruals, necessary
for a fair presentation of the results of operations for the interim periods
presented have been reflected herein. The results of operations for the interim
periods are not necessarily indicative of the results which may be expected for
the entire fiscal year. The accompanying consolidated balance sheet as of
December 31, 1997, and the consolidated statements of operations, cash flows,
and stockholders' equity for the nine months ended December 31, 1997 have been
derived from the Company's audited financial statements. The consolidated
financial statements should be read in conjunction with the consolidated
financial statements and the notes thereto included in the Registration
Statement on Form S-1, File No. 333-48103, filed by Global Imaging Systems,
Inc. (together with its subsidiaries, "Global" or the "Company") and declared
effective by the Securities and Exchange Commission on June 17, 1998.
NOTE 2. EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, Earnings Per Share, which is effective for annual and interim periods
ending after December 15, 1997. Statement No. 128 requires the dual
presentation of basic and diluted earnings per share ("EPS") for complex
capital structures on the consolidated statement of operations. Basic EPS is
computed by dividing net income by the weighted average number of shares
outstanding for the period. Diluted EPS reflects the potential dilution from
the exercise of stock options or the conversion of securities into stock.
Global has implemented Statement No. 128 for the nine months ended December 31,
1998 and December 31, 1997.
The following table reconciles the numerators and denominators of the basic
and diluted EPS computations:
(In thousands except per share amounts)
<TABLE>
<CAPTION>
For the Nine
Months Ended
December 31,
------------------
1998 1997
----------- ------
(Unaudited)
<S> <C> <C>
Numerator:
Income before extraordinary item.......................... $8,754 $2,789
Extraordinary charge for early retirement of debt, net of
tax benefit.............................................. 1,817 --
------ ------
Net income................................................ 6,937 2,789
Yield adjustment on Class A common stock and accretions... 901 1,349
------ ------
Numerator for basic and diluted earnings per share--income
available to common stockholders......................... $6,036 $1,440
====== ======
Denominator:
Denominator for basic earnings per share.................. 15,756 9,523
Effect of dilutive securities:
Contingent stock-redemption of A shares in June 1998.... 327
Employee stock options.................................. 61
------ ------
Dilutive potential common shares.......................... 388
Denominator for diluted earnings per share--adjusted
weighted average shares and assumed coversions........... 16,144 9,523
====== ======
Basic earnings per share:
Earnings per share before extraordinary item, including
yield adjustments and accretions......................... $ 0.50 $ 0.15
Extraordinary charge for early retirement of debt, net of
tax benefit.............................................. (0.12) --
------ ------
Net income per share...................................... $ 0.38 $ 0.15
====== ======
</TABLE>
(table continued on following page)
F-7
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
<TABLE>
<CAPTION>
For the Nine
Months Ended
December 31,
-----------------
1998 1997
----------- -----
(Unaudited)
<S> <C> <C>
Diluted earnings per share:
Earnings per share before extraordinary item, including
yield adjustments and accretions.......................... $ 0.48 $0.15
Extraordinary charge for early retirement of debt, net of
tax benefit............................................... (0.11) --
------ -----
Net income per share....................................... $ 0.37 $0.15
====== =====
</TABLE>
NOTE 3. INITIAL PUBLIC OFFERING AND USE OF PROCEEDS
In April 1998, the Board of Directors approved a change in the Company's
capital stock structure, authorizing 10,000,000 shares of $.01 par value
preferred stock, 50,000,000 shares of $.01 par value Class B common stock and
905,000 shares of $.01 par value Class C common stock. The Board also
authorized a 132-for-1 stock split for holders of its Class B and Class C
common stock; provided for the automatic conversion into one share of Class B
common stock of each share of its Class C common stock upon the consummation of
the initial public offering; the redemption of each share of Class A common
stock for $90 plus 8% per annum from the time of its purchase through May 31,
1998 and approximately 3.41 shares of Class B common stock upon the
consummation of the initial public offering; and renamed its class B common
stock ("Common Stock").
In June 1998, the Company sold 6,000,000 shares of the Company's Common
Stock, par value $.01, in an initial public offering. The aggregate offering
price of the 6,000,000 shares was $72,000,000. After deducting expenses, the
Company received approximately $64,185,000 in proceeds from the initial public
offering. Of the $64,185,000 in estimated net proceeds to the Company,
$28,831,000 was used to repay amounts due Jackson National Life Insurance
Company ("JNL"). The remaining approximately $35,354,000 in proceeds was used
to pay the cash portion of the redemption price of the Company's Class A Common
Stock, redeemed upon the closing of the initial public offering.
NOTE 4. RETIREMENT OF DEBT
In June 1998, the Company repaid $31.5 million of long-term debt outstanding
to JNL, principally with proceeds from the initial public offering. Recognition
of a prepayment penalty of $250,000 and deferred financing costs of $901,000
related to the JNL debt repayment resulted in an extraordinary charge of
$684,000 ($.06 per share), net of related income tax benefit of $467,000. In
July 1998, the Company repaid the remaining $65.8 million balance of the JNL
loan with proceeds from a replacement credit agreement with First Union
National Bank ("First Union"). The Company recognized the remaining pro rata
deferred financing costs of $1,907,000 from the JNL loan, resulting in an
extraordinary charge of $1,133,000 ($.06 per share), net of related income tax
benefit of $774,000. The Credit Agreement with First Union consists of a $5.0
million swingline line of credit and a $170.0 million revolving line of credit.
The Credit Agreement bears interest at rates ranging from 0.75% to 1.5% over
LIBOR or, at the Company's option, ranging from 0.0% to 0.5% over a base rate
related to prime rate, and varies according to the Company's ratio of its total
funded debt to earnings before interest, taxes, depreciation, and amortization.
Amounts borrowed under the Credit Agreement may be repaid and reborrowed over
the life of the Credit Agreement, with a final maturity date of July 31, 2003.
Under the Credit Agreement, the Company has pledged substantially all of its
assets, including the capital stock of the Company's subsidiaries, to First
Union. Amounts borrowed under the Credit Agreement may be used to fund working
capital and general corporate purposes, including acquisitions.
F-8
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
NOTE 5. STOCK OPTIONS AND STOCK OPTION PLAN
The Board of Directors adopted a stock option plan, effective upon the
closing of the initial public offering. Under the terms of the stock option
plan 1,820,000 shares of the Company's common stock may be sold pursuant to
stock options or granted or sold as restricted stock to directors, officers,
employees, and consultants to the Company. As of September 30, 1998 the Board
had granted options to purchase a total of 519,750 shares of common stock of
the Company under the stock option plan and an option to purchase 10,000 shares
of common stock of the Company outside of the stock option plan, all at an
exercise price of $12, equal to the offering price per share, in the Company's
initial public offering. All of these options are subject to vesting
requirements based on length of service.
NOTE 6. ACQUISITIONS
During the nine months ended December 31, 1998 the Company acquired six
businesses that provide office-imaging solutions and related services.
Aggregate consideration for these six acquisitions was approximately
$100,084,000, including $83,498,000 in cash, plus stock valued at approximately
$16,076,000, and acquisition related expenses of $510,000. Liabilities totaling
$47,378,000 were assumed by the Company in connection with these acquisitions.
Goodwill of approximately $92,110,000 was recorded related to these
acquisitions. All acquisitions were accounted for by the purchase method of
accounting and accordingly are included in the results of operations from their
dates of acquisitions.
Under the terms of one of its purchase agreements, the Company is committed
to make contingent payments (the Earn-out) of up to $600,000 to two of the
former owners of the acquired company on or before October 31, 2001. These
contingent payments are based on the future profitability, specifically
earnings before interest and taxes, of the acquired company.
The unaudited pro forma results presented below include the effects of the
acquisitions as if they had been consummated as of April 1, 1997. The unaudited
pro forma financial information below is not necessarily indicative of either
future results of operations or results that might have been achieved had the
acquisitions been consummated at the beginning of the year prior to
acquisition.
<TABLE>
<CAPTION>
Unaudited Pro
forma
Nine Months ended
December 31,
(In Thousands
Except Per Share
Amounts)
------------------
1998 1997
-------- --------
<S> <C> <C>
Revenues.................................................... $247,871 $213,430
Income before extraordinary item............................ 10,407 2,577
Less extraordinary item..................................... (1,817) --
-------- --------
Net income.................................................. $ 8,590 $ 2,577
======== ========
Yield adjustment on class A common stock.................... (901) --
-------- --------
Net income available to common stockholders................. 7,689 2,577
======== ========
Basic earnings per share:
Income before extraordinary item, including yield
adjustment and accretions................................ $ 0.51 $ 0.07
Net income per share...................................... $ 0.41 $ 0.07
Diluted earnings per share:
Income before extraordinary item, including yield
adjustment and accretions................................ $ 0.50 $ 0.07
Net income per share...................................... $ 0.40 $ 0.07
</TABLE>
F-9
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Global Imaging Systems, Inc.
We have audited the accompanying consolidated balance sheet of Global Imaging
Systems, Inc. as of December 31, 1997 and the related consolidated statements
of operations, stockholders' equity, and cash flows for the nine-month period
then ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Global Imaging
Systems, Inc. at December 31, 1997 and the consolidated results of its
operations and its cash flows for the nine-month period then ended, in
conformity with generally accepted accounting principles.
Tampa, Florida
February 13, 1998,
except for Note 12, as to which the date is May 28, 1998
/s/ Ernst & Young LLP
F-10
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
CONSOLIDATED BALANCE SHEET
December 31, 1997
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current assets:
Cash and cash equivalents...................................... $ 3,897,598
Accounts receivable, net of allowance for doubtful accounts of
$879,000...................................................... 26,532,661
Inventories.................................................... 17,573,337
Deferred income taxes.......................................... 1,770,000
Prepaid expenses and other current assets...................... 790,081
------------
Total current assets......................................... 50,563,677
Rental equipment, net............................................ 4,879,046
Property and equipment, net...................................... 4,038,651
Other assets..................................................... 509,158
Deferred income taxes............................................ 838,000
Related party notes receivable................................... 546,793
Intangible assets, net:
Goodwill....................................................... 90,092,125
Noncompete agreements.......................................... 1,463,928
Financing fees................................................. 2,981,676
------------
Total assets................................................. $155,913,054
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................... $ 10,564,648
Accrued liabilities............................................ 3,350,029
Accrued compensation and benefits.............................. 3,120,989
Current maturities of long-term debt........................... 268,985
Deferred revenue............................................... 11,053,619
------------
Total current liabilities.................................... 28,358,270
Long-term debt, less current maturities.......................... 92,340,216
------------
Total liabilities............................................ 120,698,486
Stockholders' equity:
Class A common stock, $.01 par value: 400,000 shares
authorized; 332,925 shares issued and outstanding............. 3,329
Class B common stock, $.01 par value: 50,000,000 shares
authorized; 9,314,844 shares issued and outstanding........... 93,148
Class C common stock, $.01 par value: 900,000 shares
authorized; 894,564 shares issued and outstanding............. 8,946
Additional paid-in capital..................................... 32,291,100
Retained earnings.............................................. 3,090,682
------------
35,487,205
Less stockholder receivables................................... (272,637)
------------
Total stockholders' equity................................... 35,214,568
------------
Total liabilities and stockholders' equity................... $155,913,054
============
</TABLE>
See accompanying notes.
F-11
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
Nine-Month Period Ended December 31, 1997
<TABLE>
<S> <C>
Revenues:
Equipment and supplies sales..................................... $ 80,515,099
Service and rentals.............................................. 29,514,904
------------
Total revenues.................................................. 110,030,003
Costs and operating expenses:
Cost of equipment and supplies sales............................. 57,487,742
Service and rental costs......................................... 14,492,645
Selling, general and administrative expenses..................... 25,817,773
Intangible asset amortization.................................... 2,159,538
------------
Total costs and operating expenses.............................. 99,957,698
------------
Income from operations............................................ 10,072,305
Interest expense.................................................. (4,534,167)
------------
Income before income taxes........................................ 5,538,138
Income taxes...................................................... 2,749,337
------------
Net income........................................................ 2,788,801
Yield adjustment on
Class A common stock............................................. (1,349,128)
------------
Net income available to common stockholders....................... $ 1,439,673
============
Earnings per share
Basic and diluted................................................ $ .15
============
Weighted average number of shares used in the calculation......... 9,522,612
============
</TABLE>
See accompanying notes.
F-12
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Class A Class B Class C
Common Stock Common Stock Common Stock
----------------- ------------------- -----------------
Additional
Paid-In Stockholder Retained
Shares Par Value Shares Par Value Shares Par Value Capital Receivables Earnings Total
------- --------- --------- --------- ------- --------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at
March 31,
1997........... 211,146 $2,111 8,562,708 $85,627 633,996 $6,340 $19,500,286 $(100,000) $ 301,881 $19,796,245
Common stock
issued......... 121,779 1,218 752,136 7,521 260,588 2,606 12,790,814 (172,637) -- 12,629,522
Net income...... -- -- -- -- -- -- -- -- 2,788,801 2,788,801
------- ------ --------- ------- ------- ------ ----------- --------- ---------- -----------
Balances at
December 31,
1997........... 332,925 $3,329 9,314,844 $93,148 894,564 $8,946 $32,291,100 $(272,637) $3,090,682 $35,214,568
======= ====== ========= ======= ======= ====== =========== ========= ========== ===========
</TABLE>
See accompanying notes.
F-13
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
Nine-Month Period Ended December 31, 1997
<TABLE>
<S> <C>
OPERATING ACTIVITIES
Net income........................................................ $ 2,788,801
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation.................................................... 2,538,657
Amortization.................................................... 2,581,199
Deferred income taxes........................................... (98,000)
Changes in operating assets and liabilities, net of amounts
acquired in purchase business combinations:
Accounts receivable........................................... (3,072,141)
Inventories................................................... (283,287)
Prepaid expenses and other current assets..................... (303,588)
Other assets.................................................. (150,407)
Accounts payable.............................................. (1,246,837)
Accrued liabilities........................................... (584,194)
Deferred revenue.............................................. 417,462
Income taxes.................................................. (438,872)
-----------
Net cash provided by operating activities......................... 2,148,793
INVESTING ACTIVITIES
Related party notes receivable.................................... (500,000)
Purchases of property, equipment and rental equipment............. (2,671,026)
Payment for purchase of businesses, net of cash acquired.......... (61,778,957)
-----------
Net cash used in investing activities............................. (64,949,983)
FINANCING ACTIVITIES
Net draws under line of credit agreements......................... 55,684,993
Financing fees.................................................... (853,861)
Common stock issued for cash...................................... 10,906,898
-----------
Net cash provided by financing activities......................... 65,738,030
-----------
Net increase in cash and cash equivalents......................... 2,936,840
Cash and cash equivalents, beginning of year...................... 960,758
-----------
Cash and cash equivalents, end of year............................ $ 3,897,598
===========
</TABLE>
See accompanying notes.
F-14
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Consolidation
Global Imaging Systems, Inc. was formed on June 3, 1994. The Company's
principal operating subsidiaries are located in the United States and are in
the business of supplying photocopiers, facsimile equipment, automated office
equipment, electronic presentation and document imaging equipment, network
integration services and related service, parts, and supplies. The consolidated
financial statements include the financial statements of Global Imaging
Systems, Inc. and its subsidiaries (the Company). All significant intercompany
balances and transactions have been eliminated in consolidation.
Interim Results
Operating results for the nine-month period ended December 31, 1997 are not
necessarily indicative of the results that may be expected for the entire
fiscal year.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
Revenue Recognition
Revenue is recognized as follows:
Supply sales to customers are recognized at the time of shipment. Equipment
sales are recognized at the time of customer acceptance, or in the case of
equipment sales financed by third-party leasing companies, at the time of
acceptance by the leasing company and the customer.
Maintenance contract service revenues are recognized ratably over the term of
the underlying maintenance contract. Other service revenues are recognized as
earned. Deferred revenue consists of unearned maintenance contract revenue that
is recognized over the life of the related contract, generally twelve months.
Rental equipment revenue is recognized ratably over the lives of the
underlying cancelable operating leases, principally one to three years.
Financial Instruments
The Company's financial instruments include cash, accounts receivable,
accounts payable, long-term debt and obligations under capital leases. The
carrying amount of these financial instruments approximate their fair market
value.
Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of three
months or less when acquired to be cash equivalents.
Concentrations of Credit Risk
Financial instruments which potentially subject the Company to concentrations
of credit risk consist principally of cash and cash equivalents, and trade
receivables. Concentrations of credit risk with respect to trade receivables
are limited due to the large number of customers comprising the Company's
customer base and their dispersion across different industries and geographical
areas. As of December 31, 1997, the Company had no significant concentrations
of credit risk.
F-15
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Inventories
Inventories consist of photocopiers, facsimile equipment, automated office
equipment, electronic presentation equipment, document imaging equipment,
computers, and related software, and related parts and supplies and are valued
at the lower of cost (specific identification and/or average cost for equipment
and average cost for related parts and supplies) or market value. Inventories
are stated net of reserves of $1,010,876 at December 31, 1997 for excess and
slow moving inventories.
Long-Lived Assets
The recoverability of long-lived assets (including related intangibles) is
evaluated at the operating unit level by an analysis of operating results and
consideration of other significant events or changes in the business
environment. If an operating unit has current operating losses and there is a
likelihood that such operating losses will continue, the Company will determine
if impairment exists based on the undiscounted expected future cash flows from
operations before interest. Impairment losses would be measured based on the
amount by which the carrying amount exceeds the fair value.
Rental Equipment
Rental equipment is stated at cost less accumulated depreciation.
Depreciation is provided using the straight-line method over the assets'
estimated economic lives, principally three years.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation and amortization is principally provided using the
straight-line method over the assets' estimated economic lives, which range
from three to ten years.
Intangibles
Goodwill (excess of purchase price over fair value of net assets acquired)
recognized in business combinations accounted for as purchases is amortized
over periods of between 20 and 40 years on the straight-line basis. Accumulated
amortization was approximately $2,600,000 at December 31, 1997.
Noncompete agreements are amortized over the lives of the agreements, which
range from two to four years, using the straight-line basis. Accumulated
amortization was approximately $3,200,000 at December 31, 1997.
Financing fees are amortized over the terms of the underlying debt agreements
using the straight-line method, which method approximates the effective
interest rate method. Accumulated amortization at December 31, 1997 was
approximately $600,000.
New Accounting Standard
In June 1997, the FASB issued Statement No. 131, Disclosures About Segments
of an Enterprise and Related Information (SFAS 131). SFAS 131 establishes
standards for reporting information about operating segments and supersedes
SFAS 14, Financial Reporting for Segments of a Business Enterprise. SFAS 131
will be adopted in fiscal 1999.
F-16
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
2. ACQUISITIONS
During the nine-month period ended December 31, 1997, the Company acquired
ten businesses that provide office imaging solutions and related services for
an aggregate purchase price of approximately $66,353,000 primarily for cash,
including the direct costs of acquisitions of approximately $557,000.
Liabilities assumed in connection with these acquisitions totaled $20,170,000.
The Company also sold stock in connection with these acquisitions. The Class B
common stock was valued from $3.30 to $8.20 per share and the Class A common
stock from $65.00 to $80.00 per share. The excess of the fair value of the
stock over the sales price amounted to $1,723,000 and is included in the
purchase price of these acquisitions.
Significant acquisitions during the nine-month period ended December 31, 1997
include Electronic Systems, Inc. (ESI), Eastern Copy Products, Inc. (ECP),
Electronic Systems of Richmond, Inc. (ESR) and Connecticut Business Systems,
Inc. (CBS).
The following summarizes these acquisitions:
<TABLE>
<CAPTION>
Total
Acquisition Assets Goodwill
Acquired Company Date Acquired Acquired
---------------- ------------- ----------- -----------
<S> <C> <C> <C>
ESI.................................... July 1997 $34,700,000 $24,800,000
ECP.................................... August 1997 9,100,000 5,300,000
ESR.................................... December 1997 15,700,000 8,600,000
CBS.................................... December 1997 12,800,000 9,300,000
----------- -----------
$72,300,000 $48,000,000
=========== ===========
</TABLE>
Total assets related to the remaining six acquisitions was $12,500,000,
including goodwill of approximately $7,400,000. In connection with the
acquisition of CBS, the Company issued stock in January, 1998 at below fair
market value resulting in additional goodwill.
All acquisitions have been accounted for as purchases and accordingly are
included in the results of operations from their dates of acquisitions. In
connection with the allocation of the purchase price, there were no significant
adjustments to fair value.
Under the terms of one of its purchase agreements, the Company is committed
to make contingent payments (the "Earn-out") of up to $3,000,000 to two of the
former owners of the acquired company on or before June 30, 2002. This
contingent payment is based on the future profitability, specifically earnings
before interest and taxes, of the acquired company. The former owner may
receive a portion of the Earn-out equal to $250,000, payable by June 30 of each
year for fiscal years ending March 31, 1999, 2000 and 2001. The former owner
shall be entitled to receive, on or before June 30, 2002, the balance of the
Earn-out, if applicable, minus any portion of the Earn-out previously paid. The
Earn-out, if paid, will be recorded as goodwill related to the acquired
company.
The pro forma results presented below include the effects of the acquisitions
as if they had been consummated at the beginning of the year of the
acquisition:
<TABLE>
<CAPTION>
Nine-Month Period Ended
December 31, 1997
-----------------------
<S> <C>
Revenues............................................. $159,390,507
Net income........................................... 2,943,330
Net income available to common stockholders.......... 1,099,244
Earnings per share................................... .11
</TABLE>
F-17
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
3. RENTAL EQUIPMENT
The Company's rental equipment consists of the following:
<TABLE>
<S> <C>
Rental equipment on operating leases............................ $11,096,754
Less accumulated depreciation................................... (6,217,708)
-----------
Rental equipment, net........................................... $ 4,879,046
===========
</TABLE>
4. PROPERTY AND EQUIPMENT
The Company's property and equipment consists of the following:
<TABLE>
<S> <C>
Office furniture, equipment and leasehold improvements.......... $ 5,575,614
Less accumulated depreciation and amortization.................. (1,536,963)
-----------
Property and equipment, net..................................... $ 4,038,651
===========
</TABLE>
5. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<S> <C>
Term loans...................................................... $92,299,600
Various notes payable........................................... 309,601
-----------
92,609,201
Less current maturities......................................... (268,985)
-----------
$92,340,216
===========
</TABLE>
The Company currently has a credit facility with Jackson National Life
Insurance Company (the "Credit Facility") of up to $120,000,000 for
acquisitions and for working capital purposes. At December 31, 1997,
$27,700,000 was available under the Credit Facility, including $6,000,000
available for working capital under the revolving line of credit. The Credit
Facility bears interest at 3.25% and 3.00% over LIBOR (5.7% at December 31,
1997) for the term and revolving loans, respectively. Principal under the
Credit Facility is repayable in semi-annual installments beginning in fiscal
2000. In addition to these scheduled payments, the Company is required to
prepay outstanding principal in an amount equal to 70% of the excess cash flow
(as defined) for each fiscal year within 90 days of year end. No amounts have
been required to be prepaid under this provision or are expected to be payable
at March 31, 1998. All remaining principal under the Credit Facility is due and
payable in August 2004.
Under the terms of the Credit Facility, the Company has pledged substantially
all of its assets to the lender. The terms of the Credit Facility also require
compliance with numerous covenants that restrict, among other things, dividend
payments, sales of stock or assets or the incurrence of additional debt.
In fiscal 1997, the Company sold approximately 633,933 shares of Class C
common stock and approximately 27,083 shares of Class A common stock at their
fair value for an aggregate amount of $2,500,000 to its lender. During the nine
months ended December 31, 1997, the Company sold approximately 260,663 shares
of Class C common stock and approximately 11,136 shares of Class A common stock
in connection with certain anti-dilution provisions at the same per share price
as the fiscal 1997 shares were sold to the Company's lender, resulting in
aggregate proceeds of $1,030,000 to the Company. Additionally, in 1997, the
Company paid a financing fee of 2% to the lender to increase the Credit
Facility by $40,000,000 to $120,000,000.
F-18
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
In September 1996, the Company purchased an interest rate cap from a bank on
$23,500,000 of the term loan debt outstanding. In January 1998, the Company
purchased an additional rate cap on an additional $26,475,000 of the term loan.
The interest rate caps are for three-year terms and provide for the Company to
be reimbursed by the bank if the annual average of the LIBOR rate exceeds 8%.
The cost of the interest rate cap ($150,000) is amortized over the three-year
term of the agreement and is included in interest.
Aggregate annual maturities of long-term debt at December 31, 1997 are as
follows:
<TABLE>
<S> <C>
Three months ended March 31, 1998............................... $ 55,000
Fiscal year ended March 31, 1999................................ 254,601
2000............................................................ 6,460,972
2001............................................................ 13,592,547
2002............................................................ 13,074,735
Thereafter...................................................... 59,171,346
-----------
Total......................................................... $92,609,201
===========
</TABLE>
Interest paid was approximately $3,900,000 for the nine-month period ended
December 31, 1997.
The Company intends to replace the Credit Facility with another in the near
future. Under the terms of the Credit Facility the Company will be subject to a
prepayment fee of 1% to 4% of the outstanding balance depending on the length
of time elapsed from the beginning of the term of the loan to the date of
prepayment. In the case that the loan is repaid within 60 days of an initial
public offering of the Company's common stock, this fee will be reduced to the
lesser of 1% of the outstanding balance or $250,000.
6. STOCKHOLDERS' EQUITY
From inception through December 31, 1997 the Company has sold stock in
connection with business combinations and to its founding stockholders,
employees and others. During the nine months ended December 31, 1997 such stock
was subscribed and sold as units of approximately 7.15 shares of Class A common
stock and one share of Class B (or one share of Class C) common stock. The
sales of those units have been recorded at their estimated fair value at the
date of the commitment to sell the shares, except for shares issued in
connection with anti-dilution provisions, which shares were issued at the per
share price at the date of the transaction giving rise to the anti-dilution
agreement. The value of the units has been allocated between shares of the
Class A and Class B (or Class C) common stock based on their estimated fair
values.
Class B stockholders are entitled to voting rights of one vote per share.
Class A and Class C stockholders are not entitled to voting rights.
No distributions other than in complete liquidation of the Company can be
made without approval of the Board of Directors. In the event of such a
distribution, the priority is as follows for the distribution of funds to
stockholders:
1. Class A stockholders are first entitled to a portion of the distribution
equivalent to 8% per annum (the "Yield") of the original share cost ($90).
2. Class A stockholders are then entitled to receive a distribution
equivalent to the original cost ($90) of the shares.
3. After the required distributions in clauses 1 and 2 above have been
completed, holders of shares of Class A common stock are entitled to
receive 10% of, and holders of shares of Class B common stock and Class C
common stock are entitled to receive 90% of, the remaining portion of the
distribution.
F-19
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
During 1997, the Board of Directors authorized an additional 100,000,
26,400,000 and 26,400,000 shares of Class A, Class B and Class C stock,
respectively.
In connection with the founding agreements, one of the founders and various
members of senior management have received the right to purchase, and have
purchased, an aggregate of 1,207,800 shares of Class B common stock at a price
of $0.07 per share. In June 1994, the Company's president (who is also a
founding stockholder), received an option to purchase at a price of $0.07 per
share, certain shares of common stock that were reserved for issuance to senior
management and that remain unissued as of the time of the Company's initial
public offering. At December 31, 1997, the number of such shares which remain
unissued was 86,276. These shares will be allocated between and purchased by
the Company's president and its majority stockholder (Golder, Thoma, Cressey,
Rauner, Inc.) based on their current ownership of the Company's common stock.
7. EARNINGS PER SHARE
In 1997, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards No. 128 (SFAS 128), "Earnings per Share." SFAS
128 replaced the calculations of primary and fully diluted earnings per share
with basic and diluted earnings per share.
The weighted average number of shares outstanding used in the calculation of
both basic and diluted earnings per share have been adjusted to give
retroactive effect to the 132-for-1 stock split effective May 28, 1998.
The Company will accrete the approximately $1,000,000 difference of the
redemption value of the Class A common stock and the value allocated to the
stock for calculation of the earnings per share beginning January 1998 (the
month following the date an initial public offering became probable) through
the estimated date of the initial public offering.
Assuming redemption of the Class A common stock using the proceeds from the
number of shares of common stock necessary at $15 per share to redeem such
shares, earnings per share would have been $0.23 for the nine months ended
December 31, 1997.
8. INCOME TAXES
The Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109 (SFAS 109) "Accounting for Income Taxes". Deferred income tax
assets and liabilities are determined based upon differences between financial
reporting and tax bases of assets and liabilities and are measured using the
enacted tax rates and laws that will be in effect when the differences are
expected to reverse.
The components of the income tax provision (benefit) for the nine month
period ended December 31, 1997 follows:
<TABLE>
<S> <C>
Current:
Federal........................................................ $2,176,337
State.......................................................... 671,000
----------
2,847,337
Deferred:
Federal........................................................ (75,000)
State.......................................................... (23,000)
----------
(98,000)
----------
$2,749,337
==========
</TABLE>
F-20
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
A reconciliation of the difference between the effective income tax rate and
the statutory federal tax rate for the nine month period ended December 31,
1997 follows:
<TABLE>
<S> <C>
Tax at U.S. statutory rate....................................... $1,882,966
State taxes, net of federal benefit.............................. 427,512
Goodwill amortization............................................ 297,425
Other............................................................ 141,434
----------
$2,749,337
==========
</TABLE>
Significant components of the Company's deferred tax assets and liabilities
are as follows:
<TABLE>
<CAPTION>
December 31,
1997
------------
<S> <C>
Deferred tax assets:
Noncompete agreements........................................... $1,025,000
Inventory related............................................... 544,000
Various accrued expenses........................................ 543,000
Deferred revenue................................................ 512,000
Depreciation.................................................... 246,000
Accounts receivable related..................................... 171,000
Capitalized acquisition costs................................... 85,000
----------
Gross deferred tax asset........................................ 3,126,000
Deferred tax liabilities:
Goodwill........................................................ 518,000
----------
Net deferred tax asset.......................................... $2,608,000
==========
Classified as follows:
Current asset................................................... $1,770,000
Noncurrent asset................................................ 838,000
----------
$2,608,000
==========
</TABLE>
SFAS 109 requires a valuation allowance to reduce the deferred tax assets
reported if, based on the weight of the evidence, it is more likely than not
that some portion or all of the deferred tax assets will not be realized. After
consideration of all the evidence, both positive and negative, management has
determined that a valuation allowance is not necessary as of December 31, 1997.
Cash paid for income taxes was $2,776,400 for the nine-month period ended
December 31, 1997.
9. EMPLOYEE BENEFIT PLANS
The majority of the employees of the Company are eligible to participate in
defined contribution plans (the "Plans") established under Section 401(k) of
the U.S. Internal Revenue Code. Employees are generally eligible to contribute
voluntarily to the Plans after one year of service. The Company may contribute
a discretionary amount of the employee contribution up to specified limits.
Employees are always vested in their contributed balance and generally become
fully vested in the Company's contributions after seven years of service. The
expense related to the Company's contributions to the Plans for the nine-month
period ended December 31, 1997, was approximately $372,000.
F-21
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
10. LEASES
The Company is obligated under various noncancelable operating leases for its
office facilities, office equipment and vehicles. Certain of the leases for its
office facilities are with various employee stockholders. Future noncancelable
lease commitments as of December 31, 1997 are as follows:
<TABLE>
<CAPTION>
Related-Party Other
Leases Leases Total
------------- ---------- ----------
<S> <C> <C> <C>
Three months ended March 31, 1998...... $ 251,042 $ 404,261 $ 655,303
Fiscal year ended March 31, 1999....... 952,938 1,505,660 2,458,598
2000................................... 826,352 1,348,347 2,174,699
2001................................... 472,532 1,231,221 1,703,753
2002................................... 376,028 804,540 1,180,568
Thereafter............................. 140,028 693,644 833,672
---------- ---------- ----------
Total................................ $3,018,920 $5,987,673 $9,006,593
========== ========== ==========
</TABLE>
Rental expense related to the above leases was as follows:
<TABLE>
<CAPTION>
Related Party Other Lease
Lease Expense Expense Total
------------- ----------- ----------
<S> <C> <C> <C>
Nine-month period ended December 31,
1997................................ $611,381 $763,619 $1,375,000
</TABLE>
11. RELATED-PARTY TRANSACTIONS
During 1994, the Company entered into a seven-year consulting agreement with
its majority stockholder, Golder, Thoma, Cressey, Rauner, Inc. (the "Majority
Stockholder"). Under the terms of this agreement, the Company is obligated to
pay the Majority Stockholder an annual management fee of $200,000. The Company
is also obligated to pay a 1% placement fee to the Majority Stockholder for all
debt and equity raised by the Company during the term of the agreement. The
agreement will terminate earlier than the aforementioned seven-year term upon
the closing of any initial public offering of the Company's common stock or a
sale of substantially all of the Company's assets or common stock.
The majority stockholder agreed to waive their 1% placement fee related to
debt refinancing completed in August 1996, because the majority of the work to
obtain the financing was performed by another related party, Green, Manning &
Bunch, which charged a 1% fee.
In connection with the aforementioned agreements, the Company incurred
management fees of $150,000 during the nine months ended December 31, 1997.
The Company entered into a consulting agreement with Capitol Office Solutions
(Capitol) in July 1997, whereby the Company will provide certain human
resources, administration, financial, accounting, and consulting services to
Capitol for an annual fee of $150,000. Additionally, the Company received a
one-time fee of $270,000 from Capitol related to assisting Capitol in obtaining
financing. The majority stockholders of the Company also own the majority of
the outstanding stock of Capitol.
F-22
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Related party notes receivable relate to amounts loaned to officers of the
Company to purchase stock in Capitol. These notes, which bear interest of 8%
per annum, are due and payable, with interest, on June 30, 2000, and are
collateralized by the shares purchased with the proceeds of the notes.
Also at December 31, 1997, the Company held notes receivable from employees
with balances totaling $272,637. These notes arose from transactions in fiscal
years 1997 and 1998, whereby the Company loaned the employees money to purchase
shares of the Company's stock. The notes, which bear interest of 8% per annum,
are due and payable, with interest, on dates from July 1 to November 1, 2000.
These notes are collateralized by the shares purchased with the proceeds of the
notes. These receivables are shown on the balance sheet as a component of
stockholders' equity.
12. SUBSEQUENT EVENTS
The Board of Directors contemplates an initial public offering (the
"Offering") of the Company's Common Stock.
Effective May 28, 1998, the Board of Directors approved a change in the
Company's capital stock to authorize 10,000,000 shares of $.01 par value
preferred shares, 50,000,000 shares of $.01 par value Class B common stock and
900,000 shares of $.01 par value Class C common stock. At this time, the Board
also authorized a 132-for-1 split for holders of its Class B and Class C common
stock; provided for the automatic conversion into one share of Class B common
stock of each share of its Class C common stock upon consummation of the
Offering; provided that, upon consummation of the Offering, each share of Class
A common stock would automatically be redeemed for $90 plus 8% per annum from
the time of its purchase through May 31, 1998 (provided that the Offering
closes prior to June 30, 1998) and approximately 3.41 shares of Class B common
stock; and renamed its Class B common stock "Common Stock". The accompanying
consolidated financial statements have been restated to reflect this change in
capitalization.
The Board of Directors has adopted a stock option plan, which is to take
effect upon the closing of the Offering. Under the terms of the stock option
plan, 1,820,000 shares of the Company's common stock may be granted pursuant to
stock options or granted or sold as restricted stock to directors, officers and
employees of and consultants and advisors to the Company. Under the stock
option plan, the Board has authorized that upon the closing of the Offering,
options to purchase 519,750 shares of common stock of the Company at an
exercise price equal to the Offering price per share will be granted to key
employees. All of these options are subject to vesting requirements based on
length of service or satisfaction of certain performance milestones.
F-23
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Global Imaging Systems, Inc.
We have audited the accompanying consolidated balance sheets of Global
Imaging Systems, Inc. as of March 31, 1996, 1997 and 1998, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the three years in the period ended March 31, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Global Imaging Systems, Inc. at March 31, 1996, 1997 and 1998, and the
consolidated results of its operations and its cash flows for each of the three
years in the period ended March 31, 1998, in conformity with generally accepted
accounting principles.
/s/ Ernst & Young LLP
Tampa, Florida
May 6, 1998
except for Note 12, as to which the date is May 28, 1998.
F-24
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31
------------------------------------
1996 1997 1998
----------- ----------- ------------
A S S E T S
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents............... $ 397,727 $ 960,758 $ 4,496,085
Accounts receivable, net of allowance
for doubtful accounts ($200,000,
$309,000 and $871,000 at March 31,
1996, 1997 and 1998, respectively)..... 5,653,186 10,856,167 27,571,944
Inventories............................. 5,526,050 10,055,214 19,061,389
Deferred income taxes................... 251,000 554,000 1,543,000
Prepaid expenses and other current
assets................................. 134,448 112,260 424,706
----------- ----------- ------------
Total current assets.................. 11,962,411 22,538,399 53,097,124
Rental equipment, net..................... 2,634,613 3,668,106 4,655,318
Property and equipment, net............... 1,246,512 1,721,134 4,418,612
Other assets.............................. 294,930 173,816 2,146,653
Deferred income taxes..................... 121,500 870,000 571,000
Related party notes receivable............ -- 46,793 546,793
Intangible assets, net:
Goodwill................................ 25,074,904 35,824,147 94,685,401
Noncompete agreements................... 1,933,333 1,615,855 1,336,227
Financing fees.......................... 406,987 2,531,917 2,885,181
----------- ----------- ------------
Total assets.......................... $43,675,190 $68,990,167 $164,342,309
=========== =========== ============
</TABLE>
See accompanying notes.
F-25
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS--(Continued)
<TABLE>
<CAPTION>
March 31
--------------------------------------
1996 1997 1998
----------- ----------- ------------
L I A B I L I T I E S A N D S T O C K H O L D E R S ' E Q U I T Y
<S> <C> <C> <C>
Current liabilities:
Accounts payable..................... $ 1,468,904 $ 3,811,761 $ 10,555,655
Accrued liabilities.................. 773,833 1,467,343 3,878,262
Accrued compensation and benefits.... 940,328 1,789,605 3,542,921
Current maturities of long-term
debt................................ 312,641 562,700 232,916
Deferred revenue..................... 3,358,279 5,252,390 10,632,476
Income taxes payable................. 70,000 -- --
----------- ----------- ------------
Total current liabilities.......... 6,923,985 12,883,799 28,842,230
Long-term debt, less current
maturities............................ 21,518,848 36,310,123 97,251,600
----------- ----------- ------------
Total liabilities.................. 28,442,833 49,193,922 126,093,830
Stockholders' equity:
Class A common stock, $.01 par value:
400,000 shares authorized; 172,917,
211,146 and 339,945 shares issued
and outstanding at March 31, 1996,
1997 and 1998, respectively......... 1,729 2,111 3,399
Class B common stock, $.01 par value:
50,000,000 shares authorized;
8,114,436, 8,562,708 and 9,521,058
shares issued and outstanding at
March 31, 1996, 1997 and 1998,
respectively........................ 81,144 85,627 95,211
Class C common stock, $.01 par value:
905,000 shares authorized; -0-,
633,933 and 904,252 shares issued
and outstanding at March 31, 1996,
1997 and 1998, respectively......... -- 6,340 9,043
Additional paid-in capital........... 15,970,927 19,500,286 33,617,680
Retained earnings (deficit).......... (821,443) 301,881 4,754,465
----------- ----------- ------------
15,232,357 19,896,245 38,479,798
Less stockholder receivables......... -- (100,000) (231,319)
----------- ----------- ------------
Total stockholders' equity......... 15,232,357 19,796,245 38,248,479
----------- ----------- ------------
Total liabilities and stockholders'
equity............................ $43,675,190 $68,990,167 $164,342,309
=========== =========== ============
</TABLE>
See accompanying notes.
F-26
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year ended March 31
--------------------------------------
1996 1997 1998
----------- ----------- ------------
<S> <C> <C> <C>
Revenues:
Equipment and supplies sales........ $20,561,009 $41,200,292 $121,316,021
Service and rentals................. 16,404,888 22,892,898 43,059,246
----------- ----------- ------------
Total revenues.................... 36,965,897 64,093,190 164,375,267
Costs and operating expenses:
Cost of equipment and supplies
sales.............................. 13,455,435 27,087,299 85,971,953
Service and rental costs............ 8,302,791 11,467,191 21,593,696
Selling, general and administrative
expenses........................... 11,687,398 18,279,813 38,619,666
Intangible asset amortization....... 1,396,463 1,939,288 3,075,831
----------- ----------- ------------
Total costs and operating
expenses......................... 34,842,087 58,773,591 149,261,146
----------- ----------- ------------
Income from operations................ 2,123,810 5,319,599 15,114,121
Interest expense...................... (2,041,178) (3,189,204) (6,713,327)
----------- ----------- ------------
Income before income taxes............ 82,632 2,130,395 8,400,794
Income taxes.......................... 275,000 1,007,071 3,948,210
----------- ----------- ------------
Net income (loss)..................... (192,368) 1,123,324 4,452,584
Yield adjustment on Class A common
stock................................ (1,022,979) (1,402,225) (2,442,119)
----------- ----------- ------------
Net income (loss) available to common
stockholders......................... $(1,215,347) $ (278,901) $ 2,010,465
=========== =========== ============
Earnings (loss) per share, basic and
diluted.............................. $ (.15) $ (.03) $ .21
=========== =========== ============
Weighted average number of shares used
in the calculation................... 8,017,812 8,728,568 9,804,953
=========== =========== ============
</TABLE>
See accompanying notes.
F-27
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Class A Class B Class C
Common Stock Common Stock Common Stock Additional Retained
----------------- ------------------- ----------------- Paid-in Stockholder Earnings
Shares Par Value Shares Par Value Shares Par Value Capital Receivables (Deficit) Total
------- --------- --------- --------- ------- --------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at March
31, 1995........ 48,995 $ 490 7,890,960 $78,910 -- $ -- $ 4,893,491 $ -- $ (629,075) $ 4,343,816
Common stock
issued......... 123,922 1,239 223,476 2,234 -- -- 11,077,436 -- -- 11,080,909
Net loss........ -- -- -- -- -- -- -- -- (192,368) (192,368)
------- ------ --------- ------- ------- ------ ----------- --------- ---------- -----------
Balances at March
31, 1996........ 172,917 1,729 8,114,436 81,144 -- -- 15,970,927 -- (821,443) 15,232,357
Common stock
issued......... 38,229 382 448,272 4,483 633,933 6,340 3,529,359 (100,000) -- 3,440,564
Net income...... -- -- -- -- -- -- -- -- 1,123,324 1,123,324
------- ------ --------- ------- ------- ------ ----------- --------- ---------- -----------
Balances at March
31, 1997........ 211,146 2,111 8,562,708 85,627 633,933 6,340 19,500,286 (100,000) 301,881 19,796,245
Common stock
issued......... 128,799 1,288 958,350 9,584 270,319 2,703 14,117,394 (131,319) -- 13,999,650
Net income...... -- -- -- -- -- -- -- -- 4,452,584 4,452,584
------- ------ --------- ------- ------- ------ ----------- --------- ---------- -----------
Balances at March
31, 1998........ 339,945 $3,399 9,521,058 $95,211 904,252 $9,043 $33,617,680 $(231,319) $4,754,465 $38,248,479
======= ====== ========= ======= ======= ====== =========== ========= ========== ===========
</TABLE>
See accompanying notes.
F-28
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended March 31
---------------------------------------
1996 1997 1998
----------- ------------ ------------
<S> <C> <C> <C>
Operating activities
Net income (loss)..................... $ (192,368) $ 1,123,324 $ 4,452,584
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation........................ 2,237,923 2,533,486 3,592,850
Amortization........................ 1,687,168 2,575,879 3,630,127
Deferred income taxes............... (372,500) (527,500) 278,000
Changes in operating assets and
liabilities, net of amounts
acquired in purchase business
combinations:
Accounts receivable............... (770,168) (2,105,605) (2,340,904)
Inventories....................... (936,942) (1,278,697) (1,034,153)
Prepaid expenses and other current
assets........................... 213,760 131,414 47,843
Other assets...................... (201,600) 71,692 (201,332)
Accounts payable.................. 387,810 615,923 (1,565,038)
Accrued liabilities............... (1,427,399) 1,010,451 (545,106)
Deferred revenue.................. 282,893 268,518 (72,248)
Income taxes...................... (63,308) (105,000) (440,051)
----------- ------------ ------------
Net cash provided by operating
activities........................... 845,269 4,313,885 5,802,572
Investing activities
Related party notes receivable........ -- (46,793) (500,000)
Purchases of property, equipment and
rental equipment..................... (1,593,964) (2,939,709) (3,423,734)
Payment for purchase of businesses,
net of cash acquired................. (8,098,428) (16,008,039) (67,974,869)
----------- ------------ ------------
Net cash used in investing
activities........................... (9,692,392) (18,994,541) (71,898,603)
Financing activities
Net draws (payments) under line of
credit agreements.................... (1,883,248) 14,564,648 60,560,308
Financing fees........................ (697,830) (2,761,525) (884,148)
Deferred cost of initial public
offering............................. -- -- (1,646,900)
Common stock issued for cash.......... 11,080,909 3,440,564 11,602,098
----------- ------------ ------------
Net cash provided by financing
activities........................... 8,499,831 15,243,687 69,631,358
----------- ------------ ------------
Net increase (decrease) in cash and
cash equivalents..................... (347,292) 563,031 3,535,327
Cash and cash equivalents, beginning
of year.............................. 745,019 397,727 960,758
----------- ------------ ------------
Cash and cash equivalents, end of
year................................. $ 397,727 $ 960,758 $ 4,496,085
=========== ============ ============
</TABLE>
See accompanying notes.
F-29
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1998
1. Summary of Significant Accounting Policies
Basis of Consolidation
Global Imaging Systems, Inc. was formed on June 3, 1994. The Company's
principal operating subsidiaries are located in the United States and are in
the business of supplying photocopiers, facsimile equipment, automated office
equipment, electronic presentation and document imaging equipment, network
integration services and related service, parts, and supplies. The consolidated
financial statements include the financial statements of Global Imaging
Systems, Inc. and its subsidiaries (the Company). All significant intercompany
balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
Revenue Recognition
Revenue is recognized as follows:
Supply sales to customers are recognized at the time of shipment. Equipment
sales are recognized at the time of customer acceptance, or in the case of
equipment sales financed by third-party leasing companies, at the time of
acceptance by the leasing company and the customer.
Maintenance contract service revenues are recognized ratably over the term of
the underlying maintenance contract. Other service revenues are recognized as
earned. Deferred revenue consists of unearned maintenance contract revenue that
is recognized over the life of the related contract, generally 12 months.
Rental equipment revenue is recognized ratably over the lives of the
underlying cancelable operating leases, principally one to three years.
Financial Instruments
The Company's financial instruments include cash, accounts receivable,
accounts payable, and long-term debt. The carrying amount of these financial
instruments approximate their fair market value.
Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of three
months or less when acquired to be cash equivalents.
Concentrations of Credit Risk
Financial instruments which potentially subject the Company to concentrations
of credit risk consist principally of cash and cash equivalents, and trade
receivables. Concentrations of credit risk with respect to trade receivables
are limited due to the large number of customers comprising the Company's
customer base and their dispersion across different industries and geographical
areas. As of March 31, 1998, the Company had no significant concentrations of
credit risk.
F-30
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Inventories
Inventories consist of photocopiers, facsimile equipment, automated office
equipment, electronic presentation equipment, document imaging equipment,
computers and related software, and related parts and supplies and are valued
at the lower of cost (specific identification and/or average cost for equipment
and average cost for related parts and supplies) or market value. Inventories
are stated net of reserves of $133,026, $326,099 and $1,295,020 at March 31,
1996, 1997 and 1998, respectively, for excess and slow moving inventories.
Long-Lived Assets
The recoverability of long-lived assets (including related intangibles) is
evaluated at the operating unit level by an analysis of operating results and
consideration of other significant events or changes in the business
environment. If an operating unit has current operating losses and there is a
likelihood that such operating losses will continue, the Company will determine
if impairment exists based on the undiscounted expected future cash flows from
operations before interest. Impairment losses would be measured based on the
amount by which the carrying amount exceeds the fair value.
Rental Equipment
Rental equipment is stated at cost less accumulated depreciation.
Depreciation is provided using the straight-line method over the assets'
estimated economic lives, principally three years.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation and amortization is principally provided using the
straight-line method over the assets' estimated economic lives, which range
from three to ten years.
Intangibles
Goodwill (excess of purchase price over fair value of net assets acquired)
recognized in business combinations accounted for as purchases is amortized
over periods of between 20 and 40 years on the straight-line basis. Accumulated
amortization was approximately $600,000, $1,400,000 and $3,200,000 at March 31,
1996, 1997 and 1998, respectively.
Noncompete agreements are amortized over the lives of the agreements, which
range from two to four years, using the straight-line basis. Accumulated
amortization was approximately $1,100,000, $2,200,000 and $3,500,000 at March
31, 1996, 1997 and 1998, respectively.
Financing fees are amortized over the terms of the underlying debt agreements
using the straight-line method, which method approximates the effective
interest rate method. Accumulated amortization at March 31, 1996, 1997 and 1998
was approximately $285,000, $230,000 and $760,000, respectively. In August
1996, the Company refinanced its existing lines of credit. Unamortized
financing fees of $292,000 that related to the existing lines of credit were
charged to operations at that time.
New Accounting Standard
In June 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standard (SFAS) No. 131, Disclosures About
Segments of an Enterprise and Related Information. SFAS No. 131 establishes
standards for reporting information about operating segments and supersedes
SFAS No. 14, Financial Reporting for Segments of a Business Enterprise. This
statement is effective for financial statements for periods beginning after
December 15, 1997. SFAS No. 131 will be adopted in fiscal 1999.
F-31
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
2. Acquisitions
During the year ended March 31, 1996, the Company acquired four businesses
that provide office imaging solutions and related services for an aggregate
purchase price of approximately $9,088,000 primarily for cash, including the
direct costs of acquisitions of approximately $223,000. Liabilities totaling
$3,112,000 were assumed by the Company in connection with these acquisitions.
The Company also sold stock at its fair market value of approximately $588,000
in connection with these acquisitions. Total assets related to these four
acquisitions were $12,200,000, including goodwill of approximately $8,000,000.
During the year ended March 31, 1997, the Company acquired four businesses
that provide office imaging solutions and related services for an aggregate
purchase price of approximately $16,982,000 primarily for cash, including the
direct costs of acquisitions of approximately $518,000. The Company assumed
$4,118,000 in liabilities in connection with these acquisitions. The Company
also sold stock at its fair market value of approximately $883,000 in
connection with these acquisitions. Total assets related to these four
acquisitions were $21,100,000, including goodwill of approximately $12,000,000.
During the year ended March 31, 1998, the Company acquired 12 businesses that
provide office imaging solutions and related services for an aggregate purchase
price of approximately $72,267,000 primarily for cash, including the direct
costs of acquisitions of approximately $621,000. Liabilities assumed in
connection with these acquisitions totaled $21,400,000. The Company also sold
stock in connection with these acquisitions. The Class B common stock was
valued from $3.30 to $8.20 per share and the Class A common stock from $65.00
to $80.00 per share. Stock valued at approximately $6,058,000 was sold in
connection with these acquisitions. The excess of the fair value of the stock
over the sales price was approximately $2,400,000 and has been considered
additional purchase price.
Significant acquisitions during the year ended March 31, 1998 include
Electronic Systems, Inc. (ESI), Eastern Copy Products, Inc. (ECP), Electronic
Systems of Richmond, Inc. (ESR), and Connecticut Business Systems, Inc. (CBS).
The following summarizes these acquisitions:
<TABLE>
<CAPTION>
Acquisition Total Assets Goodwill
Acquired Company Date Acquired Acquired
---------------- ------------- ------------- -----------
<S> <C> <C> <C>
ESI................................ July 1997 $34,700,000 $24,800,000
ECP................................ August 1997 9,100,000 5,300,000
ESR................................ December 1997 15,700,000 8,600,000
CBS................................ December 1997 12,800,000 9,300,000
----------- -----------
$72,300,000 $48,000,000
=========== ===========
</TABLE>
Total assets related to the remaining eight acquisitions was $19,700,000,
including goodwill of approximately $11,300,000.
All acquisitions have been accounted for as purchases and accordingly are
included in the results of operations from their dates of acquisitions. In
connection with the allocation of purchase price, there were no significant
adjustments to fair value.
Under the terms of one of its purchase agreements, the Company is committed
to make contingent payments (the Earn-out) of up to $3,000,000 to two of the
former owners of the acquired company on or before June 30, 2002. This
contingent payment is based on the future profitability, specifically earnings
before interest and taxes, of the acquired company. The former owner may
receive a portion of the Earn-out equal to
F-32
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
$250,000, payable by June 30 of each year for fiscal years ending March 31,
1999, 2000 and 2001. The former owner shall be entitled to receive, on or
before June 30, 2002, the balance of the Earn-out, if applicable, minus any
portion of the Earn-out previously paid. The Earn-out, if paid, will be
recorded as goodwill related to the acquired company.
The unaudited pro forma results presented below include the effects of the
acquisitions as if they had been consummated at the beginning of the year prior
to acquisition. The unaudited proforma financial information below is not
necessarily indicative of either future results of operations or results that
might have been achieved had the acquisitions been consummated at the beginning
of the year prior to acquisition.
<TABLE>
<CAPTION>
Unaudited Proforma
Year ended March 31
---------------------------------------
1996 1997 1998
----------- ------------ ------------
<S> <C> <C> <C>
Revenues..................... $75,504,139 $196,842,526 $215,376,735
Net income (loss)............ (1,215,279) (90,136) 3,707,319
Net income (loss) available
to common stockholders...... (2,738,917) (2,535,200) 768,188
Earnings (loss) per share.... (.30) (.22) .07
</TABLE>
3. Rental Equipment
The Company's rental equipment consists of the following:
<TABLE>
<CAPTION>
March 31
-----------------------------------
1996 1997 1998
---------- ---------- -----------
<S> <C> <C> <C>
Rental equipment on operating
leases........................ $4,899,205 $7,959,553 $11,594,114
Less accumulated depreciation.. (2,264,592) (4,291,447) (6,938,796)
---------- ---------- -----------
Rental equipment, net.......... $2,634,613 $3,668,106 $ 4,655,318
========== ========== ===========
</TABLE>
4. Property and Equipment
The Company's property and equipment consists of the following:
<TABLE>
<CAPTION>
March 31
----------------------------------
1996 1997 1998
---------- ---------- ----------
<S> <C> <C> <C>
Office furniture, equipment and
leasehold improvements.......... $1,664,452 $2,645,701 $6,288,680
Less accumulated depreciation and
amortization.................... (417,940) (924,567) (1,870,068)
---------- ---------- ----------
Property and equipment, net...... $1,246,512 $1,721,134 $4,418,612
========== ========== ==========
</TABLE>
F-33
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
5. Long-Term Debt
Long-term debt consists of the following:
<TABLE>
<CAPTION>
March 31
-------------------------------------
1996 1997 1998
----------- ----------- -----------
<S> <C> <C> <C>
Term and revolving loans....... $20,979,105 $36,105,694 $97,251,600
Various notes payable.......... 852,384 767,129 232,916
----------- ----------- -----------
21,831,489 36,872,823 97,484,516
Less current maturities........ (312,641) (562,700) (232,916)
----------- ----------- -----------
$21,518,848 $36,310,123 $97,251,600
=========== =========== ===========
</TABLE>
The Company currently has a credit facility with Jackson National Life
Insurance Company (the Credit Facility) of up to $120,000,000 for acquisitions
and for working capital purposes. At March 31, 1998, $22,748,000 was available
under the Credit Facility, including $6,000,000 available for working capital
under the revolving line of credit. The Credit Facility bears interest at 3.25%
and 3.00% over LIBOR (5.6328% at March 31, 1998) for the term and revolving
loans, respectively. Principal under the Credit Facility is repayable in semi-
annual installments beginning in fiscal 2000. In addition to these scheduled
payments, the Company is required to prepay outstanding principal in an amount
equal to 70% of the excess cash flow (as defined) for each fiscal year within
90 days of year end. No amounts have been required to be prepaid under this
provision. All remaining principal under the Credit Facility is due and payable
in August 2004.
Under the terms of the Credit Facility, the Company has pledged substantially
all of its assets to the lender. The terms of the Credit Facility also require
compliance with numerous covenants that restrict, among other things, dividend
payments, sales of stock or assets or the incurrence of additional debt.
In fiscal 1997, the Company sold 633,933 shares of Class C common stock and
27,083 shares of Class A common stock at their fair value for an aggregate
amount of $2,500,000 to its lender. During the year ended March 31, 1998, the
Company sold 270,319 shares of Class C common stock and 11,136 shares of Class
A common stock in connection with certain antidilution provisions. Of such
shares of Class C Common Stock 260,600 shares were sold at the same per share
price as the fiscal 1997 shares were sold to the Company's lender, and 9,656
shares were sold at a per share price of $0.07, resulting in aggregate proceeds
of $1,030,000 to the Company. Additionally, in 1997, the Company paid a
financing fee of 2% to the lender to increase the Credit Facility by
$40,000,000 to $120,000,000.
In September 1996, the Company purchased an interest rate cap from a bank on
$23,500,000 of the term loan debt outstanding. In January 1998, the Company
purchased an additional rate cap on an additional $26,475,000 of the term loan.
The interest rate caps are for three-year terms and provide for the Company to
be reimbursed by the bank if the annual average of the LIBOR rate exceeds 8%.
The cost of the interest rate caps ($150,000) is amortized over the three-year
term of the agreement and is included in interest.
Aggregate annual maturities of long-term debt at March 31, 1998 are as
follows:
<TABLE>
<S> <C>
1999..................................................... $ 232,916
2000..................................................... 6,807,612
2001..................................................... 14,321,805
2002..................................................... 13,776,212
2003..................................................... 12,693,640
Thereafter............................................... 49,652,331
-----------
Total.................................................... $97,484,516
===========
</TABLE>
F-34
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Interest paid was approximately $1,782,000, $2,700,000 and $6,000,000 for the
years ended March 31, 1996, 1997 and 1998, respectively.
The Company has signed a commitment letter with First Union for a $175
million revolving credit facility, contingent upon the closing of the public
offering. The letter was signed in April 1998. The terms of the new credit
facility would include a five year term; collateralization of all Company
assets; a variable interest rate ranging from 0.625% to 1.5% over LIBOR, or at
the Company's option, ranging from 0.0% to 0.5% over a base rate related to the
prime rate; quarterly interest payments; an unused facility fee and various
restrictive covenants, including certain financial covenants.
Under the terms of the existing Credit Facility, the Company will be subject
to a prepayment fee of 1% to 4% of the outstanding balance depending on the
length of time elapsed from the beginning of the term of the loan to the date
of prepayment. In the case that the loan is repaid within 60 days of an initial
public offering of the Company's common stock, this fee will be reduced to the
lesser of 1% of the outstanding balance or $250,000.
6. Stockholders' Equity
From inception through March 31, 1998, the Company has sold stock in
connection with business combinations and to its founding stockholders,
employees and others. During the year ended March 31, 1998, such stock was
subscribed and sold as units of approximately 7.15 shares of Class A common
stock and one share of Class B (or one share of Class C) common stock. The
sales of those units have been recorded at their estimated fair value at the
date of the commitment to sell the shares, except for shares issued in
connection with antidilution provisions, which shares were issued at the per
share price at the date of the transaction giving rise to the antidilution
issuance. The value of the units has been allocated between shares of the Class
A and Class B (or Class C) common stock based on their estimated fair values.
Class B stockholders are entitled to voting rights of one vote per share.
Class A and Class C stockholders are not entitled to voting rights.
No distributions other than in complete liquidation of the Company can be
made without approval of the Board of Directors. In the event of such a
distribution, the priority is as follows for the distribution of funds to
stockholders:
1. Class A stockholders are first entitled to a portion of the distribution
equivalent to 8% per annum (the Yield) of the original share cost ($90).
2. Class A stockholders are then entitled to receive a distribution equivalent
to the original cost ($90) of the shares.
3. After the required distributions in clauses 1 and 2 above have been
completed, holders of shares of Class A common stock are entitled to receive
10% of, and holders of shares of Class B common stock and Class C common
stock are entitled to receive 90% of, the remaining portion of the
distribution.
During 1998, the Board of Directors approved an increase in the authorized
number of shares of Class A, Class B and Class C stock, to 400,000, 50,000,000
and 905,000 shares, respectively.
In connection with the founding agreements, one of the founders and various
members of senior management have received the right to purchase, and have
purchased, an aggregate of 1,207,800 shares of Class B common stock at a price
of $0.07 per share. In June 1994, the Company's president (who is also a
founding stockholder), received an option to purchase at a price of $0.07 per
share, certain shares of common stock that were reserved for issuance to senior
management. At March 31, 1998, the number of such shares
F-35
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
which remain unissued was zero. Of the 1,207,800 shares, 86,276 shares were
allocated between and purchased by the Company's president, the principal
lender, Jackson National Life Insurance Company, and its majority stockholder
(Golder, Thoma, Cressey, Rauner, Inc.) based on their current ownership of the
Company's common stock. These shares are subject to the Company's right to
repurchase such shares in the event that an initial public offering of the
Company's stock is not consummated.
7. Earnings Per Share
In 1997, the FASB issued SFAS No. 128, Earnings per Share. SFAS No. 128
replaced the calculations of primary and fully diluted earnings per share with
basic and diluted earnings per share.
The weighted average number of shares outstanding used in the calculation of
both basic and diluted earnings per share have been adjusted to give
retroactive effect to (i) the 86,276 shares of common stock sold during the
year ended March 31, 1998 pursuant to a pre-existing contractual obligation;
and (ii) the 132-for-1 stock split to be effective upon the closing of the
initial public offering of the Company's common stock.
The Company is accreting the approximately $1,000,000 difference of the
redemption value of the Class A common stock and the value allocated to the
stock for calculation of the earnings per share beginning January 1998 (the
month following the date an initial public offering became probable) through
the estimated date of the initial public offering. Such accretion was
approximately $500,000 during the year ended March 31, 1998.
Assuming redemption of the Class A common stock using the proceeds from the
number of shares of common stock necessary at $12 per share to redeem such
shares, earnings per share would have been $0.10 for the year ended March 31,
1997 and $0.34 for the year ended March 31, 1998.
8. Income Taxes
The Company accounts for income taxes under FASB No. 109, Accounting for
Income Taxes. Deferred income tax assets and liabilities are determined based
upon differences between financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that will be
in effect when the differences are expected to reverse.
The components of the income tax provision (benefit) are as follows:
<TABLE>
<CAPTION>
Year ended March 31
--------------------------------
1996 1997 1998
-------- ---------- ----------
<S> <C> <C> <C>
Current:
Federal................................... $435,000 $1,159,571 $2,807,210
State..................................... 212,500 375,000 863,000
-------- ---------- ----------
647,500 1,534,571 3,670,210
Deferred:
Federal................................... (316,500) (448,400) 213,000
State..................................... (56,000) (79,100) 65,000
-------- ---------- ----------
(372,500) (527,500) 278,000
-------- ---------- ----------
$275,000 $1,007,071 $3,948,210
======== ========== ==========
</TABLE>
F-36
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
A reconciliation of the difference between the effective income tax rate and
the statutory federal tax rate follows:
<TABLE>
<CAPTION>
Year ended March 31
--------------------------------
1996 1997 1998
-------- ---------- ----------
<S> <C> <C> <C>
Tax at U.S. statutory rate................. $ 28,095 $ 724,334 $2,856,250
State taxes, net of federal benefit........ 45,142 187,080 616,342
Goodwill amortization...................... 150,703 216,252 288,919
Valuation allowance........................ (8,500) (175,500) --
Other permanent differences................ 59,560 54,905 186,699
-------- ---------- ----------
$275,000 $1,007,071 $3,948,210
======== ========== ==========
</TABLE>
Significant components of the Company's deferred tax assets and liabilities
are as follows:
<TABLE>
<CAPTION>
March 31
-------------------------------
1996 1997 1998
-------- ---------- ----------
<S> <C> <C> <C>
Deferred tax assets:
Noncompete agreements........................ $351,000 $ 713,000 $1,091,000
Inventory related............................ 120,000 305,000 688,000
Various accrued expenses..................... 31,200 139,000 239,000
Deferred revenue............................. -- -- 403,000
Depreciation................................. 191,000 269,000 199,000
Accounts receivable related.................. 99,800 110,000 213,000
Other items.................................. 20,000 33,000 --
-------- ---------- ----------
Gross deferred tax asset....................... 813,000 1,569,000 2,833,000
Less valuation allowance....................... (395,500) -- --
-------- ---------- ----------
417,500 1,569,000 2,833,000
Deferred tax liabilities:
Goodwill..................................... 45,000 145,000 654,000
Other items.................................. -- -- 65,000
-------- ---------- ----------
Net deferred tax asset......................... $372,500 $1,424,000 $2,114,000
======== ========== ==========
Classified as follows:
Current asset................................ $251,000 $ 554,000 $1,543,000
Noncurrent asset............................. 121,500 870,000 571,000
-------- ---------- ----------
$372,500 $1,424,000 $2,114,000
======== ========== ==========
</TABLE>
SFAS No. 109 requires a valuation allowance to reduce the deferred tax assets
reported if, based on the weight of the evidence, it is more likely than not
that some portion or all of the deferred tax assets will not be realized. A
portion of the reduction of the valuation allowance during the years ended
March 31, 1996 and 1997 was credited to goodwill since it related to basis
differences from previous business combinations not previously recognized.
After consideration of all the evidence, both positive and negative, management
has determined that a valuation allowance is not necessary as of March 31,
1998.
Cash paid for income taxes was $645,000, $1,581,000 and $3,467,900 for the
years ended March 31, 1996, 1997 and 1998, respectively.
F-37
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
9. Employee Benefit Plans
The majority of the employees of the Company are eligible to participate in
defined contribution plans (the Plans) established under Section 401(k) of the
U.S. Internal Revenue Code. Employees are generally eligible to contribute
voluntarily to the Plans after one year of service. The Company may contribute
a discretionary amount of the employee contribution up to specified limits.
Employees are always vested in their contributed balance and generally become
fully vested in the Company's contributions after seven years of service. The
expense related to the Company's contributions to the Plans for the years ended
March 31, 1996, 1997 and 1998 was approximately $206,000, $302,000 and
$519,000, respectively.
10. Leases
The Company is obligated under various noncancelable operating leases for its
office facilities, office equipment and vehicles. Certain of the leases for its
office facilities are with various employee stockholders. Future noncancelable
lease commitments as of March 31, 1998 are as follows:
<TABLE>
<CAPTION>
Related-Party
Leases Other Leases Total
------------- ------------ -----------
<S> <C> <C> <C>
1999.................................. $1,101,181 $1,634,138 $ 2,735,319
2000.................................. 994,954 1,480,705 2,475,659
2001.................................. 899,609 1,301,489 2,201,098
2002.................................. 835,604 916,152 1,751,756
2003.................................. 618,360 531,631 1,149,991
Thereafter............................ -- 453,595 453,595
---------- ---------- -----------
Total............................... $4,449,708 $6,317,710 $10,767,418
========== ========== ===========
</TABLE>
Rental expense related to the above leases was as follows:
<TABLE>
<CAPTION>
Related-Party Other Lease
Lease Expense Expense Total
------------- ----------- ----------
<S> <C> <C> <C>
Year ended March 31, 1996.............. $249,712 $ 315,288 $ 565,000
Year ended March 31, 1997.............. 530,407 261,593 792,000
Year ended March 31, 1998.............. 862,423 1,235,600 2,098,023
</TABLE>
11. Related-Party Transactions
During 1994, the Company entered into a seven-year consulting agreement with
its majority stockholder, Golder, Thoma, Cressey, Rauner, Inc. (the Majority
Stockholder). Under the terms of this agreement, the Company is obligated to
pay the Majority Stockholder an annual management fee of $200,000. The Company
is also obligated to pay a 1% placement fee to the Majority Stockholder for all
debt and equity raised by the Company during the term of the agreement. The
agreement will terminate earlier than the aforementioned seven-year term upon
the closing of any initial public offering of the Company's common stock or a
sale of substantially all of the Company's assets or common stock.
The Majority Stockholder agreed to waive their 1% placement fee related to
debt refinancing completed in August 1996, because the majority of the work to
obtain the financing was performed by another related party, Green, Manning &
Bunch, which charged a 1% fee.
F-38
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
In connection with the aforementioned agreements, the Company incurred
management fees and placement fees. The following shows the fees paid in each
period:
<TABLE>
<CAPTION>
Year ended March 31
--------------------------
1996 1997 1998
-------- -------- --------
<S> <C> <C> <C>
Management fees................................... $200,000 $200,000 $200,000
Placement fees.................................... 390,000 -- 800,000
</TABLE>
The Company entered into a consulting agreement with Capitol Office Solutions
(Capitol) in July 1997, whereby the Company will provide certain human
resources, administration, financial, accounting, and consulting services to
Capitol for an annual fee of $150,000. Additionally, the Company received a
one-time fee of $270,000 from Capitol related to assisting Capitol in obtaining
financing. The majority stockholders of the Company also own the majority of
the outstanding stock of Capitol.
Related party notes receivable relate to amounts loaned to officers of the
Company to purchase stock in Capitol. These notes, which bear interest of 8%
per annum, are due and payable, with interest, on June 30, 2000, and are
collateralized by the shares purchased with the proceeds of the notes.
Also at March 31, 1998, the Company held notes receivable from employees with
balances totaling $231,319. These notes arose from transactions in fiscal years
1997 and 1998, whereby the Company loaned the employees money to purchase
shares of the Company's stock. The notes, which bear interest of 8% per annum,
are due and payable, with interest, on dates from July 1 to November 1, 2000.
These notes are collateralized by the shares purchased with the proceeds of the
notes. These receivables are shown on the balance sheet as a component of
stockholders' equity.
12. Subsequent Events
The Board of Directors (the Board) contemplates an initial public offering
(the Offering) of the Company's Common Stock.
Effective May 28, 1998, the Board of Directors approved a change in the
Company's capital stock to authorize 10,000,000 shares of $.01 par value
preferred shares, 50,000,000 shares of $.01 par value Class B common stock and
905,000 shares of $.01 par value Class C common stock. At this time, the Board
also authorized a 132-for-1 split for holders of its Class B and Class C common
stock; provided for the automatic conversion into one share of Class B common
stock of each share of its Class C common stock upon consummation of the
Offering; provided that, upon consummation of the Offering, each share of Class
A common stock would automatically be redeemed for $90 plus 8% per annum from
the time of its purchase through May 31, 1998 (provided that the Offering
closes prior to June 30, 1998) and approximately 3.41 shares of Class B common
stock; and renamed its Class B common stock (Common Stock). The accompanying
consolidated financial statements have been restated to reflect this change in
capitalization.
The Board of Directors has adopted a stock option plan, which is to take
effect upon the closing of the Offering. Under the terms of the stock option
plan, 1,820,000 shares of the Company's common stock may be granted pursuant to
stock options or granted or sold as restricted stock to directors, officers and
employees of and consultants and advisors to the Company. Under the stock
option plan, the Board has authorized that upon the closing of the Offering,
options to purchase 519,750 shares of common stock of the Company at an
exercise price equal to the Offering price per share will be granted to key
employees. All of these options are subject to vesting requirements based on
length of service.
F-39
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
13. Supplemental Guarantor Financial Information
In connection with Global Imaging Systems, Inc.'s proposed issuance of
$100,000,000 of 10 3/4% Senior Subordinated Notes (the Notes), the Notes will
be fully and unconditionally guaranteed on a joint and several basis by all of
the Company's existing subsidiaries (the Guarantors). All of the operations of
the Company are conducted by the Guarantors and Global Imaging Systems, Inc.
(the Parent), has no operations or assets separate from its investment in its
subsidiaries. Therefore, separate financial statements of the Guarantors have
not been presented. Separate financial statements and other disclosures
concerning the Guarantors and the Parent are not presented because management
believes that such information would not be material to investors.
F-40
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
The following unaudited proforma consolidated statements of operations are
based on the historical financial statements of the Company, and the businesses
acquired during fiscal 1998 and 1999, which are more fully described below. The
unaudited pro forma consolidated statement of operations for the fiscal year
ended March 31, 1998 gives effect to acquisitions consummated during fiscal
years 1998 and 1999, as if those acquisitions occurred on April 1, 1997. The
unaudited pro forma consolidated statement of operations for the nine months
ended December 31, 1998 gives effect to acquisitions consummated during fiscal
year 1999, as if those acquisitions occurred on April 1, 1998.
During the fiscal year ended March 31, 1998, the Company acquired the
following twelve businesses: Cascade Office Systems, Inc., Connecticut Business
Systems, Inc., Copy Care, Duplicating Specialties, Inc. d/b/a Copytronix,
Eastern Copy Products, Inc. and Subsidiaries, Electronic Systems, Inc.,
Electronic Systems of Richmond, Inc., Fowler Communications, Inc., Quality
Business Systems, Inc., South Alabama Business Machines, Inc., United Office
Systems, Inc., and the Business Systems Division of Bloom's, Inc. During the
fiscal year ended March 31, 1999, the Company acquired the following eight
businesses: Capitol Office Solutions, Inc., Carr Business Machines of Great
Neck, Inc. d/b/a Carr Business Systems, Centre Business Products, Dahill
Industries, Inc., Distinctive Business Products, Inc., GE Capital IT Solutions'
Tidewater Operation, ProView, Inc., and Stephen C. Fuller d/b/a Henderson's
Office Systems.
The pro forma adjustments are based upon currently available information, as
well as upon certain assumptions that management believes are reasonable. Each
of the acquisitions was accounted for under the purchase method of accounting.
The unaudited pro forma consolidated financial statements are not necessarily
indicative of either future results of operations or results that might have
been achieved had the foregoing transactions been consummated as of the
indicated dates. The unaudited pro forma consolidated financial statements
should be read in conjunction with the notes thereto and the historical
consolidated financial statements of the Company, together with the related
notes thereto, included in this prospectus.
F-41
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For The Nine Months Ended December 31, 1998
<TABLE>
<CAPTION>
Historical Acquired Pro Forma Pro Forma
Company(f) Businesses(a) Adjustments(b) Consolidated
------------ ------------- -------------- ------------
<S> <C> <C> <C> <C>
Revenue:
Equipment and supplies
sales................ $153,320,298 $48,471,083 $ -- $201,791,381
Service and rental
revenue.............. 47,540,574 17,784,854 -- 65,325,428
------------ ----------- ----------- ------------
Total revenue....... 200,860,872 66,255,937 -- 267,116,809
Costs and operating
expenses:
Cost of equipment and
supplies sales....... 109,424,718 29,085,182 -- 138,509,900
Service and rental
costs................ 23,494,986 10,046,164 -- 33,541,150
Selling, general, and
administrative
expenses............. 43,661,110 17,149,235 -- 60,810,345
Intangible asset
amortization and
charges.............. 3,038,801 388,214 1,526,696(c) 4,953,711
------------ ----------- ----------- ------------
Total costs and
operating
expenses........... 179,619,615 56,668,795 1,526,696 237,815,106
------------ ----------- ----------- ------------
Income from operations.. 21,241,257 9,587,142 (1,526,696) 29,301,703
Interest expense, net... 5,442,782 1,008,135 3,862,053(d) 10,312,970
------------ ----------- ----------- ------------
Income before income
taxes ................. 15,798,475 8,579,007 (5,388,749) 18,988,733
Income taxes............ 7,044,316 3,208,622 (1,564,234)(e) 8,688,704
------------ ----------- ----------- ------------
Net Income.............. $ 8,754,159 $ 5,370,385 $(3,824,514) $ 10,300,030
============ =========== =========== ============
Earnings per common
share--basic........... $ 0.56 $ 0.55
============ ============
Earnings per common
share--diluted......... $ 0.54 $ 0.54
============ ============
Weighted average number
of shares used in the
calculation:
Basic................. 15,756,397 18,725,841
============ ============
Diluted............... 16,144,410 19,061,607
============ ============
</TABLE>
See accompanying notes to the unaudited pro forma consolidated financial
statements.
F-42
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF OPERATIONS
Nine Months Ended December 31, 1998
(a) Represents historical operating results of the following eight businesses
prior to acquisition of their stock or certain of their assets and
liabilities by the Company: Capitol Office Solutions, Inc., Carr Business
Machines of Great Neck, Inc. d/b/a Carr Business Systems, Centre Business
Products, Dahill Industries, Inc., Distinctive Business Products, Inc., GE
Capital IT Solutions' Tidewater Operation, ProView, Inc., and Stephen C.
Fuller d/b/a Henderson's Office Systems.
(b) Includes adjustments to reflect: (1) amortization expense for financing
fees, goodwill and non-compete agreements recorded as a result of purchase
accounting, (2) interest expense resulting from increased borrowings to
fund the cash portion of the purchase price for the businesses acquired,
and (3) income tax expense that would have resulted if the businesses
acquired by Global during the period from April 1, 1998 to March 31, 1999
had been combined and subject to an assumed federal income tax statutory
rate and the applicable state statutory rate for each of these businesses
for the periods presented. Excludes adjustments resulting from the
elimination of certain sales, service, and administrative positions net of
additional expenses related to positions added in connection with the
Company's acquisitions of the Acquired Businesses; decreases in former
owners' salaries and perquisites; improved purchasing terms; and decreases
in certain other general and administrative expenses. Prior to completing
an acquisition, the Company formulates a formal integration plan which
clearly identifies employees to be terminated, their job classifications or
functions, and their locations. Staff reductions are typically completed
within several months of the acquisition date. Former owners that remain
with the Company post-acquisition are compensated according to the terms of
an employment contract executed at the time of the acquisition.
(c) Reflects additional goodwill amortization expense of $1,780,327 and non-
compete covenant amortization expense of $134,583, offset by an adjustment
to eliminate amortization expense of ($388,214), that was recorded on
acquired companies' books. The goodwill amortization periods range from 25
to 40 years; goodwill is amortized using the straight-line method. The non-
compete covenant amortization periods range from 2 to 3 years; non-compete
covenants are amortized using the straight-line method.
(d) Reflects additional interest expense related to borrowings that would have
been incurred by the Company to finance the acquisitions, had all of the
acquisitions been consummated at April 1, 1998. An average interest rate of
7.25% was used for this calculation which approximates the Company's
average borrowing rate during such period.
(e) Represents the income tax impact on purchase accounting adjustments, based
on an effective rate of 40.0%.
(f) This column represents the historical consolidated results of operations
and excludes an extraordinary charge of $3.1 million ($1.8 million net of
income taxes) to recognize a $0.2 million prepayment penalty and the write-
off of deferred financing costs of $2.9 million related to the retirement
of Global's prior credit facility from Jackson National Life Insurance
Company.
F-43
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For The Fiscal Year Ended March 31, 1998
<TABLE>
<CAPTION>
Historical Acquired Pro Forma Pro Forma
Company Businesses(a) Adjustments(b) Consolidated
------------ ------------- -------------- ------------
<S> <C> <C> <C> <C>
Revenue:
Equipment and supplies
sales................ $121,316,021 $111,625,679 $ -- $232,941,700
Service and rental
revenue.............. 43,059,246 37,962,365 -- 81,021,611
------------ ------------ ------------ ------------
Total revenue....... 164,375,267 149,588,044 -- 313,963,311
Costs and operating
expenses:
Cost of equipment and
supplies sales....... 85,971,953 72,924,453 -- 158,896,406
Service and rental
costs................ 21,593,696 20,645,700 -- 42,239,396
Selling, general, and
administrative
expenses............. 38,619,666 38,294,586 -- 76,914,252
Intangible asset
amortization and
charges.............. 3,075,831 309,565 3,808,768 (c) 7,194,164
------------ ------------ ------------ ------------
Total costs and
operating
expenses........... 149,261,146 132,174,304 3,808,768 285,244,218
------------ ------------ ------------ ------------
Income from operations.. 15,114,121 17,413,740 (3,808,768) 28,719,093
Interest expense, net... 6,713,327 1,836,539 10,152,324 (d) 18,702,190
------------ ------------ ------------ ------------
Income before income
taxes.................. 8,400,794 15,577,201 (13,961,092) 10,016,903
Income taxes............ 3,948,210 3,640,277 (2,223,848)(e) 5,364,639
------------ ------------ ------------ ------------
Net income.............. 4,452,584 $ 11,936,924 $(11,737,244) 4,652,264
============ ============
Yield adjustment on
class A common stock... (2,442,119) (2,939,131)
------------ ------------
Net income available to
common stockholders.... $ 2,010,465 $ 1,713,133
============ ============
Earnings per common
share--basic........... $ 0.21 $ 0.09
============ ============
Earnings per common
share--diluted......... $ 0.21 $ 0.09
============ ============
Weighted average number
of shares used in the
calculation:
Basic................. 9,804,953 18,725,841
============ ============
Diluted............... 9,804,953 19,061,607
============ ============
</TABLE>
See accompanying notes to the unaudited pro forma consolidated financial
statements.
F-44
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF OPERATIONS
Fiscal Year Ended March 31, 1998
(a) Represents historical operating results of the following twenty businesses
prior to acquisition of their stock or certain of their assets and
liabilities by the Company: Cascade Office Systems, Inc., Connecticut
Business Systems, Inc., the Business Systems Division of Bloom's, Inc.,
Copy Care, Inc., Duplicating Specialties, Inc. d/b/a Copytronix, Eastern
Copy Products, Inc. and Subsidiaries, Electronic Systems, Inc., Electronic
Systems of Richmond, Inc., Fowler Communications, Inc., Quality Business
Systems, Inc., South Alabama Business Machines, Inc., United Office
Systems, Inc., Capitol Office Solutions, Inc., Carr Business Machines of
Great Neck, Inc. d/b/a Carr Business Systems, Centre Business Products,
Dahill Industries, Inc., Distinctive Business Products, Inc., GE Capital IT
Solutions' Tidewater Operation, ProView, Inc., and Stephen C. Fuller d/b/a
Henderson's Office Systems.
(b) Includes adjustments to reflect: (1) amortization expense for financing
fees, goodwill and non-compete agreements recorded as a result of purchase
accounting, (2) interest expense resulting from increased borrowings to
fund the cash portion of the purchase price for the businesses acquired,
and (3) income tax expense that would have resulted if the businesses
acquired by Global during the period from April 1, 1997 to March 31, 1999
had been combined and subject to an assumed federal income tax statutory
rate and the applicable state statutory rate for each of these businesses
for the periods presented. Excludes adjustments resulting from the
elimination of certain sales, service, and administrative positions net of
additional expenses related to positions added in connection with the
Company's acquisitions of the Acquired Businesses; decreases in former
owners' salaries and perquisites; improved purchasing terms; and decreases
in certain other general and administrative expenses. Prior to completing
an acquisition, the Company formulates a formal integration plan which
clearly identifies employees to be terminated, their job classifications or
functions, and their locations. Staff reductions are typically completed
within several months of the acquisition date. Former owners that remain
with the Company post-acquisition are compensated according to the terms of
an employment contract executed at the time of the acquisition.
(c) Reflects additional goodwill amortization expense of $3,737,573 and non-
compete covenant amortization expense of $380,760, offset by an adjustment
to eliminate amortization expense of ($309,565), that was recorded on
acquired companies' books. The goodwill amortization periods range from 20
to 40 years; goodwill is amortized using the straight-line method. The non-
compete covenant amortization periods range from 2 to 3 years; non-compete
covenants are amortized using the straight-line method.
(d) Reflects additional interest expense related to borrowings that would have
been incurred by the Company to finance the acquisitions, had all of the
acquisitions been consummated at April 1, 1997. An average interest rate of
8.9% was used for this calculation which approximates the Company's average
borrowing rate during such period.
(e) Represents the income tax impact on purchase accounting adjustments, based
on an effective rate of 40%.
F-45
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Stockholders
Electronic Systems, Inc.
We have audited the accompanying statements of income and retained earnings
and cash flows of Electronic Systems, Inc. for the years ended December 31,
1995 and 1996 and the six months ended June 30, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and cash flows of Electronic
Systems, Inc. for the years ended December 31, 1995 and 1996 and the six months
ended June 30, 1997 in conformity with generally accepted accounting
principles.
/s/ Ernst & Young
Richmond, Virginia
January 23, 1998
F-46
<PAGE>
ELECTRONIC SYSTEMS, INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS
<TABLE>
<CAPTION>
Six months
Year ended December 31 ended
------------------------ June 30
1995 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
Revenue:
Equipment, supplies and parts........ $24,096,319 $35,903,314 $20,373,983
Service and training................. 4,013,939 6,304,117 3,899,523
Rental............................... 758,271 802,465 422,963
----------- ----------- -----------
Total revenue...................... 28,868,529 43,009,896 24,696,469
Cost of goods and services sold:
Equipment, supplies and parts........ 20,478,529 31,008,200 17,294,908
Service and training................. 1,883,456 3,115,095 1,804,993
Rental............................... 470,729 513,096 282,111
----------- ----------- -----------
Total cost of goods and services
sold.............................. 22,832,714 34,636,391 19,382,012
----------- ----------- -----------
6,035,815 8,373,505 5,314,457
Selling, general, and administrative
expenses.............................. 4,824,892 5,961,952 4,482,983
----------- ----------- -----------
1,210,923 2,411,553 831,474
Other income (expense):
Interest expense..................... (78,207) (87,713) (17,250)
Interest income...................... 16,498 21,850 34,135
Management fee....................... 15,000 25,000 14,000
Other, net........................... 100,008 32,740 90,031
----------- ----------- -----------
53,299 (8,123) 120,916
----------- ----------- -----------
Net income............................. 1,264,222 2,403,430 952,390
Retained earnings at beginning of
year.................................. 1,958,487 2,877,594 4,682,982
Distributions to shareholders.......... (345,115) (598,042) (1,174,346)
----------- ----------- -----------
Retained earnings at end of year....... $ 2,877,594 $ 4,682,982 $ 4,461,026
=========== =========== ===========
</TABLE>
See accompanying notes.
F-47
<PAGE>
ELECTRONIC SYSTEMS, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six months
Year ended December 31 ended
------------------------ June 30
1995 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
Operating activities
Net income............................. $ 1,264,222 $ 2,403,430 $ 952,390
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization........ 398,866 521,799 250,726
(Gain) loss on sale of assets........ 1,610 8,243 (26,620)
Provision for doubtful accounts...... 20,776 -- 108,000
Changes in operating assets and lia-
bilities:
Accounts receivable................. (1,725,911) 35,132 (691,819)
Inventories......................... (617,253) (463,747) 248,873
Prepaid expenses and other.......... 42,368 (336) (44,952)
Accounts payable.................... 801,781 2,032,101 (1,301,766)
Accrued expenses and other liabili-
ties............................... 162,239 371,848 554,626
----------- ----------- -----------
Net cash provided by operating activi-
ties.................................. 348,698 4,908,470 49,458
Investing activities
Purchases of property and equipment.... (659,254) (444,200) (339,048)
Proceeds on sale of property and equip-
ment.................................. 39,176 101,242 45,043
Proceeds on notes receivable from
shareholders.......................... -- -- 166,980
----------- ----------- -----------
Net cash used in investing activities.. (620,078) (342,958) (127,025)
Financing activities
Borrowings on revolving credit loan.... 1,792,325 200,000 --
Repayments on revolving credit loan.... (1,026,630) (1,178,705) --
Principal payments on long-term debt... (149,200) (236,700) (20,000)
Distributions to shareholders.......... (345,115) (598,042) (1,174,346)
----------- ----------- -----------
Net cash (used) provided by financing
activities............................ 271,380 (1,813,447) (1,194,346)
(Decrease) increase in cash............ -- 2,752,065 (1,271,913)
Cash at beginning of year.............. 10,450 10,450 2,762,515
----------- ----------- -----------
Cash at end of year.................... $ 10,450 $ 2,762,515 $ 1,490,602
=========== =========== ===========
</TABLE>
See accompanying notes.
F-48
<PAGE>
ELECTRONIC SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1997
1. Significant Accounting Policies
Electronic Systems, Inc. (the Company) is an office technology supplier
incorporated in Virginia. The Company sells and services computer hardware,
software and copiers and provides consulting and training services for various
office systems. The following is a description of the Company's significant
accounting policies:
Cash Equivalents
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
Inventories
Inventories are stated at the lower of cost or market, primarily using
specific identification.
Property and Equipment
Property and equipment are stated at cost. Depreciation is computed using
both straight-line and accelerated methods over the estimated useful lives of
the related assets.
Rental Equipment
Equipment is rented to customers under operating leases. Rental equipment is
stated at cost. Depreciation is computed using the straight-line method over
the estimated useful life of the related asset. Future minimum rentals as of
June 30, 1997 are as follows:
<TABLE>
<CAPTION>
Year ending June 30 Amount
------------------- --------
<S> <C>
1998................................................................ $426,258
1999................................................................ 261,103
2000................................................................ 105,828
--------
$793,189
========
</TABLE>
Revenue Recognition
Revenues are recognized as follows:
Equipment and supply sales revenues are recognized when shipped or delivered
and title and risk of loss pass to the customer.
Maintenance contract service revenues are recognized ratably over the term of
the underlying maintenance contract. Other service revenues are recognized as
earned.
Rental revenue is recognized ratably over the term of the underlying leases,
typically one to three years.
Advertising
The costs of advertising the Company's products and services are generally
expensed as incurred. Total advertising costs amounted to $176,910, $197,525
and $47,392 in 1995, 1996 and 1997, respectively.
Income Taxes
The Company is organized to be taxed under the provisions of Subchapter S of
the Internal Revenue Code. Under these provisions, the Company does not pay
federal or state income taxes on its corporate income. Instead the Company's
income is included in the income of its stockholders for federal and state
income tax purposes.
F-49
<PAGE>
ELECTRONIC SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management make estimates and assumptions which
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
Long Lived Assets
In March 1995, the Financial Accounting Standards Board issued Statement No.
121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of, which requires impairment losses be recorded on long-
lived assets used in operations when indicators of impairment are present and
the undiscounted cash flows estimated to be generated by those assets are less
than the assets' carrying amount. Statement 121 also addresses the accounting
for long-lived assets that are expected to be disposed of. The Company adopted
Statement 121 in 1996 and such adoption had no effect on the financial
statements.
2. Borrowings
The Company has a term loan collateralized by its headquarters land and
building. The loan bears interest at 90.2778% of prime and principal payments
are $40,000 for each of the next five years.
Interest paid on all indebtedness was $78,207, $87,713 and $17,256 in 1995,
1996 and 1997, respectively.
3. Employee Benefit Plans
The Company has a 401(k) plan which covers all full-time employees meeting
certain eligibility requirements. Participants may elect to contribute up to
15% of their compensation on a pre-tax basis, as defined in the plan. The
Company contributes an amount equal to 50% of the participant's contribution
not to exceed 5% of each participant's base compensation. Participants are
fully vested in the Company contributions. The Company made contributions of
$68,404, $93,390 and $62,766 in 1995, 1996 and 1997, respectively.
The Company also maintains a profit sharing plan which covers all full time
employees meeting certain eligibility requirements. Contributions to the plan
are at the discretion of the Board of Directors. The Company contributed
$92,000, $120,000 and $60,000 in 1995, 1996 and 1997, respectively.
4. Leases
The Company is obligated under various noncancelable operating leases for
facilities, warehouse space and training centers.
Future minimum lease payments under the noncancelable operating leases as of
June 30, 1997 are as follows:
<TABLE>
<CAPTION>
Year ending June 30 Amount
------------------- --------
<S> <C>
1998................................................................ $113,449
1999................................................................ 74,339
2000................................................................ 65,570
2001................................................................ 68,849
2002................................................................ 41,309
--------
$363,516
========
</TABLE>
Rent expense amounted to $57,914, $77,126 and $61,658 in 1995, 1996 and 1997,
respectively.
F-50
<PAGE>
ELECTRONIC SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
5. Related Party Transactions
The Company provides certain administrative and accounting services to
Electronic Systems of Richmond, Inc., a corporation owned by certain
shareholders of Electronic Systems, Inc. Management fees of $15,000, $25,000
and $14,000 were received by the Company in 1995, 1996 and 1997, respectively.
6. Concentrations of Credit Risk
Financial instruments which potentially subject the Company to concentrations
of credit risk consist primarily of cash equivalents and accounts receivable.
The Company's temporary cash is invested in short-term money market accounts.
The Company markets its products and services to customers located primarily
in Virginia. The Company performs credit evaluations of its customers prior to
delivery or commencement of services and normally does not require collateral.
Payments for equipment are typically due within thirty days of billing and
supplies and services are typically due upon receipt. The Company maintains an
allowance for potential credit losses and losses have historically been within
management's expectations. Credit losses have historically been insignificant.
The carrying values of amounts classified as current assets and current
liabilities approximate fair values due to the short-term nature of these
instruments. The carrying value of long-term debt approximates fair value as
current borrowing rates approximately market rates for loans with similar
rates.
Two customers accounted for 11%, 20% and 8% of the Company's sales in 1995,
1996 and 1997, respectively.
7. Subsequent Events
Effective July 7, 1997, all outstanding stock of the Company was acquired by
Global Imaging Systems, Inc. In connection with the acquisition, the Company's
S Corporation election was terminated and from the date of acquisition forward
the earnings of the Company will be taxed at the corporate level.
Immediately prior to the acquisition, the headquarters building and land and
related term debt were transferred in the form of a shareholder distribution to
an entity owned by the shareholders of the Company. The Company has entered
into an agreement to lease these facilities for five years, with initial rent
of $185,082 per year, escalating 2% annually.
F-51
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders
Eastern Copy Products, Inc. and Subsidiaries
We have audited the accompanying consolidated statements of income and
retained earnings and cash flows of EASTERN COPY PRODUCTS, INC. AND
SUBSIDIARIES for the years ended July 31, 1997, 1996, and 1995. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the results of operations and cash
flows of EASTERN COPY PRODUCTS, INC. AND SUBSIDIARIES as of July 31, 1997,
1996, and 1995 in conformity with generally accepted accounting principles.
/s/ Pasquale & Bowers, LLP
Syracuse, New York
December 17, 1997
F-52
<PAGE>
EASTERN COPY PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
Years Ended July 31, 1997, 1996, and 1995
<TABLE>
<CAPTION>
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Sales and service
Equipment sales....................... $ 8,389,297 $ 5,838,732 $ 4,691,487
Service............................... 5,897,324 5,281,391 4,640,232
Rental income......................... 737,113 761,268 733,635
Other................................. 230,241 163,977 203,475
----------- ----------- -----------
15,253,975 12,045,368 10,268,829
----------- ----------- -----------
Cost of sales and service
Cost of equipment sales............... 5,549,634 3,914,590 2,822,924
Cost of service....................... 3,982,670 3,645,680 3,142,454
Depreciation on rental equipment...... 254,990 170,193 182,768
Other................................. 126,740 104,937 96,405
----------- ----------- -----------
9,914,034 7,835,400 6,244,551
----------- ----------- -----------
Gross profit............................ 5,339,941 4,209,968 4,024,278
Selling, general and administrative
expenses............................... 4,971,142 4,087,298 3,689,948
----------- ----------- -----------
Income from operations.................. 368,799 122,670 334,330
Other expense--net, including interest
expense of $108,879, $111,947, and
$123,441............................... 76,090 54,537 78,732
----------- ----------- -----------
Income before provision for income
taxes.................................. 292,709 68,133 255,598
Provision for income taxes (Note 5)..... 110, 000 12,400 99,800
----------- ----------- -----------
Net income.............................. 182,709 55,733 155,798
Retained earnings (accumulated
deficit)--beginning of year............ 55,645 (88) (155,886)
----------- ----------- -----------
Retained earnings (accumulated
deficit)--end of year.................. $ 238,354 $ 55,645 $ (88)
=========== =========== ===========
</TABLE>
See accompanying notes to the consolidated financial statements.
F-53
<PAGE>
EASTERN COPY PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended July 31, 1997, 1996, and 1995
Increase (Decrease) in Cash
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities
Net income.................................. $ 182,709 $ 55,733 $ 155,798
--------- --------- ---------
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Deferred tax expense (benefit)............ (29,000) (138,000) 65,000
Depreciation.............................. 283,640 210,788 232,672
Bad debt expense.......................... 124,242 40,236 38,889
Loss on disposal of assets................ 0 0 3,355
Changes in assets and liabilities
affecting cash flow from operating
activities:
Accounts receivable..................... (263,488) (317,460) (129,802)
Inventory............................... 677,796 34,657 (456,844)
Other current assets.................... 17,179 (52,319) 66,530
Other assets............................ 0 800 0
Accounts payable........................ (111,511) (439,855) 36,831
Notes payable........................... (231,243) 424,747 85,940
Accrued expenses........................ 12,309 115,168 (65,573)
Deferred revenue........................ 8,419 195,200 (79,325)
Income taxes payable.................... 126,000 86,964 14,688
Other current liabilities............... (29,028) 2,802 (5,512)
--------- --------- ---------
Total adjustments..................... 585,315 163,728 (193,151)
--------- --------- ---------
Net cash provided by (used in) operat-
ing activities....................... 768,024 219,461 (37,353)
--------- --------- ---------
Cash flows from investing activities
Capital expenditures--Net................... (559,067) (102,409) (70,609)
--------- --------- ---------
Net cash used in investing activi-
ties................................. (559,067) (102,409) (70,609)
--------- --------- ---------
Cash flows from financing activities
Proceeds from long-term debt................ 131,219 93,611 55,472
Payments on long-term debt.................. (202,168) (180,436) (161,000)
Payments on capital lease obligations....... 0 (5,426) (57,887)
(Advances) Repayments on shareholder loan--
Net........................................ (10,925) (39,985) 41,415
--------- --------- ---------
Net cash used in financing activi-
ties................................. (81,874) (132,236) (122,000)
--------- --------- ---------
Net increase (decrease) in cash............... 127,083 (15,184) (229,962)
Cash--Beginning of year....................... 112,274 127,458 357,420
--------- --------- ---------
Cash--End of year............................. $ 239,357 $ 112,274 $ 127,458
========= ========= =========
</TABLE>
See Accompanying Notes to the Consolidated Financial Statements.
F-54
<PAGE>
EASTERN COPY PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Significant Accounting Policies
The parent company is primarily involved in the selling, leasing and
servicing of Konica office copiers. Eastern Copy Credit Corporation, Inc., a
wholly-owned subsidiary, was formerly involved in the leasing of office copiers
and is now inactive. Eastern Copy Products Vend-A-Copy Division, Inc., a
wholly-owned subsidiary, is engaged in providing copy vending services to the
general public.
Principles of Consolidation
The consolidated financial statements include the accounts of Eastern Copy
Products, Inc., and both of its wholly-owned subsidiaries. All intercompany
accounts and transactions have been eliminated. "Company" as used herein refers
to the consolidated group.
Concentrations of Credit Risk
The Company, in the normal course of business, grants credit to customers,
essentially all of whom are located in central or western New York State. The
Company uses the direct write-off method to provide for bad debts. Management
considers any allowance necessary for uncollectible accounts receivable at July
31, 1997, 1996, and 1995 as not material to the financial statements.
At July 31, 1997, the Company had approximately $92,000 in bank deposits in
excess of federally insured levels.
Inventory
Inventory represents copiers, parts and supplies held for sale or lease.
Inventory is stated at the lower of average cost or market.
Revenue Recognition
Revenue is recognized when earned. The Company recognizes revenue on
maintenance contracts primarily on a straight-line basis over the term of the
related agreements. Lengths of the maintenance agreements generally range from
one to three years.
The three year agreements generally involve the Company providing a copier
and the related maintenance under one installment contract. Essentially all of
these contracts, and the conditional title to the associated equipment, are
subsequently sold to a third party financing company in exchange for cash
proceeds. A portion of the proceeds are allocated to machine sales and
recognized currently, while the remainder is deferred and recognized as service
income on a straight-line basis over the term of the related agreement.
Revenue is recorded on equipment sales upon delivery to a customer. Service
revenue is recorded at the time service is performed.
Depreciation
Fixed assets are recorded at cost.
The cost of fixed assets is depreciated over the estimated useful lives of
the related assets using the straight-line method for financial statement
purposes.
F-55
<PAGE>
EASTERN COPY PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Income Taxes
Income taxes are provided for the tax effects of transactions reported in the
financial statements and consist of taxes currently due plus deferred taxes
related primarily to differences between the basis of deferred revenue and
fixed assets for financial and income tax reporting. The deferred tax assets
and liabilities represent the future tax return consequences of those
differences, which will either be taxable or deductible when the assets and
liabilities are recovered or settled.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Supplemental Disclosures of Cash Flow Information
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Cash paid during the year for--Interest.......... $108,879 $111,947 $123,441
--Income taxes................................... $ 2,093 $ 69,747 $ 20,460
</TABLE>
Capital expenditures reflected in the statements of cash flows includes the
net increase in vending copiers in service and the net increase in copiers on
operating lease.
Non-Cash Financing Activities
During fiscal 1996, the Company issued 10 shares of common stock at its fair
market value to Konica Business Machines, Inc. In consideration for the shares,
Konica transferred all of the assets and liabilities of Konica's Buffalo, New
York branch to the Company. The assets and liabilities transferred consisted of
computer parts and equipment inventory, and obligations under customer
maintenance agreements. Following is a summary of the transaction:
<TABLE>
<S> <C>
Copier inventory transferred.................................... $ 261,024
Liabilities under maintenance agreements assumed................ (110,400)
---------
Value assigned to common stock issued........................... $ 150,624
=========
</TABLE>
2. Notes Payable
The Company has various notes payable owed to financing companies under
inventory financing arrangements. The arrangements call for the respective
financing company to pay the invoice cost, less available discounts, on
inventory purchases. The Company then remits payment for the full invoiced cost
to the financing company; if payment to the finance company is made within 30
days, the Company retains a portion of the discount. Interest is charged on any
late payments.
F-56
<PAGE>
EASTERN COPY PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
3. Long-Term Debt
Scheduled maturities of long-term debt for the next four years and in the
aggregate are as follows:
<TABLE>
<CAPTION>
Years Ending
July 31,
------------
<S> <C>
1998............................... $732,017
1999............................... 70,438
2000............................... 49,528
2001............................... 19,411
--------
$871,394
========
</TABLE>
4. Commitments
The Company leases vehicles, office equipment, office and warehouse
facilities under various noncancelable operating leases. Lease expense under
these arrangements for the years ended July 31, 1997, 1996, and 1995,
approximated $234,000, $96,000, and $63,000, respectively. Minimum future
rental payments due under the agreements for the next five years and in the
aggregate are as follows:
<TABLE>
<CAPTION>
Years Ending
July 31,
------------
<S> <C>
1998............................. $ 287,868
1999............................. 239,428
2000............................. 241,615
2001............................. 205,865
2002............................. 171,990
Thereafter....................... 79,464
----------
$1,226,230
==========
</TABLE>
The Company also leases certain other office and warehouse facilities on a
month-to-month basis, and accounts for the agreements as operating leases.
5. Income Taxes
The components of the provision for income taxes at July 31, 1997, 1996, and
1995, are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
-------- --------- --------
<S> <C> <C> <C>
Current expense--Federal..................... $129,000 $ 133,000 $ 50,600
--State...................................... 10,000 17,400 6,200
Current benefit from utilization of operating
loss carryforward--Federal.................. 0 0 (22,000)
Deferred tax expense (benefit)--Federal...... (23,000) (110,000) 47,000
--State...................................... (6,000) (28,000) 18,000
-------- --------- --------
$110,000 $ 12,400 $ 99,800
======== ========= ========
</TABLE>
F-57
<PAGE>
EASTERN COPY PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The net deferred tax asset at July 31, 1997, 1996, and 1995, is comprised of
the following:
<TABLE>
<CAPTION>
1997 1996 1995
-------- --------- ---------
<S> <C> <C> <C>
Deferred tax assets.......................... $796,000 $ 787,000 $ 703,000
Deferred tax liabilities..................... (94,000) (114,000) (168,000)
-------- --------- ---------
Net deferred tax asset....................... $702,000 $ 673,000 $ 535,000
======== ========= =========
</TABLE>
The reconciliation of the effective income tax rate is as follows:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Federal income tax rate....................................... 34% 15% 34%
State taxes, net of federal income tax benefit................ 6 6 6
Other, net.................................................... (2) (3) (1)
--- --- ---
38% 18% 39%
=== === ===
</TABLE>
Deferred tax assets result primarily from different methods of revenue
recognition on certain maintenance contracts for book and tax purposes.
Deferred tax liabilities result mainly from the use of accelerated depreciation
methods for tax purposes.
At July 31, 1997, the Company has a state operating loss carryforward of
approximately $146,000 available to offset future state taxable income expiring
through the year 2011.
6. Related Party Transactions
The Company leases office and warehouse space from its shareholder on a
month-to-month basis. Rent expense incurred under the arrangements amounted to
$150,000 for fiscal years 1997, 1996, and 1995, and is included in selling,
general and administrative expenses.
7. Major Supplier
The Company buys substantially all of its equipment, parts, and supplies held
for resale from Konica. Net amounts due Konica at July 31, 1997, 1996, and
1995, approximated $724,000, $780,000, and $1,398,000, respectively, and are
included in accounts payable.
8. Pension Plan
The Company maintains a 401(k) profit sharing plan covering substantially all
employees meeting certain age and length of service requirements. Employer
contributions are at the discretion of the Board of Directors. No contributions
were made for the years ended July 31, 1997, 1996, and 1995.
9. Subsequent Events
Stock Purchase Agreement
Effective August 1, 1997, the Company entered into a Stock Purchase Agreement
with Conway Office Products, Inc. ("Conway"), a wholly-owned subsidiary of
Global Imaging Systems, Inc. for all the capital stock of the Company. The
total purchase price for the stock of the Company was approximately $6,750,000.
Merger
Effective September 1, 1997, Eastern Copy Products Vend-A-Copy Division, Inc.
and Eastern Copy Credit Corporation, Inc., merged into Eastern Copy Products,
Inc.
F-58
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Stockholders and Board of Directors
Duplicating Specialties, Inc.
We have audited the accompanying statements of income and retained earnings
and cash flows of Duplicating Specialties, Inc. for the ten months ended August
31, 1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. These standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and cash flows of Duplicating
Specialties, Inc. for the ten months ended August 31, 1997 in conformity with
generally accepted accounting principles.
/s/ Moss Adams LLP
Vancouver, Washington
December 19, 1997
F-59
<PAGE>
DUPLICATING SPECIALTIES, INC.
STATEMENT OF INCOME AND RETAINED EARNINGS
For the Ten Months Ended August 31, 1997
<TABLE>
<S> <C>
Revenue
Equipment and supplies............................................ $4,240,383
Service agreement revenue......................................... 2,006,268
Rental income..................................................... 72,736
----------
6,319,387
Cost of sales
Cost of equipment and supplies sales.............................. 2,642,715
Cost of service agreement revenue................................. 927,691
Cost of rental income............................................. 22,184
----------
3,592,590
Gross profit........................................................ 2,726,797
Selling, general and administrative expenses........................ 2,493,602
Provision for doubtful accounts..................................... 25,201
----------
Operating income.................................................... 207,994
----------
Other income (expense)
Miscellaneous income.............................................. 10,556
Interest expense.................................................. (7,470)
----------
3,086
----------
Net income before income taxes...................................... 211,080
Income taxes........................................................ 93,361
----------
Net income.......................................................... 117,719
Retained earnings, beginning of period.............................. 625,249
----------
Retained earnings, end of period.................................... $ 742,968
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-60
<PAGE>
DUPLICATING SPECIALTIES, INC.
STATEMENT OF CASH FLOWS
For the Ten Months Ended August 31, 1997
<TABLE>
<S> <C>
Cash flows from operating activities
Net income........................................................ $ 117,719
Adjustments to reconcile net income to net cash flows from
operating activities
Depreciation.................................................... 57,560
Net deferred taxes.............................................. (94,687)
Gain on sale of assets.......................................... (456)
Increase (decrease) in cash due to changes in assets and
liabilities
Accounts receivable, net........................................ (24,421)
Inventory....................................................... 141,727
Prepaid expense................................................. 24,110
Cash surrender value of life insurance.......................... 9,473
Deposits........................................................ 1,317
Accounts payable................................................ (188,859)
Accrued expenses................................................ 413,033
Deferred service contract revenue............................... 40,921
---------
Net cash flows from operating activities...................... 497,437
Cash flows from investing activities
Purchase of equipment............................................. (112,570)
Proceeds from sale of assets...................................... 17,040
---------
Net cash flows from investing activities...................... (95,530)
Cash flows from financing activities
Net change in short-term note payable............................. (202,000)
Proceeds from long-term borrowings................................ 25,000
Payments on long-term borrowings.................................. (18,774)
Increase in due from stockholder.................................. (10,686)
---------
Net cash flows from financing activities...................... (206,460)
---------
Net increase in cash................................................ 195,447
Cash, beginning of period........................................... 46,930
---------
Cash, end of period................................................. $ 242,377
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-61
<PAGE>
DUPLICATING SPECIALITIES, INC.
NOTES TO FINANCIAL STATEMENTS
August 31, 1997
Note 1--Nature of Business
The Company is an Oregon corporation engaged in the business of selling and
providing maintenance and supplies for reproduction equipment and facsimile
machines. Customers are primarily located in Oregon and Southwest Washington.
Note 2--Significant Accounting Policies
Cash and cash equivalents--For purposes of the statement of cash flows, the
Company considers all highly liquid debt instruments purchased with a maturity
of three months or less to be cash equivalents. The Company maintains its cash
in bank deposit accounts which, at times, may exceed federally insured limits.
The Company has not experienced any losses in such accounts and believes it is
not exposed to any significant credit risk on cash and cash equivalents.
Accounts receivable--Management periodically assesses the collectability of
accounts receivable. This assessment provides the basis for the allowance for
doubtful accounts and related bad debt expense. The allowance for doubtful
accounts was $30,000 as of August 31, 1997. Credit is generally extended to
customers without collateral requirements.
Inventory--Inventory is stated at the lower of cost (first-in first-out
method) or market.
Equipment and vehicles--Expenditures for maintenance and repairs are charged
to expense as incurred, whereas major betterments and equipment additions are
capitalized. The Company has provided for depreciation of equipment using
straight-line and accelerated methods over estimated useful lives ranging from
three to ten years.
Revenue recognition--Revenues are recorded at the time of shipment of
products or performance of services. Deferred service contract revenue is
recognized over the estimated service period, based upon copier usage.
Contracts are billed in increments of preventive maintenance cycles.
Income taxes--Income taxes are provided for the tax effects of transactions
reported in the financial statements and consist of taxes currently due plus
deferred taxes related primarily to differences between the bases of the
equipment and vehicles for financial and income tax reporting. The deferred tax
assets and liabilities represent future tax return consequences of these
differences which will either be taxable or deductible when the assets and
liabilities are recovered or settled.
Use of estimates--The preparation of the financial statements in conformity
with generally accepted accounting principles require management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
Note 3--Inventory
Inventory as of August 31, 1997 consists of:
<TABLE>
<S> <C>
Duplicating equipment............................................ $330,520
Supplies......................................................... 118,651
Service parts and accessories.................................... 309,955
--------
$759,126
========
</TABLE>
F-62
<PAGE>
DUPLICATING SPECIALTIES, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
Note 4--Long-Term Debt
Long-term debt as of August 31, 1997 consists of:
<TABLE>
<S> <C>
Notes payable collateralized by automotive equipment. Interest
rates from 3.9% to 8.58%. Due in monthly payments totaling
$1,792, including interest. Maturing from October 1998 to March
2002. Paid in full during September 1997......................... $41,925
Less current portion.............................................. 16,087
-------
$25,838
=======
</TABLE>
The following is a schedule of required principal payments on long-term debt
during the succeeding five years:
<TABLE>
<CAPTION>
Year Ending
August
31,
-----------
<S> <C>
1998............................................................ $16,087
1999............................................................ 12,286
2000............................................................ 5,081
2001............................................................ 5,283
2002............................................................ 3,188
-------
$41,925
=======
</TABLE>
Note 5--Leases
The Company leases office and warehouse space under a long-term operating
lease. The lease agreement provides for monthly payments of $6,500 (increasing
to $7,850 effective September 1, 1997), plus property taxes. The lease expires
November 30, 2003. Lease expense for the ten months ended August 31, 1997 was
$73,990. The following is a schedule of future minimum facility lease payments,
required for the next 5 years, under the operating lease as of August 31, 1997.
<TABLE>
<CAPTION>
Year Ending
August 31,
-----------
<S> <C>
1998 ......................................................... $ 94,200
1999 .......................................................... 94,200
2000 .......................................................... 94,200
2001 .......................................................... 94,200
2002 .......................................................... 94,200
--------
$471,000
========
</TABLE>
Note 6--Profit Sharing and 401(k) Plan
The Company adopted a profit sharing plan effective November 1, 1969. The
plan provides for contributions to be determined annually by the board of
directors of up to 15% of eligible compensation. The Company approved a
contribution of $116,027 for the ten months ended August 31, 1997.
In addition, the Company provides a 401(k) plan benefit whereby eligible
employee contributions are matched by the Company. The Company contribution for
the 401(k) plan was $32,071 for the ten months ended August 31, 1997.
F-63
<PAGE>
DUPLICATING SPECIALTIES, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
As more fully described in Note 10, the Company was acquired subsequent to
period end and these plans were terminated and replaced by plans of the new
parent company.
Note 7--Income Taxes
The deferred tax asset and liability as of August 31, 1997 consist of the
following:
<TABLE>
<S> <C>
Current deferred tax asset
Allowance for doubtful accounts................................ $ 11,700
Accrued officer salaries....................................... 86,171
Accrued vacation............................................... 9,849
--------
$107,720
========
Noncurrent deferred tax liability
Depreciation................................................... $ 23,584
========
</TABLE>
The components of income tax expense are as follows:
<TABLE>
<S> <C>
Current.......................................................... $188,048
Deferred......................................................... (94,687)
--------
$ 93,361
========
</TABLE>
The Company's income tax expense differed from the statutory Federal rate as
follows:
<TABLE>
<S> <C>
Statutory rate applied to net income before income taxes.......... $65,571
Increase in income taxes resulting from
Effect of non-deductible expenses under federal tax code........ 4,049
State and local taxes, net of federal tax benefit............... 25,051
Other........................................................... (1,310)
-------
$93,361
=======
</TABLE>
Note 8--Supplemental Disclosure of Cash Flow Information
<TABLE>
<S> <C>
Cash paid for interest............................................ $ 7,470
=======
Cash paid for income taxes........................................ $81,688
=======
</TABLE>
Note 9--Concentration
Approximately 80% of all inventory purchases of the Company were from one
vendor during the ten months ended August 31, 1997.
Note 10--Subsequent Event
Subsequent to, but effective as of, August 31, 1997 all outstanding stock of
the Company was purchased by Global Imaging Systems, Inc., a Delaware
corporation.
F-64
<PAGE>
INDEPENDENT AUDITOR'S REPORT
The Board of Directors Global Imaging Systems, Inc. Tampa, Florida
We have audited the accompanying statements of income and retained earnings
and statements of cash flow of Electronic Systems of Richmond, Inc. for the
eleven-month and twelve-month periods ended November 30, 1997 and December 31,
1996, respectively. These financial statements are the responsibility of
Electronic Systems of Richmond, Inc.'s management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the statements of income and retained earnings and statements
of cash flows referred to above present fairly, in all material respects, the
results of operations and cash flows of Electronic Systems of Richmond, Inc.
for the eleven-month and twelve-month periods ended November 30, 1997 and
December 31, 1996, respectively, in conformity with generally accepted
accounting principles.
/s/ EDMONDSON, LEDBETTER & BALLARD,
L.L.P.
Norfolk, Virginia
January 27, 1998
F-65
<PAGE>
ELECTRONIC SYSTEMS OF RICHMOND, INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS
For the Eleven-month and Twelve-month Periods Ended
November 30, 1997 and December 31, 1996
<TABLE>
<CAPTION>
November 30, December 31,
1997 1996
------------ ------------
<S> <C> <C>
Revenue
Net sales of products............................. $ 9,337,430 $ 20,075,135
Service and rental................................ 1,635,354 1,474,899
----------- ------------
Total revenue................................... 10,972,784 21,550,034
----------- ------------
Costs and expenses
Cost of goods sold................................ 6,260,046 16,973,045
Service and rental costs.......................... 676,726 686,579
Selling, general and administrative............... 1,939,057 2,190,345
----------- ------------
Total costs and expenses........................ 8,875,829 19,849,969
----------- ------------
Net profit...................................... 2,096,955 1,700,065
----------- ------------
Other income
Interest income................................... 152,943 110,746
Other income...................................... 78,178 7,755
----------- ------------
Total other income.............................. 231,121 118,501
----------- ------------
Net income...................................... 2,328,076 1,818,566
Retained earnings, beginning of period.......... 2,783,057 1,606,491
Dividends declared................................ (3,956,262) (642,000)
----------- ------------
Retained earnings, end of period................ $ 1,154,871 $ 2,783,057
=========== ============
</TABLE>
See Independent Auditor's Report
and Accompanying Notes to Financial Statements
F-66
<PAGE>
ELECTRONIC SYSTEMS OF RICHMOND, INC.
STATEMENTS OF CASH FLOWS
For the Eleven-month and Twelve-month Periods Ended
November 30, 1997 and December 31, 1996
<TABLE>
<CAPTION>
November 30, December 31,
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities
Net income......................................... $ 2,328,076 $1,818,566
Adjustments to reconcile net income to net cash
from operating activities
Depreciation...................................... 17,074 19,213
Uncollectible accounts expense.................... -- 37,747
Loss on disposition of assets..................... -- 84
(Increase) decrease in operating assets
Accounts receivable.............................. (1,531,626) 1,611,357
Inventories of machines, parts and supplies...... (155,670) 453,519
Prepaid expense.................................. 2,054 (1,396)
Increase (decrease) in operating liabilities
Accounts payable................................. (3,277,819) 1,941,085
Accrued commissions.............................. 701,623 33,855
Sales tax payable................................ (4,080) 650
Deferred income.................................. 67,315 113,321
Other............................................ 1,169 342
----------- ----------
Net cash provided (used) by operating activities... (1,851,884) 6,028,343
----------- ----------
Cash flows from investing activities
Acquisition of equipment........................... (12,431) (19,557)
----------- ----------
Net cash used by investing activities.............. (12,431) (19,557)
----------- ----------
Cash flows from financing activities
Proceeds from issuance of common stock............. 110,670 --
Dividends paid..................................... (1,120,440) (642,000)
----------- ----------
Net cash used by financing activities.............. (1,009,770) (642,000)
----------- ----------
Increase in cash and cash equivalents................ (2,874,085) 5,366,786
Cash and cash equivalents, beginning of period....... 6,844,570 1,477,784
----------- ----------
Cash and cash equivalents, end of period............. $ 3,970,485 $6,844,570
=========== ==========
Supplemental disclosure of cash flow information
Cash paid during the period for interest........... $ 2,721 $ 4,075
=========== ==========
Supplemental schedule of noncash investing and fi-
nancing activities
Increase in dividends payable...................... $ 2,835,822 $ --
=========== ==========
</TABLE>
See Independent Auditor's Report
and Accompanying Notes to Financial Statements
F-67
<PAGE>
ELECTRONIC SYSTEMS OF RICHMOND, INC.
NOTES TO FINANCIAL STATEMENTS
Nature of business
The Company is engaged in the sale of technologies and related services,
primarily as a systems integrator with a focus on computer networking,
networking security, data systems security, migration services and Internet
access and connectivity. The Company serves its customers from locations in
Richmond and Arlington, Virginia.
Effective December 1, 1997, Electronic Systems of Richmond, Inc. became a
subsidiary of Electronic Systems, Inc. and adopted a March 31 year-end.
Significant accounting policies
Estimates Management uses estimates and assumptions in preparing these
financial statements in accordance with generally accepted accounting
principles. Those estimates and assumptions affect the reported assets and
liabilities and the reported revenues and expenses. Actual results could vary
from the estimates that were used.
Revenue Recognition Income is recognized at point of sale except for income
from maintenance agreements and training which is recognized over individual
contract terms and as training is provided.
Cash Equivalents The Company considers all highly liquid debt instruments
purchased with an original maturity of three months or less to be cash
equivalents.
Accounts Receivable The Company routinely extends its customers trade credit,
most of which is not collateralized or otherwise secured. Uncollectible
accounts receivable are charged to operations in the period in which an account
is determined to be uncollectible.
Inventory Inventories are valued at the lower of cost or market, using the
specific identification method.
Equipment All equipment is recorded at cost and depreciated using the
straight-line method. Depreciable lives are from five to seven years.
Advertising Advertising costs are charged to operations when incurred.
Income Taxes The Corporation is not subject to corporate income tax because
its shareholders have elected to be taxed according to Subchapter S of the
Internal Revenue Code. As such, net income or loss; certain items of income and
expense; and credits, if any, are passed through to the shareholders for
inclusion in their tax returns.
Uncollectible accounts
Included in expense for the period ended December 31, 1996 are $37,747 of
uncollectible acccounts. There were no uncollectible accounts charged to
expense for the period ended November 30, 1997.
Advertising
Advertising expenses were $30,788 and $71,822 for the periods ended November
30, 1997 and December 31, 1996, respectively.
Depreciation
Depreciation charges of $17,074 and $19,213 were expensed for the periods
ended November 30, 1997 and December 31, 1996, respectively.
F-68
<PAGE>
ELECTRONIC SYSTEMS OF RICHMOND, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
Related party transactions
The Company receives administrative and accounting personnel assistance from
Electronic Systems, Inc., an affiliated corporation with in excess of 50% of
its stock owned by several of the stockholders of Electronic Systems of
Richmond, Inc. Included in administrative expense are management fees of
$33,750 and $25,000 paid to Electronic Systems, Inc., for the periods ended
November 30, 1997 and December 31, 1996, respectively.
Operating leases
The Company leases its Richmond facilities through a non-cancelable operating
lease which expires November 30, 2000. The Company leases its Arlington
facilities through a non-cancelable operating lease which expires May 31, 2000.
These leases provide for annual operating expense adjustments. Occupancy
expense attributable to operating leases was $103,813 and $95,554,
respectively, for the periods ended November 30, 1997 and December 31, 1996,
respectively.
Minimum future rent commitments under these leases for the four months ending
March 31, 1998, and for each of the next four years ending March 31, are:
<TABLE>
<CAPTION>
1998 1999 2000 2001 2002 Total
------- -------- -------- -------- ----- --------
<S> <C> <C> <C> <C> <C>
$37,428 $114,610 $119,464 $ 55,492 $ -- $326,994
</TABLE>
Employee benefit plans
Effective July 1, 1996, the Company began to offer a profit sharing plan with
a 401(k) deferral feature covering substantially all employees who have
attained age 21, have been employed for at least one year, and who work a
minimum of 1,000 hours annually. Contributions to the plan are an employer-
matching contribution of 50% of employee elective deferrals up to 5% of salary.
The Company's policy is to fund the contributions as accrued. Employer
contributions to this plan were $16,772 and $7,454 for the periods ended
November 30, 1997 and December 31, 1996, respectively, exclusive of plan
administration costs.
Concentration of credit risk
At November 30, 1997 and at various times during the periods ended November
30, 1997 and December 31, 1996, the Company had on deposit with a single
financial institution, more than $100,000, which is the limit currently insured
by the Federal Deposit Insurance Corporation.
Dividends
The Company declared dividends of $3,693.99 and $629.41 per share for the
periods ended November 30, 1997 and December 31, 1996, respectively.
Subsequent event
Effective December 1, 1997, shareholders of record November 30, 1997 were
redeemed by a new shareholder, Electronic Systems, Inc.
Reclassifications
Certain amounts in the December 31, 1996 financial statements have been
reclassified to conform with the current year financial statement presentation.
These reclassifications had no effect on operating results as previously
reported.
F-69
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Connecticut Business Systems, Inc.:
We have audited the accompanying statements of income (loss) and retained
earnings (deficit) and cash flows of Connecticut Business Systems, Inc. for the
years ended September 30, 1996 and September 30, 1997 and for the three months
ended December 31, 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and cash flows of Connecticut
Business System, Inc. for the years ended September 30, 1996 and September 30,
1997 and for the three months ended December 31, 1997 in conformity with
generally accepted accounting principles.
/s/ Arthur Andersen LLP
Hartford, Connecticut
February 16, 1998
F-70
<PAGE>
CONNECTICUT BUSINESS SYSTEMS, INC.
STATEMENTS OF INCOME (LOSS) AND RETAINED EARNINGS (DEFICIT)
For the Years Ended September 30, 1996 and 1997
and the Three Months Ended December 31, 1997
<TABLE>
<CAPTION>
Year Ended
------------------------------------- Three Months Ended
September 30, 1996 September 30, 1997 December 31, 1997
------------------ ------------------ ------------------
<S> <C> <C> <C>
Net sales:
Equipment............. $ 5,608,784 $ 6,577,866 $1,592,616
Supplies.............. 2,083,713 2,241,317 601,013
Service............... 3,995,009 4,330,964 1,154,604
Other................. 113,613 139,469 34,507
----------- ----------- ----------
Total net sales..... 11,801,119 13,289,616 3,382,740
----------- ----------- ----------
Costs and operating
expenses:
Equipment............. 3,505,491 4,113,684 934,930
Supplies.............. 1,230,029 1,314,995 343,953
Service............... 2,279,942 2,207,399 558,607
Selling, general and
administrative....... 4,545,790 5,227,111 1,261,578
Other................. 166,414 193,563 38,562
----------- ----------- ----------
11,727,666 13,056,752 3,137,630
----------- ----------- ----------
Income from opera-
tions.............. 73,453 232,864 245,110
Interest expense........ 122,405 123,402 38,352
----------- ----------- ----------
Income (loss) before
provision for income
taxes................ (48,952) 109,462 206,758
Provision (benefit) for
state income taxes..... -- (18,000) 20,000
----------- ----------- ----------
Net income (loss)... (48,952) 127,462 186,758
Retained earnings
(deficit), beginning of
period................. (112,471) (161,423) (33,961)
Distribution to
shareholders........... -- -- 32,000
----------- ----------- ----------
Retained earnings
(deficit), end of
period................. $ (161,423) $ (33,961) $ 120,797
=========== =========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-71
<PAGE>
CONNECTICUT BUSINESS SYSTEMS, INC.
STATEMENTS OF CASH FLOWS
For the Years Ended September 30, 1996 and 1997
and the Three Months Ended December 31, 1997
<TABLE>
<CAPTION>
Year Ended
---------------------------
September 30, September 30, Three Months Ended
1996 1997 December 31, 1997
------------- ------------- ------------------
<S> <C> <C> <C>
Cash flows from operating
activities:
Net income (loss)............. $ (48,952) $ 127,462 $ 186,758
Adjustments to reconcile net
income (loss) to net cash
provided by operating
activities:
Depreciation................ 192,147 275,788 82,191
Changes in operating assets
and liabilities--
Accounts receivable....... 2,622 (57,816) 47,680
Inventories............... 81,146 99,995 (31,621)
Other receivables......... (44,529) 29,785 12,580
Deposits.................. 28,770 (25,995) (3,172)
Accounts payable.......... (99,723) (158,858) 53,425
Accrued expenses.......... 65,956 201,445 (82,069)
Unearned income........... (68,118) (188,668) 74,477
Deferred tax asset........ -- (18,000) 12,000
--------- --------- ---------
Net cash provided by
operating activities..... 109,319 285,138 352,249
--------- --------- ---------
Cash flows from investing
activities:
Acquisition of property and
equipment.................... (483,194) (701,678) (120,335)
Disposition of property and
equipment.................... 268,384 281,497 25,907
--------- --------- ---------
Net cash used for invest-
ing activities........... (214,810) (420,181) (94,428)
--------- --------- ---------
Cash flows from financing
activities:
Net proceeds from notes
payable to stockholders...... 216,776 566,697 --
Repayments of revolving and
other note payable, net...... (59,284) (439,433) (165,000)
(Decrease) increase of long-
term liabilities............. (64,207) 10,912 13,994
--------- --------- ---------
Net cash provided by (used
for) financing
activities............... 93,285 138,176 (151,006)
--------- --------- ---------
Net (decrease) increase in
cash........................... (12,206) 3,133 106,815
Cash, beginning of period....... 28,073 15,867 19,000
--------- --------- ---------
Cash, end of period............. $ 15,867 $ 19,000 $ 125,815
========= ========= =========
Supplemental disclosure of cash
flow information:
Cash paid for interest........ $ 122,883 $ 127,892 $ 38,252
========= ========= =========
Cash paid for state income
taxes........................ $ 3,529 $ 4,508 $ --
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-72
<PAGE>
CONNECTICUT BUSINESS SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 1996 and 1997 and December 31, 1997
1. Summary of Significant Accounting Policies:
Organization--
Connecticut Business Systems, Inc. (the Company) commenced operations on
April 18, 1986 when it purchased property, equipment and inventory from
Columbia Business Systems, Inc. The Company sells, rents and services photocopy
machines, facsimile machines and duplicators and distributes related supplies.
Use of estimates--
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Inventories--
Inventories are stated at the lower of cost (average cost and specific
identification) or market. The inventory value at September 30, 1996, September
30, 1997 and December 31, 1997 are net of reserves for excess/obsolete
inventory of approximately $-0-, $170,000 and $58,000, respectively.
Property and equipment--
Property and equipment are stated at cost. Depreciation is provided using the
straight-line method over the following estimated useful lives:
<TABLE>
<S> <C>
Demo and showroom equipment...................................... 2-5 years
Furniture and fixtures........................................... 5 years
Warehouse equipment.............................................. 5 years
Vehicles......................................................... 3 years
Leasehold improvements........................................... 7 years
</TABLE>
Revenue recognition and unearned income--
Revenue on the sale of machines and supplies is recorded when the machines
and supplies are shipped. Revenue for services is recorded when the services
are provided. Maintenance contract service revenues are recognized ratably over
the term of the applicable maintenance contract.
Amounts billed under maintenance agreements are reflected in unearned income
and recognized as income on a straight-line basis over the term of the related
contract. Contract terms range from one to three years, but primarily are for a
one year term.
Concentration of credit risk--
Financial instruments which may subject the Company to concentrations of
credit risk consist principally of trade receivables. Concentrations of credit
risk with respect to trade receivables are limited due to the large number of
customers comprising the Company's customer base. The Company purchases a
majority of its machines for resale from one vendor. Purchases from this vendor
are based on inventory requirements and no purchase commitments or blanket
purchase orders existed at September 30, 1996, September 30, 1997 or December
31, 1997.
F-73
<PAGE>
CONNECTICUT BUSINESS SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
2. Revolving and Other Note Payable:
At September 30, 1996, September 30, 1997 and December 31, 1997, the Company
had the following notes payable:
<TABLE>
<CAPTION>
September 30, September 30, December 31,
1996 1997 1997
------------- ------------- ------------
<S> <C> <C> <C>
Revolving note payable, with
interest at bank's prime (8.50% at
September 30, 1997) plus 1%,
payable monthly................... $600,000 $165,000 $--
Note payable with interest at
14.123% payable monthly........... 4,433 -- --
-------- -------- ----
604,433 165,000 --
Less--current maturities........... (604,433) (165,000) --
-------- -------- ----
Long-term debt..................... $ -- $ -- $--
======== ======== ====
</TABLE>
Under the terms of the revolving note payable (the Note), the Company may
borrow up to $1,250,000, not to exceed 80% of eligible accounts receivable, as
defined, and 45% of eligible inventory, as defined. As of September 30, 1996,
September 30, 1997 and December 31, 1997, the Company had $650,000, $1,085,000
and $1,250,000, respectively, of available borrowing under the Note.
The Note is collateralized by substantially all assets of the Company and
personally guaranteed by the stockholders.
The Note also contains certain restrictive financial covenants including
minimum tangible net worth of $500,000 (which considers amounts due
stockholders as capital), a current ratio greater than 1.1, minimum working
capital of $450,000 (as defined) and a debt service ratio greater than 1.2. As
of September 30, 1996, September 30, 1997 and December 31, 1997, the Company
was in compliance with these covenants.
3. Notes Payable to Stockholders:
The Company has entered into note agreements with its two stockholders. These
notes are due upon demand and bear interest at 10%, payable quarterly. These
notes are classified as long-term as the stockholders do not intend to request
repayment until after December 31, 1998. A portion of these notes payable is
subordinated to the Company's bank debt and is classified as Subordinated Notes
Payable to Stockholders in the accompanying financial statements (see Note 8
for Subsequent Event).
4. Income Taxes:
The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes." This
standard requires that a deferred tax asset or liability be recognized for the
estimated future tax effects attributable to temporary differences.
The Company has elected to be taxed as an S corporation for Federal income
tax purposes. As such, the Company is not subject to Federal income taxes as
the taxable income of the Company is included in the individual income tax
returns of the stockholders of the Company.
F-74
<PAGE>
CONNECTICUT BUSINESS SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
The provision (benefit) for state income taxes consists of the following:
<TABLE>
<CAPTION>
Year Ended
---------------------------
September 30, September 30, Three Months Ended
1996 1997 December 31, 1997
------------- ------------- ------------------
<S> <C> <C> <C>
Current....................... $-- $ -- $ 8,000
Deferred...................... -- (18,000) 12,000
---- -------- -------
$-- $(18,000) $20,000
==== ======== =======
</TABLE>
Deferred tax assets and liability are comprised of the following:
<TABLE>
<CAPTION>
Current Asset Long-Term Liability
---------------------------------------- ----------------------------------------
September 30, September 30, December 31, September 30, September 30, December 31,
1996 1997 1997 1996 1997 1997
------------- ------------- ------------ ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Depreciation............ $ -- $ -- $ -- $28,600 $18,000 $18,000
Inventory reserves...... -- 18,000 6,000 -- -- --
Deferred income......... 15,000 15,000 15,000 -- -- --
------- ------- ------- ------- ------- -------
$15,000 $33,000 $21,000 $28,600 $18,000 $18,000
======= ======= ======= ======= ======= =======
</TABLE>
5. Employee Benefit Plan:
Effective January 1, 1992, the Company established a salary deferral plan
under Section 401(k) of the Internal Revenue Code. Substantially all full-time
salaried employees are eligible to participate in the plan which provides for
salary deferrals from 1% to 15% of gross wages, up to a maximum deferral of
$9,500. The Company's annual contribution to the plan is discretionary.
Approximately $17,000, $20,000 and $3,000 are included in general and
administrative expenses on the accompanying Statements of Income and Retained
Earnings (Deficit) for the years ended September 30, 1996, September 30, 1997
and for the three months ended December 31, 1997, respectively, relating to
the Company's discretionary contribution.
6. Other Long-Term Liabilities:
As of September 30, 1996, September 30, 1997 and December 31, 1997 other
long-term liabilities consisted of the following:
<TABLE>
<CAPTION>
September 30, September 30, December 31,
1996 1997 1997
------------- ------------- ------------
<S> <C> <C> <C>
Unearned income..................... $29,924 $51,436 $65,430
Deferred state income taxes......... 28,600 18,000 18,000
------- ------- -------
$58,524 $69,436 $83,430
======= ======= =======
</TABLE>
7. Commitments:
The Company leased its Rocky Hill facility from CBS Realty Associates (CBS
Realty), a partnership related through common ownership through March, 1997.
In March, 1997, CBS Realty sold the building to an unrelated third party. The
Company has entered into a seven year triple net lease for this space at
approximately $140,000 per year. The Company also leases office space in
Norwalk, CT. (expires September, 1998) and Westchester, NY. (expires August,
1998) and office equipment and vehicles under operating leases expiring in
various years. Total lease expense resulting from the agreements noted above
approximated $277,000, $293,000 and $82,000 for the years ended September 30,
1996, September 30, 1997 and the three months ended December 31, 1997,
respectively.
F-75
<PAGE>
CONNECTICUT BUSINESS SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
Minimum future annual rental payments under noncancellable operating leases,
as of December 31, 1997, are as follows:
<TABLE>
<S> <C>
1998 (nine months).............................................. $ 246,044
1999............................................................ 222,789
2000............................................................ 214,562
2001............................................................ 192,443
2002............................................................ 168,068
Thereafter...................................................... 230,554
----------
$1,274,460
==========
</TABLE>
8. Subsequent Event:
As of the close of business on December 31, 1997, the stockholders of the
Company sold their stock to Global Imaging Systems, Inc. (Global) for
$8,700,000 in cash and $650,000 in stock. In addition, the Company, through
funding provided by Global, repaid the notes due the former stockholders of
approximately $1,405,000.
F-76
<PAGE>
To the Stockholder and To the Stockholders and
Board of Directors Board of Directors
Bloom's, Incorporated Global Imaging Systems, Inc.
Enfield, Connecticut Tampa, Florida
We have audited the accompanying statement of divisional net assets of
Business Systems Division ("BSD"), an operating division of Bloom's,
Incorporated (which is a Massachusetts S Corporation) as of December 31, 1997
and January 31, 1997, and the related statements of divisional operations,
changes in divisional net assets, and divisional cash flows for the eleven
months ended December 31, 1997 and the year ended January 31, 1997. These
financial statements are the responsibility of the management of Bloom's,
Incorporated. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provides a reasonable basis
for our opinion.
The accompanying financial statements were prepared on the basis of
presentation as described in Note 1, and are not intended to be a complete
presentation of all of the assets and liabilities of Business Systems Division
as if it were a standalone entity.
In our opinion, the accompanying financial statements as of December 31, 1997
and January 31, 1997 and for the periods then ended, present fairly, in all
material respects, the net assets of Business Systems Division and its
divisional operations, cash flows and changes in net assets in accordance with
the basis of accounting described in Note 1 in conformity with generally
accepted accounting principles.
/s/ Joseph D. Kalicka & Company, LLP
JOSEPH D. KALICKA & COMPANY, LLP
Certified Public Accountants
Holyoke, Massachusetts
February 6, 1998 (for the period ended December 31, 1997)
February 20, 1998 (for the period ended January 31, 1997)
F-77
<PAGE>
BUSINESS SYSTEMS DIVISION
(an Operating Division of Bloom's, Incorporated)
STATEMENTS OF DIVISIONAL NET ASSETS
December 31, 1997 and January 31, 1997
<TABLE>
<CAPTION>
December 31, January 31,
1997 1997
------------ -----------
ASSETS
<S> <C> <C>
Current assets:
Cash funds.......................................... $ 50 $ 50
Accounts receivable--trade.......................... 1,327,584 1,324,137
Other receivables................................... 2,074 3,555
Inventory........................................... 820,921 659,316
----------- -----------
Total current assets.............................. 2,150,629 1,987,058
----------- -----------
Property and equipment:
Equipment rental fleet.............................. 2,117,793 2,146,233
Vehicles............................................ 238,871 249,177
Furniture and equipment............................. 80,815 70,207
----------- -----------
2,437,479 2,465,617
Accumulated depreciation............................ (2,052,535) (1,776,567)
----------- -----------
Total property and equipment...................... 384,944 689,050
----------- -----------
Other assets:
Deposits............................................ 450 450
Accounts receivable--trade--noncurrent.............. 480,260 306,799
----------- -----------
Total other assets................................ 480,710 307,249
----------- -----------
Total assets...................................... $ 3,016,283 $ 2,983,357
=========== ===========
LIABILITIES AND DIVISIONAL NET ASSETS
Current liabilities:
Accounts payable.................................... $ 45,493 $ 44,859
Accrued expenses.................................... 137,634 195,501
Deferred revenues................................... 726,703 817,128
----------- -----------
Total current liabilities......................... 909,830 1,057,488
----------- -----------
Other liabilities:
Deferred revenues--noncurrent....................... 132,345 67,494
Accounts payable--noncurrent........................ 119,970 --
----------- -----------
Total other liabilities........................... 252,315 67,494
----------- -----------
Total liabilities................................. 1,162,145 1,124,982
----------- -----------
Divisional net assets............................... 1,854,138 1,858,375
----------- -----------
Total liabilities and divisional net assets....... $ 3,016,283 $ 2,983,357
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-78
<PAGE>
BUSINESS SYSTEMS DIVISION
(an Operating Division of Bloom's, Incorporated)
STATEMENTS OF DIVISIONAL OPERATIONS
For the Eleven Months Ended December 31, 1997 and Year Ended January 31, 1997
<TABLE>
<CAPTION>
December 31, January 31,
1997 1997
------------ -----------
<S> <C> <C>
Net sales:
Equipment........................................... $3,173,138 $2,399,948
Supplies............................................ 1,205,492 1,152,446
Service............................................. 2,320,161 2,481,687
Rental.............................................. 718,711 795,731
Other............................................... 600,623 522,216
---------- ----------
Total net sales................................... 8,018,125 7,352,028
---------- ----------
Costs and operating expenses:
Equipment........................................... 2,470,845 1,911,202
Supplies............................................ 862,645 804,788
Service............................................. 1,046,690 1,081,357
Rental.............................................. 91,196 85,157
Selling, general and administrative................. 3,578,078 3,822,870
---------- ----------
Total costs and operating expenses................ 8,049,454 7,705,374
---------- ----------
Loss from operations.................................. (31,329) (353,346)
Other income (expense):
Interest expense.................................... (41,553) (62,184)
Interest income..................................... 21,283 22,750
---------- ----------
(20,270) (39,434)
---------- ----------
Loss before provision for income taxes................ (51,599) (392,780)
(Provision) benefit for state income taxes.......... 5,000 31,000
---------- ----------
Divisional net loss................................... $ (46,599) $ (361,780)
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-79
<PAGE>
BUSINESS SYSTEMS DIVISION
(an Operating Division of Bloom's, Incorporated)
STATEMENTS OF CHANGES IN DIVISIONAL NET ASSETS
For the Eleven Months Ended December 31, 1997 and Year Ended January 31, 1997
<TABLE>
<S> <C>
Divisional net assets, February 1, 1996............................ $1,693,200
Activity--year ended January 31, 1997:
Net assets provided by Bloom's, Incorporated to Business Systems
Division........................................................ 526,955
Net loss for year................................................ (361,780)
----------
Divisional net assets, January 31, 1997............................ 1,858,375
Activity--eleven months ended December 31, 1997:
Net assets provided by Bloom's, Incorporated to Business System's
Division........................................................ 42,362
Net loss for period.............................................. (46,599)
----------
Divisional net assets--December 31, 1997........................... $1,854,138
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-80
<PAGE>
BUSINESS SYSTEMS DIVISION
(an Operating Division of Bloom's, Incorporated)
STATEMENTS OF DIVISIONAL CASH FLOWS
For the Eleven Months Ended December 31, 1997 and Year Ended January 31, 1997
<TABLE>
<CAPTION>
December 31, January 31,
1997 1997
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss............................................ $ (46,599) $(361,780)
Adjustment to reconcile net loss to net cash
provided (used) by operating activities:
Depreciation...................................... 359,567 464,128
Changes in operating assets and liabilities:
Accounts receivable--trade...................... (176,908) (487,440)
Other receivables............................... 1,481 (3,555)
Inventories..................................... (161,605) 130,741
Accounts payable................................ 120,604 (70,924)
Accrued expenses................................ (57,867) 104,818
Deferred income................................. (25,574) (14,735)
--------- ---------
Net cash provided (used) by operating
activities..................................... 13,099 (238,747)
--------- ---------
Cash flows from investing activities:
Acquisition of equipment............................ (55,461) (287,758)
Deposits made....................................... -- (450)
--------- ---------
Net cash used by investing activities........... (55,461) (288,208)
--------- ---------
Cash flows from financing activities:
Cash provided by Bloom's Incorporated............... 42,362 526,955
--------- ---------
Net cash provided by financing activities....... 42,362 526,955
--------- ---------
Net change in cash.................................... -- --
Divisional cash, beginning of period.................. 50 50
--------- ---------
Divisional cash, end of period........................ $ 50 $ 50
========= =========
Supplemental cash flow information:
Interest paid during period......................... $ 41,553 $ 62,184
========= =========
Taxes paid during period............................ None None
========= =========
</TABLE>
Additional cash flow disclosures:
During the eleven months ended December 31, 1997 the Division disposed of
$84,977 of fully depreciated equipment through retirement or sale and $220,557
was disposed of during the earlier period.
The accompanying notes are an integral part of these financial statements.
F-81
<PAGE>
BUSINESS SYSTEMS DIVISION
(an Operating Division of Bloom's, Incorporated)
NOTES TO FINANCIAL STATEMENTS
December 31, 1997 and January 31, 1997
1. Organization and basis of presentation:
Business Systems Division ("BSD", the "Division") is an operating division of
Bloom's, Incorporated, (the "Company", "Bloom's"). Bloom's was organized under
the laws of the Commonwealth of Massachusetts in 1948 and maintains its
corporate offices in Enfield, Connecticut with sales and service locations in
Massachusetts and Connecticut. Bloom's, Incorporated is a Massachusetts S
corporation, and closes its fiscal year on January 31, of each year.
The Company is engaged in retail sales, service, and lease of graphic arts
equipment, photocopiers and fax machines. The Printed Products Division
provides graphic arts equipment and supplies to the printing trade. Business
Systems Division provides copiers and fax machines to the general business and
educational community.
In January, 1998, the Company agreed to sell substantially all of the direct
operating assets of the Business Systems Division (exclusive of cash and
prepaids), subject to certain direct liabilities and obligations, to Global
Imaging System's, Inc. ("Global") through its Connecticut subsidiary,
Connecticut Business Systems, Inc. to be effective, February 1, 1998.
These divisional financial statements have been prepared using the historical
basis of accounting but include only the net assets and resulting cash flows
directly attributable to the BSD division along with the related revenues and
expenses for the Division including certain corporate allocations, all of which
are included in Bloom's financial statements. Net assets, as used in these
financial statements, may also include certain liabilities which are not to be
assumed by Global.
In accordance with Securities and Exchange Commission Staff Accounting
Bulletin No. 55, these statements have been adjusted to include certain
corporate expenses incurred by Bloom's on the Division's behalf. The financial
statements may not necessarily present BSD's net assets, results of operations,
changes in net assets and cash flows if the Division was a standalone entity.
2. Summary of significant accounting policies:
A. Corporate allocation:
Bloom's, Incorporated provides services to BSD, including management,
accounting, working capital financing, tax, financial accounting and reporting,
benefits administration, occupancy, shipping/receiving, insurance, information
systems management, accounts receivable and credit, and accounts payable
functions. For purposes of these financial statements, the above corporate
costs have been allocated based upon the percentage of time corporate
administrative personnel were estimated to spend on the BSD division along with
an estimated percentage of common occupancy costs deemed incurred by BSD. Such
allocations and corporate charges totalled approximately $1,170,000 for the
eleven months ended December 31, 1997, of which approximately $568,000 was for
remuneration paid to the majority stockholder/officer.
Corporate allocations for the year ended January 31, 1997 amounted to
approximately $1,435,000, of which approximately $684,000 was for remuneration
to the same stockholder/officer.
Management believes that the basis used for allocating corporate
administrative services is reasonable. However, the amounts included in these
allocations may differ from those that would result from transactions among
unrelated parties. In addition, these allocations were not based on specific
costs attributable to BSD
F-82
<PAGE>
BUSINESS SYSTEMS DIVISION
(an Operating Division of Bloom's, Incorporated)
NOTES TO FINANCIAL STATEMENTS--(Continued)
division and may not be representative of actual costs that would have been
incurred if BSD division had been operating independently.
B. Revenue recognition:
Assets, liabilities, revenues and expenses are recognized on the accrual
method of accounting. Revenues from the sale of machines and supplies is
recognized when the product is shipped to the customer through a regular sale
or a direct-sales type lease. Revenues for service are recorded at the time the
service is provided. Maintenance contract service revenues are recognized
ratably over the term of the applicable maintenance contract or on a per copy
basis, where the contract stipulates a minimum number of copies.
Unearned revenues at December 31, 1997 of $859,048 are the result of billings
to customers under maintenance service agreements which are scheduled to be
earned after December 31, 1997. Contract terms range from one month to three
years, but are generally for periods of one year. Unearned revenues at January
31, 1997 amounted to $884,622.
C. Accounts receivable:
The Company uses the direct write-off method to provide for bad debts.
Management considers an allowance for uncollectible accounts at December 31,
1997 and January 31, 1997 unnecessary and not material to the financial
statements.
Accounts receivable at December 31, 1997 and January 31, 1997 include
billings for product sales, service, contracts, and equipment sold under
Company financed sales type leases. When the Company directly finances the sale
of equipment through direct leasing arrangement and the economic risks of
ownership are effectively borne by the customer, the arrangement is recognized
as a sale upon shipment of the equipment. Customer payments under these
arrangements are to be received over the life of the lease and give rise to
deferred receivables.
D. Inventories:
Inventories, which consist of equipment, supplies and parts are stated at the
lower of average cost or market. Inventory at December 31, 1997 is stated net
of reserves for excess/obsolete inventory of approximately $41,000 ($31,500 at
January 31, 1997).
E. Concentrations of credit risk:
Financial instruments which may subject the Company (and BSD) to
concentrations of credit risk consist principally of cash and cash equivalents
and trade receivables. Concentrations of credit risk relating to cash and cash
equivalents arose when from time to time during the period cash deposited in
one financial institution exceeded the FDIC insured limits of $100,000. Credit
risks relating to concentrations from accounts receivable are mitigated due to
the large number of customers within the Company's customer base, all of whom
are located in the New England region.
In addition, BSD purchases substantially all of its equipment inventory for
resale and a majority of its resale supplies and parts from one vendor.
Purchases from this vendor are based upon inventory requirements and no
purchase commitments or blanket purchase orders exist at December 31, 1997. The
Company's formal agreement with that vendor expired in 1996 and continues on an
informal basis.
F-83
<PAGE>
BUSINESS SYSTEMS DIVISION
(an Operating Division of Bloom's, Incorporated)
NOTES TO FINANCIAL STATEMENTS--(Continued)
F. Equipment and depreciation:
Equipment is recorded at cost. Depreciation is provided using straight line
and accelerated methods over estimated useful lives (for furniture, fixtures,
and motor vehicles) and the rental period for depreciation of the equipment
rental fleet. Components of accumulated depreciation at December 31, 1997 and
January 31, 1997 are as follows:
<TABLE>
<CAPTION>
Accumulated Accumulated
Depreciation Depreciation Life
12/31/97 1/31/97 (Years)
------------ ------------ -------
<S> <C> <C> <C>
Equipment Rental Fleet................... $1,787,124 $1,540,013 1-5
Motor vehicles........................... 222,335 206,158 5
Furniture & equipment.................... 43,076 30,396 5
---------- ----------
Totals................................. $2,052,535 $1,776,567
========== ==========
</TABLE>
Depreciation charged to expense for the eleven months ended December 31, 1997
amounted to $359,567 ($464,128 for the year ended January 31, 1997).
Expenditures for maintenance and repairs are charged against income as
incurred. Company policy is to charge or credit to income any loss or gain
resulting from disposal or retirements of vehicles or furniture and equipment.
Gains or losses on disposition of equipment rental fleet are included in net
sales on the statement of operations.
G. Leases:
The Company is the lessor of equipment under operating leases expiring in
various years. The cost and accumulated depreciation of leased assets are
included in equipment as rental (Note 1F).
H. Use of estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. One significant estimate is
the amounts of corporate expenses allocable to BSD as more fully described in
Note 2A.
I. Advertising costs:
The Company expenses production costs of advertising the first time
advertising takes place. Advertising costs for the eleven months ended December
31, 1997 amounted to approximately $147,000, ($176,000 for the year ended
January 31, 1997) which is stated net of manufacturers' reimbursement.
3. Income taxes:
Bloom's has elected and the stockholders have consented to be taxed under the
provisions of Subchapter S of the Internal Revenue Code effective for tax years
after January 31, 1987. In lieu of federal corporation income taxes, the
stockholders of an S corporation are taxed on their proportionate share of the
corporation's taxable income. Therefore, no provisions or liabilities for
federal income taxes has been included in these financial statements.
F-84
<PAGE>
BUSINESS SYSTEMS DIVISION
(an Operating Division of Bloom's, Incorporated)
NOTES TO FINANCIAL STATEMENTS--(Continued)
As a Massachusetts S corporation, the Company is subject to corporate income
taxes on its net income because total receipts aggregate $6 million or more.
The Company is also subject to Connecticut corporate income taxes.
Statement of Financial Accounting Standards No. 109 requires that deferred
income taxes be computed using the liability method under which deferred income
tax assets and liabilities are computed based on differences between the
financial statement and tax basis of assets and liabilities which will result
in taxable or deductible amounts on future tax returns. These financial
statements do not include any provisions for deferred state income taxes since
they are not considered material.
State income tax benefits of $5,000 and $31,000, respectively, included on
the statement of operations for the period ended December 31, 1997 and January
31, 1997 result from the tax savings inuring to the Company each year, when
taxes are computed on all operations.
4. Working capital and allocated interest:
The working capital employed by BSD is provided directly by Bloom's,
Incorporated and by an unsecured revolver note payable to a commercial bank
held in the name of Bloom's, Incorporated. The note, currently limited to
$2,500,000, was amended in August, 1997 and is scheduled to expire on July 31,
1998 unless renewed. This note is not included as those liabilities to be
assumed by Global. However, interest, at the prime rate, of approximately
$42,000 for the eleven months ended December 31, 1997, has been allocated to
these financial statements on the basis of direct employable assets of each of
the operating divisions of Bloom's, Incorporated. Amounts for the year ended
January 31, 1997 approximated $62,000.
5. Related party transactions--lease:
In March 1981, the Company entered into a 25 year lease agreement with the
Company's majority stockholder (lessor) covering its general offices and
warehouse in Enfield, Connecticut.
During the eleven months ended December 31, 1997, the Company made rental
payments under the lease of $107,000. Of this amount, approximately $58,000 has
been allocated to BSD on the basis of the occupancy formula discussed in Note
2A ($63,000 for the earlier period). Aggregate future annual minimum rentals to
Bloom's, Incorporated (excluding payment for real estate taxes, maintenance,
utilities and insurance) are estimated as follows:
Thru December 31,
-----------------
<TABLE>
<S> <C>
1998............................................................ $107,000
1999............................................................ 107,000
2000............................................................ 107,000
2001............................................................ 107,000
2002............................................................ 107,000
Thereafter...................................................... 330,000
--------
$865,000
========
</TABLE>
Obligations under this lease will not be assumed by Global.
F-85
<PAGE>
BUSINESS SYSTEMS DIVISION
(An Operating Division of Bloom's, Incorporated)
NOTES TO FINANCIAL STATEMENTS--(Continued)
6. Commitments:
The Company is obligated under three leases at December 31, 1997 which are
used exclusively by BSD division for outside sales offices. The terms of these
arrangements are summarized below:
East Hartford, CT:
The facility lease is dated March 15, 1996 which calls for minimum
monthly payments of $2,500 per month through September 30, 1998, plus a
share of operating expenses.
Pittsfield, MA:
The facility is rented on a month to month basis and currently calls
for monthly rents of $700 per month plus common expenses.
Fairfield, CT:
The facility arrangement calls for monthly rents of $750 plus common
expenses on a month to month basis. In January, 1998, monthly rents were
increased to $1,000.
The Company is also committed under three (3) vehicle leases which will
expire during 1998 and 1999. Minimum monthly rents aggregate $646 per month,
with two leases expiring in May, 1998 ($406 per month) and the third lease
expiring in October, 1999 for $240 per month. All vehicles are used in BSD
operations.
Future minimum monthly payments under facility and vehicle leases (all of
which are to be transferred to Global) are as follows at December 31, 1997:
<TABLE>
<CAPTION>
Aggregate
Minimum
Payments
---------
<S> <C>
1998............................................................. $29,910
1999............................................................. 2,400
-------
Total.......................................................... $32,310
=======
</TABLE>
7. Employee benefit plan:
The Company maintains a salary deferral plan under section 401(k) of the
Internal Revenue Code which covers substantially all employees. Company
contributions to the plan are at the discretion of the Board of Directors.
There were no employer contributions to the plan for the eleven months ended
December 31, 1997. Employer contributions amounted to approximately $110,000
for the year ended January 31, 1997, of which approximately $65,000 was charged
to BSD Division.
8. Subsequent event:
Effective February 1, 1998, one of BSD's larger customers decided not to
renew a portion of their rental arrangement and returned approximately 90
copiers out of a total of approximately 250 under lease during 1997.
Financially, this may result in a reduction in future annual rental (and total
annual sales) of approximately $200,000 to $250,000.
F-86
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors
Carr Business Machines of Great Neck Inc.
Farmingdale, New York
We have audited the accompanying balance sheet of Carr Business Machines of
Great Neck Inc. as of December 31, 1997 and the related statements of
operations, retained earnings, and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Carr Business Machines of
Great Neck Inc. as of December 31, 1997, and the results of its operations and
its cash flows for the year then ended, in conformity with generally accepted
accounting principles.
/s/ Margolin, Winer & Evens LLP
_____________________________________
November 13, 1998
F-87
<PAGE>
CARR BUSINESS MACHINES OF GREAT NECK, INC.
BALANCE SHEET
December 31, 1997
ASSETS
<TABLE>
<S> <C>
Current Assets:
Cash and cash equivalents (Note 1)................................ $ 554,878
Marketable securities (Notes 1, 2 and 4).......................... 550,860
Accounts receivable, net of allowance for doubtful accounts of
$35,000.......................................................... 1,235,916
Merchandise inventory (Notes 1 and 4)............................. 858,547
Prepaid expenses and other receivables............................ 257,803
----------
Total Current Assets................................................ 3,458,004
----------
Equipment and Improvements (Notes 1, 3 and 4):
Real property under capital lease................................. 980,000
Improvements...................................................... 563,122
Office equipment and fixtures..................................... 1,117,703
Equipment leased to customers..................................... 180,255
Automobiles and trucks............................................ 63,005
----------
2,904,085
Less accumulated depreciation..................................... 1,458,699
----------
Equipment and Improvements net.................................... 1,445,386
----------
Other Assets:
Security deposits (Note 4)........................................ 96,277
Parts for long term contracts..................................... 234,924
----------
331,201
----------
Total Assets........................................................ $5,234,591
==========
</TABLE>
The accompanying notes are an integral part of this statement.
F-88
<PAGE>
CARR BUSINESS MACHINES OF GREAT NECK, INC.
BALANCE SHEET
December 31, 1997
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<S> <C>
Current Liabilities:
Current portion of long-term debt (Note 3)................... $ 50,216
Accounts payable and accrued expenses........................ 433,136
Payroll and sales tax payable................................ 35,246
Corporate income taxes payable............................... 2,629
Current portion of capital lease obligation (Note 4)......... 86,740
Deferred maintenance contract revenue (Note 1)............... 769,790
----------
Total Current Liabilities...................................... 1,377,757
----------
Noncurrent Liabilities:
Long-term debt (less current portion) (Note 3)............... 127,540
Long-term portion of capital lease obligation (Note 4)....... 641,494
Deferred maintenance contract revenue........................ 198,822
----------
Total Noncurrent Liabilities................................... 967,856
----------
Total Liabilities.............................................. 2,345,613
----------
Commitments and Contingencies (Note 4)......................... --
Stockholders' Equity:
Common stock, no par value; 200 shares authorized, 110 shares
issued and outstanding
(Note 5).................................................... 315,000
Stock subscription receivable (Note 5)....................... (211,394)
Retained earnings............................................ 2,634,522
Unrealized gains from securities available for sale (Notes 1
and 2)...................................................... 150,850
----------
Total Stockholders' Equity..................................... 2,888,978
----------
Total Liabilities and Stockholders' Equity..................... $5,234,591
==========
</TABLE>
The accompanying notes are an integral part of this statement.
F-89
<PAGE>
CARR BUSINESS MACHINES OF GREAT NECK, INC.
STATEMENT OF OPERATIONS
Year Ended December 31, 1997
<TABLE>
<S> <C>
Net Sales and Service Revenue Earned (Note 1)...................... $17,301,451
Cost of Sales...................................................... 8,398,427
-----------
Gross Profit....................................................... 8,903,024
-----------
Operating Expenses:
Selling expense.................................................. 2,882,855
Service expense.................................................. 1,994,298
General and administrative expense............................... 1,782,900
Shipping and warehouse........................................... 246,513
Depreciation and amortization (Note 1)........................... 255,423
-----------
Total Operating Expenses......................................... 7,161,989
-----------
Income from Operations............................................. 1,741,035
-----------
Other Income and Expenses:
Interest and dividend income..................................... 60,473
Miscellaneous income............................................. 14,887
Realized gain from sale of marketable securities (Note 2)........ 99,428
Gain on sale of automobiles...................................... 6,250
Interest expense................................................. (97,103)
-----------
Total Other Income and Expenses.................................. 83,935
-----------
Income Before Provision for Income Taxes........................... 1,824,970
Provision for Income Taxes (Note 1)................................ 61,859
-----------
Net Income......................................................... $ 1,763,111
===========
</TABLE>
The accompanying notes are an integral part of this statement.
F-90
<PAGE>
CARR BUSINESS MACHINES OF GREAT NECK, INC.
STATEMENT OF RETAINED EARNINGS
Year Ended December 31, 1997
<TABLE>
<S> <C>
Retained Earnings January 1, 1997, as previously reported......... $2,747,634
Adjustments to Correct Inventory Pricing and Stockholder Advance
(Note 7)......................................................... (23,807)
----------
Retained Earnings January 1, 1997, as restated.................... 2,723,827
Net Income........................................................ 1,763,111
Dividends to Stockholders......................................... (1,852,416)
----------
Retained Earnings December 31, 1997............................... $2,634,522
==========
</TABLE>
The accompanying notes are an integral part of this statement.
F-91
<PAGE>
CARR BUSINESS MACHINES OF GREAT NECK, INC.
STATEMENT OF CASH FLOWS
Year Ended December 31, 1997
<TABLE>
<S> <C>
Cash Flows from Operating Activities:
Net income....................................................... $1,763,111
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization.................................. 255,423
Realized gain on sale of marketable securities................. (99,428)
Gain on sale of vehicles....................................... (6,250)
(Increase) decrease in:
Accounts receivable.......................................... 164,931
Merchandise inventory........................................ (89,632)
Prepaid expenses and other receivables....................... 29,831
Security deposits............................................ (14,149)
Parts used in long term contracts............................ (314)
Decrease in:
Accounts payable and accrued expenses........................ (42,432)
Payroll, sales and corporate taxes payable................... (33,070)
Deferred maintenance contract revenue........................ (175,952)
----------
Total adjustments.............................................. (11,042)
----------
Net Cash Provided by Operating Activities........................ 1,752,069
----------
Cash Flows from Investing Activities:
Matured certificate of deposit................................... 218,511
Purchase of marketable securities................................ (336,863)
Sales proceeds from marketable securities........................ 746,733
Acquisition of equipment and leasehold improvements.............. (226,956)
Proceeds from sale of automobile................................. 11,380
Advance to stockholder........................................... 34,028
----------
Net Cash Provided by Investing Activities........................ 446,833
----------
Cash Flows from Financing Activities:
Note payable borrowings.......................................... 36,400
Repayments of notes payable...................................... (257,696)
Principal payments on obligation under capital lease............. (78,969)
Proceeds from sale of common stock............................... 22,684
Dividends to stockholders........................................ (1,852,416)
----------
Net Cash Used in Financing Activities............................ (2,129,997)
----------
Net Increase in Cash and Cash Equivalents.......................... 68,905
Cash and Cash Equivalents beginning of year........................ 485,973
----------
Cash and Cash Equivalents end of year.............................. $ 554,878
==========
</TABLE>
The accompanying notes are an integral part of this statement.
F-92
<PAGE>
CARR BUSINESS MACHINES OF GREAT NECK, INC.
STATEMENT OF CASH FLOWS
Year Ended December 31, 1997
<TABLE>
<S> <C>
Supplemental Disclosure of Cash Flow Information -Cash paid during the
year for:
Interest............................................................ $ 97,103
Income taxes........................................................ 58,765
Supplemental Schedule of Noncash Investing Activities:
Transfer of inventory which was rented to a customer to depreciable
equipment.......................................................... $119,649
Transfer of depreciable equipment to inventory upon lease expira-
tion............................................................... 13,448
</TABLE>
The accompanying notes are an integral part of this statement.
F-93
<PAGE>
CARR BUSINESS MACHINES OF GREAT NECK, INC.
NOTES TO FINANCIAL STATEMENTS
1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS--Carr Business Machines of Great Neck Inc., doing business
as Carr Business Systems ("the Company"), sells, rents and services copiers,
facsimile machines, typewriters and other business machines, primarily to
customers located in the New York Metropolitan area. The majority of the
Company's sales are equipment sales and servicing income. Rentals are only a
small portion of the Company's business.
INVESTMENT IN SECURITIES--The Company's debt and equity securities have been
classified as available for sale securities and are reported at their fair
values. Unrealized holding gains and losses are included as a separate
component of stockholders' equity.
CASH EQUIVALENTS--The Company considers all highly liquid investments
purchased with an original maturity of three months or less to be cash
equivalents.
MERCHANDISE INVENTORY--Merchandise inventory, consisting solely of finished
goods, is stated at the lower of cost (specific identification and moving
average FIFO method) or market.
EQUIPMENT AND IMPROVEMENTS--Real property under capital lease is recorded at
the net present value of the related lease obligation. Real property under
capital lease together with the cost of related improvements are amortized over
the ten year term of the lease using the straight-line method. At December 31,
1997, accumulated amortization attributable to real property under capital
lease totaled $363,417.
Equipment is recorded at cost and depreciated over the estimated useful lives
of the assets using the straight-line method as follows:
Office equipment and fixtures 5 - 7 years
Automobiles and trucks 5 years
Equipment leased to customers 5 years
INCOME TAXES--The Company does not provide for Federal income taxes as the
stockholders have elected to have the income of the Company taxed directly to
them in accordance with the S Corporation provisions of the Internal Revenue
Code and New York State. The Company has provided for New York City Corporation
taxes as New York City does not recognize S Corporation status. In addition,
the Company provides for New York State S Corporation taxes.
ESTIMATES--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates.
DEFERRED MAINTENANCE CONTRACT REVENUE--Deferred maintenance contract revenue
is recognized over the contract period (which ranges from three months to five
years) and represents billings in advance of the maintenance period.
Incremental direct costs resulting from the sale of such contracts are not
material and are expensed currently.
ADVERTISING COSTS--Advertising costs are expensed currently as the benefits
and placements of such advertising do not extend beyond the current period.
Advertising costs aggregated $163,743 during 1997.
F-94
<PAGE>
CARR BUSINESS MACHINES OF GREAT NECK, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
2.MARKETABLE SECURITIES
Marketable securities available for sale at December 31, 1997 consist of the
following:
<TABLE>
<CAPTION>
Gross Gross
Cost or Unrealized Unrealized
Fair Amortized Holding Holding
Value Cost Losses Gains Maturities
-------- --------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Equity securities....... $330,606 $182,478 $ -- $148,128
Debt securities:
State and local obli-
gations.............. 52,414 49,692 -- 2,722 6-7 years
U.S. obligations...... 167,840 167,840 -- -- within 1 year
-------- -------- ----- --------
$550,860 $400,010 $ -- $150,850
======== ======== ===== ========
</TABLE>
Realized gains and losses are determined on the basis of sales price less
original cost determined on a FIFO basis. During 1997, sales proceeds and gross
realized gains and losses on securities available for sale were as follows:
<TABLE>
<CAPTION>
Realized Realized
Gains Losses Total
-------- -------- --------
<S> <C> <C> <C>
Sales proceeds....................................... $746,733 $ -- $746,733
Cost................................................. 647,305 -- 647,305
-------- ----- --------
Realized Gain........................................ $ 99,428 $ -- $ 99,428
======== ===== ========
</TABLE>
During 1997, unrealized holding gains aggregated $38,529 and are included as
a separate component of stockholders' equity.
3.DEBT OBLIGATIONS
The Company is obligated to a bank on various notes and loans as follows:
SHORT-TERM DEBT--A $150,000 demand note at December 31, 1996 required
monthly payments of interest only at 1% over a one year certificate of
deposit interest rate and was paid in December 1997. The loan was secured
by a one year certificate of deposit in the amount of $218,511 which
matured in December 1997.
The Company had a $300,000 secured line of credit which was increased to
$1,500,000 in June 1997. Borrowings bear interest at the prime rate and are
due in June 1998. The line of credit is secured by personal property and
fixtures and guaranteed by an affiliated company and the Company's majority
stockholder. There was no outstanding balance at December 31, 1997.
LONG-TERM DEBT--The Company is obligated on a note with an outstanding
balance of $143,176 at December 31, 1997. The note requires monthly
principal payments of $3,578 plus interest at prime and matures on November
12, 2001. The note is secured by personal property and fixtures now
existing or acquired thereafter and is guaranteed by an affiliated company
and the Company's majority stockholder. This loan and the loan described
below contain cross default provisions with the obligations of an entity
owned by the stockholders which owns the Company's warehouse and office
facility.
A secured note dated November 18, 1994 for $121,000, which was self
liquidating, required monthly payments of $3,492 and bore interest at 2.5%
per annum, matured on November 18, 1997. The loan was secured by
improvements to the real property under capital lease now existing or
acquired thereafter and was guaranteed by an affiliated company and the
Company's majority stockholder.
F-95
<PAGE>
CARR BUSINESS MACHINES OF GREAT NECK, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
In October of 1997, the Company became obligated on a secured note in
the amount of $36,400 for the purchase of a truck. The note requires
monthly principal payments of $606 plus interest at prime plus 3% and
matures on September 30, 2002. The amount outstanding at December 31, 1997
is $34,580.
Principal repayments of long-term debt are as follows:
Years ending December 31,
<TABLE>
<S> <C>
1998........................................................ $ 50,216
1999........................................................ 50,216
2000........................................................ 50,216
2001........................................................ 21,648
2002........................................................ 5,460
--------
$177,756
========
</TABLE>
4. COMMITMENTS AND RELATED PARTY TRANSACTIONS
The Company's office and warehouse facilities are leased from an entity owned
by the stockholders and require a $60,000 security deposit. The lease, which is
for ten years expiring in 2004, is classified as a capital lease.
Future minimum lease payments under the capital lease together with the
present value of the net minimum lease payments as of December 31, 1997 are as
follows:
Years ending December 31,
<TABLE>
<S> <C>
1998...................................................... $ 209,688
1999...................................................... 212,009
2000...................................................... 214,423
2001...................................................... 216,934
2002...................................................... 219,545
Thereafter................................................ $ 307,477
----------
Total minimum payments.................................... $1,380,076
Less amounts representing estimated executory costs (such
as real estate taxes and insurance) which are included in
minimum lease payments................................... 406,943
----------
Net minimum lease payments................................ 973,133
Less amounts representing interest........................ 244,899
----------
Present value of net minimum lease payments............... 728,234
Less current portion of obligation under capital lease.... 86,740
----------
Long-term portion of obligation under capital lease....... $ 641,494
==========
</TABLE>
The Company guaranteed obligations of the entity owned by the stockholders
aggregating $694,000 at December 31, 1997, incurred in connection with
financing the facility, and assigned $100,000 of its marketable securities as
additional collateral. As of September 1, 1998, the Company is no longer a
guarantor. (See Note 5.)
F-96
<PAGE>
CARR BUSINESS MACHINES OF GREAT NECK, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
In December 1995 the Company entered into a five year, seven month operating
lease beginning February 1, 1996 for office space in New York City. Rent
expense, including escalations, during 1997 was approximately $81,650. The
future minimum payments under the lease are as follows:
Years ending December 31,
<TABLE>
<S> <C>
1998........................................................ $ 50,864
1999........................................................ 54,520
2000........................................................ 54,520
2001........................................................ 36,347
--------
$196,251
========
</TABLE>
A major supplier of the Company has a lien on certain inventory as collateral
for amounts outstanding to them aggregating $62,807 at December 31, 1997.
5.COMMON STOCK
On July 1, 1994, the Company admitted a new stockholder and issued 10 shares
of no par value common stock in exchange for $30,000 and a $275,000 note. The
note is payable in annual installments of $39,444 including interest at 7.16%
per annum and will self-liquidate on December 22, 2004. Interest income from
the note receivable for the year ended December 31, 1997 is $16,760. On
September 16, 1998, effective September 1, 1998, the stockholders sold all the
issued and outstanding shares of common stock to a public company for
$17,500,000. In connection with the purchase agreement, the $177,756 of long-
term debt was repaid and the $211,394 stock subscription receivable was
collected.
6.PROFIT SHARING
The Company has a defined contribution profit sharing plan for the benefit of
its employees. Contributions PLAN are at the discretion of the Company.
Contributions for the year ended December 31, 1997 totaled $103,406.
7.RESTATEMENTS
The Company's previously issued 1997 financial statements have been restated
to correct overstatements in inventory pricing of $58,000 at January 1, 1997
and $223,000 at December 31, 1997, and an overstatement of previously reported
net income aggregating $165,000. The effect of these errors on previously
reported 1996 net income is not significant.
Retained earnings at January 1, 1997 has also been restated from the amount
previously reported to record $34,193 paid to a stockholder in 1996 as an
advance rather than as a dividend. The restatement does not effect previously
reported net income for 1996.
In addition, $104,616 of equipment leased to customers has been reclassified
from merchandise inventory to equipment and improvements.
F-97
<PAGE>
Report of Independent Auditors
To the Board of Directors and Stockholders
of Capitol Office Solutions, Inc.
Beltsville, Maryland
We have audited the accompanying consolidated balance sheets of Capitol
Office Solutions, Inc., formerly Capitol Copy Products, Inc., and subsidiary as
of June 30, 1998 and 1997, and the related consolidated statements of earnings,
stockholders' equity (deficit), and cash flows for each of the three years in
the period ended June 30, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Capitol Office Solutions, Inc.,
and subsidiary as of June 30, 1998 and 1997, and the results of their
operations and their cash flows for each of the three years in the period ended
June 30, 1998, in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Washington, D.C.
August 28, 1998
F-98
<PAGE>
CAPITOL OFFICE SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 1998 AND 1997
<TABLE>
<CAPTION>
ASSETS 1998 1997
------ ----------- ----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents........................... $ 3,671,371 $1,790,230
Accounts receivable................................. 2,825,868 2,024,542
Inventories......................................... 1,946,903 1,853,098
Refundable income taxes............................. 159,509 153,709
Deferred income taxes............................... 105,000 57,000
Prepaid expenses and other.......................... 82,991 69,454
----------- ----------
Total current assets.............................. 8,791,642 5,948,033
----------- ----------
PROPERTY AND EQUIPMENT:
Office furniture and equipment...................... 412,818 430,124
Property under capital leases....................... 130,662 112,155
Leasehold improvements.............................. 177,015 232,135
Rental equipment.................................... 120,340 109,231
----------- ----------
840,835 883,645
Less accumulated depreciation and amortization...... (609,928) (654,541)
----------- ----------
Total property and equipment...................... 230,907 229,104
----------- ----------
OTHER ASSETS:
Excess of acquisition cost over value of net assets
acquired--net...................................... 2,089,409 2,160,847
Deferred financing and other deferred costs--net.... 710,000 895,000
Deferred income taxes............................... 119,000 41,000
Deposits and other.................................. 75,488 72,988
----------- ----------
Total other assets................................ 2,993,897 3,169,835
----------- ----------
TOTAL ASSETS........................................ $12,016,446 $9,346,972
=========== ==========
</TABLE>
See notes to consolidated financial statements.
F-99
<PAGE>
CAPITOL OFFICE SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 1998 AND 1997
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) 1998 1997
---------------------------------------------- ------------ ------------
<S> <C> <C>
CURRENT LIABILITIES:
Loan payable..................................... $ -- $ 1,450,000
Accounts payable and accrued liabilities......... 1,527,084 1,141,885
Deferred revenue................................. 582,836 504,845
Current portion of long-term debt................ 3,904,000 --
Current portion of capital lease obligations..... 12,228 14,538
------------ ------------
Total current liabilities...................... 6,026,148 3,111,268
------------ ------------
LONG-TERM LIABILITIES:
Long-term debt (less current portion shown
above).......................................... 14,961,000 18,865,000
Capital lease obligations (less current portion
shown above).................................... 68,867 31,881
------------ ------------
Total long-term liabilities.................... 15,029,867 18,896,881
------------ ------------
Total liabilities.............................. 21,056,015 22,008,149
------------ ------------
<CAPTION>
COMMITMENTS
<S> <C> <C>
STOCKHOLDERS' EQUITY (DEFICIT):
Class A common stock, $.01 par value--authorized,
200,000 shares; issued and outstanding, 59,400
shares.......................................... 594 594
Class B common stock, $.01 par value--authorized,
100,000 shares; issued and outstanding, 29,700
shares.......................................... 297 297
Class C common stock, $.01 par value--authorized;
40,000, shares; issued and outstanding, 9,000
shares.......................................... 90 90
Additional paid-in capital....................... 999,891 999,891
Retained earnings (deficit)...................... (10,040,441) (13,662,049)
------------ ------------
Total stockholders' equity (deficit)........... (9,039,569) (12,661,177)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)......................................... $ 12,016,446 $ 9,346,972
============ ============
</TABLE>
See notes to consolidated financial statements.
F-100
<PAGE>
CAPITOL OFFICE SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE YEARS ENDED JUNE 30, 1998, 1997, AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
SALES:
Sales of equipment................... $14,459,555 $11,192,343 $ 9,267,028
Sales of services and supplies....... 13,709,553 12,360,411 10,942,168
----------- ----------- -----------
Total sales........................ 28,169,108 23,552,754 20,209,196
----------- ----------- -----------
COST OF SALES:
Cost of equipment sold............... 9,575,547 8,278,146 6,433,208
Cost of services and supplies sold... 6,041,436 5,906,491 5,603,351
----------- ----------- -----------
Total cost of sales................ 15,616,983 14,184,637 12,036,559
----------- ----------- -----------
GROSS PROFIT........................... 12,552,125 9,368,117 8,172,637
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES.............................. 5,103,664 4,497,166 3,781,559
----------- ----------- -----------
OPERATING INCOME....................... 7,448,461 4,870,951 4,391,078
INTEREST EXPENSE....................... (1,735,245) (8,201) (11,330)
OTHER INCOME........................... 81,392 257,591 112,360
----------- ----------- -----------
EARNINGS BEFORE INCOME TAXES........... 5,794,608 5,120,341 4,492,108
PROVISION FOR INCOME TAXES............. 2,173,000 1,870,000 1,780,000
----------- ----------- -----------
NET EARNINGS........................... $ 3,621,608 $ 3,250,341 $ 2,712,108
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
F-101
<PAGE>
CAPITOL OFFICE SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED JUNE 30, 1998, 1997, AND 1996
<TABLE>
<CAPTION>
Class Class Class Total
A B C Additional Retained Stockholders'
Common Common Common Class B Paid-in Earnings Equity
Stock Stock Stock Stock Capital (Deficit) (Deficit)
------ ------ ------ ------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, JULY 1, 1995... $ -- $ -- $ -- $120 $749,880 $ 5,503,737 $ 6,253,737
Dividends declared.... -- -- -- -- -- (240,000) (240,000)
Net earnings.......... -- -- -- -- -- 2,712,108 2,712,108
---- ---- ---- ---- -------- ------------- ------------
BALANCE, JUNE 30, 1996.. -- -- -- 120 749,880 7,975,845 8,725,845
Dividends declared.... -- -- -- -- -- (5,834,390) (5,834,390)
Recapitalization...... 7 4 1 (120) 108 -- --
Net earnings.......... -- -- -- -- -- 3,250,341 3,250,341
Purchase and
retirement of common
stock, including
transaction costs.... (5) (3) -- -- (749,988) (19,052,977) (19,802,973)
Stock split........... 493 296 79 -- -- (868) --
Sale of common stock.. 99 -- 10 -- 999,891 -- 1,000,000
---- ---- ---- ---- -------- ------------- ------------
BALANCE, JUNE 30, 1997.. 594 297 90 -- 999,891 (13,662,049) (12,661,177)
Net earnings.......... -- -- -- -- -- 3,621,608 3,621,608
---- ---- ---- ---- -------- ------------- ------------
BALANCE, JUNE 30, 1998.. $594 $297 $ 90 $ -- $999,891 $ (10,040,441) $ (9,039,569)
==== ==== ==== ==== ======== ============= ============
</TABLE>
See notes to consolidated financial statements.
F-102
<PAGE>
CAPITOL OFFICE SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 1998, 1997, AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
---------- ----------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings............................. $3,621,608 $ 3,250,341 $2,712,108
Adjustments to reconcile net earnings to
net cash provided by operations:
Depreciation and amortization........... 379,387 194,960 221,476
Deferred income taxes................... (126,000) 76,000 (65,000)
Loss on disposal of equipment........... 6,871 13,179 --
Changes in operating assets and
liabilities:
Accounts receivable.................... (801,326) 26,700 (319,496)
Inventories............................ (93,805) 323,422 (425,730)
Refundable income taxes................ (5,800) (153,709) --
Prepaid expenses and other assets...... (16,037) (14,953) 21,359
Accounts payable and accrued
liabilities........................... 385,199 277,972 179,027
Deferred revenue....................... 77,991 4,202 20,785
---------- ----------- ----------
Net cash provided by operating
activities........................... 3,428,088 3,998,114 2,344,529
---------- ----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment--net............... (78,633) (141,361) (55,189)
Increase in other assets................ -- (300,000) --
---------- ----------- ----------
Net cash used in investing
activities........................... (78,633) (441,361) (55,189)
---------- ----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term notes............ -- 18,865,000 --
Proceeds from bank line of credit........ -- 1,450,000 --
Proceeds from sale of common stock....... -- 1,000,000 --
Acquisition and retirement of common
stock................................... -- (19,802,973) --
Debt issuance costs...................... -- (595,000) --
Principal payments on long-term notes.... -- (5,104) (19,015)
Principal payments on bank line of
credit.................................. (1,450,000) -- --
Principal payments on capital lease
obligations............................. (18,314) (27,750) (34,156)
Dividends paid........................... -- (5,834,390) (240,000)
---------- ----------- ----------
Net cash used in financing
activities........................... (1,468,314) (4,950,217) (293,171)
---------- ----------- ----------
NET INCREASE (DECREASE) IN CASH........... 1,881,141 (1,393,464) 1,996,169
CASH AND CASH EQUIVALENTS, BEGINNING OF
YEAR..................................... 1,790,230 3,183,694 1,187,525
---------- ----------- ----------
CASH AND CASH EQUIVALENTS, END OF YEAR.... $3,671,371 $ 1,790,230 $3,183,694
========== =========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Interest paid............................ $1,754,125 $ 8,135 $ 10,730
========== =========== ==========
Income taxes paid........................ $2,122,500 $ 2,157,100 $1,633,107
========== =========== ==========
SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Capital leases........................... $ 52,900 $ 37,040 $ --
========== =========== ==========
</TABLE>
See notes to consolidated financial statements.
F-103
<PAGE>
CAPITOL OFFICE SOLUTIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 1998, 1997, AND 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Operations--Capitol Office Solutions, Inc., formerly Capitol Copy
Products, Inc. ("COS" or "the Company"), a majority-owned subsidiary of Golder,
Thoma, Cressey, Rauner Fund IV, L.P., is in the business of selling, leasing,
and servicing copier and facsimile equipment, and selling related supply
products. The Company's principal business territory comprises the greater
Metropolitan Washington, D.C., and Baltimore areas. The Company operates
pursuant to certain dealer agreements, primarily with Canon, USA, Inc.
Principles of Consolidation--The consolidated financial statements include
the accounts of COS and its wholly owned subsidiary, General Service Leasing,
Inc. All significant intercompany balances and transactions have been
eliminated in consolidation.
Revenue Recognition--The Company recognizes revenue from the sale of
equipment, maintenance contracts, and month-to-month equipment rental
agreements. Sales of equipment are recorded as revenue on the date the
equipment is shipped. Revenue from maintenance contracts and month-to-month
equipment rental agreements is recognized ratably over the terms of the
agreements.
Cash and Cash Equivalents--Cash and cash equivalents consist of checking
accounts and temporary investments in repurchase agreements. For purposes of
the consolidated statements of cash flows, the Company considers only highly
liquid debt instruments purchased with a maturity of three months or less to be
cash equivalents.
Inventories--Inventories are stated at the lower of average cost or market.
Property and Equipment--Property and equipment are stated at cost.
Depreciation is computed using straight-line methods based on the estimated
useful lives of the related equipment. Leasehold improvements are amortized
over the lives of the respective leases or service lives of the improvements,
whichever is shorter.
Repairs and maintenance are charged directly to expense as incurred.
Betterments or improvements that increase the estimated useful life of an asset
are capitalized.
Goodwill--The excess of cost over fair values of the net tangible assets
acquired (goodwill) is amortized using the straight-line method over forty
years. The Company annually reviews its goodwill recoverability by assessing
historical profitability and expectations as to future nondiscounted cash flows
and net income as well as the Company's success in meeting its commitments
under its dealer agreements. Based upon its most recent analysis, the Company
believes that no material impairment of goodwill exists at June 30, 1998.
Deferred Financing and Other Deferred Costs--Deferred financing costs consist
of financing fees paid by the Company to obtain its line of credit and loan
payable (see Notes 5 and 7). The fees are amortized using the straight-line
method over the life of the loan payable. Other deferred costs relate to costs
associated with an agreement entered into upon the Company's recapitalization,
stock redemption, and stock purchase (see Note 2). These costs are amortized
using the straight-line method over three years, the term of the agreement.
Income Taxes--The Company records its provision for income taxes in
accordance with Statement of Financial Accounting Standards No. 109 (SFAS 109).
SFAS 109 requires the Company to record a provision for deferred income taxes
for differences between the basis of certain assets and liabilities for income
tax and financial statement reporting purposes, and between reporting methods
for income tax return and financial statement reporting purposes, which will
create taxable income or deductions in future periods.
Deferred income taxes result primarily from temporary differences in the
recognition of revenue from maintenance contracts, certain inventory costs, bad
debt expense, and depreciation for tax and financial reporting purposes.
F-104
<PAGE>
CAPITOL OFFICE SOLUTIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
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.
Reclassifications--Certain 1997 amounts have been reclassified for
comparative purposes. Actual results could differ from those estimates.
2. RECAPITALIZATION, STOCK REDEMPTION, AND STOCK PURCHASE
Prior to June 30, 1997, the Company was a majority owned subsidiary (66
2/3%) of CERBCO, Inc., with the remaining 33 1/3% owned by the President of
the Company. Effective June 30, 1997, the following transactions took place:
. A $5,684,390 dividend was paid to the existing shareholders representing
cash held by the Company in excess of $800,000.
. The Company recapitalized itself by amending its Certificate of
Incorporation to authorize three classes of common stock. Class A Common
Stock, $.01 par value (the "Class A Common"); Class B Common Stock, $.01
par value (the "Class B Common"); and Class C Common Stock, $.01 par
value (the "Class C Common"). Each share of the Company's then currently
issued and outstanding Class B stock was exchanged for .61875 shares of
Class A Common, .37125 shares of Class B Common, and .01 shares of Class
C Common.
. The Company entered into credit agreements with a financial institution
that provided for loans to the Company in the principal amount of up to
approximately $30,000,000.
. Following the above transactions, all of the shares of Class A Common,
Class B Common, and Class C Common of the Company held by CERBCO, Inc.,
were redeemed by the Company for an aggregate purchase price of
$19,000,000, subject to adjustment and escrow holdbacks.
. Immediately after the redemption, the Company effected a 200-to-1 stock
split of the Class A Common, which resulted in 200,000 shares of Class A
Common being authorized and 49,500 shares being issued and outstanding; a
200-to-1 stock split of the Class B Common, which resulted in 100,000
shares of Class B Common being authorized and 29,700 shares being issued
and outstanding; and a 2,000-to-1 stock split of the Class C Common,
which resulted in 40,000 shares of Class C Common being authorized and
8,000 shares being issued and outstanding.
. Immediately after the stock split, new investors purchased from the
Company 9,900 shares of Class A common and 1,000 shares of Class C Common
for a purchase price of $100 per share of Class A Common and $10 per
share of Class C Common, an aggregate purchase price of $1,000,000.
. Contemporaneously with the above investment, the new investors purchased
all 49,500 shares of Class A Common and 62.5% of Class C Common (5,000
shares) held by the President of the Company.
. In connection with the transactions, the President, the new investors,
and the Company entered into various stockholder agreements, registration
rights agreements, and employment agreements.
3. ACCOUNTS RECEIVABLE
The allowance for doubtful accounts was $35,000 and $30,000 at June 30, 1998
and 1997, respectively. The provisions for doubtful accounts included in
selling, general, and administrative expense for the years ended June 30,
1998, 1997, and 1996, were $51,345, $35,585 and $26,226 respectively.
F-105
<PAGE>
CAPITOL OFFICE SOLUTIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
4. INVENTORIES
Inventories at June 30, 1998 and 1997, consist of:
<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
Equipment..................................... $1,452,109 $1,288,937
Supplies...................................... 197,181 192,578
Parts......................................... 297,613 371,583
---------- ----------
$1,946,903 $1,853,098
========== ==========
</TABLE>
5. LOAN PAYABLE
The Company has available a line of credit as part of a credit agreement with
a life insurance company (see Note 7) that enables the Company to borrow up to
$2,500,000, subject to a borrowing base, at an interest rate equal to the LIBOR
rate plus 3.0% (8.6445% and 8.6875% at June 30, 1998 and 1997, respectively).
The agreement expires in June 2004 and is collateralized by all personal and
real property. The agreement requires the Company to meet certain financial
covenants quarterly. As of June 30, 1998, the Company is in compliance with the
required financial covenants.
6. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities at June 30, 1998 and 1997, consist
of:
<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
Accounts payable.............................. $ 328,450 $ 177,537
Accrued expenses and other.................... 929,856 873,759
Income taxes payable.......................... 268,778 77,945
Other......................................... -- 12,644
---------- ----------
$1,527,084 $1,141,885
========== ==========
</TABLE>
7. LONG-TERM DEBT
Long-term debt at June 30, 1998 and 1997, consists of:
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Term loan payable that matures in June 2004, with
a percentage of principal payable every six
months beginning in January 2000 and interest due
monthly at LIBOR plus 3.25%...................... $18,865,000 $18,865,000
Less: Current portion............................. 3,904,000 --
----------- -----------
$14,961,000 $18,865,000
=========== ===========
</TABLE>
The total term loan commitment is $27,500,000. In addition to the percentage
of principal payments required, the Company is required to prepay the term loan
and related revolving loan (Note 5) in an amount equal to 70% of excess cash
flow as defined in the credit agreement for each fiscal year beginning with
year fiscal 1998. This prepayment of excess cash flows is classified as current
portion of long-term debt at June 30, 1998. The Company is required to meet
certain financial covenants quarterly. As of June 30, 1998, the Company is in
compliance with the required financial covenants.
F-106
<PAGE>
CAPITOL OFFICE SOLUTIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
8. COMMITMENTS
The Company leases warehouse, store, and office facilities under operating
leases that expire on various dates through 2008. Some of the facility leases
provide for renewal options. Rental expense was approximately $165,000,
$148,000 and $139,000 for the years ended June 30, 1998, 1997 and 1996,
respectively. In addition, the Company leases equipment under capital leases
that expire on various dates through 1999. Accumulated amortization for
property under capital leases was $52,947 and $70,557 as of June 30, 1998 and
1997, respectively. Minimum future rental commitments under long-term capital
and operating leases in effect at June 30, 1998 are as follows:
<TABLE>
<CAPTION>
Capital Operating
Leases Leases
-------- ----------
<S> <C> <C>
1999............................................ $ 24,000 $ 335,000
2000............................................ 24,000 308,000
2001............................................ 24,000 289,000
2002............................................ 17,000 260,000
2003............................................ 12,000 237,000
Thereafter...................................... 16,000 1,080,000
-------- ----------
Total minimum payments.......................... 117,000 $2,509,000
==========
Less: Interest.................................. 36,000
--------
Present value of minimum payments............... $ 81,000
========
</TABLE>
9. INCOME TAXES
The provision for taxes for the years ended June 30, 1998, 1997, and 1996, is
comprised of the following (in thousands):
<TABLE>
<CAPTION>
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Current:
Federal..................................... $1,849 $1,534 $1,580
State....................................... 450 260 265
------ ------ ------
Total current............................. 2,299 1,794 1,845
------ ------ ------
Deferred:
Federal..................................... (102) 66 (55)
State....................................... (24) 10 (10)
------ ------ ------
Total deferred............................ (126) 76 (65)
------ ------ ------
Total provision for taxes..................... $2,173 $1,870 $1,780
====== ====== ======
</TABLE>
F-107
<PAGE>
CAPITOL OFFICE SOLUTIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The provision for income taxes is different from that computed using the
statutory federal income tax rate of 34% for the years ended June 30, 1998,
1997, and 1996, for the following reasons (in thousands except percentages):
<TABLE>
<CAPTION>
1998 1997 1996
------------- ------------- ------------
Amounts % Amounts % Amounts %
------- ---- ------- ---- ------- ----
<S> <C> <C> <C> <C> <C> <C>
Taxes computed at statutory rate..... $1,970 34.0% $1,741 34.0% $1,527 34.0%
Increase in taxes resulting from:
State income taxes, net of federal
income tax benefit................ 281 4.8 179 3.5 176 3.9
Nondeductible items................ 27 0.5 29 0.6 29 0.6
Other.............................. (105) (1.8) (79) (1.6) 48 1.1
------ ---- ------ ---- ------ ----
Total provision for taxes.......... $2,173 37.5% $1,870 36.5% $1,780 39.6%
====== ==== ====== ==== ====== ====
</TABLE>
The approximate tax effect of each type of temporary difference that gave
rise to the Company's deferred tax asset amount (in thousands) at June 30, 1998
and 1997, is as follows:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Bad debt reserves......................................... $ 14 $12
Vacation expenses......................................... 23 19
Depreciation.............................................. 49 41
Inventory costs........................................... 67 35
Deferred revenue.......................................... 21 --
Deferred rent allowance................................... 37 --
Section 197 intangible.................................... 33 --
Other..................................................... (20) (9)
---- ---
$224 $98
==== ===
</TABLE>
10. PROFIT SHARING AND 401(K) PLAN
The Company has a profit sharing and 401(k) retirement plan for all of its
employees meeting certain minimum eligibility requirements. Contributions are
determined annually by the Company's Board of Directors. The Company
contributed $151,552, $147,438, and $120,713 to the plan through the 401(k)
matching provision in fiscal years 1998, 1997 and 1996, respectively.
11. STOCKHOLDER'S EQUITY
The Company has three classes of Common Stock, which are designated as Class
A, B, and C Common Stock. Shares of Class C Common Stock have one vote per
share on all matters to be voted on by the Company's stockholders. Shares of
Classes A and B Common Stock are not entitled to vote on any matter submitted
to a vote of the Company's stockholders.
12. RELATED PARTY TRANSACTIONS
On June 30, 1997, the Company entered into a consulting agreement with Global
whereby the Company will pay Global an annual management fee of $150,000.
Global will provide human resources, administration, financial, accounting, and
consulting services.
F-108
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
We have not authorized any person to make a statement that differs from what
is in this prospectus. If any person makes a statement that differs from what
is in this prospectus, you should not rely on it. This prospectus is not an
offer to sell, nor is it seeking an offer to buy, the notes in any state where
such offer or sale is not permitted. The information in this prospectus is
complete and accurate as of its date, but the information may change after
that date.
---------------
TABLE OF CONTENTS
---------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Where You Can Get More Information....................................... i
Cautionary Statement Regarding
Forward-Looking Statements.............................................. i
Use of Certain Terms..................................................... i
Prospectus Summary....................................................... 1
Risk Factors............................................................. 12
The Exchange Offer....................................................... 17
Use of Proceeds.......................................................... 25
Capitalization........................................................... 25
Selected Financial Data.................................................. 26
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 28
Business................................................................. 39
Management............................................................... 47
Certain Transactions..................................................... 54
Principal Stockholders................................................... 58
Description of Senior Credit Facilities.................................. 59
Description of Exchange Notes............................................ 60
Plan of Distribution..................................................... 100
Legal Matters............................................................ 101
Experts.................................................................. 101
Index to Financial Statements............................................ F-1
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
----------------
PROSPECTUS
----------------
$100,000,000
[logo appears here]
10 3/4% Senior Subordinated Exchange Notes Due 2007
, 1999
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification Of Directors And Officers
The Amended and Restated Certificate of Incorporation (the "Charter") and
Amended and Restated Bylaws of Global provide for the indemnification of
Global's directors and officers to the fullest extent permitted by law. Insofar
as indemnification for liabilities under the Securities Act may be permitted to
directors, officers or controlling persons of Global pursuant to Global's
Charter, Bylaws and the Delaware General Corporation Law, Global has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in such Act and is
therefore unenforceable.
As permitted by the Delaware General Corporation Law, the Charter provides
that directors of Global shall not be personally liable to Global or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to
Global or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, relating to prohibited
dividends or distributions or the repurchase or redemption of stock or (iv) for
any transaction from which the director derives an improper personal benefit.
As a result of this provision, Global and its stockholders may be unable to
obtain monetary damages from a director for breach of his or her duty of care.
Additionally, Global has entered into indemnification agreements with certain
of its directors and officers, which may, in certain cases, be broader than the
specific indemnification provisions contained under applicable law. The
indemnification agreements may require Global, among other things, to indemnify
such officers and directors against certain liabilities that may arise by
reason of their status or service as directors, officers or employees of
Global, to advance the expenses incurred by such parties as a result of any
threatened claims or proceedings brought against them as to which they could be
indemnified, and to cover such officers and directors under Global's directors'
and officers' liability insurance policies to the maximum extent that insurance
coverage is maintained.
The directors and officers of each additional registrant listed below may be
insured and/or indemnified against liability incurred in their capacity as
officers and/or directors pursuant to provisions in the certificate of
incorporation or articles of incorporation (either, the charter) of such
additional registrant. The provision(s) of each such additional registrant's
charter providing for insurance or indemnification or a limitation of liability
are identified in the table below; are set forth in the exhibits, identified
below, to this registration statement; and are incorporated herein by
reference.
<TABLE>
<CAPTION>
Article(s) of Charter
Containing
Indemnification
and/or Limit of
Name of Registrant Liability Provisions Exhibit No.
------------------ --------------------- -----------
<S> <C> <C>
Capitol Copy Products, Inc............... 9 3.6a
Capitol Office Solutions, Inc............ 9 3.7a
Duplicating Specialties, Inc. d/b/a
Copytronix.............................. III 3.15a
Electronic Systems of Richmond, Inc...... 9 3.17a
Global Imaging Finance Company........... X, XI 3.20a
Global Imaging Operations, Inc........... X, XI 3.21a
ProView, Inc............................. V 3.22a
Southern Business Communications, Inc.... 11, 12 3.24a
</TABLE>
II-1
<PAGE>
The directors and officers of each additional registrant listed below may be
insured and/or indemnified against liability incurred in their capacity as
officers and/or directors pursuant to provisions in the bylaws of such
additional registrants. The provisions of each such additional registrant's
bylaws providing insurance or indemnification or a limitation of liability are
identified in the table below; are set forth in the exhibits, identified below,
to this registration statement and are incorporated herein by reference.
<TABLE>
<CAPTION>
Article(s) of Bylaws
Containing
Indemnification
and/or Limit of
Name of Registrant Liability Provisions Exhibit No.
------------------ -------------------- -----------
<S> <C> <C>
Business Equipment Unlimited................ VII 3.4b
Capitol Copy Products, Inc.................. IX, X 3.6b
Conway Office Products, Inc................. II 3.11b
Distinctive Business Products, Inc.......... IX 3.14b
Global Imaging Finance Company.............. IX, X 3.20b
Global Imaging Operations, Inc.............. 6 3.21b
ProView, Inc................................ VIII 3.22b
Southern Copy Systems, Inc.................. VIII 3.25b
</TABLE>
Directors and officers of each additional registrant may also be insured
and/or indemnified against liability incurred in their capacity as officers
and/or directors pursuant to the provisions of state law identified below.
These provisions are set forth in the exhibits, identified below, to this
registration statement and are incorporated herein by reference.
<TABLE>
<CAPTION>
Statutory Provisions Regarding
Indemnification and/or Limitations of
Name of Registrant Liability Exhibit No.
------------------ ------------------------------------- -----------
<S> <C> <C>
American Photocopy Section 145 of the Delaware General 99.5
Equipment Company of Corporation Law
Pittsburgh d/b/a AMCOM
Office Systems
Capitol Copy Products,
Inc.
Capitol Office
Solutions, Inc.
Global Imaging Finance
Company
Global Imaging
Operations, Inc.
Berney, Inc. Sections 10-2B-8.51 to 8.58 of the Alabama 99.6
Southern Copy Systems, Business Corporation Act
Inc.
Business Equipment Section 719 of the Maine Business 99.7
Unlimited Corporation Act
Cameron Office Products, Section 67 of the Massachusetts Business 99.8
Inc. Corporation Law
Carr Business Machines Sections 402(b) and 721 to 726 of the 99.9
of Great Neck Inc. d/b/a Business Corporation Code of the State of
Carr New York
Eastern Copy Products,
Inc.
Centre Business Sections 1741 to 1750 of the Pennsylvania 99.10
Products, Inc. Business Corporation Law
Connecticut Business Sections 33-771 to 33-778 of the of the 99.11
Systems, Inc. Connecticut Business Corporations Act
Conway Office Products, Sections 293-A:8.50 to 293-A:8.58 of the New 99.12
Inc. Hampshire Business Corporation Act
Copy Service and Supply, Sections 55-8-50 to 55-8-58 of the North 99.13
Inc. Carolina Business Corporation Act
ProView, Inc.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
Statutory Provisions Regarding
Indemnification and/or Limitations of
Name of Registrant Liability Exhibit No.
------------------ ------------------------------------- -----------
<S> <C> <C>
COS Financial, Inc. Section 2-418 of the General Corporation Law 99.14
of the State of Maryland
Distinctive Business Section 8.75 of the Illinois Business 99.15
Products, Inc. Corporation Act
Duplicating Specialties, Section 60.047(2)(d) and 60.367 to 60.414 of 99.16
Inc. d/b/a the Oregon Business Corporation Act
Copytronix
Electronic Systems, Inc. Sections 13.1-692 and 13.1-696 to 99.17
Electronic Systems of 13.1-704 of the Virginia Stock Corporation Act
Richmond, Inc.
Felco Office Systems, Article 2.02-1 of the Texas Business 99.18
Inc. Corporation Act and Article 1302-7.06 of the
Texas Miscellaneous Corporation Laws Act
Quality Business Sections 23B.08.500 to 23B.08.600 of the 99.19
Systems, Inc. Washington Business Corporation Act
Southern Business Sections 14-2-202(b)(4) and 14-2-850 99.20
Communications, Inc. to 14-2-859 of the Code of Georgia
Business Corporation Act
</TABLE>
Item 21. Exhibits And Financial Statement Schedules
(a) Exhibits
1.1 Note Purchase Agreement, dated March 3, 1999, by and among Global, the
subsidiary guarantors, First Union Capital Markets Corp., Prudential
Securities Incorporated, Raymond James & Associates, Inc. and Scotia
Capital Markets (USA) Inc.
3.1a Amended and Restated Certificate of Incorporation of Global Imaging
Systems, Inc. (1)
3.1b Amended and Restated Bylaws of Global Imaging Systems, Inc.(1)
3.2a Certificate of Incorporation of American Photocopy Equipment Company of
Pittsburgh.
3.2b Bylaws, as amended, of American Photocopy Equipment Company of
Pittsburgh.
3.3a Certificate of Incorporation, as amended of Berney, Inc.
3.3b Bylaws, as amended, of Berney, Inc., as amended.
3.4a Articles of Incorporation of Business Equipment Unlimited.
3.4b Bylaws, as amended, of Business Equipment Unlimited.
3.5a Articles of Organization of Cameron Office Products, Inc.
3.5b Bylaws, as amended, of Cameron Office Products, Inc.
3.6a Certificate of Incorporation of Capitol Copy Products, Inc.
3.6b Bylaws, as amended, of Capitol Copy Products, Inc.
3.7a Certificate of Incorporation of Capitol Office Solutions, Inc.
3.7b Bylaws, as amended, of Capitol Office Solutions, Inc.
3.8a Certificate of Incorporation of Carr Business Machines of Great Neck
Inc.
3.8b Bylaws, as amended, of Carr Business Machines of Great Neck Inc.
3.9a Articles of Incorporation of Centre Business Products, Inc.
3.9b Bylaws, as amended, of Centre Business Products, Inc.
3.10a Certificate of Incorporation of Connecticut Business Systems, Inc.
3.10b Bylaws of Connecticut Business Systems, Inc.
3.11a Record of Organization, as amended, of Conway Office Products, Inc.
3.11b Bylaws, as amended, of Conway Office Products, Inc.
3.12a Articles of Incorporation of Copy Service and Supply, Inc.
II-3
<PAGE>
<TABLE>
<C> <S>
3.12b Bylaws, as amended, of Copy Service and Supply, Inc.
3.13a Articles of Incorporation of COS Financial, Inc.
3.13b Bylaws, as amended, of COS Financial, Inc.***
3.14a Articles of Incorporation of Distinctive Business Products, Inc.
3.14b Bylaws, as amended, of Distinctive Business Products, Inc.
3.15a Restated Articles of Incorporation of Duplicating Specialties, Inc.
d/b/a Copytronix.
3.15b Bylaws, as amended, of Duplicating Specialties, Inc. d/b/a Copytronix.
3.16a Certificate of Incorporation, as amended, of Eastern Copy Products, Inc.
3.16b Bylaws, as amended of Eastern Copy Products, Inc.
3.17a Articles of Incorporation of Electronic Systems, Inc.
3.17b Bylaws, as amended, of Electronic Systems, Inc.
3.18a Articles of Incorporation of Electronic Systems of Richmond, Inc.
3.18b Bylaws of Electronic Systems of Richmond, Inc.
3.19a Articles of Incorporation, as amended of Felco Office Systems, Inc.
3.19b Bylaws, as amended of Felco Office Systems, Inc.
3.20a Certificate of Incorporation of Global Imaging Finance Company.
3.20b Bylaws, as amended, of Global Imaging Finance Company.
3.21a Certificate of Incorporation of Global Imaging Operations, Inc.
3.21b Bylaws, as amended, of Global Imaging Operations, Inc.
3.22a Articles of Incorporation of ProView, Inc.
3.22b Bylaws, as amended, of ProView, Inc.
3.23a Articles of Incorporation of Quality Business Systems, Inc.
3.23b Bylaws, as amended, of Quality Business Systems, Inc.
3.24a Restated Articles of Incorporation of Southern Business Communications,
Inc.
3.24b Bylaws, as amended, of Southern Business Communications, Inc.
3.25a Articles of Incorporation of Southern Copy Systems, Inc.***
3.25b Bylaws, as amended, of Southern Copy Systems, Inc.
4.1 Indenture dated as of March 8, 1999 between Global, the subsidiary
guarantors and United States Trust Company of New York, as Trustee,
relating to the 10 3/4% Senior Subordinated Notes Due 2007.
4.2 Form of Exchange Note. (Included in Indenture filed as Exhibit 4.1.)
4.3 Credit Agreement, dated as of July 31, 1998, by and among the Company
and its subsidiaries, as Borrowers, the Lenders referred to therein,
First Union National Bank, as Administrative Agent, and ScotiaBanc,
Inc., as Documentation Agent. (4)
5.1 Opinion of Hogan & Hartson L.L.P.***
10.1 Registration Agreement, dated as of June 9, 1994, as amended, by and
among Global and the stockholders identified therein. (Incorporated by
reference to Global's Registration Statement on Form S-1, No. 333-48103,
as filed on March 17, 1998.)
10.2 Termination Agreement, dated as of May 27, 1998, by and among Global;
FUND IV; Golder, Thoma, Cressey, Rauner, Inc. and the stockholders
identified therein. (2)
10.3 Executive Agreement, dated as of June 9, 1994, as amended, by and among
Global, Thomas S. Johnson and FUND IV. (2)*
10.4 Executive Agreement, dated as of June 9, 1994, as amended, by and among
Global, Raymond Schilling and FUND IV. (2)*
10.5 Executive Agreement, dated as of January 1, 1995, as amended, by and
among Global, H. Michael Mueller and FUND IV. (2)*
10.6 Executive Agreement, dated as of March 31, 1997, by and among Global,
Alfred N. Vieira and FUND IV. (2)*
10.7 1998 Stock Option and Incentive Plan. (2)*
10.7a Form of Incentive Stock Option Agreement.*
10.7b Form of Non-Qualified Stock Option Agreement.*
10.7c Form of Director's Stock Option Agreement.*
10.8 Form of Supply Agreement between the Company and Konica. (3)**
</TABLE>
II-4
<PAGE>
10.9 Non-Exclusive Third Party Lessor Agreement, dated July 16, 1996, as
amended, by and between Global and General Electric Capital Corporation.
(3)**
10.10 License Agreement, dated as of July 31, 1996, as amended, between Global
and Copelco Capital, Inc. (3)**
10.11 Non-Exclusive Third Party Lessor Agreement, dated July 26, 1996, as
amended, by and between Global and Tokai Financial Services, Inc. (3)**
10.12 Stock Purchase Agreement, dated as of June 27, 1996 by and among Global
as Buyer, Copy Service & Supply, Inc., Office Furniture Concepts, Inc.,
CSS Leasing, LLC and Terry K. Smith and Crystal E. Smith as Sellers. (2)
10.13 Stock Purchase Agreement, dated as of November 13, 1996 by and among
Global as Buyer and Southern Business Communications, Inc. and Mark M.
Lloyd and Arthur E. Kreps as Sellers. (2)**
10.14 Asset Purchase Agreement, dated as of November 13, 1996 by and among
ATS-Atlanta One, LLC as Seller, ATS-Atlanta One, Inc. as Purchaser, and
ATS-Atlanta, Inc., Mark M. Lloyd and Arthur E. Kreps. (2)
10.15 Stock Purchase Agreement, dated as of August 7, 1997 by and among
Global, ESI Acquisition Corporation as Buyer, Electronic Systems, Inc.
("ESI") and the Shareholders of ESI as Sellers. (2)**
10.16 Stock Purchase Agreement, dated as of August 29, 1997 by and among
Global, Conway Office Products as Buyer, Eastern Copy Products, Inc. and
Michael E. Kleinhans as Seller. (2)
10.17 Stock Purchase Agreement, dated as of September 30, 1997 by and among
Global as Buyer, Duplicating Specialties, Inc. (d/b/a Copytronix) and
Dean Groves as Seller. (2)**
10.18 Stock Purchase Agreement, dated as of September 30, 1997 by and among
Global as Buyer, Quality Business Systems, Inc. and Gary Stevens as
Seller. (2)**
10.19 Stock Purchase Agreement, dated as of September 30, 1997 by and among
Global as Buyer, Cascade Office Systems, Inc. and Fred Woodard as
Seller. (2)**
10.20 Stock Purchase Agreement, dated as of December 23, 1997 by and among
Global, ESI as Buyer, Electronic Systems of Richmond, Inc. ("ESRI") and
the Shareholders of ESRI as Seller. (2)**
10.21 Stock Purchase Agreement, dated as of December 31, 1997, as assigned, by
and among Global, Connecticut Business Systems, Inc. as Buyer, and the
Company, Michael E. Shea, Jr. and Peter Wenzke as Sellers. (2)**
10.22 Asset Purchase Agreement, dated as of February 26, 1998 by and among
Connecticut Systems, Inc., Bloom's Business Systems, a division of
Bloom's Incorporated, the Assets and Bloom's Incorporated as Seller.
(2)**
10.23 Stock Purchase Agreement, dated as of November 13, 1996, by and among
Global as Buyer, Southern Business Communications of D.C., Inc., and
George Gough, Mark M. Lloyd, and Arthur E. Kreps as Sellers. (2)
10.24 Equity Subscription Agreement, dated as of March 27, 1998, by and among
Global, FUND IV, JNL and Thomas S. Johnson. (2)
10.25 Form of Indemnification Agreement between Global and its directors and
executive officers. (1)*
10.26 Stock Purchase Agreement, dated as of August 31, 1998, by and among
Global and Southern Business Communications, Inc. ("SBC") as Buyer,
Centre Business Products, Inc., and the shareholders thereof, as
Sellers. (4)
10.27 Stock Purchase Agreement, dated as of September 16, 1998, by and among
Global, Carr Acquisition Corporation, as buyer, Carr Business Machines
of Great Neck Inc. (d/b/a Carr Business Systems) and its Shareholders,
as Sellers. (Incorporated by reference to Global's Current Report on
Form 8-K, as filed with the SEC on September 29, 1998.)
10.28 Stock Purchase Agreement, dated as of September 28, 1998, by and among
Global and SBC as Buyer, ProView, Inc., and the Shareholders thereof, as
Sellers. (4)
10.29 Stock Purchase Agreement, dated as of November 19, 1998, by and among
Global as Buyer, Capitol Office Solutions, Inc., FUND IV, Armen
Manoogian, and the other persons named therein as Sellers. (Incorporated
by reference to Global's Current Report on Form 8-K, as filed with the
SEC on January 5, 1998.)
II-5
<PAGE>
10.30 Stock Purchase Agreement, dated as of December 22, 1998, by and among
Global as Buyer, Distinctive Business Products, Inc., and the
shareholders thereof, as Sellers. (Incorporated by reference to Global's
Quarterly Report on Form 10-Q filed with the SEC on February 16, 1999.)
10.31 Merger Agreement and Plan of Merger, dated as of February 26, 1999, by
and among Global, Dahill Acquisition, Inc., Dahill Industries, Inc. and
Randall E. Davidson.
10.32 Registration Rights Agreement, dated March 8, 1999, by and among
Global,the subsidiary guarantors, First Union Capital Markets Corp.,
Prudential Securities Incorporated, Raymond James & Associates, Inc. and
Scotia Capital Markets (USA) Inc.
11.1 Statement regarding computation of per share earnings (See Consolidated
Statements of Operations for the years ended March 31, 1996, 1997 and
1998 appearing herein and Note 7 to the Notes to Consolidated Financial
Statements for the same period).
12.1 Statement regarding computation of ratio of earnings to fixed charges.
21.1 Subsidiaries of Global.
23.1 The consent of Ernst & Young LLP.
23.2 The consent of Ernst & Young LLP.
23.3 The consent of Pasquale & Bowers, LLP.
23.4 The consent of Moss Adams LLP.
23.5 The consent of Edmondson, LedBetter & Ballard, L.L.P.
23.6 The consent of Arthur Andersen LLP.
23.7 The consent of Joseph D. Kalicka & Company, LLP.
23.8 The consent of Margolin, Winer & Evens LLP.
23.9 The consent of Deloitte & Touche LLP.
23.10 The consent of Pacific Media Associates.
23.11 The consent of International Data Corporation.
23.12 The consent of AIIM International.
23.13 The consent of Industry Analysts, Inc.
24.1 Powers of Attorney (included on the signature pages of the Registration
Statement).
25.1 Form T-1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939, as amended, of United States Trust Company, as
trustee.
99.1 Form of Senior Subordinated Note Letter of Transmittal.
99.2 Form of Senior Subordinated Note Guaranteed Delivery.
99.3 Form of Senior Subordinated Note Letter to Brokers, Dealers, Commercial
Banks, Trust Companies and other Nominees.
99.4 Form of Senior Subordinated Note Letter to Clients.
99.5 Section 145 of the Delaware General Corporation Law.
99.6 Sections 10-2B-8.51 to 8.58 of the Alabama Business Corporation Act.
99.7 Section 719 of the Maine Business Corporation Act.
99.8 Section 67 of the Massachusetts Business Corporation Law.
99.9 Sections 402(b) and 721 to 726 of the Business Corporation Code of the
State of New York.
99.10 Sections 1741 to 1750 of the Pennsylvania Business Corporation Law.
99.11 Sections 33-771 to 33-778 of the Connecticut Business Corporation Act.
99.12 Sections 293-A:8.50 to 293-A:8.58 of the New Hampshire Business
Corporation Act.
99.13 Sections 55-8-50 to 55-8-58 of the North Carolina Business Corporation
Act.
99.14 Section 2-418 of the General Corporation Law of the State of Maryland.
99.15 Section 8.75 of the Illinois Business Corporation Act.
99.16 Section 60.047(2)(d) and 60.367 to 60.414 of the Oregon Business
Corporation Act.
99.17 Sections 13.1-692.1, 13.1-696 to 13.1-704 of the Virginia Stock
Corporation Act.
99.18 Article 2.02-1 of the Texas Business Corporation Act and Article 1302-
7.06 of the Texas Miscellaneous Corporation Laws Act.
99.19 Sections 23B.08.500 to 23B.08.600 the Washington Business Corporation
Act.
99.20 Sections 14-2-202(b)(4) and 14-2-850 to 14-2-859 of the Georgia Business
Corporation Code.
II-6
<PAGE>
- --------
(1) Incorporated by reference to Global's Registration Statement on Form S-1,
No. 333-48103, as filed with the SEC on May 8, 1998.
(2) Incorporated by reference to Global's Registration Statement on Form S-1,
No. 333-48103, as filed with the SEC on June 11, 1998.
(3) Incorporated by reference to Global's Registration Statement on Form S-1,
No. 333-48103, as filed with the SEC on March 27, 1998.
(4) Incorporated by reference to Global's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1998.
* Management contract or compensatory plan, contract or arrangement.
** Confidential treatment has been granted for portions of this exhibit.
*** To be filed by amendment.
(b) Financial Statement Schedules
Report of Independent Auditors on Schedule
Schedule II--Valuation and Qualifying Accounts
Item 22. Undertakings
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described above, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of this registration statement through
the date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in
the registration statement when it became effective.
The undersigned registrant hereby undertakes to file, during any period in
which offers or sales are being made, a post-effective amendment to this
registration statement;
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of this registration statement (or the most recent
post-effective amendment hereof) which, individually or in the aggregate,
represents a fundamental change in the information set forth in this
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Securities and
Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in this registration statement when it becomes
effective; and
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in this registration statement or
any material change to such information in this registration statement.
II-7
<PAGE>
The undersigned registrant hereby undertakes that, for the purpose of
determining any liability under the Securities Act, each such post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes to remove from registration by
means of a post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
II-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Global Imaging
Systems, Inc. has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Tampa,
State of Florida as of May 6, 1999.
Global Imaging Systems, Inc.
/s/ Thomas S. Johnson
By: ____________________________________
Thomas S. Johnson
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Thomas S. Johnson and Raymond Schilling, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, from such person and in each person's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statement or any
registration statement relating to this registration statement under Rule 462
and to file the same, with all exhibits thereto and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or his or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities indicated
as of May 6, 1999.
Name Title
---- -----
/s/ Thomas S. Johnson President, Chief Executive Officer
- --------------------------- and Director (Principal Executive
Thomas S. Johnson Officer)
/s/ Raymond Schilling Vice President, Chief Financial
- --------------------------- Officer,Secretary and
Raymond Schilling Treasurer(Principal Financial and
Accounting Officer)
/s/ Carl D. Thoma Chairman of the Board
- ---------------------------
Carl D. Thoma
/s/ L. Neal Berney Director
- ---------------------------
L. Neal Berney
/s/ Bruce D. Gorchow Director
- ---------------------------
Bruce D. Gorchow
/s/ William C. Kessinger Director
- ---------------------------
William C. Kessinger
/s/ Edward N. Patrone Director
- ---------------------------
Edward N. Patrone
II-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Tampa, State of Florida
as of May 6, 1999.
American Photocopy Equipment Company of
Pittsburgh
/s/ Matthew G. Swider
By: ________________________________________
Matthew G. Swider
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Thomas S. Johnson and Raymond Schilling, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, from such person and in each person's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statement or any
registration statement relating to this registration statement under Rule 462
and to file the same, with all exhibits thereto and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or his or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities indicated
as of May 6, 1999.
Name Title
---- -----
/s/ Matthew G. Swider President and Director (Principal
- --------------------------- Executive Officer)
Matthew G. Swider
/s/ Raymond Schilling Vice President, Assistant
- --------------------------- Secretary and Director (Principal
Raymond Schilling Financial and Accounting Officer)
/s/ Thomas S. Johnson Chairman of the Board
- ---------------------------
Thomas S. Johnson
II-10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Tampa, State of Florida
as of May 6, 1999.
Berney, Inc.
/s/ L. Neal Berney
By: ____________________________________
L. Neal Berney
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Thomas S. Johnson and Raymond Schilling, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, from such person and in each person's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statement or any
registration statement relating to this registration statement under Rule 462
and to file the same, with all exhibits thereto and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or his or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities indicated
as of May 6, 1999.
Name Title
---- -----
/s/ L. Neal Berney President and Director (Principal
- --------------------------- Executive Officer)
L. Neal Berney
/s/ Raymond Schilling Vice President and Director
- --------------------------- (Principal Financial and
Raymond Schilling Accounting Officer)
/s/ Thomas S. Johnson Chairman of the Board
- ---------------------------
Thomas S. Johnson
II-11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City Tampa, State of Florida as
of May 6, 1999.
Business Equipment Unlimited
/s/ Douglas A. Timm
By: ____________________________________
Douglas A. Timm
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Thomas S. Johnson and Raymond Schilling, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, from such person and in each person's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statement or any
registration statement relating to this registration statement under Rule 462
and to file the same, with all exhibits thereto and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or his or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities indicated
as of May 6, 1999.
Name Title
---- -----
/s/ Douglas A. Timm President (Principal Executive
- --------------------------- Officer)
Douglas A. Timm
/s/ Raymond Schilling Vice President, Secretary,
- --------------------------- Treasurer and Director (Principal
Raymond Schilling Financial and Accounting Officer)
/s/ Thomas S. Johnson Chairman of the Board
- ---------------------------
Thomas S. Johnson
/s/ Peter W. Dinan Director
- ---------------------------
Peter W. Dinan
II-12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Tampa, State of Florida
as of May 6, 1999.
Cameron Office Products, Inc.
/s/ Dennis Cameron
By: ____________________________________
Dennis Cameron
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Thomas S. Johnson and Raymond Schilling, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, from such person and in each person's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statement or any
registration statement relating to this registration statement under Rule 462
and to file the same, with all exhibits thereto and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or his or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities indicated
as of May 6, 1999.
Name Title
---- -----
/s/ Dennis Cameron President (Principal Executive
- --------------------------- Officer)
Dennis Cameron
/s/ Raymond Schilling Vice President and Director
- --------------------------- (Principal Financial and
Raymond Schilling Accounting Officer)
/s/ Thomas S. Johnson Chairman of the Board
- ---------------------------
Thomas S. Johnson
/s/ Peter W. Dinan Director
- ---------------------------
Peter W. Dinan
II-13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Tampa, State of Florida
as of May 6, 1999.
Capitol Copy Products, Inc.
/s/ Stephen Rolla
By: ____________________________________
Stephen Rolla
President and Treasurer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Thomas S. Johnson and Raymond Schilling, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, from such person and in each person's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statement or any
registration statement relating to this registration statement under Rule 462
and to file the same, with all exhibits thereto and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or his or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities indicated
as of May 6, 1999.
Name Title
---- -----
/s/ Stephen Rolla President and Treasurer (Principal
- --------------------------- Executive Officer)
Stephen Rolla
/s/ Raymond Schilling Vice President and Director
- --------------------------- (Principal Financial and
Raymond Schilling Accounting Officer)
/s/ Thomas S. Johnson Chairman of the Board
- ---------------------------
Thomas S. Johnson
II-14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Tampa, State of Florida
as of May 6, 1999.
Capitol Office Solutions, Inc.
/s/ Stephen Rolla
By: ____________________________________
Stephen Rolla
President and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Thomas S. Johnson and Raymond Schilling, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, from such person and in each person's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statement or any
registration statement relating to this registration statement under Rule 462
and to file the same, with all exhibits thereto and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or his or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities indicated
as of May 6, 1999.
Name Title
---- -----
/s/ Stephen Rolla President, Chief Executive Officer
- --------------------------- and Director (Principal Executive
Stephen Rolla Officer)
/s/ Raymond Schilling Vice President, Secretary,
- --------------------------- Treasurer and Director (Principal
Raymond Schilling Financial and Accounting Officer)
/s/ Thomas S. Johnson Chairman of the Board
- ---------------------------
Thomas S. Johnson
II-15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Tampa, State of Florida
as of May 6, 1999.
Carr Business Machines of Great Neck,
Inc.
/s/ Paul A. Schulman
By: ____________________________________
Paul A. Schulman
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Thomas S. Johnson and Raymond Schilling, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, from such person and in each person's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statement or any
registration statement relating to this registration statement under Rule 462
and to file the same, with all exhibits thereto and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or his or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities indicated
as of May 6, 1999.
Name Title
---- -----
/s/ Paul A. Schulman President and Director (Principal
- --------------------------- Executive Officer)
Paul A. Schulman
/s/ Raymond Schilling Vice President, Secretary,
- --------------------------- Treasurer and Director (Principal
Raymond Schilling Financial and Accounting Officer)
/s/ Thomas S. Johnson Chairman of the Board
- ---------------------------
Thomas S. Johnson
II-16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Tampa, State of Florida
as of May 6, 1999.
Centre Business Products, Inc.
/s/ C. Arnold McClure
By: ____________________________________
C. Arnold McClure
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Thomas S. Johnson and Raymond Schilling, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, from such person and in each person's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statement or any
registration statement relating to this registration statement under Rule 462
and to file the same, with all exhibits thereto and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or his or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities indicated
as of May 6, 1999.
Name Title
---- -----
/s/ C. Arnold McClure President (Principal Executive
- --------------------------- Officer)
C. Arnold McClure
/s/ Raymond Schilling Vice President and Director
- --------------------------- (Principal Financial and
Raymond Schilling Accounting Officer)
/s/ Thomas S. Johnson Chairman of the Board and Chairman
- --------------------------- of the Board of Southern Business
Thomas S. Johnson Communications, Inc., the
registrant's sole stockholder
/s/ Mark M. Lloyd Director
- ---------------------------
Mark M. Lloyd
II-17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Tampa, State of Florida
as of May 6, 1999.
Connecticut Business Systems, Inc.
/s/ Michael E. Shea, Jr.
By: ____________________________________
Michael E. Shea, Jr.
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Thomas S. Johnson and Raymond Schilling, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, from such person and in each person's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statement or any
registration statement relating to this registration statement under Rule 462
and to file the same, with all exhibits thereto and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or his or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities indicated
as of May 6, 1999.
Name Title
---- -----
/s/ Michael E. Shea, Jr. President and Director (Principal
- --------------------------- Executive Officer)
Michael E. Shea, Jr.
/s/ Raymond Schilling Vice President, Secretary,
- --------------------------- Treasurer and Director (Principal
Raymond Schilling Financial and Accounting Officer)
/s/ Thomas S. Johnson Chairman of the Board
- ---------------------------
Thomas S. Johnson
II-18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Tampa, State of Florida
as of May 6, 1999.
Conway Office Products, Inc.
/s/ Peter W. Dinan
By: ____________________________________
Peter W. Dinan
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Thomas S. Johnson and Raymond Schilling, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, from such person and in each person's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statement or any
registration statement relating to this registration statement under Rule 462
and to file the same, with all exhibits thereto and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or his or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities indicated
as of May 6, 1999.
Name Title
---- -----
/s/ Peter W. Dinan President and Director (Principal
- --------------------------- Executive Officer)
Peter W. Dinan
/s/ Raymond Schilling Vice President, Asst. Secretary,
- --------------------------- Asst. Treasurer and Director
Raymond Schilling (Principal Financial and
Accounting Officer)
/s/ Thomas S. Johnson Chairman of the Board
- ---------------------------
Thomas S. Johnson
/s/ James B. Conway Director
- ---------------------------
James B. Conway
II-19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Tampa, State of Florida
as of May 6, 1999.
Copy Service and Supply, Inc.
/s/ Terry K. Smith
By: ____________________________________
Terry K. Smith
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Thomas S. Johnson and Raymond Schilling, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, from such person and in each person's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statement or any
registration statement relating to this registration statement under Rule 462
and to file the same, with all exhibits thereto and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or his or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities indicated
as of May 6, 1999.
Name Title
---- -----
/s/ Terry K. Smith President and Director (Principal
- --------------------------- Executive Officer)
Terry K. Smith
/s/ Raymond Schilling Vice President, Assistant
- --------------------------- Secretary and Director (Principal
Raymond Schilling Financial and Accounting Officer)
/s/ Thomas S. Johnson Chairman of the Board
- ---------------------------
Thomas S. Johnson
II-20
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Tampa, State of Florida
as of May 6, 1999.
COS Financial, Inc.
/s/ Stephen Rolla
By: ____________________________________
Stephen Rolla
President and Treasurer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Thomas S. Johnson and Raymond Schilling, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, from such person and in each person's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statement or any
registration statement relating to this registration statement under Rule 462
and to file the same, with all exhibits thereto and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or his or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities indicated
as of May 6, 1999.
Name Title
---- -----
/s/ Stephen Rolla President, Treasurer and Director
- --------------------------- (Principal Executive Officer)
Stephen Rolla
/s/ Raymond Schilling Vice President and Director
- --------------------------- (Principal Financial and
Raymond Schilling Accounting Officer)
/s/ Thomas S. Johnson Chairman of the Board
- ---------------------------
Thomas S. Johnson
II-21
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Tampa, State of Florida
as of May 6, 1999.
Distinctive Business Products, Inc.
/s/ John R. Cosich
By: ____________________________________
John R. Cosich
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Thomas S. Johnson and Raymond Schilling, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, from such person and in each person's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statement or any
registration statement relating to this registration statement under Rule 462
and to file the same, with all exhibits thereto and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or his or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities indicated
as of May 6, 1999
Name Title
---- -----
/s/ John R. Cosich President and Director (Principal
- --------------------------- Executive Officer)
John R. Cosich
/s/ Raymond Schilling Vice President, Secretary,
- --------------------------- Treasurer and Director (Principal
Raymond Schilling Financial and Accounting Officer)
/s/ Thomas S. Johnson Chairman of the Board
- ---------------------------
Thomas S. Johnson
II-22
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Tampa, State of Florida
as of May 6, 1999.
Duplicating Specialties, Inc.
/s/ Thomas Metzler
By: ____________________________________
Thomas Metzler
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Thomas S. Johnson and Raymond Schilling, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, from such person and in each person's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statement or any
registration statement relating to this registration statement under Rule 462
and to file the same, with all exhibits thereto and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or his or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities indicated
as of May 6, 1999.
Name Title
---- -----
/s/ Thomas Metzler President (Principal Executive
- --------------------------- Officer)
Thomas Metzler
/s/ Raymond Schilling Vice President, Chief Financial
- --------------------------- Officer,Assistant Secretary,
Raymond Schilling Treasurer and Director(Principal
Financial and Accounting Officer)
/s/ Carl D. Thoms Director
- ---------------------------
Carl D. Thoms
/s/ Thomas S. Johnson Chairman of the Board
- ---------------------------
Thomas S. Johnson
II-23
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Tampa, State of Florida
as of May 6, 1999.
Eastern Copy Products, Inc.
/s/ Peter W. Dinan
By: ____________________________________
Peter W. Dinan
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Thomas S. Johnson and Raymond Schilling, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, from such person and in each person's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statement or any
registration statement relating to this registration statement under Rule 462
and to file the same, with all exhibits thereto and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or his or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities indicated
as of May 6, 1999.
Name Title
---- -----
/s/ Peter W. Dinan President and Director (Principal
- --------------------------- Executive Officer)
Peter W. Dinan
/s/ Raymond Schilling Vice President, Assistant
- --------------------------- Secretary and Director (Principal
Raymond Schilling Financial and Accounting Officer)
/s/ Thomas S. Johnson Chairman of the Board
- ---------------------------
Thomas S. Johnson
II-24
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Tampa, State of Florida
as of May 6, 1999.
Electronic Systems, Inc.
/s/ William G. Kamarek
By: ____________________________________
William G. Kamarek
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Thomas S. Johnson and Raymond Schilling, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, from such person and in each person's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statement or any
registration statement relating to this registration statement under Rule 462
and to file the same, with all exhibits thereto and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or his or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities indicated
as of May 6, 1999.
Name Title
---- -----
/s/ William G. Kamarek President and Director (Principal
- --------------------------- Executive Officer)
William G. Kamarek
/s/ Raymond Schilling Vice President, Assistant
- --------------------------- Secretary and Director (Principal
Raymond Schilling Financial and Accounting Officer)
/s/ Thomas S. Johnson Chairman of the Board
- ---------------------------
Thomas S. Johnson
II-25
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Tampa, State of Florida
as of May 6, 1999.
Electronic Systems of Richmond, Inc.
/s/ Timothy D. McCulloch
By: ____________________________________
Timothy D. McCulloch
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Thomas S. Johnson and Raymond Schilling, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, from such person and in each person's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statement or any
registration statement relating to this registration statement under Rule 462
and to file the same, with all exhibits thereto and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or his or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities indicated
as of May 6, 1999.
Name Title
---- -----
/s/ Timothy D. McCulloch President and Director (Principal
- --------------------------- Executive Officer)
Timothy D. McCulloch
/s/ Raymond Schilling Vice President, Assistant
- --------------------------- Secretary and Director (Principal
Raymond Schilling Financial and Accounting Officer)
/s/ Thomas S. Johnson Chairman of the Board
- ---------------------------
Thomas S. Johnson
/s/ William G. Kamarek Director
- ---------------------------
William G. Kamarek
II-26
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Tampa, State of Florida
as of May 6, 1999.
FELCO Office Systems, Inc.
/s/ Randall E. Davidson
By: ____________________________________
Randall E. Davidson
President and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Thomas S. Johnson and Raymond Schilling, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, from such person and in each person's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statement or any
registration statement relating to this registration statement under Rule 462
and to file the same, with all exhibits thereto and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or his or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities indicated
as of May 6, 1999.
Name Title
/s/ Randall E. Davidson President and Chief Executive
- --------------------------- Officer (Principal Executive
Randall E. Davidson Officer)
/s/ Raymond Schilling Vice President, Secretary and
- --------------------------- Director(Principal Financial and
Raymond Schilling Accounting Officer)
/s/ Thomas S. Johnson Chairman of the Board
- ---------------------------
Thomas S. Johnson
/s/ Dana Davis Director
- ---------------------------
Dana Davis
II-27
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Tampa, State of Florida
as of May 6, 1999.
Global Imaging Finance Company
/s/ Thomas S. Johnson
By: ____________________________________
Thomas S. Johnson
President and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Thomas S. Johnson and Raymond Schilling, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, from such person and in each person's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statement or any
registration statement relating to this registration statement under Rule 462
and to file the same, with all exhibits thereto and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or his or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities indicated
as of May 6, 1999.
Name Title
---- -----
/s/ Thomas S. Johnson President, Chief Executive Officer
- --------------------------- and Chairman of the Board
Thomas S. Johnson (Principal Executive Officer)
/s/ Raymond Schilling Vice President and Director
- --------------------------- (Principal Financial and
Raymond Schilling Accounting Officer)
/s/ Carl D. Thoma Director
- ---------------------------
Carl D. Thoma
II-28
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Tampa, State of Florida
as of May 6, 1999.
Global Imaging Operations, Inc.
/s/ Thomas S. Johnson
By: ____________________________________
Thomas S. Johnson
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Thomas S. Johnson and Raymond Schilling, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, from such person and in each person's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statement or any
registration statement relating to this registration statement under Rule 462
and to file the same, with all exhibits thereto and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or his or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities indicated
as of May 6, 1999.
Name Title
---- -----
/s/ Thomas S. Johnson President and Chairman of the
- --------------------------- Board (Principal Executive
Thomas S. Johnson Officer)
/s/ Raymond Schilling Vice President, Treasurer and
- --------------------------- Director (Principal Financial and
Raymond Schilling Accounting Officer)
/s/ Carl D. Thoma Director
- ---------------------------
Carl D. Thoma
II-29
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Tampa, State of Florida
as of May 6, 1999.
ProView, Inc.
/s/ Neil C. Davis
By: ____________________________________
Neil C. Davis
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Thomas S. Johnson and Raymond Schilling, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, from such person and in each person's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statement or any
registration statement relating to this registration statement under Rule 462
and to file the same, with all exhibits thereto and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or his or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities indicated
as of May 6, 1999.
Name Title
---- -----
/s/ Neil C. Davis President (Principal Executive
- --------------------------- Officer)
Neil C. Davis
/s/ Raymond Schilling Vice President and Director
- --------------------------- (Principal Financial and
Raymond Schilling Accounting Officer)
/s/ Thomas S. Johnson Chairman of the Board
- ---------------------------
Thomas S. Johnson
/s/ Mark M. Lloyd Director
- ---------------------------
Mark M. Lloyd
II-30
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Tampa, State of Florida
as of May 6, 1999.
Quality Business Systems, Inc.
/s/ Thomas Metzler
By: ____________________________________
Thomas Metzler
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Thomas S. Johnson and Raymond Schilling, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, from such person and in each person's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statement or any
registration statement relating to this registration statement under Rule 462
and to file the same, with all exhibits thereto and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or his or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities indicated
as of May 6, 1999.
Name Title
---- -----
/s/ Thomas Metzler President and Director (Principal
- --------------------------- Executive Officer)
Thomas Metzler
/s/ Raymond Schilling Vice President, Chief Financial
- --------------------------- Officer, Assistant Secretary,
Raymond Schilling Treasurer and Director (Principal
Financial and Accounting Officer)
/s/ Thomas S. Johnson Chairman of the Board
- ---------------------------
Thomas S. Johnson
II-31
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Tampa, State of Florida
as of May 6, 1999.
Southern Business Communications, Inc.
/s/ Mark M. Lloyd
By: ____________________________________
Mark M. Lloyd
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Thomas S. Johnson and Raymond Schilling, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, from such person and in each person's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statement or any
registration statement relating to this registration statement under Rule 462
and to file the same, with all exhibits thereto and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or his or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities indicated
as of May 6, 1999.
Name Title
---- -----
/s/ Mark M. Lloyd President and Director (Principal
- --------------------------- Executive Officer)
Mark M. Lloyd
/s/ Raymond Schilling Vice President, Secretary,
- --------------------------- Treasurer and Director (Principal
Raymond Schilling Financial and Accounting Officer)
/s/ Thomas S. Johnson Chairman of the Board
- ---------------------------
Thomas S. Johnson
II-32
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Tampa, State of Florida
as of May 6, 1999.
Southern Copy Systems, Inc.
/s/ L. Neal Berney
By: ____________________________________
L. Neal Berney
Vice Chairman
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Thomas S. Johnson and Raymond Schilling, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, from such person and in each person's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statement or any
registration statement relating to this registration statement under Rule 462
and to file the same, with all exhibits thereto and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or his or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities indicated
as of May 6, 1999.
Name Title
---- -----
/s/ L. Neal Berney Vice Chairman and Director
- --------------------------- (Principal Executive Officer)
L. Neal Berney
/s/ Raymond Schilling Vice President and Director
- --------------------------- (Principal Financial and
Raymond Schilling Accounting Officer)
/s/ Thomas S. Johnson Chairman of the Board
- ---------------------------
Thomas S. Johnson
II-33
<PAGE>
REPORT OF INDEPENDENT AUDITORS ON SCHEDULE
We have audited the consolidated financial statements of Global imaging
Systems, Inc. as of March 31, 1996, 1997 and 1998, and for each of the three
years in the period ended March 31, 1998, and have issued our report thereon
dated May 6, 1998 (included elsewhere in this Registration Statement). Our
audits also included the financial statement schedule listed in item 21(b) of
this Registration Statement. This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
/s/ Ernst & Young LLP
Tampa, Florida
May 6, 1998
II-34
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
Reserve for returns and allowances and bad debts:
<TABLE>
<CAPTION>
Additions
-----------------------
Balance at the Charged to Charged to Balance at the
Beginning of Costs and Other End of
the period Expenses Accounts(1) Deductions the period
-------------- ---------- ------------ ---------- --------------
<S> <C> <C> <C> <C> <C>
Period Ended:
March 31, 1996........ $137,000 $ 34,498 $ 58,666 $ 30,164 $200,000
March 31, 1997........ $200,000 $ 30,824 $147,005 $ 68,785 $309,044
March 31, 1998........ $309,044 $289,879 $532,689 $261,068 $870,544
</TABLE>
Reserve for Excess and Slow-Moving Inventory:
<TABLE>
<CAPTION>
Additions
-----------------------
Balance at the Charged to Charged to Balance at the
Beginning of Costs and Other End of
the period Expenses Accounts(1) Deductions the period
-------------- ---------- ------------ ---------- --------------
<S> <C> <C> <C> <C> <C>
Period Ended:
March 31, 1996........ $256,778 $197,248 $ 98,000 $419,000 $133,026
March 31, 1997........ $133,026 $256,280 $340,000 $403,207 $326,099
March 31, 1998........ $326,099 $868,802 $686,877 $606,758 $1,295,020
</TABLE>
- --------
(1) These amounts primarily represent reserve balances acquired in connection
with business combinations.
II-35
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
1.1 Note Purchase Agreement, dated March 3, 1999, by and among Global, the
subsidiary guarantors, First Union Capital Markets Corp., Prudential
Securities Incorporated, Raymond James & Associates, Inc. and Scotia
Capital Markets (USA) Inc.
3.1a Amended and Restated Certificate of Incorporation of Global Imaging
Systems, Inc.(1)
3.1b Amended and Restated Bylaws of Global Imaging Systems, Inc.(1)
3.2a Certificate of Incorporation of American Photocopy Equipment Company
of Pittsburgh.
3.2b Bylaws, as amended of American Photocopy Equipment Company of
Pittsburgh.
3.3a Certificate of Incorporation, as amended of Berney, Inc.
3.3b Bylaws, as amended of Berney, Inc., as amended.
3.4a Articles of Incorporation of Business Equipment Unlimited.
3.4b Bylaws, as amended of Business Equipment Unlimited.
3.5a Articles of Organization of Cameron Office Products, Inc.
3.5b Bylaws, as amended of Cameron Office Products, Inc.
3.6a Certificate of Incorporation of Capitol Copy Products, Inc.
3.6b Bylaws, as amended of Capitol Copy Products, Inc.
3.7a Certificate of Incorporation of Capitol Office Solutions, Inc.
3.7b Bylaws, as amended of Capitol Office Solutions, Inc.
3.8a Certificate of Incorporation of Carr Business Machines of Great Neck
Inc.
3.8b Bylaws, as amended of Carr Business Machines of Great Neck Inc.
3.9a Articles of Incorporation of Centre Business Products, Inc.
3.9b Bylaws, as amended of Centre Business Products, Inc.
3.10a Certificate of Incorporation of Connecticut Business Systems, Inc.
3.10b Bylaws of Connecticut Business Systems, Inc.
3.11a Record of Organization, as amended of Conway Office Products, Inc.
3.11b Bylaws, as amended of Conway Office Products, Inc.
3.12a Articles of Incorporation of Copy Service and Supply, Inc.
3.12b Bylaws, as amended of Copy Service and Supply, Inc.
3.13a Articles of Incorporation of COS Financial, Inc.
3.13b Bylaws, as amended of COS Financial, Inc.***
3.14a Articles of Incorporation of Distinctive Business Products, Inc.
3.14b Bylaws, as amended of Distinctive Business Products, Inc.
3.15a Restated Articles of Incorporation of Duplicating Specialties, Inc.
d/b/a Copytronix.
3.15b Bylaws, as amended of Duplicating Specialties, Inc. d/b/a Copytronix.
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
3.16a Certificate of Incorporation, as amended of Eastern Copy Products,
Inc.
3.16b Bylaws, as amended of Eastern Copy Products, Inc.
3.17a Articles of Incorporation of Electronic Systems, Inc.
3.17b Bylaws, as amended of Electronic Systems, Inc.
3.18a Articles of Incorporation of Electronic Systems of Richmond, Inc.
3.18b Bylaws of Electronic Systems of Richmond, Inc.
3.19a Articles of Incorporation, as amended of Felco Office Systems, Inc.
3.19b Bylaws, as amended of Felco Office Systems, Inc.
3.20a Certificate of Incorporation of Global Imaging Finance Company.
3.20b Bylaws, as amended of Global Imaging Finance Company.
3.21a Certificate of Incorporation of Global Imaging Operations, Inc.
3.21b Bylaws, as amended of Global Imaging Operations, Inc.
3.22a Articles of Incorporation of ProView, Inc.
3.22b Bylaws, as amended of ProView, Inc.
3.23a Articles of Incorporation of Quality Business Systems, Inc.
3.23b Bylaws, as amended of Quality Business Systems, Inc.
3.24a Restated Articles of Incorporation of Southern Business
Communications, Inc.
3.24b Bylaws, as amended of Southern Business Communications, Inc.
3.25a Articles of Incorporation of Southern Copy Systems, Inc.***
3.25b Bylaws, as amended of Southern Copy Systems, Inc.
4.1 Indenture dated as of March 8, 1999 between Global, the subsidiary
guarantors and United States Trust Company of New York, as Trustee,
relating to the 10 3/4% Senior Subordinated Notes Due 2007.
4.2 Form of Exchange Note. (Included in Indenture filed as Exhibit 4.1.)
4.3 Credit Agreement, dated as of July 31, 1998, by and among the Company
and its subsidiaries, as Borrowers, the Lenders referred to therein,
First Union National Bank, as Administrative Agent, and ScotiaBanc,
Inc., as Documentation Agent.(4)
5.1 Opinion of Hogan & Hartson L.L.P.***
10.1 Registration Agreement, dated as of June 9, 1994, as amended, by and
among Global and the stockholders identified therein. (Incorporated by
reference to Global's Registration Statement on Form S-1, No. 333-
48103, as filed on March 17, 1998.)
10.2 Termination Agreement, dated as of May 27, 1998, by and among Global;
FUND IV; Golder, Thoma, Cressey, Rauner, Inc. and the stockholders
identified therein.(2)
10.3 Executive Agreement, dated as of June 9, 1994, as amended, by and
among Global,
Thomas S. Johnson and FUND IV.(2)*
10.4 Executive Agreement, dated as of June 9, 1994, as amended, by and
among Global, Raymond Schilling and FUND IV.(2)*
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
10.5 Executive Agreement, dated as of January 1, 1995, as amended, by and
among Global, H. Michael Mueller and FUND IV.(2)*
10.6 Executive Agreement, dated as of March 31, 1997, by and among Global,
Alfred N. Vieira and FUND IV.(2)*
10.7 1998 Stock Option and Incentive Plan.(2)*
10.7a Form of Incentive Stock Option Agreement.*
10.7b Form of Non-Qualified Stock Option Agreement.*
10.7c Form of Director's Stock Option Agreement.*
10.8 Form of Supply Agreement between the Company and Konica.(3)**
10.9 Non-Exclusive Third Party Lessor Agreement, dated July 16, 1996, as
amended, by and between Global and General Electric Capital
Corporation.(3)**
10.10 License Agreement, dated as of July 31, 1996, as amended, between
Global and Copelco Capital, Inc.(3)**
10.11 Non-Exclusive Third Party Lessor Agreement, dated July 26, 1996, as
amended, by and between Global and Tokai Financial Services, Inc.(3)**
10.12 Stock Purchase Agreement, dated as of June 27, 1996 by and among
Global as Buyer, Copy Service & Supply, Inc., Office Furniture
Concepts, Inc., CSS Leasing, LLC and Terry K. Smith and
Crystal E. Smith as Sellers.(4)
10.13 Stock Purchase Agreement, dated as of November 13, 1996 by and among
Global as Buyer and Southern Business Communications, Inc. and Mark M.
Lloyd and Arthur E. Kreps as Sellers.(4)**
10.14 Asset Purchase Agreement, dated as of November 13, 1996 by and among
ATS-Atlanta One, LLC as Seller, ATS-Atlanta One, Inc. as Purchaser,
and ATS-Atlanta, Inc., Mark M. Lloyd and
Arthur E. Kreps.(4)
10.15 Stock Purchase Agreement, dated as of August 7, 1997 by and among
Global, ESI Acquisition Corporation as Buyer, Electronic Systems, Inc.
("ESI") and the Shareholders of ESI as Sellers.(4)**
10.16 Stock Purchase Agreement, dated as of August 29, 1997 by and among
Global, Conway Office Products as Buyer, Eastern Copy Products, Inc.
and Michael E. Kleinhans as Seller.(4)
10.17 Stock Purchase Agreement, dated as of September 30, 1997 by and among
Global as Buyer, Duplicating Specialties, Inc. (d/b/a Copytronix) and
Dean Groves as Seller.(4)**
10.18 Stock Purchase Agreement, dated as of September 30, 1997 by and among
Global as Buyer, Quality Business Systems, Inc. and Gary Stevens as
Seller.(4)**
10.19 Stock Purchase Agreement, dated as of September 30, 1997 by and among
Global as Buyer, Cascade Office Systems, Inc. and Fred Woodard as
Seller.(4)**
10.20 Stock Purchase Agreement, dated as of December 23, 1997 by and among
Global, ESI as Buyer, Electronic Systems of Richmond, Inc. ("ESRI")
and the Shareholders of ESRI as Seller.(4)**
10.21 Stock Purchase Agreement, dated as of December 31, 1997, as assigned,
by and among Global, Connecticut Business Systems, Inc. as Buyer, and
the Company, Michael E. Shea, Jr. and Peter Wenzke as Sellers.(4)**
10.22 Asset Purchase Agreement, dated as of February 26, 1998 by and among
Connecticut Systems, Inc., Bloom's Business Systems, a division of
Bloom's Incorporated, the Assets and Bloom's Incorporated as
Seller.(4)**
10.23 Stock Purchase Agreement, dated as of November 13, 1996, by and among
Global as Buyer, Southern Business Communications of D.C., Inc., and
George Gough, Mark M. Lloyd, and Arthur E. Kreps as Sellers.(4)
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
10.24 Equity Subscription Agreement, dated as of March 27, 1998, by and
among Global, FUND IV, JNL and Thomas S. Johnson.(2)
10.25 Form of Indemnification Agreement between Global and its directors and
executive officers.(1)*
10.26 Stock Purchase Agreement, dated as of August 31, 1998, by and among
Global and Southern Business Communications, Inc. ("SBC") as Buyer,
Centre Business Products, Inc., and the shareholders thereof, as
Sellers. (4)
10.27 Stock Purchase Agreement, dated as of September 16, 1998, by and among
Global, Carr Acquisition Corporation, as buyer, Carr Business Machines
of Great Neck Inc. (d/b/a Carr Business Systems) and its Shareholders,
as Sellers. (Incorporated by reference to Global's Current Report on
Form 8-K, as filed with the SEC on September 29, 1998.)
10.28 Stock Purchase Agreement, dated as of September 28, 1998, by and among
Global and SBC as Buyer, ProView, Inc., and the Shareholders thereof,
as Sellers. (4)
10.29 Stock Purchase Agreement, dated as of November 19, 1998, by and among
Global as Buyer, Capitol Office Solutions, Inc., FUND IV, Armen
Manoogian, and the other persons named therein as Sellers.
(Incorporated by reference to Global's Current Report on Form 8-K, as
filed with the SEC on January 5, 1998.)
10.30 Stock Purchase Agreement, dated as of December 22, 1998, by and among
Global as Buyer, Distinctive Business Products, Inc., and the
shareholders thereof, as Sellers. (Incorporated by reference to
Global's Quarterly Report on Form 10-Q filed with the SEC on February
16, 1999.)
10.31 Merger Agreement and Plan of Merger, dated as of February 26, 1999, by
and among Global, Dahill Acquisition, Inc., Dahill Industries, Inc.
and Randall E. Davidson.
10.32 Registration Rights Agreement, dated March 8, 1999, by and among
Global,the subsidiary guarantors, First Union Capital Markets Corp.,
Prudential Securities Incorporated, Raymond James & Associates, Inc.
and Scotia Capital Markets (USA) Inc.
11.1 Statement regarding computation of per share earnings (See
Consolidated Statements of Operations for the years ended March 31,
1996, 1997 and 1998 appearing herein and Note 7 to the Notes to
Consolidated Financial Statements for the same period).
12.1 Statement regarding computation of ratios.
21.1 Subsidiaries of Global.
23.1 The consent of Ernst & Young LLP.
23.2 The consent of Ernst & Young LLP.
23.3 The consent of Pasquale & Bowers, LLP.
23.4 The consent of Moss Adams LLP.
23.5 The consent of Edmondson, LedBetter & Ballard, L.L.P.
23.6 The consent of Arthur Andersen LLP.
23.7 The consent of Joseph D. Kalicka & Company, LLP.
23.8 The consent of Margolin, Winer & Evens LLP.
23.9 The consent of Deloitte & Touche LLP, LLP.
23.10 The consent of Pacific Media Associates.
23.11 The consent of International Data Corporation.
23.12 The consent of AIIM International.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
23.13 The consent of Industry Analysts, Inc.
24.1 Powers of Attorney (included on the signature pages of the
Registration Statement).
25.1 Form T-1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939, as amended, of United States Trust Company, as
trustee.
99.1 Form of Senior Subordinated Note Letter of Transmittal.
99.2 Form of Senior Subordinated Note Guaranteed Delivery.
99.3 Form of Senior Subordinated Note Letter to Brokers, Dealers,
Commercial Banks, Trust Companies and other Nominees.
99.4 Form of Senior Subordinated Note Letter to Clients.
99.5 Section 145 of the Delaware General Corporation Law.
99.6 Sections 10-2B-8.51 to 8.58 of the Alabama Business Corporation Act.
99.7 Section 719 of the Maine Business Corporation Act.
99.8 Section 67 of the Massachusetts Business Corporation Law.
99.9 Sections 402(b) and 721 to 726 of the Business Corporation Code of the
State of New York.
99.10 Sections 1741 to 1750 of the Pennsylvania Business Corporation Law.
99.11 Sections 33-771 to 33-778 of the Connecticut Business Corporation Act.
99.12 Sections 293-A:8.50 to 293-A:8.58 of the New Hampshire Business
Corporation Act.
99.13 Sections 55-8-50 to 55-8-58 of the North Carolina Business Corporation
Act.
99.14 Section 2-418 of the General Corporation Law of the State of Maryland.
99.15 Section 8.75 of the Illinois Business Corporation Act.
99.16 Section 60.047(2)(d) and 60.367 to 60.414 of the Oregon Business
Corporation Act.
99.17 Sections 13.1-692.1, 13.1-696 to 13.1-704 of the Virginia Stock
Corporation Act.
99.18 Article 2.02-1 of the Texas Business Corporation Act and Article 1302-
7.06 of the Texas Miscellaneous Corporation Laws Act.
99.19 Sections 23B.08.500 to 23B.08.600 the Washington Business Corporation
Act.
99.20 Sections 14-2-202(b)(4) and 14-2-850 to 14-2-859 of the Georgia
Business Corporation Code.
</TABLE>
- --------
(1) Incorporated by reference to Global's Registration Statement on Form S-1,
No. 333-48103, as filed with the SEC on May 8, 1998.
(2) Incorporated by reference to Global's Registration Statement on Form S-1,
No. 333-48103, as filed with the SEC on June 11, 1998.
(3) Incorporated by reference to Global's Registration Statement on Form S-1,
No. 333-48103, as filed with the SEC on March 27, 1998.
(4) Incorporated by reference to Global's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1998.
* Management contract or compensatory plan, contract or arrangement.
** Confidential treatment has been granted for portions of this exhibit.
*** To be filed by amendment.
5
<PAGE>
EXECUTION COPY
EXHIBIT 1.1
GLOBAL IMAGING SYSTEMS, INC.
$100,000,000
10 3/4% Senior Subordinated Notes Due 2007
NOTE PURCHASE AGREEMENT
-----------------------
March 3, 1999
FIRST UNION CAPITAL MARKETS CORP.
PRUDENTIAL SECURITIES INCORPORATED
RAYMOND JAMES & ASSOCIATES, INC.
SCOTIA CAPITAL MARKETS (USA) INC.
c/o First Union Capital Markets Corp.
301 South College Street, TW-10
Charlotte, North Carolina 28288-0606
Ladies and Gentlemen:
GLOBAL IMAGING SYSTEMS, INC., a Delaware corporation (the "Company")
-------
and the Subsidiary Guarantors (as defined below), confirm their agreement with
First Union Capital Markets Corp., Prudential Securities Incorporated, Raymond
James & Associates, Inc. and Scotia Capital Markets (USA) Inc. (collectively the
"Initial Purchasers") as set forth below.
------------------
1. Notes. The Company proposes to issue and sell (the "Initial
Placement") to the Initial Purchasers, $100,000,000 principal amount of its 10
3/4 % Senior Subordinated Notes Due 2007 (the "Notes"). The Notes will be
-----
unconditionally guaranteed (the "Guarantees") on an unsecured, senior
----------
subordinated basis by each of the Subsidiary Guarantors. The Notes and the
Guarantees are to be issued under an indenture (the "Indenture") to be dated the
---------
Closing Date (as defined below) between the Company, the Subsidiary Guarantors
and United States Trust Company of New York, as trustee (the "Trustee"). This
-------
Agreement, the registration rights agreement, to be dated the Closing Date,
among the Initial Purchasers, the Company and the Subsidiary Guarantors (the
"Registration Rights Agreement"), the Notes and the Indenture are hereinafter
-----------------------------
collectively referred to as the "Transaction Documents" and the transactions
---------------------
contemplated herein and therein are hereinafter referred to as the
"Transactions".
------------
The sale of the Notes to the Initial Purchasers will be made without
registration of the Notes or the Guarantees under the Securities Act of 1933, as
amended (the "Securities Act"), in reliance upon certain exemptions from the
--------------
registration requirements of the Securities Act. You have advised the Company
that you will offer and sell the Notes purchased by you hereunder in accordance
with Section 4 hereof as soon as you deem advisable.
<PAGE>
In connection with the sale of the Notes, the Company has prepared a
preliminary offering memorandum, dated February 16, 1999 (the "Preliminary
-----------
Memorandum"), and a final offering memorandum, dated March 3, 1999 (the "Final
- ---------- -----
Memorandum"). Each of the Preliminary Memorandum and the Final Memorandum sets
- ----------
forth certain information concerning the Company, the Subsidiary Guarantors, the
Transaction Documents and the Transactions. The Company hereby confirms that it
has authorized the use of the Preliminary Memorandum and the Final Memorandum,
and any amendment or supplement thereto, in connection with the offer and sale
of the Notes by the Initial Purchasers. Unless stated to the contrary, all
references herein to the Final Memorandum are to the Final Memorandum at the
Execution Time (as defined below) and are not meant to include any amendment or
supplement, or any information incorporated by reference therein, subsequent to
the Execution Time.
2. Representations and Warranties of the Company and the Subsidiary
----------------------------------------------------------------
Guarantors. The Company and each Subsidiary Guarantor jointly and severally
- ----------
represent and warrant to, and agree with, each of the several Initial Purchasers
that:
(a) The Preliminary Memorandum, at the date thereof, did not contain
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The Final Memorandum, at the date hereof,
does not and at the Closing Date will not (and any amendment or supplement
thereto, at the date thereof and at the Closing Date, will not), contain any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading; provided, however, that neither the Company nor the
-------- -------
Subsidiary Guarantors make any representation or warranty as to any statements
made in or omissions from the Preliminary Memorandum or the Final Memorandum (or
any amendment or supplement thereto) in reliance upon and in conformity with
information relating to any Initial Purchaser furnished to the Company in
writing by any Initial Purchaser, expressly for use therein.
(b) Schedule 2 lists all of the Company's subsidiaries, the state of
incorporation of each such subsidiary and the jurisdiction in which each such
subsidiary is qualified to do business as a foreign corporation. The Company and
each subsidiary listed on Schedule 2 (each such subsidiary a "Subsidiary
----------
Guarantor" and collectively, the "Subsidiary Guarantors") have been duly
- --------- ---------------------
organized and are validly existing as corporations in good standing under the
laws of their respective jurisdictions of incorporation, except for COS
Financial, Inc. (which failure to be so qualified does not amount to a material
liability or disability to the Company and its subsidiaries, taken as a whole),
and are duly qualified to transact business as foreign corporations and are in
good standing under the laws of all other jurisdictions where the ownership or
leasing of their respective properties or the conduct of their respective
businesses requires such qualification, except where the failure to be so
qualified does not amount to a material liability or disability to the Company
and its subsidiaries, taken as a whole.
(c) The Company and each of its subsidiaries have full power (corporate
and other) to own or lease their respective properties and conduct their
respective businesses as described in the Final Memorandum and the Company and
each Subsidiary Guarantor have full power
2
<PAGE>
(corporate and other) to enter into this Agreement and to carry out all the
terms and provisions hereof to be carried out by them.
(d) The issued shares of capital stock of the Company's subsidiaries
have been duly authorized and validly issued, are fully paid and nonassessable
and are owned beneficially by the Company or its subsidiaries free and clear of
any security interests, liens, encumbrances, equities or claims, other than the
security interests, liens and encumbrances granted to First Union National Bank
("FUNB") in connection with the Company's credit agreement with FUNB.
----
(e) The Company had an authorized, issued and outstanding
capitalization as set forth on page F-3 of the Final Memorandum at the date as
of which such information is provided. All of the issued shares of capital stock
of the Company have been duly authorized and validly issued and are fully paid
and nonassessable. The Notes have been duly authorized and at the Closing Date,
when authenticated in accordance with the provisions of the Indenture, after
payment therefor in accordance herewith, will constitute the valid and legally
binding obligations of the Company. The Guarantee of each Subsidiary Guarantor
has been duly authorized and at the Closing Date will constitute the valid and
legally binding obligation of such Subsidiary Guarantor. No holders of
outstanding shares of capital stock of the Company are entitled as such to any
preemptive or other rights to subscribe for any of the Notes to be sold by the
Company, and no holder of securities of the Company will have any right to
require the Company to register the offer or sale of any securities owned by
such holder under any registration statement required to be filed by the Company
and the Subsidiary Guarantors pursuant to the Registration Rights Agreement.
(f) None of the Company or any of its "Affiliates" (as defined in Rule
----------
501(b) of Regulation D under the Securities Act ("Regulation D")), nor any
person acting on its or their behalf (other than the Initial Purchasers or any
of their respective Affiliates, as to whom the Company and the Subsidiary
Guarantors make no representation or warranty) has, directly or indirectly:
(i) made offers or sales of any security, or solicited offers to
buy any security, which is or will be integrated with the sale of the Notes in a
manner that would require the registration of the Notes under the Securities
Act;
(ii) engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D) in connection with any offer or
sale of the Notes;
(iii) taken any action designed to cause or result in, or that
has constituted or that might reasonably be expected to constitute,
stabilization or manipulation of the price of the Notes;
(iv) paid or agreed to pay to any person any compensation for
soliciting another to purchase any of the Notes;
(v) engaged in any directed selling efforts (as that term is
defined in Regulation S under the Securities Act ("Regulation S")) with respect
------------
to the Notes, and each of the Company
3
<PAGE>
and its Affiliates and any person acting on its or their behalf (other than the
Initial Purchasers or any of their respective Affiliates, as to whom the Company
and the Subsidiary Guarantors make no representation) has complied with the
offering restrictions requirement of Rule 903 under Regulation S.
(g) The Notes satisfy the eligibility requirements of Rule 144A(d)(3)
under the Securities Act.
(h) Assuming the accuracy of the representations and warranties of the
Initial Purchasers in Section 4 hereof and compliance by the Initial Purchasers
with the procedures set forth in Section 4 hereof, it is not necessary, except
as may be required under the Registration Rights Agreement, in connection with
the offer, sale and delivery of the Notes to the Initial Purchasers in the
manner contemplated by this Agreement and the Final Memorandum to register any
of the Notes or Guarantees under the Securities Act or to qualify the Indenture
under the Trust Indenture Act.
(i) The consolidated financial statements of the Company and its
consolidated subsidiaries included in the Final Memorandum fairly present the
financial position of the Company and its consolidated subsidiaries and the
results of operations and changes in financial condition as of the dates and for
the periods therein specified. Such financial statements have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved (except as otherwise noted therein). The
selected financial data set forth under the caption "Selected Financial Data" in
the Final Memorandum fairly present, on the basis stated in the Final
Memorandum, the information included therein. The unaudited pro forma financial
statements of the Company included in the Final Memorandum comply as to form in
all material respects with the requirements of the Securities Act that would
apply to such statements (or adjustments) if they were contained in a
registration statement filed under the Securities Act to register the Notes; the
pro forma adjustments have been properly applied to the historical amounts in
the compilation of such pro forma statements; the assumptions described in the
notes to such pro forma statements provide a reasonable basis for presenting the
significant direct effects of the transactions contemplated therein; and such
pro forma adjustments comply as to form in all material respects with the
applicable accounting requirements of Regulation S-X under the Securities Act
("Regulation S-X") that would apply to such statements (or adjustments) if they
--------------
were contained in a registration statement filed under the Securities Act to
register the Notes.
(j) Ernst & Young LLP, who have certified certain financial statements
of the Company and its consolidated subsidiaries and delivered their report with
respect to the audited consolidated financial statements included in the Final
Memorandum, are independent public accountants as required by the Securities Act
and the applicable rules and regulations thereunder that would apply if the
offering of the Notes were being registered under the Securities Act.
(k) The execution and delivery of this Agreement have been duly
authorized by the Company and each Subsidiary Guarantor and this Agreement has
been duly executed and delivered by the Company and each Subsidiary Guarantor,
and is the valid and binding
4
<PAGE>
agreement of the Company and each Subsidiary Guarantor, enforceable against the
Company and each Subsidiary Guarantor in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance, receivership, conservatorship or other
similar laws, regulations or procedures of general applicability relating to or
affecting enforcement of the rights of creditors or by general equity principles
and the discretion of the court before which any proceeding is brought
(regardless of whether enforceability is considered in a proceeding in equity or
at law) and except as the obligations of the Company and each Subsidiary
Guarantor under the indemnification and contribution provisions hereof may be
limited by public policy under certain circumstances, including applicable
federal or state securities laws.
(l) No legal or governmental proceedings are pending to which the
Company or any of its subsidiaries is a party or to which the property of the
Company or any of its subsidiaries is subject that are required to be described
in the Final Memorandum and are not described therein, and, to the Company's
knowledge, no such proceedings have been threatened against the Company or any
of its subsidiaries or with respect to any of their respective properties; and
no contract or other document is required to be described in the Final
Memorandum that is not described therein.
(m) The issuance, offering and sale of the Notes to the Initial
Purchasers by the Company and the Subsidiary Guarantors pursuant to this
Agreement, the compliance by the Company and the Subsidiary Guarantors with the
other provisions of this Agreement and the consummation of the other
transactions herein contemplated do not (i) require the consent, approval,
authorization, registration or qualification of or with any governmental
authority, except such as have been obtained, such as may be required under
state securities or blue sky laws or (ii) conflict with or result in a breach or
violation of any of the terms and provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, lease or other agreement or instrument
to which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries or any of their respective properties are
bound, or the charter documents or by-laws of the Company or any of its
subsidiaries, or any statute or any judgment, decree, order, rule or regulation
of any court or other governmental authority or any arbitrator applicable to the
Company or any of its subsidiaries, except where such breach, violation or
default would not amount to a material liability or disability to the Company
and its subsidiaries, taken as a whole.
(n) Subsequent to the date as of which information is given in the
Final Memorandum, neither the Company nor any of its subsidiaries has sustained
any material loss or interference with their respective businesses or properties
from fire, flood, hurricane, accident or other calamity, whether or not covered
by insurance, or from any labor dispute or any legal or governmental proceeding
and there has not been any material adverse change, or any development involving
a prospective material adverse change, in the condition (financial or
otherwise), management, business prospects, net worth, or results of the
operations of the Company or any of its subsidiaries, except in each case as
described in or contemplated by the Final Memorandum.
5
<PAGE>
(o) The Company has not distributed and, prior to the later of (i) the
Closing Date and (ii) the completion of the distribution of the Notes, will not
distribute any offering material in connection with the offering and sale of the
Notes other than the Final Memorandum or any amendment or supplement thereto.
(p) Subsequent to the date as of which information is given in the
Final Memorandum, (1) the Company and its subsidiaries have not incurred any
material liability or obligation, direct or contingent, nor entered into any
material transaction not in the ordinary course of business; (2) the Company has
not purchased any of its outstanding capital stock, nor declared, paid or
otherwise made any dividend or distribution of any kind on its capital stock;
and (3) there has not been any material change in the capital stock, short-term
debt or long-term debt of the Company and its consolidated subsidiaries, except
in each case as described in or contemplated by the Final Memorandum.
(q) The Company and each of its subsidiaries have marketable title to
all personal property owned by each of them, in each case free and clear of any
security interests, liens, encumbrances, equities, claims and other defects,
except such as do not materially and adversely affect the value of such property
and do not interfere with the use made or proposed to be made of such property
by the Company or such subsidiary, and any real property and buildings held
under lease by the Company or any such subsidiary are held under valid,
subsisting and enforceable leases, with such exceptions as are not material and
do not interfere with the use made or proposed to be made of such property and
buildings by the Company or such subsidiary, in each case except as described in
or contemplated by the Final Memorandum. Neither the Company nor any of its
subsidiaries owns any real property.
(r) No labor dispute with the employees of the Company or any of its
subsidiaries exists or is threatened or imminent that could result in a material
adverse change in the condition (financial or otherwise), business prospects,
net worth or results of operations of the Company and its subsidiaries taken as
a whole, except as described in or contemplated by the Final Memorandum.
(s) The Company and its subsidiaries own or possess, all material
patents, patent applications, trademarks, service marks, trade names, licenses,
copyrights and proprietary or other confidential information currently employed
by them in connection with their respective businesses or, upon the failure to
so own or possess, can acquire on reasonable terms such other patents,
applications, trademarks, service marks, trade names, licenses, copyrights and
proprietary or other confidential information in replacement thereof, and
neither the Company nor any such subsidiary has received any notice of
infringement of or conflict with asserted rights of any third party with respect
to any of the foregoing which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a material adverse
change in the condition (financial or otherwise), business prospects, net worth
or results of operations of the Company and its subsidiaries taken as a whole,
except as described in or contemplated by the Final Memorandum.
6
<PAGE>
(t) The Company and each of its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are
engaged; neither the Company nor any such subsidiary has been refused any
insurance coverage sought or applied for; and neither the Company nor any such
subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect the condition
(financial or otherwise), business prospects, net worth or results of operations
of the Company and its subsidiaries taken as a whole, except as described in or
contemplated by the Final Memorandum.
(u) No subsidiary of the Company is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any other
distribution on such subsidiary's capital stock, from repaying to the Company
any loans or advances to such subsidiary from the Company or from transferring
any of such subsidiary's property or assets to the Company or any other
subsidiary of the Company, except as described in or contemplated by the Final
Memorandum.
(v) The Company and its subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state or foreign
regulatory authorities necessary to conduct their respective businesses, and
neither the Company nor any such subsidiary has received any notice of
proceedings relating to the revocation or modification of any such certificate,
authorization or permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a material adverse
change in the condition (financial or otherwise), business prospects, net worth
or results of operations of the Company and its subsidiaries taken as a whole,
except as described in or contemplated by the Final Memorandum.
(w) The Company and each Subsidiary Guarantor have filed all foreign,
federal, state and local tax returns that are required to be filed or has
requested extensions thereof (except in any case in which the failure so to file
would not have a material adverse effect on the Company and its subsidiaries
taken as a whole) and has paid all taxes required to be paid by any of them and
any other assessment, fine or penalty levied against any of them, to the extent
that any of the foregoing is due and payable, except for any such assessment,
fine or penalty that is currently being contested in good faith or as described
in or contemplated by the Final Memorandum.
(x) Neither the Company nor any of its subsidiaries is in violation of
any federal or state law or regulation relating to occupational safety and
health or to the storage, handling or transportation of hazardous or toxic
materials and the Company and its subsidiaries have received all permits,
licenses or other approvals required of them under applicable federal and state
occupational safety and health and environmental laws and regulations to conduct
their respective businesses, and the Company and each such subsidiary is in
compliance with all terms and conditions of any such permit, license or
approval, except any such violation of law or regulation, failure to receive
required permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals which would not,
singly or
7
<PAGE>
in the aggregate, result in a material adverse change in the condition
(financial or otherwise), business prospects, net worth or results of operations
of the Company and its subsidiaries taken as a whole, except as described in or
contemplated by the Final Memorandum.
(y) Each certificate signed by any officer of the Company or any
Subsidiary Guarantor and delivered to the Initial Purchasers or counsel for the
Initial Purchasers shall be deemed to be a representation and warranty by the
Company or such Subsidiary Guarantor, as the case may be, to each Initial
Purchaser as to the matters covered thereby.
(z) Except for the shares of capital stock of each of the
subsidiaries owned directly or indirectly by the Company, neither the Company
nor any such subsidiary owns any shares of stock or any other equity securities
of any corporation or has any equity interest in any firm, partnership,
association or other entity, except as described in or contemplated by the Final
Memorandum.
(aa) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (1)
transactions are executed in accordance with management's general or specific
authorizations; (2) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability; (3) access to assets is
permitted only in accordance with management's general or specific
authorization; and (4) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(bb) No material default exists, and no event has occurred which, with
notice or lapse of time or both, would constitute a material default in the due
performance and observance of any term, covenant or condition of any indenture,
mortgage, deed of trust, lease or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or any of their respective properties is bound or may be
affected in any material adverse respect with regard to property, business or
operations of the Company and its subsidiaries taken as a whole.
(cc) (A) The Company is not now, and after giving effect to the
issuance of the Notes, the execution, delivery and performance of the
Transaction Documents and the consummation of the transactions contemplated
thereby, will not be (i) insolvent, (ii) left with unreasonably small capital
with which to engage in its anticipated businesses or (iii) incurring debts
beyond its ability to pay such debts as they become due. The Company is not in
liquidation, administration or receivership nor has any petition been presented
for the winding-up of the Company.
(B) Each Subsidiary Guarantor is not now, and after giving
effect to such Subsidiary Guarantor's Guarantee, the execution, delivery and
performance of the Transaction Documents and the consummation of the
transactions contemplated thereby, will not be (i) insolvent, (ii) left with
unreasonably small capital with which to engage in its anticipated businesses or
(iii) incurring debts beyond its ability to pay such debts as they become due.
No Subsidiary Guarantor is in liquidation, administration or receivership or has
any petition been presented for the winding-up of any Subsidiary Guarantor.
8
<PAGE>
(dd) None of the Company or any of its Subsidiaries is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Investment Company Act of 1940 (as any of the preceding acts have
been amended) or other law which regulates the incurrence by the Company or any
of its subsidiaries of indebtedness, including, but not limited to, laws
relating to common contract carriers or the sale of electricity, gas, steam,
water or other public utility services.
(ee) Except as disclosed in the Final Memorandum, any reprogramming
and related testing required to permit the proper functioning of the Company's
and its Subsidiaries' computer systems in and following the year 2000 will be
completed in all material respects prior to December 31, 1999 (that is, the
Company and each of its subsidiaries will be "Year 2000 Compliant"), and the
-------------------
cost to the Company and each of its subsidiaries of such reprogramming and
testing will not result in a default under any indenture, mortgage, deed of
trust, lease or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
any of their respective properties are bound, nor would such cost reasonably be
expected to have a material adverse effect on the condition (financial or
otherwise), management, business prospects, net worth, or results of the
operations of the Company or any of its subsidiaries. Except for such
reprogramming referred to in the preceding sentence as may be necessary, the
computer and management information systems of the Company and its subsidiaries
are adequate for the conduct of their respective businesses.
(ff) Except for the fees and expenses payable to the Initial
Purchasers, the Company did not employ any investment banker, broker, finder,
consultant or intermediary in connection with the transactions contemplated by
this Agreement which would be entitled to any investment banking, brokerage,
finder's or similar fee or commission in connection with this Agreement or the
transactions contemplated hereby.
3. Purchase, Sale and Delivery of the Notes. (a) On the basis of the
----------------------------------------
representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Company agrees to
issue and sell $100,000,000 aggregate principal amount of Notes, and each of the
Initial Purchasers, severally and not jointly, agrees to purchase from the
Company the principal amount of Notes set forth opposite the name of such
Initial Purchaser on Schedule 1 hereto at a purchase price equal to 97.5% of the
principal amount thereof. Notes that the several Initial Purchasers have agreed
to purchase hereunder in such denomination or denominations, and in certificated
and/or global form, and registered in such name or names as the Initial
Purchasers may request upon notice to the Company at least 48 hours prior to the
Closing Date, shall be delivered by or on behalf of the Company to the Initial
Purchasers for the respective accounts of the Initial Purchasers, against
payment by or on behalf of the Initial Purchasers of the purchase price therefor
to or upon the order of the Company by wire transfer in same-day funds (the
"Wired Funds") or such other manner of payment as may be agreed by the Company
-----------
and the Initial Purchasers. Such delivery of and payment for the Notes shall be
made at the offices of Hogan & Hartson L.L.P., 555 Thirteenth Street, NW,
Washington, D.C. at 9:30 A.M., New York time, on March 8, 1999, or at such other
place, time or date as the Initial Purchasers and the Company may agree upon,
such time and date of delivery against payment being herein referred to as the
"Closing Date". The Company will make such certificate or
------------
9
<PAGE>
certificates for the Notes available for checking and packaging by the Initial
Purchasers at the offices in New York, New York of Cleary, Gottlieb, Steen &
Hamilton or at such other place as the parties may agree at least 24 hours prior
to the Closing Date.
(b) The Company and the Initial Purchasers hereby acknowledge that
the wire transfer by or on behalf of the Initial Purchasers of the purchase
price for the Notes, and/or the delivery by the Company of certificates
representing the Notes does not constitute closing of a purchase and sale of the
Notes. Only execution and delivery of a receipt for the Notes by the Initial
Purchasers and execution by the Company of a receipt for payment of the purchase
price of the Notes indicate completion of the closing of the purchase of the
Notes from the Company. Furthermore, in the event that the Initial Purchasers
wire funds to the Company prior to the completion of the closing of the purchase
of the Notes, the Company hereby acknowledges that until the Initial Purchasers
execute and deliver a receipt for the Notes, by facsimile or otherwise, the
Company will not be entitled to the Wired Funds and shall return the Wired Funds
to the Initial Purchasers as soon as practicable (by wire transfer of same-day
funds) upon demand. In the event that the closing of the purchase of the Notes
is not completed and the Wired Funds are not returned by the Company to the
Initial Purchasers on the same day the Wired Funds were received by the Company,
the Company agrees to pay to the Initial Purchasers in respect of each day the
Wired Funds could practicably be and are not returned by it, in same-day funds,
interest on the amount of such Wired Funds in an amount representing the Initial
Purchasers' cost of financing as reasonably determined by First Union Capital
Markets Corp.
(c) It is understood that any of you, individually and not as one of
the Initial Purchasers, may (but shall not be obligated to) make payment on
behalf of any Initial Purchaser or Initial Purchasers for any of the Notes to be
purchased by such Initial Purchaser or Initial Purchasers. No such payment shall
relieve such Initial Purchaser or Initial Purchasers from any of its or their
obligations hereunder.
4. Offering of the Notes and the Initial Purchasers' Representations
-----------------------------------------------------------------
and Warranties. Each of the Initial Purchasers acknowledges that it is
- --------------
purchasing the Notes pursuant to a private sale exemption from registration
under the Securities Act, and that the Notes have not been registered under the
Securities Act and may not be offered or sold within the United States or to, or
for the account or benefit of, U.S. persons except pursuant to an exemption from
the registration requirements of the Securities Act. Each of the Initial
Purchasers, severally and not jointly, represents and warrants to and agrees
with the Company and the Subsidiary Guarantors that:
(a) It has not offered or sold, or solicited offers to buy, and it
will not offer or sell, or solicit offers to buy, any Notes except (i) to those
persons it reasonably believes to be qualified institutional buyers (as defined
in Rule 144A under the Securities Act) ("QIBs") in transactions meeting the
----
requirements of Rule 144A, (ii) to other institutional "accredited investors"
(as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) who
provide to it and to the Company a letter in the form of Exhibit A hereto or
(iii) in accordance with the restrictions set forth in Exhibit B hereto. In
connection with each sale pursuant to clause (i) above, such Initial
10
<PAGE>
Purchaser has taken or will take reasonable steps to ensure that the purchaser
of such Notes is aware that such sale is being made in reliance upon Rule 144A.
(b) It is an "accredited investor" (as defined in Rule 501(a)(1),
(2), (3) or (7) under the Securities Act).
(c) Neither it nor any person acting on its behalf has made or will
make offers or sales of the Notes, or has solicited or will solicit offers to
buy the Notes by means of any form of general solicitation or general
advertising (within the meaning of Regulation D under the Securities Act) or in
any manner involving a public offering within the meaning of Section 4(2) of the
Securities Act.
(d) It will offer the Notes for resale only upon the terms and
conditions set forth in this Agreement and in the Final Memorandum.
5. Covenants of the Company and the Subsidiary Guarantors. The
------------------------------------------------------
Company and the Subsidiary Guarantors, jointly and severally, covenant and agree
with each of the Initial Purchasers that:
(a) The Company will furnish to the Initial Purchasers and to each of
Cleary, Gottlieb, Steen & Hamilton and Willkie, Farr & Gallagher as soon as
reasonably possible, without charge, during the period referred to in paragraph
(c) below, as many copies of the Final Memorandum and any amendments and
supplements thereto as they may reasonably request. The Company will pay the
expenses of printing or other production of all documents relating to the
offering of the Notes and will reimburse the Initial Purchasers for payment of
the required PORTAL filing fee.
(b) The Company will not amend or supplement the Final Memorandum
prior to the completion of the distribution of the Notes by the Initial
Purchasers, without the prior written consent of the Initial Purchasers, which
will not be unreasonably withheld.
(c) If at any time prior to the completion of the distribution of the
Notes acquired by the Initial Purchasers pursuant to this Agreement, during
which time you are required to deliver a Final Memorandum in connection with
sales of the Notes by you (as reasonably determined by the Initial Purchasers,
upon the advice of counsel), any event occurs as a result of which the Final
Memorandum, as then amended or supplemented, would include any untrue statement
of a material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or if it should be necessary to amend or supplement the Final
Memorandum to comply with applicable law, the Company will promptly notify the
Initial Purchasers of the same and, subject to the requirements of paragraph (b)
of this Section 5, will prepare and provide to the Initial Purchasers pursuant
to paragraph (a) of this Section 5, an amendment or supplement that will correct
such statement or omission or effect such compliance.
(d) The Company will use its best efforts to arrange for the
qualification of the Notes for sale by the Initial Purchasers under the laws of
such jurisdictions as the Initial Purchasers
11
<PAGE>
may reasonably designate and will maintain such qualifications in effect so long
as required for the sale of the Notes by the Initial Purchasers; provided,
however, that the Company will not be required to qualify generally to do
business in any jurisdiction in which it is not then so qualified, to file any
general consent to service of process or to take any other action which would
subject it to general service of process or to taxation in any such jurisdiction
where it is not then so subject. The Company will promptly advise the Initial
Purchasers of the receipt by the Company of any notification with respect to the
suspension of the qualification of the Notes for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose.
(e) The Company, whenever it or any of its subsidiaries publishes or
makes available to the public (by filing with any regulatory authority or
securities exchange or by publishing a press release or otherwise) any
information that would reasonably be expected to be material in the context of
the issue of the Notes under this Agreement, shall promptly notify the Initial
Purchasers as to the nature of such information or event. The Company will
likewise notify the Initial Purchasers of any decrease in the rating of the
Notes or any other debt securities of the Company by any nationally recognized
statistical rating organization (as defined in Rule 436(g)(2) under the
Securities Act). The Company will also deliver to the Initial Purchasers, as
soon as available and without request, copies of its latest yearly and quarterly
financial statements and any report of its auditors thereon; provided, however,
-------- -------
that electronic filing of such material with the Securities and Exchange
Commission shall constitute timely delivery hereunder.
(f) The Company will not, and will not permit any of its Affiliates to,
resell any of the Notes that have been acquired by any of them, other than
pursuant to an effective registration statement under the Securities Act.
(g) Except as contemplated in the Registration Rights Agreement, none
of the Company or any of its Affiliates, nor any person acting on its or their
behalf (other than the Initial Purchasers or any of their respective Affiliates,
as to whom the Company and the Subsidiary Guarantors make no representation,
warranty or covenant) will, directly or indirectly, make offers or sales of any
security, or solicit offers to buy any security, under circumstances that would
require the registration of the Notes under the Securities Act.
(h) None of the Company or any of its Affiliates, nor any person acting
on its or their behalf (other than the Initial Purchasers or any of their
respective Affiliates, as to whom the Company and the Subsidiary Guarantors make
no representation, warranty or covenant) will engage in any form of general
solicitation or general advertising (within the meaning of Regulation D) in
connection with any offer or sale of the Notes.
(i) So long as any of the Notes are "restricted securities" within the
meaning of Rule 144(a)(3) under the Securities Act, at any time that the Company
is not then subject to Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), the Company will provide at its expense
------------
to each holder of the Notes and to each prospective purchaser (as designated by
such holder) of the Notes, upon the request of such holder or prospective
purchaser, any information required to be provided by Rule 144A(d)(4) under the
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Securities Act. This covenant is intended to be for the benefit of the holders,
and the prospective purchasers designated by such holders from time to time, of
the Notes.
(j) The Company will cooperate with the Initial Purchasers and use its
best efforts to (i) permit the Notes to be designated PORTAL securities in
accordance with the Rules and regulations of the NASD relating to trading in the
Private Offerings, Resale and Trading through Automated Linkages market
("PORTAL") and (ii) permit the Notes to be eligible for clearance and settlement
as described under "Book-Entry; Delivery and Form" in the Final Memorandum.
(k) The Company will apply the net proceeds from the sale of the Notes
as set forth under "Use of Proceeds" in the Final Memorandum.
(l) The Company and its subsidiaries will conduct its or their
operations in a manner that will not subject the Company or any of its
subsidiaries to registration as an investment company under the Investment
Company Act of 1940, as amended.
(m) Each Note will bear a legend substantially to the following effect
until such legend shall no longer be necessary or advisable because the Notes
are no longer subject to the restrictions on transfer described therein:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE
--------------
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE.
BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A ADOPTED UNDER
THE SECURITIES ACT) OR (B) IT IS AN "ACCREDITED INVESTOR" (AS DEFINED
IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) (AN
"ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING
-------------------
THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S
ADOPTED UNDER THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT WITHIN
TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS NOTE RESELL OR OTHERWISE
TRANSFER THIS NOTE EXCEPT (A) TO THE ISSUER OR ANY SUBSIDIARY THEREOF,
(B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A ADOPTED UNDER THE SECURITIES ACT, (C) INSIDE
THE UNITED STATES TO AN ACCREDITED INVESTOR THAT IS ACQUIRING THE NOTE
FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN ACCREDITED INVESTOR,
IN EITHER CASE, IN A MINIMUM PRINCIPAL AMOUNT OF THE NOTES OF U.S.
$250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER
OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, AND THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS
FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A
SIGNED LETTER CONTAINING CERTAIN
13
<PAGE>
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE
TRUSTEE), (D) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S
ADOPTED UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 ADOPTED UNDER THE SECURITIES ACT (IF
AVAILABLE), OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT; AND (3) AGREES THAT IT WILL GIVE TO EACH
PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE
WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS NOTE, IF THE
PROPOSED TRANSFEREE IS AN ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR
TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE ISSUER SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM
MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE
TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE
-------------------- ------------- -----------
THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
6. Expenses. The Company and the Subsidiary Guarantors will pay all
--------
costs and expenses incident to the performance of the obligations of the Company
and the Subsidiary Guarantors under this Agreement, whether or not the
transactions contemplated herein are consummated or this Agreement is terminated
pursuant to Section 11 hereof, including all costs and expenses incident to: (i)
the printing or other production of documents with respect to the transactions,
including any costs of printing the Preliminary Memorandum and Final Memorandum
and any amendment or supplement thereto, this Agreement and any blue sky
memoranda, (ii) all arrangements relating to the delivery to the Initial
Purchasers of copies of the foregoing documents, (iii) the fees and
disbursements of the counsel, the accountants, the Trustee and any other experts
or advisors retained by the Company, (iv) preparation, issuance and delivery to
the Initial Purchasers of any certificates evidencing the Notes, (v) the
qualification of the Notes under state securities and blue sky laws, including
filing fees and fees and disbursements of counsel for the Initial Purchasers
relating thereto, (vi) the fees and expenses, if any, incurred in connection
with the admission of the Notes for trading in the PORTAL Market, (vii) the fees
of any agency that rates the securities and (viii) any meetings with prospective
investors in the Notes (other than as shall have been specifically approved by
the Initial Purchasers to be paid for by the Initial Purchasers). If the sale of
the Notes provided for herein is not consummated because any condition to the
obligations of the Initial Purchasers set forth in Section 7 hereof is not
satisfied, because this Agreement is terminated pursuant to Section 10(a)(i) or
(ii) hereof or because of any failure, refusal or inability on the part of the
Company or any Subsidiary Guarantor to perform all obligations and satisfy all
conditions on its part to be performed or satisfied hereunder other than by
reason of a default by any of the Initial Purchasers, the Company and the
Subsidiary Guarantors will reimburse the Initial Purchasers
14
<PAGE>
severally upon demand for all out-of-pocket expenses (including counsel fees and
disbursements) that shall have been incurred by them in connection with the
proposed purchase and sale of the Notes. Neither the Company nor any Subsidiary
Guarantor shall in any event be liable to any of the Initial Purchasers for the
loss of anticipated profits from the transactions covered by this Agreement.
7. Conditions of the Initial Purchasers' Obligations. The obligations
-------------------------------------------------
of the several Initial Purchasers to purchase and pay for the Notes shall be
subject, in the Initial Purchasers' sole discretion, to the accuracy of the
representations and warranties of the Company and the Subsidiary Guarantors in
Section 2 hereof, in each case as of the date hereof (the "Execution Date") and
--------------
as of the Closing Date, as if made on and as of the Closing Date, to the
accuracy of the statements of the Company's and any Subsidiary Guarantor's
officers made pursuant to the provisions hereof, to the performance by the
Company and the Subsidiary Guarantors of their respective covenants and
agreements hereunder and to the following additional conditions:
(a) The Initial Purchasers shall have received an opinion, dated the
Closing Date, of Hogan & Hartson, L.L.P., counsel for the Company, to the effect
set forth in Exhibit C hereto and otherwise in form and substance satisfactory
to the Initial Purchasers.
(b) The Initial Purchasers shall have received an opinion, dated the
Closing Date, of each of Willkie Farr & Gallagher and Cleary, Gottlieb, Steen &
Hamilton, each as counsel for the Initial Purchasers, with respect to the
issuance and sale of the Notes and such other related matters as the Initial
Purchasers may reasonably require, and the Company shall have furnished to such
counsel such documents as they may reasonably request for the purpose of
enabling them to pass upon such matters. In rendering such opinion, such counsel
may, to the extent that Hogan & Hartson L.L.P. consents, rely as to certain
matters of law upon the opinion of Hogan & Hartson L.L.P. referred to in
paragraph (a) above.
(c) The Initial Purchasers shall have received from Ernst & Young LLP a
letter or letters dated, respectively, the Execution Date and the Closing Date,
in form and substance satisfactory to the Initial Purchasers, to the effect
that:
(i) they are independent accountants with respect to the Company
and its consolidated subsidiaries within the meaning of the Securities Act and
the applicable rules and regulations thereunder;
(ii) in their opinion, the audited consolidated financial
statements and schedules examined by them and included in the Final Memorandum
comply in form in all material respects with the applicable accounting
requirements of the Securities Act and the related published rules and
regulations;
(iii) on the basis of carrying out certain specified procedures
(which do not constitute an examination made in accordance with generally
accepted auditing standards) that would not necessarily reveal matters of
significance with respect to the comments set forth in this paragraph (iii), a
reading of the minute books of the shareholders, the board of directors and any
committees thereof of the Company, and inquiries of certain officials of the
Company who have
15
<PAGE>
responsibility for financial and accounting matters, nothing came to their
attention that caused them to believe that, at a specific date not more than
five business days prior to the date of such letter, there were any changes in
the capital stock or long-term debt of the Company consolidated or any decreases
in net current assets or stockholders' equity of the Company consolidated, in
each case compared with amounts shown on the December 31, 1998 unaudited
consolidated balance sheet included in the Final Memorandum, or, for the period
from January 1, 1999 to such specified date, there were any decreases, as
compared with a period of substantially the same length of time ended on
December 31, 1998, in total revenues, net income before income taxes or total or
per share amounts of net income of the Company consolidated, except in all
instances for changes, decreases or increases set forth in such letter;
(iv) they have carried out certain specified procedures, not
constituting an audit, with respect to certain amounts, percentages and
financial information that are derived from the general accounting records of
the Company and its consolidated subsidiaries and are included in the Final
Memorandum and have compared such amounts, percentages and financial information
with such records of the Company and its consolidated subsidiaries and with
information derived from such records and have found them to be in agreement,
excluding any questions of legal interpretation; and
(v) on the basis of a reading of the unaudited pro forma
consolidated financial statements included in the Final Memorandum, carrying out
certain specified procedures that would not necessarily reveal matters of
significance with respect to the comments set forth in this paragraph (v),
inquiries of certain officials of the Company who have responsibility for
financial and accounting matters and proving the arithmetic accuracy of the
application of the pro forma adjustments to the historical amounts in the
unaudited pro forma consolidated financial statements, nothing came to their
attention that caused them to believe that the unaudited pro forma consolidated
financial statements do not comply in form in all material respects with the
applicable accounting requirements of Rule 11-02 of Regulation S-X or that the
pro forma adjustments have not been properly applied to the historical amounts
in the compilation of such statements.
In the event that the letters referred to above set forth any
such changes, decreases or increases, it shall be a further condition to the
obligations of the Initial Purchasers that (A) such letters shall be accompanied
by a written explanation from the Company as to the significance thereof, unless
the Initial Purchasers deem such explanation unnecessary, and (B) such changes,
decreases or increases do not, in the sole judgment of the Initial Purchasers,
make it impractical or inadvisable to proceed with the purchase and delivery of
the Notes as contemplated by this Agreement and the Final Memorandum, as amended
as of the date hereof.
References to the Final Memorandum in this paragraph (c) with
respect to either letter referred to above shall include any amendment or
supplement thereto at the date of such letter.
(d)(1) The Initial Purchasers shall have received a certificate,
dated the Closing Date, of the Chief Executive Officer and the Chief Financial
Officer of the Company to the effect that:
16
<PAGE>
(i) the representations and warranties of the Company in this
Agreement are true and correct as if made on and as of the Closing Date;
the Final Memorandum, as amended or supplemented as of the Closing Date,
does not include any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; and
the Company has performed all covenants and agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to the
Closing Date; and
(ii) subsequent to the date as of which information is given in the
Final Memorandum, neither the Company nor any of its subsidiaries has
sustained any material loss or interference with their respective
businesses or properties from fire, flood, hurricane, accident or other
calamity, whether or not covered by insurance, or from any labor dispute or
any legal or governmental proceeding, and there has not been any material
adverse change, or any development involving a prospective material adverse
change, in the condition (financial or otherwise), management, business
prospects, net worth or results of operations of the Company or any of its
subsidiaries, except in each case as described in or contemplated by the
Final Memorandum (exclusive of any amendment or supplement thereto).
(2) The Initial Purchasers shall have received a certificate, dated the
Closing Date, of the chairman of the board and the principal financial or
accounting officer of each Subsidiary Guarantor, to the effect that the
representations and warranties of such Subsidiary Guarantor in this Agreement
are true and correct as if made on and as of the Closing Date and such
Subsidiary Guarantor has performed all covenants and agreements and satisfied
all conditions on its part to be performed or satisfied at or prior to the
Closing Date.
(e) Subsequent to Execution Date, there shall not have been any decrease
in the rating of any of the Company's debt securities by any "nationally
recognized statistical rating organization" (as defined for purposes of Rule
436(g) under the Securities Act) or any notice given of any intended or
potential decrease in any such rating or of a possible change in any such rating
that does not indicate the direction of the possible change.
(f) On or before the Closing Date, the Initial Purchasers, Cleary,
Gottlieb, Steen & Hamilton and Willkie, Farr & Gallagher shall have received
such further certificates, documents or other information as they may have
reasonably requested from the Company.
All opinions, certificates, letters and documents delivered pursuant to
this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects to the Initial Purchasers and
counsel for the Initial Purchasers. The Company shall furnish to the Initial
Purchasers such conformed copies of such opinions, certificates, letters and
documents in such quantities as the Initial Purchasers and counsel for the
Initial Purchasers shall reasonably request.
8. Indemnification and Contribution. (a) The Company and each Subsidiary
--------------------------------
Guarantor agree, on a joint and several basis, to indemnify and hold harmless
the Initial Purchasers, the directors, officers, employees and agents of each
Initial Purchaser and each
17
<PAGE>
person who controls any of the Initial Purchasers within the meaning of either
the Securities Act or the Exchange Act, against any and all losses, claims,
damages or liabilities, joint or several, to which they or any of them may
become subject under the Securities Act, the Exchange Act or other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon:
(i) any untrue statement or alleged untrue statement made by the
Company or any Subsidiary Guarantor in Section 2 of this Agreement,
(ii) any untrue statement or alleged untrue statement of any material
fact contained in (A) the Final Memorandum or any amendment or supplement
thereto or (B) any application or other document, or any amendment or
supplement thereto, executed by the Company or any Subsidiary Guarantor or
based upon written information furnished by or on behalf of the Company or
any Subsidiary Guarantor and filed in any jurisdiction in order to qualify
the Notes under the securities or blue sky laws thereof or filed with any
securities association or securities exchange (each an "Application"),
-----------
(iii) the omission or alleged omission to state in the Final
Memorandum or any amendment or supplement thereto, or any Application a
material fact required to be stated therein or necessary to make the
statements therein not misleading or
(iv) any untrue statement or alleged untrue statement by the Company
of any material fact contained in any audio or visual materials used in
connection with the marketing of the Notes, including without limitation,
slides, videos, films or tape recordings,
and agrees to reimburse each such indemnified party, as incurred, for any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
--------
however, that neither the Company nor any Subsidiary Guarantor will be liable in
- -------
any case to the extent that any such loss, claim, damage or liability arises out
of or is based upon any such untrue statement or alleged untrue statement or
omission or alleged omission made in the Preliminary Memorandum or the Final
Memorandum, any Application or in any amendment thereof or supplement thereto,
in reliance upon and in conformity with written information relating to the
Initial Purchasers furnished to the Company by or on behalf of the Initial
Purchasers specifically for inclusion therein; and, provided, further, that with
-------- -------
respect to any untrue statement or omission of a material fact made in the
Preliminary Memorandum, the indemnity agreement contained in this Section 8(a)
shall not inure to the benefit of the Initial Purchasers to the extent that any
such losses, claims, damages or liabilities asserted against the Initial
Purchasers occurs under circumstances where (x) the Company had previously
furnished copies of the Final Memorandum to the Initial Purchasers as required
by this Agreement, (y) the untrue statement or omission of a material fact
contained in the Preliminary Memorandum was corrected in the Final Memorandum
and (z) there was not sent or given to such person asserting any such losses,
claims, damages or liabilities, at or prior to the written confirmation of the
sale of Notes to such person, a copy of the Final Memorandum. This
18
<PAGE>
indemnity agreement will be in addition to any liability which the Company and
each Subsidiary Guarantor may otherwise have.
(b) Each Initial Purchaser, severally and not jointly with the other
Initial Purchasers, agrees to indemnify and hold harmless the Company and each
Subsidiary Guarantor, their respective directors, officers, employees and agents
and each person who controls the Company or any such Subsidiary Guarantor, as
the case may be, within the meaning of either the Securities Act or the Exchange
Act to the same extent as the foregoing indemnity from the Company and the
Subsidiary Guarantors to the Initial Purchasers, but only with reference to
written information relating to such Initial Purchaser furnished to the Company
by or on behalf of such Initial Purchaser specifically for inclusion in the
documents referred to in the foregoing indemnity. This indemnity agreement will
be in addition to any liability which such Initial Purchaser may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section 8
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); provided, however, that such counsel shall be
-------- -------
satisfactory to the indemnified party. Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel (and local counsel) if (i) the use of
counsel chosen by the indemnifying party to represent the indemnified party
would present such counsel with a conflict of interest, (ii) the actual or
potential defendants in, or targets of, any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to those
available to the indemnifying party, (iii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the institution of
such action or (iv) the indemnifying party shall have authorized the indemnified
party to employ separate counsel at the expense of the indemnifying party;
provided further, that the indemnifying party shall not be responsible for the
- -------- -------
fees and expenses of more than one separate counsel (together with appropriate
local counsel) representing all the indemnified parties under paragraph (a) or
paragraph (b) above. An indemnifying party will not, without the prior written
consent of the indemnified party, settle or compromise or consent to the entry
of any judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of
19
<PAGE>
which indemnification or contribution may be sought hereunder (whether or not an
indemnified party is an actual or potential party to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b) of
this Section 8 is unavailable or insufficient to hold harmless an indemnified
party for any reason, the Company and the Subsidiary Guarantors, on the one
hand, and each Initial Purchaser, on the other, agree to contribute to the
aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating or defending same)
(collectively "Losses") to which the Company or the Subsidiary Guarantors, on
------
the one hand, and the Initial Purchasers, on the other, may be subject in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Subsidiary Guarantors, on the one hand, and by the Initial
Purchasers, on the other, from the offering of the Notes. If the allocation
provided by the immediately preceding sentence is unavailable for any reason,
the Company and the Subsidiary Guarantors, on the one hand, and the Initial
Purchasers, on the other, shall contribute in such proportion as is appropriate
to reflect not only such relative benefits but also the relative fault of the
Company, on the one hand, and of the Initial Purchasers, on the other, in
connection with the statements or omissions that resulted in such Losses as well
as any other relevant equitable considerations. Benefits received by the Company
shall be deemed to be equal to the total net proceeds from the offering (before
deducting expenses), and benefits received by an Initial Purchaser shall be
deemed to be equal to the total purchase discounts and commissions received by
such Initial Purchaser from the Company in connection with the purchase of the
Notes hereunder. Relative fault shall be determined by reference to, among other
things, whether any alleged untrue statement or omission relates to information
provided by the Company or the Initial Purchasers and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company and the Initial Purchasers agree that it
would not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation that does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this paragraph (d), in no case shall an Initial Purchaser be obligated to make
contributions hereunder that are in excess of the purchase discount or
commission applicable to the Notes purchased by such Initial Purchaser
hereunder, and no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8, each person who controls an
Initial Purchaser within the meaning of either the Securities Act or the
Exchange Act and each director, officer, employee and agent of each Initial
Purchaser shall have the same rights to contribution as each Initial Purchaser,
and each person who controls the Company or any Subsidiary Guarantor, as the
case may be, within the meaning of either the Securities Act or the Exchange Act
and each officer, director, employee and agent of the Company or any Subsidiary
Guarantor, as the case may be, shall have the same rights to contribution as the
Company or such Subsidiary Guarantor, as the case may be, subject in each case
to the applicable terms and conditions of this paragraph (d).
20
<PAGE>
9. Survival. The respective representations, warranties, agreements,
--------
covenants, indemnities and other statements of the Company, the Subsidiary
Guarantors, their respective officers, and the several Initial Purchasers set
forth in this Agreement or made by or on behalf of them, respectively, pursuant
to this Agreement shall remain in full force and effect, regardless of (i) any
investigation made by or on behalf of the Company, the Subsidiary Guarantors,
any of their respective officers or directors, any Initial Purchaser or any
controlling person referred to in Section 8 hereof and (ii) delivery of and
payment for the Notes. The respective agreements, covenants, indemnities and
other statements set forth in Sections 6 and 8 hereof shall remain in full force
and effect, regardless of any termination or cancellation of this Agreement.
10. Termination. (a) This Agreement may be terminated with respect to the
-----------
Notes in the sole discretion of the Initial Purchasers by notice to the Company
given prior to the Closing Date in the event that the Company or any Subsidiary
Guarantor shall have failed, refused or been unable to perform all obligations
and satisfy all conditions on its part to be performed or satisfied hereunder at
or prior thereto or, if at or prior to the Closing Date
(i) the Company or any of its subsidiaries shall have, in the
reasonable judgment of the Initial Purchasers, sustained any material loss
or interference with their respective businesses or properties from fire,
flood, hurricane, accident or other calamity, whether or not covered by
insurance, or from any labor dispute or any legal or governmental
proceeding or there shall have been any material adverse change, or any
development involving a prospective material adverse change (including
without limitation a change in management or control of the Company), in
the condition (financial or otherwise), business prospects, net worth or
results of operations of the Company and its subsidiaries, except in each
case as described in or contemplated by the Final Memorandum (exclusive of
any amendment or supplement thereto);
(ii) trading in the Company's common stock shall have been suspended
by the Securities and Exchange Commission or the Nasdaq National Market or
trading in securities generally on the New York Stock Exchange or Nasdaq
National Market shall have been suspended or minimum or maximum prices
shall have been established on any such exchange or market system;
(iii) a banking moratorium shall have been declared by New York or
United States authorities; or
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or (C) any other calamity or crisis or material
adverse change in general economic, political or financial conditions
having an effect on the U.S. financial markets that, in the sole judgment
of the Initial Purchasers, makes it impractical or inadvisable to proceed
with the offer, sale and delivery of the Notes as contemplated by the Final
Memorandum, as amended as of the date hereof.
21
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(b) Termination of this Agreement pursuant to this Section 10 shall be
without liability of any party to any other party except as provided in Section
9 hereof.
11. Information Supplied by Initial Purchasers. The statements set forth
------------------------------------------
in the last paragraph on the front cover page and under the heading "Plan of
Distribution" in the Preliminary Memorandum or the Final Memorandum (to the
extent such statements relate to the Initial Purchasers) constitute the only
information furnished by any Initial Purchaser to the Company for inclusion in
the Preliminary Memorandum and the Final Memorandum for the purposes of Sections
2(a) and 8 hereof. The Initial Purchasers confirm that such statements (to such
extent) are correct.
12. Notices. All communications hereunder shall be in writing and, if sent
-------
to any of the Initial Purchasers, shall be delivered or sent by mail, telex or
facsimile transmission and confirmed in writing to First Union Capital Markets
Corp., One First Union Center, 301 South College Street, TW-10, Charlotte, North
Carolina 28288-0604 Attention: High Yield Origination, with a copy to Allan
Sperling, Cleary, Gottlieb, Steen & Hamilton, One Liberty Plaza, New York, New
York 10006 and if sent to the Company or any Subsidiary Guarantor, shall be
delivered or sent by mail, telex or facsimile transmission and confirmed in
writing to the Company at Global Imaging Systems, Inc., 3820 Northdale
Boulevard, Suite 200A, Tampa, Florida 33624, with a copy to Alan L. Dye, Esq.,
Hogan & Hartson L.L.P., 555 Thirteenth Street, N.W., Washington, D.C. 20004-
1109.
13. Successors. This Agreement shall inure to the benefit of and shall be
----------
binding upon the several Initial Purchasers, the Company and the Subsidiary
Guarantors and their respective successors and legal representatives, and
nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any other person any legal or equitable right, remedy or claim
under or in respect of this Agreement, or any provisions herein contained, this
Agreement and all conditions and provisions hereof being intended to be and
being for the sole and exclusive benefit of such persons and for the benefit of
no other person except that (i) the indemnities of the Company and the
Subsidiary Guarantors contained in Section 8 of this Agreement shall also be for
the benefit of any person or persons who control any Initial Purchaser within
the meaning of the Securities Act or the Exchange Act and (ii) the indemnities
of the Initial Purchasers contained in Section 8 of this Agreement shall also be
for the benefit of the directors of the Company and any Subsidiary Guarantor,
the officers, employees and agents of the Company and any Subsidiary Guarantor
and any person or persons who control the Company or any Subsidiary Guarantor
within the meaning of the Securities Act or the Exchange Act. No purchaser of
Notes from any Initial Purchaser shall be deemed a successor because of such
purchase.
14. Applicable Law. The validity and interpretation of this Agreement, and
--------------
the terms and conditions set forth herein, shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to any
provisions relating to conflicts of laws.
22
<PAGE>
15. Consent to Jurisdiction and Service of Process. All judicial
----------------------------------------------
proceedings arising out of or relating to this Agreement may be brought in any
state or federal court of competent jurisdiction in the State of New York.
16. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
23
<PAGE>
If the foregoing correctly sets forth our understanding, please indicate
your acceptance thereof in the space provided below for that purpose, whereupon
this letter shall constitute an agreement binding the Company, each Subsidiary
Guarantor and each of the several Initial Purchasers.
Very truly yours,
GLOBAL IMAGING SYSTEMS, INC.
By: /s/ Raymond Schilling
----------------------------------------------
Name: Raymond Schilling
Title: Vice President, Chief Financial Officer,
Secretary and Treasurer
Each SUBSIDIARY GUARANTOR listed in
Schedule 2 hereto
By: /s/ Raymond Schilling
----------------------------------------------
Name: Raymond Schilling, on behalf of, and in
his capacity as an authorized signatory
for, each of the Subsidiary Guarantors
listed in Schedule 2 hereto
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
FIRST UNION CAPITAL MARKETS CORP.
PRUDENTIAL SECURITIES INCORPORATED
RAYMOND JAMES & ASSOCIATES, INC.
SCOTIA CAPITAL MARKETS (USA) INC.
By FIRST UNION CAPITAL MARKETS CORP.
By: /s/ Eric Lloyd
-------------------------------
Name: Eric Lloyd
Title: Managing Director
For itself and on behalf of the other Initial Purchasers
24
<PAGE>
SCHEDULE 1
INITIAL PURCHASERS
Aggregate Principal
Amount of Notes to be
Initial Purchaser Purchased from the Company
- ----------------- --------------------------
First Union Capital Markets Corp. 52,500,000
Prudential Securities Incorporated 35,000,000
Raymond James & Associates, Inc. 10,000,000
Scotia Capital Markets (USA) Inc. 2,500,000
Total 100,000,000
<PAGE>
SCHEDULE 2
SUBSIDIARY GUARANTORS
<TABLE>
<CAPTION>
JURISDICTION JURISDICTION(S) IN WHICH QUALIFIED AS
COMPANY OF ORGANIZATION A FOREIGN CORPORATION
------- --------------- -----------
<S> <C> <C>
American Photocopy Equipment Company of Delaware Pennsylvania
Pittsburgh d/b/a AMCOM Office Systems
Berney, Inc. Alabama n/a
Business Equipment Unlimited Maine n/a
Cameron Office Products, Inc. Massachusetts n/a
Capitol Copy Products, Inc. Delaware Maryland
Capitol Office Solutions, Inc. Delaware District of Columbia
Maryland
Virginia
Carr Business Machines of Great Neck Inc. New York n/a
d/b/a Carr Business Systems
Centre Business Products, Inc. Pennsylvania n/a
Connecticut Business Systems, Inc. Connecticut Massachusetts
New York
Conway Office Products, Inc. New Hampshire Massachusetts
Copy Service and Supply, Inc. North Carolina n/a
COS Financial, Inc. Maryland n/a
Dahill Industries, Inc. Texas n/a
Distinctive Business Products, Inc. Illinois Indiana
Duplicating Specialties, Inc. dba Copytronix Oregon Washington
Eastern Copy Products, Inc. New York n/a
Electronic Systems of Richmond, Inc. Virginia n/a
Electronic Systems, Inc. Virginia n/a
Felco Office Systems, Inc. Texas n/a
Global Imaging Finance Company Delaware New Hampshire
Florida
Global Imaging Operations, Inc. Delaware New Hampshire
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
JURISDICTION JURISDICTION(S) IN WHICH QUALIFIED AS
COMPANY OF ORGANIZATION A FOREIGN CORPORATION
------- --------------- -----------
<S> <C> <C>
ProView, Inc. North Carolina n/a
Quality Business Systems, Inc. Washington n/a
Southern Business Communications, Inc. Georgia Florida
Tennessee
Virginia
Southern Copy Systems, Inc. Alabama n/a
</TABLE>
<PAGE>
EXHIBIT 3.2A
CERTIFICATE OF INCORPORATION
OF
AMERICAN PHOTOCOPY EQUIPMENT COMPANY OF PITTSBURGH
1. The name of the corporation is:
AMERICAN PHOTOCOPY EQUIPMENT COMPANY OF PITTSBURGH
2. The address of its registered office in the State of Delaware is
100 West Tenth Street in the City of Wilmington, County of New Castle. The name
of its registered agent at such address is The Corporation Trust Company.
3. The nature of the business or purposes to be conducted or
promoted is to engage in any lawful act or activity for which corporations may
be organized under the General Corporation Law of Delaware.
4. The total number of shares of stock which the corporation shall
have authority to issue is one thousand (1,000) and the par value of each of
such shares is One Dollar ($1.00) amounting in the aggregate to One Thousand
Dollars ($1,000.00).
5. The board of directors is authorized to make, alter or repeal the
by-laws of the corporation. Election of directors need not be by ballot.
6. The name and mailing address of the incorporator is:
W. J. Reif
100 West Tenth Street
Wilmington, Delaware 19801
I, THE UNDERSIGNED, being the incorporator hereinbefore named for
the purpose of forming a corporation pursuant to the General Corporation Law of
Delaware, do make this certificate, hereby declaring and certifying that this is
my act and deed and the facts herein stated are true, and accordingly have
hereunto set my hand this 20th day of January, 1978.
W. J. Reif
--------------------------
W. J. Reif
<PAGE>
EXHIBIT 3.2B
AMERICAN PHOTOCOPY EQUIPMENT COMPANY OF PITTSBURGH
-o-O-o-
B Y - L A W S
-o-O-o-
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of Wilmington,
County of New Castle, State of Delaware.
Section 2. 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
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of
directors shall be held in the City of Evanston, State of Illinois, at such
place as may be fixed from time to time by the board of directors, or at such
other place either within or without the State of De1aware as shall be
designated from time to time by the board of directors and stated in the
<PAGE>
notice of the meeting. Meetings of stockholders for any other purpose may be
held at such time and place, within or without the State of Delaware, as shall
be stated in the notice of the meeting or in a duly executed waiver of notice
thereof.
Section 2. Annual meetings of stockholders, commencing with the year
l979, shall be held on the fourth Tuesday of February if not a legal holiday,
and if a legal holiday, then on the next secular day following, at 10:00 A.M.,
or at such other date and time as shall be designated from time to time by the
board of directors and stated in the notice of the meeting, at which they shall
elect by a plurality vote a board of directors, and transact such other business
as may properly be brought before the meeting.
Section 3. Written notice of the annual meeting stating the place,
date and hour of the meeting shall be given to each stockholder entitled to vote
at such meeting not less than ten nor more than sixty days before the date of
the meeting.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and 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
<PAGE>
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 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the board of
directors, or at the request in writing of stockholders owning a majority in
amount of the entire capital stock of the corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
Section 6. Written notice of a special meeting stating the place,
date and hour of the meeting and the purpose or purposes for which the meeting
is called, shall he given not less than ten nor more than sixty days before the
date of the
<PAGE>
meeting, to each stockholder entitled to vote at such meeting.
Section 7. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified. 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.
<PAGE>
Section 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or of
the certificate of incorporation, a different vote is required in which case
such express provision shall govern and control the decision of such question.
Section 10. Unless otherwise provided in the certificate of
incorporation each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder, but no proxy shall be voted on
after three years from its date, unless the proxy provides for a longer period.
Section 11. Unless otherwise provided in the certificate of
incorporation, any action required 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
<PAGE>
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
DIRECTORS
Section 1. The number of directors which shall constitute the whole
board shall be three. The directors shall be elected at the annual meeting of
the stockholders, except as provided in Section 2 of this Article, and each
director elected shall hold office until his successor is elected and qualified.
Directors need not be stockholders.
Section 2. Vacancies and newly created directorships resulting from
any increase in the authorized number of directors may be filled by a majority
of the directors then in office, though less than a quorum, or by a sole
remaining director, and the directors so chosen shall hold office until the next
annual election and until their successors are duly elected and shall qualify,
unless sooner displaced. If there are no directors in office, then an election
of directors may be held in the manner provided by statute. If, at the time of
filling any vacancy or any newly created
<PAGE>
directorship, the directors then in office shall constitute less than a majority
of the whole board (as constituted immediately prior to any such increase), the
Court of Chancery may, upon application of any stockholder or stockholders
holding at least ten percent of the total number of the shares at the time
outstanding having the right to vote for such directors, summarily order an
election to be held to fill any such vacancies or newly created directorships,
or to replace the directors chosen by the directors then in office.
Section 3. The business of the corporation shall be managed by or
under the direction of its board of directors which may exercise all such powers
of the corporation and do all such lawful acts and things as are not by statute
or by the certificate of incorporation or by these by-laws directed or required
to be exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The board of directors of the corporation may hold
meetings, both regular and special, either within or without the State of
Delaware.
Section 5. The first meeting of each newly elected board of
directors shall be held at such time and place as shall be fixed by the vote of
the stockholders at the annual meeting and no notice of such meeting shall be
necessary to
<PAGE>
the newly elected directors in order legally to constitute the meeting, provided
a quorum shall be present. In the event of the failure of the stockholders to
fix the time or place of such first meeting of the newly elected board of
directors, or in the event such meeting is not held at the time and place so
fixed by the stockholders, the meeting may be held at such time and place as
shall be specified in a notice given as hereinafter provided for special
meetings of the board of directors, or as shall be specified in a written waiver
signed by all of the directors.
Section 6. Regular meetings of the board of directors may be held
without notice at such time and at such place as shall from time to time be
determined by the board.
Section 7. Special meetings of the board may be called by the
president on one day's notice to each director, either personally or by mail or
by telegram; special meetings shall be called by the president or secretary in
like manner and on like notice on the written request of two directors unless
the board consists of only one director; in which case special meetings shall be
called by the president or secretary in like manner and on like notice on the
written request of the sole director.
Section 8. At all meetings of the board a majority of the directors
shall constitute a quorum for the transaction of
<PAGE>
business and the act of a majority of the directors present at any meeting at
which there is a quorum shall be the act of the board of directors, except as
may be otherwise specifically provided by statute or by the certificate of
incorporation. If a quorum shall not be present at any meeting of the board of
directors the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
Section 9. Unless otherwise restricted by the certificate of
incorporation or these by-laws, any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof may be taken
without a meeting, if all members of the board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board or committee.
Section 10. Unless otherwise restricted by the certificate of
incorporation or these by-laws, 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 any committee, by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
<PAGE>
COMMITTEES OF DIRECTORS
Section 11. The board of directors may, by resolution passed by a
majority of the whole board, designate one or more committees, each committee to
consist of one or more of the directors of the corporation. The board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee.
Any such committee, to the extent provided in the 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 in reference to amending the certificate of incorporation, 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 a dissolution, or amending the by-laws of the corporation; and,
unless the resolution or the certificate of incorporation expressly so provide,
no such committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock. Such committee or committees shall have such
name or names as
<PAGE>
may be determined from time to time by resolution adopted by the board of
directors.
Section 12. Each committee shall keep regular minutes of its
meetings and report the same to the board of directors when required.
COMPENSATION OF DIRECTORS
Section 13. Unless otherwise restricted by the certificate of
incorporation or these by-laws, the board of directors shall have the authority
to fix the compensation of directors. The directors may be paid their expenses,
if any, of attendance at each meeting of the board of directors and may be paid
a fixed sum for attendance at each meeting of the board of directors or a stated
salary as director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
REMOVAL OF DIRECTORS
Section 14. Unless otherwise restricted by the certificate of
incorporation or by law, any director or the entire board of directors may be
removed, with or without cause, by the holders of a majority of shares entitled
to vote at an election of directors.
<PAGE>
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these by-laws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram.
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation or of these
by-laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the
board of directors and shall be a president, a vice-president, a secretary and a
treasurer. The board of directors may also choose additional vice-presidents,
and one
<PAGE>
or more assistant secretaries and assistant treasurers. Any number of offices
may be held by the same person, unless the certificate of incorporation or these
by-laws otherwise provide.
Section 2. The board of directors at its first meeting after each
annual meeting of stockholders shall choose a president, one or more
vice-presidents, a secretary and a treasurer.
Section 3. The board of directors may appoint such other officers
and agents as it shall deem necessary who shall hold their offices for such
terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the board.
Section 4. The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officer elected or appointed by the
board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of
<PAGE>
the stockholders and. the board of directors, shall have general and active
management of the business of the corporation and shall see that all orders and
resolutions of the board of directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, 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 VICE-PRESIDENTS
Section 8. In the absence of the president or in the event of his
inability or refusal to act, the vice-president (or in the event there be more
than one vice-president, the vice-presidents in the order designated by the
directors, or in the absence of any designation, then in the order of their
election) shall perform the duties of the president, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
president. The vice-presidents shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARY
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders
<PAGE>
and record all the proceedings of the meetings of the corporation and of the
board of directors in a book to be kept for that purpose and shall perform like
duties for the standing committees when required. He shall give, or cause to be
given, notice of all meetings of the stockholders and special meetings of the
board of directors, and shall perform such other duties as may be prescribed by
the board of directors or president, under whose supervision he shall be. He
shall have custody of the corporate seal of the corporation and he, or an
assistant secretary, shall have authority to affix the same to any instrument
requiring it and when so affixed, it may be attested by his signature or by the
signature of such assistant secretary. The board of directors may give general
authority to any other officer to affix the seal of the corporation and to
attest the affixing by his signature.
Section 10. The assistant secretary, or if there be more than one,
the assistant secretaries in the order determined by the board of directors (or
if there be no such determination, then in the order of their election) shall,
in the absence of the secretary or in the event of his inability or refusal to
act, 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
may from time to time prescribe.
<PAGE>
THE TREASURER AND ASSISTANT TREASURERS
Section 11. 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.
Section 12. He 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 his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond (which shall be renewed every six years) 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 his office and for the restoration to
the corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
<PAGE>
Section 14. The assistant treasurer, or if there shall be more than
one, the assistant treasurers in the order determined by the board of directors,
(or if there be no such determination, then in the order of their election,
shall, in the absence of the treasurer or in the event of his inability or
refusal to act, perform the duties and exercise the powers of the treasurer and
shall perform such other duties and have such other powers as the board of
directors may from time to time prescribe.
ARTICLE VI
CERTIFICATE OF STOCK
Section 1. Every holder of stock in the corporation shall be
entitled to have a certificate, signed by, or in the name of the corporation by,
the chairman or vice-chairman of the board of directors, or the president or a
vice-president and the treasurer or an assistant treasurer, or the secretary or
an assistant secretary of the corporation, certifying the number of shares owned
by him in the corporation.
Section 2. Any of or all the signatures on the certificate may be
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
<PAGE>
effect as if he were such officer, transfer agent or registrar at the date of
issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the board of directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or to give the corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
TRANSFER OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent
of the corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignation or authority to transfer, it shall be
the duty of the corporation to issue a new certificate to the person entitled
<PAGE>
thereto, cancel the old certificate and record the transaction upon its books.
FIXING RECORD DATE
Section 5. 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, nor more than sixty days prior to any other action. 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.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a
<PAGE>
person registered on its books as the owner of shares, and shall not be bound to
recognize any equitable or other claim to or interest in such share or shares on
the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation,
subject to the provisions of the certificate of incorporation, if any, may be
declared by the board of directors at any regular or special meeting, pursuant
to law. Dividends may be paid in cash, in property, or in shares of the capital
stock, subject to the provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set aside
out of any funds of the corporation available for dividends such sum or sums as
the directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify
<PAGE>
or abolish any such reserve in the manner in which it was created.
ANNUAL STATEMENT
Section 3. The board of directors shall present at each annual
meeting, and at any special meeting of the stockholders when called for by vote
of the stockholders, a full and clear statement of the business and condition of
the corporation.
CHECKS
Section 4. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate.
FISCAL YEAR
Section 5. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
SEAL
Section 6. The corporate seal shall have inscribed thereon the name
of the corporation, the year of its organization and the words "Corporate Seal,
Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
<PAGE>
ARTICLE VIII
AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed or new
by-laws may be adopted by the stockholders or by the board of directors, when
such power is conferred upon the board of directors by the certificate of
incorporation at any regular meeting of the stockholders or of the board of
directors or at any special meeting of the stockholders or of the board of
directors if notice of such alteration, amendment, repeal or adoption of new
by-laws be contained in the notice of such special meeting. If the power to
adopt, amend or repeal by-laws is conferred upon the board of directors by the
certificate of incorporation it shall not divest or limit the power of the
stockholders to adopt, amend or repeal by-laws.
<PAGE>
Amendment to By Laws dated November 11, 1997
WHEREAS, the Corporation is the owner, directly or indirectly, of
all of the outstanding capital stock of each of Copy Service and Supply, Inc., a
North Carolina corporation, Office Furniture Concepts, Inc., a North Carolina
corporation, Felco Office Systems, Inc., a Texas corporation, American Photocopy
Equipment Company of Pittsburgh, Inc., a Delaware corporation, Berney, Inc., an
Alabama corporation, Southern Copy Systems, Inc., an Alabama corporation, Conway
Office Products, Inc., a New Hampshire corporation, Business Equipment
Unlimited, Inc., a Maine corporation, Cameron Office Products, Inc., a
Massachusetts corporation, Electronic Systems, Inc., a Virginia corporation,
Southern Business Communications, Inc., a Georgia corporation, Quality Business
Systems, Inc., a Washington corporation, and Duplicating Specialties, Inc., an
Oregon corporation; and
WHEREAS, the Board of Directors of the Corporation hereby deem it to
be in the best interests of the Corporation that the Corporation, as the sole
stockholder or the parent of the sole stockholder of each of the Subsidiaries,
hereby amends each of the Subsidiaries' bylaws in order to provide more
efficient and modern means for conducting the business of meetings for such
Subsidiaries' stockholders and boards of directors; NOW, THEREFORE, BE IT
RESOLVED, that the Corporation, as the sole stockholder of each of
the Subsidiaries, hereby elects by written consent of sole stockholder to amend
the Bylaws of each of the Subsidiaries to provide that any authorized person may
call a meeting of the Board of Directors of such company upon 24 hours written
notice (which notice may be given by facsimile transmission);
FURTHER RESOLVED, that the Corporation, as the sole stockholder of
each of the Subsidiaries, hereby elects by written consent of sole stockholder
to amend the Bylaws of each of the Subsidiaries to provide that any meeting of
the Board of Directors of such company may be held in person or by telephone;
FURTHER RESOLVED, that the Corporation, as the sole stockholder of
each of the Subsidiaries, hereby elects by written consent of sole stockholder
to amend the Bylaws of each of the Subsidiaries to provide that any action of
the stockholders of the Corporation may be taken by unanimous written consent
except as otherwise required by law to be held at a meeting of the stockholders
of such company; and
FURTHER RESOLVED, that the Corporation hereby ratifies all actions
previously taken by the officers of the Corporation in connection with the
amendments to its Subsidiaries' Bylaws to comply with all the requirements and
conditions in connection therewith, and all other actions taken incidental
thereto.
-1-
<PAGE>
Exhibit 3.3A
THE STATE OF ALABAMA )
) CERTIFICATE OF INCORPORATION
COUNTY OF MONTGOMERY )
The undersigned, desiring to form themselves into a corporation under the
Laws of Alabama, known as the Alabama Business Corporation Act, Code of Alabama,
Title 10, Secs. 21(1) et. seq. do certify as follow:
1. The name of said corporation shall be: Berney's Office Machines, Inc.
2. The objects and purposes of said corporation shall be to buy, sell,
trade, manufacture, deal in and with goods, property, and merchandise of every
kind and nature, and to carry on such business as wholesalers, retailers,
importer, and exporters; to acquire all such merchandise, supplies, materials
and other articles as shall be necessary, beneficial or incidental to such
business; to hold, acquire, mortgage, lease and convey real and personal
property; and generally to have any and all powers as fully as natural persons,
whether as principals, agents, trustees or otherwise, except as limited or
prohibited by law; and to these ends shall have the following powers: all
powers stated, mentioned, allowed, and approved for such corporations by the
laws of Alabama as appears in Code of Alabama, Title 10, Secs. 21(l),et.seq. and
Secs. 21(56) et.seq., which are not prohibited by law to corporations of this
kind.
3. The location and principal place of business of said corporation shall
be Montgomery, Alabama
4. The period of duration of said corporation shall be perpetual.
5. The total amount of authorized capital stock of said corporation shall
be $10,000.00, which shall be divided into 100 shares of common stock of the par
value of $100.00 per share, all being fully subscribed and paid for, upon
commencement of the corporate business.
<PAGE>
6. The name and postoffice address of the officer or agent authorized and
designated to receive subscriptions to the capital stock of said corporation is:
A. E. Berney, 1718 Vaughn Road, Montgomery, Alabama
7. The names and postoffice addresses of the incorporators and the number
of shares held by each, are as follows:
A. E. Berney, 1718 Vaughn Road
Montgomery, Alabama 65 Shares
David E. Berney, 2217 Yancey Avenue
Montgomery, Alabama 15 Shares
Margaret L. Berney, 1718 Vaughn Road
Montgomery, Alabama 20 Shares
8. The officers and/or directors chosen for the first year are as follows:
A. E. Berney, President & Chairman of the Board
David E. Berney, Vice-President & Director
Margaret L. Berney, Secretary-Treasurer & Director
There is no restriction or prohibition against the same person holding more than
one office in said corporation and it is not required that a person be a
stockholder of said corporation to be an officer or a director of said
corporation.
9. The business and affairs of said corporation shall be under the
management and control of a Board of Directors consisting of not less than 3 nor
more than 5 persons. All officers and directors shall hold office for the
period of one year, or until their successors are elected and qualified.
<PAGE>
10. The corporation shall also have as its objects and purposes and have
within its powers generally to do and perform any and all things that may be
incidental to or necessary or proper to the conduct of any or all of the objects
and purposes mentioned in numbered paragraph two (2) above, as well as any other
objects or purposes not prohibited by law, with full power to do and perform any
and all of said objects, purposes, and powers in the State of Alabama, in any
other State of the United States, Federal Districts, Territories or possessions
of the United States, and in foreign countries.
IN WITNESS WHEREOF, the undersigned have hereto set their hands this the
1st day of June, 1964.
/s/ A. E. Berney
- ------------------------- ------------------------------
/s/ Margaret L. Berney
- ------------------------- ------------------------------
/s/ David E. Berney
- ------------------------- ------------------------------
<PAGE>
THE STATE OF ALABAMA )
)
COUNTY OF MONTGOMERY )
Before me, the undersigned authority personally appeared A. E. Berney,
David E. Berney and Margaret L. Berney who are known to me, or who being made
known to me, whose names are signed as incorporators to the foregoing
Certificate of Incorporation, and I do certify that each of them did acknowledge
before me that being informed of the contents of the foregoing Certificate of
Incorporation, each did sign the same voluntarily as and for their own act and
deed on the day the same bears date.
Given under my hand this 1st day of June, 1964.
/s/ Edward J. Azar
---------------------------
Notary Public in and for
State of Alabama
at Large
<PAGE>
STATE OF ALA.
MONTGOMERY, CO.
I CERTIFY THIS INSTRUMENT
[ILLEGIBLE]
Jun 1 3 40 PM ':64
[ILLEGIBLE]
/s/ John A. [ILLEGIBLE]
JUDGE OF PROBATE
THE STATE OF ALABAMA )
)
COUNTY OF MONTGOMERY )
Before me, the undersigned authority personally, appeared A. E. Berney, who is
known to me, and who being by me first duly sworn on oath, deposes and says:
that he is the person authorized by Berney's Office Machines, Inc. to receive
subscription, to the capital stock of said Corporation and that the following is
a true and correct copy of the stock subscription lists:
"The State of Alabama
County of Montgomery"
Each of the undersigned hereby subscribes for the number of shares
set opposite his or her name of the capital stock Berney's Office
Machines, Inc., a corporation to be organized under the laws of the State
of Alabama, with a total authorized capital stock of 100 shares of common
stock of $100.00 par value per share, of which authorized capital stock
100 shares are subscribed and paid for in full in cash, unless otherwise
indicated, as follows:
/s/ A. E. Berney 65 Shares
/s/ David S. Berney 15 Shares
/s/ Margaret L. Berney 20 Shares
Affiant further says that each of the subscribers for the foregoing shares
of stock has paid for his or her shares in full in cash.
/s/ A.E. Berney
------------------------
Sworn to and subscribed before as this June 1st 1964
/s/ Edward J. Azar
------------------------
Notary Public for
State at Large
The State of Alabama )
Probate Court
Montgomery County )
I, Reese McKinney, Jr., Judge of Probate in and for said County, in said State,
hereby certify that the within and foregoing pages are a full, true and complete
copy of CERTIFICATE OF INCORPORATION OF BERNEY'S OFFICE MACHINES, INC. as fully
and completely as the same appears of record in this office in Book No. 60 of
CORP at page 450.
Given under my hand and official seal this
3rd day of JUNE, A.D. 1998
/s/ Reese McKinney, Jr.
--------------------------
Judge Probate Court, Montgomery County, Alabama
<PAGE>
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
BERNEY'S OFFICE MACHINES, INC.
Pursuant to provisions of Section 10-2A-113 of the Code of Alabama, as
amended, the undersigned Corporation adopts the following Articles of Amendment
to its Articles of Incorporation:
1. The name of the Corporation is Berney's Office Machines, Inc.
2. The following Amendments of the Articles of Incorporation were adopted
by the unanimous vote of all of the shareholders of the Corporation on the 23rd
day of June, 1982, in the manner prescribed by the Alabama Business Corporation
Act.
Paragraph I of the original Certificate of Incorporation is amended by
deleting it in its entirety and inserting the following:
1. The name of the Corporation shall be BERNEY, INC.
2. The number of shares of the Corporation outstanding at the time of such
adoption was One Hundred (100) shares of common stock, being the only class of
stock issued and the number of shares entitled to vote thereon was One Hundred
(100) shares.
3. The number of shares voting for such amendment was One Hundred (100)
shares and the number of shares voting against such amendment was none.
Dated this 23rd day of June, 1982
BERNEY'S OFFICE MACHINES, INC.
BY: /s/ A. E. Berney 7/8/82
------------------------------------
Its President
/s/ Margaret L. Berney 7/8/82
------------------------------------
Its Secretary
This Document Prepared By:
Woodley C. Campbell
260 Washington Avenue
Montgomery, Alabama 36104
<PAGE>
-2-
THE STATE OF ALABAMA *
COUNTY OF MONTGOMERY *
I, the undersigned authority, a Notary Public, do hereby certify that on
this 23rd day of June, 1982, personally appeared before me L. Neal Berney and
Margaret L. Berney, who, being by me first duly sworn, declared that they are
the President and Secretary of BERNEY'S OFFICE OFFICE MACHINES, INC., that they
signed the foregoing document as such Officers of the Corporation, voluntarily
and with full authority, on the day the same bears date, and that the statements
contained therein are certified as true and correct.
[SEAL]
/s/ [ILLEGIBLE] 7-8-82
-----------------------------------
Notary Public
This Document Prepared By:
Woodley C. Campbell
260 Washington Avenue
Montgomery, Alabama 36104
THE STATE OF ALABAMA *
COUNTY OF MONTGOMERY *
KNOW ALL MEN BY THESE PRESENTS, that:
I, the undersigned authority, hereby certify that before me personally
appeared Margaret L. Berney, who is known to me and who, being by me first duly
sworn, does depose and say as follows:
"I, Margaret L. Berney, am Secretary/Treasurer of Berney's Office
Machines, Inc. and as such, do hereby certify that the following is an excerpt
from the Minutes of the Meeting of the Board of Directors and Stockholders of
Berney's Office Machines, Inc. held the 23rd day of June, 1982:
"BE IT RESOLVED, that the name of the Corporation be changed from BERNEY'S
OFFICE MACHINES, INC. to BERNEY, INC. and that the Certificate of
Incorporation be amended by appropriate Articles of Amendment thereto and
that the President and the Secretary of the Corporation be and they are
hereby authorized for and on behalf of the Corporation to execute said
Articles of Amendment to the Articles of Incorporation heretofore filed
for record in the Office of the Judge of Probate of Montgomery County,
Alabama."
I, Margaret L. Berney, Secretary/Treasurer of BERNEY'S OFFICE MACHINES,
INC., a Corporation, certify that the foregoing is a true and correct copy of a
portion of the Minutes of the Meeting of the Board of Directors and Stockholders
of the Corporation held the 23rd day of June, 1982, and I do hereby further
certify that in the body of the Minutes, by signature affixed to said Minutes,
all of the Stockholders and Directors of the Corporation did unanimously agree
to said amendment.
/s/ Margaret L. Berney 7/8/82
----------------------------------
Secretary/ Treasurer
BERNEY'S OFFICE MACHINES, INC.
This Document Prepared By:
Woodley C. Campbell
260 Washington Avenue
Montgomery, Alabama 36104
<PAGE>
Sworn to and subscribed before me this 23rd day of June, 1982.
[SEAL]
/s/ [ILLEGIBLE] 7-8-82
----------------------------------
Notary Public
We, the undersigned, being all of the stockholder and Directors of
BERNEY'S OFFICE MACHINES, INC., do hereby signify our unanimous consent to the
Amendment to the Certificate of Incorporation of BERNEY'S OFFICE MACHINES INC.
as set forth above.
/s/ L. N. Berney 7/8/82
----------------------------------
Director/Stockholder
/s/ Margaret L. Berney 7/8/82
----------------------------------
Director/Stockholder
[SEAL]
STATE OF MONTGOMERY CO.
I CERTIFY THIS INSTRUMENT
WAS FILED ON
Jul 27 10:01 AM '82
/s/ [ILLEGIBLE]
JUDGE OF PROBATE
This Document Prepared By:
Woodley C. Campbell
260 Washington Avenue
Montgomery, Alabama 36104
The State of Alabama )
Probate Court
Montgomery County )
I, Reese McKinney, Jr., Judge of Probate in and for said County in said State,
hereby certify that the within and foregoing pages are a full, true and complete
copy of ARTICLES OF AMENDMENT TO THE INCORPORATION OF BERNEY'S OFFICE MACHINES,
INC CHANGING NAME TO BERNEY, INC. as fully and completely as the same appears of
record in this office in Book No. 127 of CORP at page 559.
Given under my hand and official seal this
25th day of February, A.D. 1999
/s/ Reese McKinney. Jr.
----------------------------------
Judge Probate Court Montgomery County, Alabama
<PAGE>
EXHIBIT "A" TO THE ARTICLES OF
AMENDMENT TO THE CERTIFICATE OF
INCORPORATION OF BERNEY, INC.
STATE OF ALABAMA )
:
MONTGOMERY COUNTY )
THIRD AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
BERNEY, INC.
THIS THIRD AMENDMENT to the Certificate of Incorporation of Berney, Inc.
is adopted by the Shareholders of Berney, Inc. this 14th day of June, 1995.
W I T N E S S E T H :
WHEREAS, the Directors and Shareholders of Berney, Inc. have voted to
amend the Certificate of Incorporation to create a single class of stock;
NOW, THEREFORE, for and in consideration of these premises and covenants
herein contained, Berney, Inc. does hereby adopt the following amendment:
1. Section 5 of the Certificate of Incorporation of Berney, Inc. is hereby
amended by deleting said Section 5, and substituting in its place and stead the
following:
"Section 5. The total amount of the authorized capital stock of the
Corporation shall be 100 shares of Common Stock of the par value of $100.00
each."
"As of the date of this Amendment, the 100 shares of common stock
currently issued and outstanding, and consisting of 20 shares of Class A stock,
20 shares of Class B stock, and 60 shares of Class C stock, shall automatically
be and become 100 shares of a single class of Common Stock, and the certificates
of stock currently issued and outstanding, shall
<PAGE>
be exchanged for and become certificates of stock representing 100 shares of the
single class of Common Stock created hereby."
2. This Amendment shall be effective June 13, 1995.
3. All other provisions of the Certificate of Incorporation of Berney,
Inc. shall remain in full force and effect.
/s/ Raymond Schilling
--------------------------------
Raymond Schilling - Assistant-Secretary
/s/ Thomas S. Johnson
- ---------------------------
THOMAS S. JOHNSON
Chairman of the Board of Directors
I, RAYMOND SCHILLING, Assistant-Secretary of Berney, Inc., do hereby
certify that the foregoing is a true and complete copy of Third Amendment to the
Certificate of Incorporation as adopted by the Unanimous Written Consent of the
Shareholders and Directors on June 13, 1995.
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed
the seal of this Corporation this 14th day of June, 1995.
/s/ Raymond Schilling
---------------------------------------
Raymond Schilling - Assistant-Secretary
SEAL
[SEAL]
STATE OF ALA.
MONTGOMERY CO.
I CERTIFY THIS INSTRUMENT
WAS FILED ON
1995 JUN 15 AM 11:33
/s/[ILLEGIBLE]
JUDGE OF PROBATE 2
The State of Alabama )
Probate Court
Montgomery County )
I, Reese McKinney, Jr., Judge of Probate in and for said County, in said State,
hereby certify that the within and foregoing pages are a full, true and complete
copy of ARTICLES OF AMENDMENT TO THE CERTIFICATE OF INCORPORATION OF BERNEY,
INC. as fully and completely as the same appears of record in this office in
Book No. 191 of CORP at page 572.
Given under my hand and official seal this
3rd day of JUNE, A.D. 1998
/s/ Reese McKinney, Jr.
-----------------------------
Judge Probate Court, Montgomery County, Alabama
<PAGE>
STATE OF ALABAMA )
:
MONTGOMERY COUNTY )
SECOND AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
BERNEY, INC.
THIS SECOND AMENDMENT to the Certificate of Incorporation of Berney,
Inc. is adopted by the Shareholders of Berney, Inc. on this 6th day of November,
1986.
W I T N E S S E T H :
WHEREAS, the Directors and Shareholders of Berney, Inc. have voted
to amend the Certificate of Incorporation to create three classes of stock;
NOW, THEREFORE, for and in consideration of these premises and
covenants herein contained, Berney, Inc. does hereby adopt the following
amendment:
1. Article II, Section 1, of the Certificate of Incorporation of
Berney, Inc. is hereby amended by deleting said Article II, Section 1, and
substituting in its place and stead the following:
"ARTICLE II
"Section 1. The total amount of the authorized capital stock of the
Corporation shall be 20 shares of Class A Common Stock of the par value of
$100.00 each, and 20 shares of Class B Common Stock of the par value of
$100.00 each and 60 shares of Class C Nonvoting Common Stock of the par value of
$100.00 each.
"The Class A Common Stock and the Class B Common Stock shall be
identical in all respects, except that the holder of the Class A Common Stock
shall nominate and elect one-half of the number of Directors and the holders of
the Class B Common Stock shall nominate and elect one-half of the number of
Directors. The total number of Directors shall be established in the Bylaws of
the Corporation, but in all events there shall always be an even number of
Directors during the time that Class A and Class B Common Stock are outstanding.
Each share of stock in each class of stock shall be entitled to one vote.
Irrespective of anything to the contrary herein contained during the time that
the only voting common stock outstanding is Class A or Class B Common Stock,
then such class with outstanding common stock will nominate and elect all of the
Directors until such time as stock in the unissued class of common stock is
issued and outstanding. In the event there shall be outstanding any Security,
debt or equity, which by its terms is convertible into either Class A or Class B
Common Stock, then the Corporation may only offer for sale shares of such class
of stock into which the Security may be converted with the majority consent of
the holders of such convertible Security.
"The 80 shares of common stock currently issued and outstanding
shall automatically be and become 20 shares of Class A Common Stock, and 60
shares of Class C Nonvoting Common Stock and the certificates of stock
representing currently issued and outstanding stock shall be exchanged for
-2-
<PAGE>
and become certificates of stock representing 20 shares of Class A Common Stock
and 60 shares of Class C Nonvoting Common Stock.
"The Class C Nonvoting Common Stock shall be identical in all
respects, except that such Class C shall have no voting rights to the extent
that such denial is not inconsistent with the Alabama Business Corporation Act
or this Article of the Certificate of Incorporation. Irrespective of anything to
the contrary herein contained, the Class C Nonvoting Common Stock shall be
entitled to vote on questions relating to issues of merger, consolidation, sale
of assets other than in the regular course of business and dissolution."
2. This Amendment shall be effective November 6, 1986.
3. All other provisions of the Certificate of Incorporation of
Berney, Inc. shall remain in full force and effect.
/s/ Raymond E. Echols
---------------------------------
Raymond E. Echols - Secretary
/s/ L. N. Berney
- --------------------------
L. N. Berney - President
I, Raymond E. Echols, Secretary of Berney, Inc., do hereby certify
that the foregoing is a true and complete copy of Second Amendment to the
Certificate of Incorporation as adopted by the Unanimous Written Consent of the
Shareholders and Directors on November 5, 1986.
<PAGE>
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed
the seal of this Corporation this 6th day of November 1986.
/s/ Raymond E. Echols
---------------------------------
Raymond E. Echols - Secretary
SEAL
-4-
The State of Alabama )
Probate Court
Montgomery County )
I, Reese McKenney, Jr., Judge of Probate in and for said County, in said State,
hereby certify that the within and foregoing pages are a full, true and complete
copy of SECOND AMENDMENT TO CERTIFICATE OF INCOPORATION OF BERNEY, INC. as fully
and completely as the same appears of record in this office in Book No. 146 of
CORP at page 756.
Given under my hand and official seal this
25th Feb 99
/s/ Reese McKinney, Jr.
------------------------------
Judge Probate Court, Montgomery County, Alabama
<PAGE>
STATE OF ALABAMA )
MONTGOMERY COUNTY )
ARTICLES OF CORRECTION
TO THE AMENDED CERTIFICATE OF INCORPORATION
OF
BERNEY, INC.
TO THE HONORABLE JUDGE OF PROBATE OF MONTGOMERY COUNTY, ALABAMA:
Pursuant to the provisions of Section 1O-2B-1.24 of the Code of
Alabama, the undersigned, L N. Berney, President of Berney, Inc., an Alabama
corporation, does hereby submit the following in order to correct the Second
Amendment to the Certificate of Incorporation of Berney, Inc.:
(a) On November 6, 1986, a Second Amendment to Certificate of
Incorporation of Berney, Inc. (attached hereto as Exhibit "A") was
filed in the Office of the Judge of Probate of Montgomery County,
Alabama, in Corporations Volume 0146, at Pages 0756 through 0759;
and
(b) Section 1 of said Amendment stated that the Certificate of
Incorporation of Berney, Inc. was thereby amended by deleting
Article II, Section 1 of the Certificate of Incorporation and
substituting an amended Article II; and
(c) The Amendment incorrectly referred to the deletion of and
substitution for Article II, Section 1 of the Certificate of
Incorporation and instead should have referred to the deletion of
and substitution for the section numbered 5 in the Certificate of
Incorporation; and
(d) Section 1 of the Second Amendment to the Certificate of
Incorporation of Berney, Inc. is hereby amended to read as follows:
"1. Section 5 of the Certificate of Incorporation of Berney,
Inc. is hereby amended by deleting said Section 5, and
substituting in its place and stead the following:
"5. The total amount of the authorized capital stock of
the Corporation shall be 20 shares of Class A Common
stock of the par value of $100.00 each, and 20 shares of
Class B Common Stock of the par value of $100.00 each
and 60 shares of Class C Nonvoting Common Stock of the
par value of $100.00 each.
<PAGE>
"The Class A Common Stock and the Class B Common Stock
shall be identical in all respects, except that the
holder of the Class A Common Stock shall nominate and
elect one-half of the number of Directors and the
holders of the Class B Common Stock shall nominate and
elect one-half of the number of Directors. The total
number of Directors shall be established in the Bylaws
of the Corporation, but in all events there shall always
be an even number of Directors during the time that
Class A and Class B Common Stock are outstanding. Each
share of stock in each class of stock shall be entitled
to one vote. Irrespective of anything to the contrary
herein contained during the time that the only voting
common stock outstanding is Class A or Class B Common
Stock, then such class with outstanding common stock
will nominate and elect all of the Directors until such
time as stock in the unissued class of common stock is
issued and outstanding. In the event there shall be
outstanding any security, debt or equity, which by its
terms is convertible into either Class A or Class B
Common Stock, then the Corporation may only offer for
sale shares of such class of stock into which the
security may be converted with the majority consent of
the holders of such convertible security.
"The 80 shares of common stock currently issued and
outstanding shall automatically be and become 20 shares
of Class A Common Stock, and 60 shares of Class C
Nonvoting Common Stock and the certificate of stock
representing currently issued and outstanding stock
shall be exchanged for and become certificates of stock
representing 20 shares of Class A Common Stock and 60
shares of Class C Nonvoting Common Stock
"The Class C Nonvoting Common Stock shall be identical
in all respects, except that such Class C shall have no
voting rights to the extent that such denial is not
inconsistent with the Alabama Business Corporation Act
or this Article of the Certificate of Incorporation.
Irrespective of anything to the contrary herein
contained, the Class C Nonvoting Common Stock shall be
entitled to vote on questions relating to issues of
merger, consolidation, sale of assets other than in the
regular course of business and dissolution."
(e) The undersigned hereby requests the Probate Judge and the
Secretary of State to make the necessary changes so that the true
Second Amendment to Certificate of Incorporation of Berney Inc. will
be reflected in their respective books and records.
-2-
<PAGE>
I, L. N. Berney, President of Berney, Inc., do hereby swear that the
above statements are true and correct.
/s/ L. N. Berney
-------------------------
L. N. Berney
FEB 17 1995
-3-
<PAGE>
STATE OF ALABAMA )
:
MONTGOMERY COUNTY )
ARTICLES OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
BERNEY, INC.
Pursuant to the provisions of Section 10-2B-10.06 of the Code of Alabama,
the undesigned Corporation adopts the following Articles of Amendment to its
Certificate of Incorporation:
FIRST
The name of the Corporation is Berney, Inc.
SECOND
The attached amendment marked Exhibit "A" of the Certificate of
Incorporation was adopted by the shareholders of the Corporation on June 14th,
1995, in the manner prescribed by the Alabama Business Corporation Act.
THIRD
The number of shares of the Corporation outstanding at the time of such
adoption was 100 shares; and the number of shares entitle to vote thereon and
the vote of such shares are as follows:
- --------------------------------------------------------------------------------
Number of Shares
Number of Shares Class Entitled to Vote Voting in Favor
- --------------------------------------------------------------------------------
20 Class A Yes 20
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
20 Class B Yes 20
- --------------------------------------------------------------------------------
60 Class C Yes 60
- --------------------------------------------------------------------------------
Total: 100 Total: 100
- --------------------------------------------------------------------------------
FOURTH
The number of shares voted for such amendment was 100 shares; and the
number of shares voted against such amendment was -0-.
DATED: June 14, 1995.
BERNEY, INC.
By: /s/ Thomas S. Johnson
-------------------------
Thomas S. Johnson
Its President
SEAL
ATTEST:
/s/ Raymond Schilling
- ---------------------------
Raymond Schilling
Its Assistant-Secretary
<PAGE>
STATE OF Florida )
:
Hillsborough COUNTY )
I, MANUEL A. DURAND, a Notary Public, do hereby certify that on this 14
day of June, 1995, personally appeared before me, Thomas S. Johnson, and Raymond
Schilling, who, being by me first duly sworn, declared that they are the
Chairman of the Board of Directors and the Assistant-Secretary of Berney, Inc.,
that they signed the foregoing document as Chairman of the Board of Directors
and Assistant-Secretary of the Corporation and that the statements therein
contain are true.
[SEAL]
/s/ Manuel A. Durand
-------------------------------
MANUEL A. DURAND
Notary Public
My Commission Expires: April 28, 1996
SEAL
<PAGE>
Exhibit 3.3B
BYLAWS
OF
BERNEY, INC.
<PAGE>
------------
BYLAWS
------------
TABLE OF CONTENTS
Page
ARTICLE I. LOCATION OF CORPORATION 1
Section 1. Registered Office and Agent 1
Section 2. Principal Business Office 1
Section 3. Other Offices 1
ARTICLE II. STOCKHOLDERS' MEETINGS 1
Section 1. Annual Meeting 1
Section 2. Notice of Annual Meeting 2
Section 3. Special Meetings 2
Section 4. Notice of Special Meeting 3
Section 5. Waiver of Notice 3
Section 6. Action Without Meeting 4
Section 7. Quorum 4
Section 8. Voting 4
Section 9. Proxies 5
Section 10. Closing of Transfer Books and
Fixing Record Dates 5
Section 11. List of Stockholders Entitled
to Vote 6
Section 12. Order of Business Meetings 7
ARTICLE III. DIRECTORS 7
Section 1. Number, Qualification, Term
and Election 7
Section 2. Vacancies 8
Section 3. Regular Meetings 9
Section 4. Special Meetings 9
Section 5. Waiver of Notice of
Special Meetings 9
Section 6. Place of Meetings 10
Section 7. Action Without Meeting 10
Section 8. Telephone and Similar Meetings 10
<PAGE>
Section 9. Quorum 10
Section 10. Voting 11
Section 11. Compensation 11
Section 12. Contracts 11
ARTICLE IV. COMMITTEES 12
Section 1. Designation of Committees 12
Section 2. Powers of Committees 12
Section 3. Meetings 13
Section 4. Record of Proceedings 13
Section 5. Quorum 14
Section 6. Compensation 14
ARTICLE V. OFFICERS 14
Section 1. Election end Appointment 14
Section 2. Suspension and Removal 15
Section 3. Powers and Duties of the
Chairman of the Board 15
Section 4. Powers and Duties of the
President 15
Section 5. Powers and Duties of the
Vice-President 16
Section 6. Powers and Duties of the
Secretary 17
Section 7. Powers and Duties of the
Treasurer 17
Section 8. Assistant Officers 18
Section 9. Returns and Statements 18
Section 10. Compensation 18
Section 11. Emeritus Status 19
ARTICLE VI. CAPITAL STOCK 19
Section 1. Certificates Representing
Shares of Stock 19
Section 2. Transfer Agent and Registrar 20
Section 4. Lost, Stolen or Destroyed
Certificates 21
Section 5. Record Holders 22
ARTICLE VI. MISCELLANEOUS 22
Section 1. Corporate Seal 22
<PAGE>
Section 2. Contracts, Etc. 22
Section 3. Deposits. Checks and
Drafts 23
Section 4. Dividends 23
Section 5. Indemnification of Officers,
Directors, Employees and
Agents; Insurance 24
ARTICLE VIII. AMENDMENT OF BYLAWS 27
Section 1. Alterations, Amendments
or Repeals 27
<PAGE>
BERNEY, INC.
BYLAWS
ARTICLE I
LOCATION OF CORPORATION
Section 1. REGISTERED OFFICE AND AGENT. The Corporation shall have
and maintain in the State of Alabama an agent registered with the Secretary of
State of Alabama, and a registered office which shall be located in the City of
Montgomery, Country of Montgomery, State of Alabama.
Section 2. PRINCIPAL BUSINESS OFFICE. The principal office of this
Corporation shall be located in the City of Montgomery, County of Montgomery,
State of Alabama.
Section 3. OTHER OFFICES. This Corporation may also have offices at
such other places within and without the State of Alabama as the Board of
Directors may from time to time designate.
ARTICLE II
STOCKHOLDERS' MEETINGS
Section 1. ANNUAL MEETING. The annual meeting of the Stockholders of
this Corporation for the election of Directors and for the transaction of such
other business as may properly come before the meeting shall be held at the
principal office of this Corporation, or at such other place within or without
the State of Alabama as may be designated from time to time, on the first day in
June in each year, at 10:00 o'clock in the morning, or in the event that the
same shall fall upon a legal holiday, then upon the next succeeding business
day. However, failure to hold the annual meeting on the date specified shall not
impair the organization of the Corporation, and in the event of such failure,
the annual meeting may be postponed, or it may be called prior to the date
specified, in which event each Stockholder of record shall be notified as
provided in Article II, Section 2 of the Bylaws.
Section 2. NOTICE OF ANNUAL MEETING. Notice of any annual meeting of
the Stockholders of this Corporation shall be given in writing, personally or by
mail, by the secretary to each Stockholder of record not less than ten (10) nor
more than sixty (60) days before such meeting and if special action is to be
taken, such notice shall also state the special action which is proposed to be
taken. If notice of the annual meeting is mailed, it shall be deemed to have
been given when deposited in the United States mail, addressed to the
Stockholder at his address as it appears on the stock transfer books of the
Corporation, with postage thereon prepaid. If one of the purposes of the annual
meeting is to consider an increase of the stock or bonded indebtedness of this
Corporation or the merger or consolidation of this Corporation and another,
notice of such meeting shall be given in the manner prescribed in this section
not less than thirty (30) nor more than sixty (60) days before such meeting.
Section 3. SPECIAL MEETINGS. A special meeting of the Stockholders
of this Corporation may be called at any time by the president and shall be
called by the president or the secretary at any time upon the
-2-
<PAGE>
written request of Stockholders holding at least ten (10%) percent of the
capital stock of this Corporation then issued and outstanding and entitled to
vote, or upon the written request of a majority of a quorum of the Board of
Directors. Such meeting may be held at any time and at any place within or
without the state, which time and place shall be specified in such request. No
business other than that specified in the notice of the meeting shall be
transacted.
Section 4. NOTICE OF SPECIAL MEETING. Notice of any special meeting
of the Stockholders of this Corporation shall be given in writing, personally or
by mail, by the secretary to each Stockholder of record not less than ten (10)
days nor more than sixty (60) days before such meeting. The notice shall state
the time and place of such meeting, and such notice shall also state the
purpose, or purposes, for which the meeting is called. If notice of a special
meeting is mailed, it shall be deemed to have been given when deposited in the
United States mail, addressed to the Stockholder of record at his address as it
appears on the stock transfer books of the Corporation, with postage thereon
prepaid. If the purpose of the special meeting is to increase the stock or
bonded indebtedness of this Corporation or the merger or consolidation of this
Corporation and another, twenty (20) days notice of such meeting shall be given
in the manner prescribed in this section.
Section 5. WAIVER OF NOTICE. Any Stockholder entitled to notice
pursuant to these Bylaws may waive notice either of the annual or any special
meeting of the Stockholders before or after the time stated in such
-3-
<PAGE>
notice. A waiver of notice in writing signed by the Stockholder entitled to such
notice shall be equivalent to the giving of such notice.
Section 6. ACTION WITHOUT MEETING. Any action which may be taken at
a meeting of the Stockholders may be taken without a meeting if a consent in
writing, setting forth the actions so taken, shall be signed by 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 voting. Such consent shall have the
same force and effect as an unanimous vote of the Stockholders and may be stated
as such in any writing or document.
Section 7. QUORUM. Except as otherwise specially provided by law or
by the certificate of incorporation, the holders of a majority of the issued and
outstanding capital stock of this Corporation, present or represented by proxy
at any meeting of Stockholders, shall constitute a quorum, except that if less
than a quorum of the Stockholders be present or represented by proxy at any
meeting, a majority of those present or represented thereat may, after the lapse
of at least half an hour, adjourn the meeting to a future time not less than nor
more than seven (7) days later, and the secretary shall thereupon give at least
five (5) days notice by certified mail to each Stockholder entitled to vote who
was absent from such meeting.
Section 8. VOTING. Each Stockholder of this Corporation shall be
entitled to one vote, in person or by proxy, for each share of capital stock
standing in the name of such Stockholders on the books of this Corporation.
There shall be no voting of treasury shares allowed. When a quorum is
-4-
<PAGE>
present at any meeting, the vote of the holders of a majority of the stock
having voting power present in person or represented by proxy shall decide any
question brought before such meeting, unless the question is one upon which by
express provision of the statutes or of the certificate of incorporation. a
different vote is required in which case such express provision shall govern and
control the decision of such question.
Section 9. PROXIES. A Stockholder may vote either in person or by
proxy executed in writing by the Stockholder or by his duly authorized
attorney-in-fact. No proxy shall be voted or acted upon after three (3) years
from its date, unless the proxy provides for a longer period.
Section 10. CLOSING OF TRANSFER BOOKS AND FIXING RECORD DATES. 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 shell not be more than sixty
(60) nor less than ten (10) days before the date of such meeting, nor more than
sixty (60) days prior to any other action.
If no record date is fixed, the record date for determining
Stockholders entitled to notice of or to vote at any meeting of Stockholders
shall be the close of business on the day next preceding the day on which
-5-
<PAGE>
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. 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.
Section 11. LIST OF STOCKHOLDERS ENTITLED TO VOTE. The secretary of
the Corporation shall prepare and make or cause to be prepared and made, from
the stock ledger of the Corporation, at least ten (10) 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.
This list shall be produced and kept open at the time and place of the meeting
and should be subject to the inspection of any Stockholder of record during the
whole time of the meeting and for a period of ten (10) days prior thereto,
during ordinary business hours, for any purpose germane to the meeting. The list
shall be kept 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. In the absence of objection by any
stockholder, failure to comply with the requirements of this section shall not
affect the validity of any action taken at the meeting. Upon the willful neglect
or refusal of the Directors to produce such a list at any meeting for the
election of Directors, they shall be ineligible for election to any office at
such meeting.
-6-
<PAGE>
Section 12. ORDER OF BUSINESS MEETINGS. The order of business at
annual meetings, and so far as practicable at all other meetings of
Stockholders, shall be as follows:
(a) DUE NOTICE. Proof of due notice of meeting or waiver
thereof.
(b) ROLL CALL. Call of roll - examination of proxies.
(c) PRIOR MINUTES. Reading and disposal of any unapproved
minutes.
(d) ANNUAL REPORTS. Annual reports of officers and committees.
(e) UNFINISHED BUSINESS. Completion of unfinished business.
(f) NEW BUSINESS. Consideration of new business.
(g) ELECTION. Election of directors.
(h) ADJOURNMENT. Adjournment of meeting.
ARTICLE III
DIRECTORS
Section 1. NUMBER, QUALIFICATION, TERM AND ELECTION. The business,
affairs and property of this Corporation shall be managed by a Board of
Directors, consisting of not less than two (2) nor more than fifteen (15)
members.
-7-
<PAGE>
Section 2. VACANCIES. If the office of any Director shall become
vacant between annual meetings for any reason, the remaining Directors may,
-8-
<PAGE>
by a majority vote, though less than a quorum of the Board of Directors, elect a
Director to the class of the Director being replaced, and any Director so
elected shall hold office for the remaining term of the Director being replaced
and until his successor shall have been duly elected by the Stockholders. Any
Director may resign at any time upon written notice to the Corporation.
Section 3. REGULAR MEETING. Regular meetings of the Board of
Directors shall be held immediately following the annual meeting of the
Stockholders, and at such other times as shall be determined by the Board of
Directors. No notice of time, place and purpose shall be required of regular
meetings of the Board of Directors.
Section 4. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called at any time by the president or by any two members of
the Board of Directors. Notice of any special meeting of the Board of Directors
shall be given in writing, personally or by mail, to each Director not less than
two (2) days before such meeting. The notice shall state the time, place and the
purpose, or purposes, for which the meeting is called. If notice of a special
meeting is mailed, it shall be deemed to have been given when deposited in the
United States mail, addressed to the Director at his last known post office
address.
Section 5. WAIVER OF NOTICE OF SPECIAL MEETINGS. Notice of any
special meeting of the Board of Directors may be waived either before or after
the time stated in such notice. A waiver of notice in writing signed by the
Director entitled to such notice shall be equivalent to the giving of
-9-
<PAGE>
such notice. Attendance of a Director at a meeting shall constitute a waiver of
notice of such meeting, except where a Director attends a meeting for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened.
Section 6. PLACE OF MEETINGS. All regular and special meetings of
the Board of Directors shall be held at the principal office of this
Corporation, or at such other place or places within or without the state, as
said Board may designate.
Section 7. ACTION WITHOUT MEETING. Any action which may be taken at
a meeting of the Board of Directors may be taken without a meeting if a consent
in writing, setting forth the action so taken, shall be signed by all of the
Directors entitled to vote with respect to the subject matter thereof. Such
consent shall have the same force and effect as an unanimous vote of the
Directors, and may be stated as such in any writing or document. Such written
consent shall be filed in the Corporation's minute book in the same manner as
minutes of meetings.
Section 8. TELEPHONE AND SIMILAR MEETINGS. Directors may participate
in and hold a meeting by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other. Participation in such a meeting shall constitute presence in person
at the meeting, except where a person participates in the meeting for the
express purpose of objecting to the transaction on the ground the meeting is now
lawfully called or convened.
Section 9. QUORUM. A majority of the Directors of this Corpora-
-10-
<PAGE>
tion shall constitute a quorum for the transaction of business at any regular or
special meeting of the Board of Directors. The act of the 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 act of a greater number is required by the
Business Corporation Act of the State of Alabama, this Corporation's certificate
of incorporation, or by these Bylaws.
Section 10. VOTING. At all meetings of the Board of Directors, each
Director shall have one vote.
Section 11. COMPENSATION. Directors shall have authority to fix the
compensation to be paid for their services as Directors. Nothing shall preclude
any Director from serving the Corporation in any other capacity as an officer,
agent or otherwise, and received compensation therefor.
Section 12. CONTRACTS. In the absence of fraud, no contract or other
transaction between this Corporation and any other Corporation shall be affected
by the fact that Directors of this Corporation are Directors of such other
corporation, if such fact shall be disclosed or known to the Board of Directors,
and such contract or transaction shall be approved or ratified by the
affirmative vote of a majority of the Directors present at a meeting of the
Board of Directors or the committee of this Corporation having authority in the
premises. Any Director individually, or any firm of which any Director is a
partner, may be a party to or may be interested in any contract or transaction
of this Corporation provided such interest be disclosed and that such contract
or transaction shall be approved or ratified by the affirmative vote of at least
a majority of the Directors
-11-
<PAGE>
present at a meeting of the Board of Directors or the committee of this
Corporation having authority in the premises. No Director shall be liable to
account to this Corporation for any profit realized by him from or through any
such transaction or contract of this Corporation, ratified or approved as
aforesaid, by reason of his interest in such transaction or contract. Directors
interested in such contract or transaction shall not be disqualified from voting
on such contract or transaction because of their interest therein.
ARTICLE IV
COMMITTEES
Section 1. DESIGNATION OF COMMITTEES. The Board of Directors may, by
resolution passed by a majority of the whole Board, designate one or more
committees, each committee to consist of one or more of the Directors of the
Corporation. The Board may designate one or more Directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee. No member of any committee shall continue to be a
member of it after he ceased to be a Director of the Corporation. The Board of
Directors shall have the power at any time to increase or decrease the number of
members of any committee, to fill vacancies on it, to remove any member of it,
and to change its functions or terminate its existence.
Section 2. POWERS OF COMMITTEES. Any committee established by
resolution of the Board of Directors, to the extent provided in the resolution
establishing it end subject to such limitations contained in the
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<PAGE>
resolution, shall have and may exercise the powers 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 fixed to all papers which may require it, but
shall not have the authority of the Board of Directors with reference to
amending the certificate of incorporation, adopting a plan or merger or
consolidation, recommending to the stockholders the sale, lease, exchange, or
other disposition of all or substantially all the property and assets of the
Corporation, nor, unless otherwise authorized by a resolution, the power or
authority to declare a dividend or to authorize the issuance of stock. Any such
committee within the functions established by the resolution of the Board of
Directors may also formulate and recommend to the Board of Directors for
approval general policies regarding the management of the business and affairs
of the Corporation.
Section 3. MEETINGS. Meetings of such committees, regular or
special, may be held either within or without the State of Alabama. Regular
meetings may be established by resolution of the Board of Directors, and no
notice shall be required thereof. Special meetings of the committees shall be
called at the request of any member of the committee and shall be held upon
notice delivered personally or by mail, telephone, or telegraph, within two (2)
days of the meeting. Notice may be waived in writing either before or after the
time of the meeting. Attendance of any member of a committee shall constitute
waiver of notice of the meeting.
Section 4. RECORD OF PROCEEDINGS. Any committee established by the
resolution of the Board of Directors shall keep minutes of its acts and
-13-
<PAGE>
proceedings. These minutes shall be submitted to the next succeeding meeting of
the Board of Directors for approval, but failure to submit or to receive
approval of such minutes shall not invalidate any action taken upon
authorization contained in them.
Section 5. QUORUM. A majority of any committee established by the
Board of Directors shall be necessary to constitute a quorum for the transaction
of any business. The act of majority of the members present at a meeting at
which a quorum is present shall be the act of such committee.
Section 6. COMPENSATION. The Board of Directors may vote to the
members of any committee established by it such compensation as it deems proper
for the performance of the duties required of such members of the committee.
ARTICLE V
OFFICERS
Section 1. ELECTION AND APPOINTMENT. At the first meeting of the
Board of Directors after the annual meeting of the Stockholders, the Directors
shall choose a president, such vice-presidents as it deems necessary, a
secretary, a treasurer and such other officers, including assistant officers, as
the Corporation from time to time may need, none of whom need be Directors,
except the Chairman of the Board. Any two offices or more may be held by one
person. All of said officers shall hold office until the first meeting of the
Board of Directors following the next annual meeting of the Stockholders or
until their respective successors shall be duly elected and shall qualify. If
any vacancy occurs among the above offices, such vacancy may be
-14-
<PAGE>
filled for the remainder of the term by the Board of Directors, at a regular or
special meeting thereof, and any officer so elected shall hold office until his
successor shall be duly elected and shall qualify.
Section 2. SUSPENSION AND REMOVAL. Any officer of the Corporation
appointed by the Board of Directors may be removed or suspended by a majority
vote of the Board of Directors at any time, with or without cause. Any agent or
employee appointed or employed by the president may be removed or discharged or
suspended by him at any time, with or without cause.
Section 3. POWERS AND DUTIES OF THE CHAIRMAN OF THE BOARD. The Board
may elect a chairman of the board. The chairman of the board shall be the chief
executive officer and shall be chosen from among the Directors, shall preside at
all meetings of the Board of Directors, if present, and shall, in general,
perform all duties incident to the office of chairman of the board and such
other duties as may be assigned to him by the Board of Directors.
Section 4. POWERS AND DUTIES OF THE PRESIDENT. The president, if
there is no chairman of the board, may also be designated the chief executive
officer of the Corporation and shall have general and active management of the
business of the Corporation and shall see that all orders and resolutions of the
Board of Directors are carried into effect. It shall be the duty of the
president, in the absence of the chairman of the board, to preside at
Stockholders' meetings and at all meetings of the Board of Directors. The
president, in the absence of the chairman of time board, shall cause to be
called regular and special meetings of the Stockholders and Directors in
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<PAGE>
accordance with these Bylaws. The president, subject to the approval of the
Board of Directors, shall appoint and remove, employ and discharge, and fix the
compensation of all agents and employees of this Corporation other than officers
appointed by the Board. The president shall see that the books, reports,
statements and certificates required by the statutes are properly kept, made and
filed according to law. The president shall sign or countersign all certificates
of stock and notes, drafts or bills of exchange, acceptances and other
instruments, for the payment of money duly drawn by the treasurer. He shall
submit a report of the operations of this Corporation for each year to the
Directors at their last regular meeting in such year, or at a special meeting
called for that purpose before the annual meeting of Stockholders, and to the
Stockholders at their annual meeting, and from time to time he shall report to
the Directors all matters within his knowledge which the interest of this
Corporation may require to be brought to their notice. In general, he shall
perform all the duties incident to his office.
Section 5. POWERS AND DUTIES OF THE VICE PRESIDENT. The executive
vice-president of this Corporation, and, if there shall be such, the additional
vice presidents of this Corporation, shall generally assist the president and
shall perform such duties as may be assigned by the Board of Directors. In the
event of the death, resignation, absence or inability to act of the president,
the executive vice president, or, if there shall be such, additional vice
president or vice presidents, in the order determined
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<PAGE>
by the Board of Directors, shall assume and discharge pro tempore the powers and
duties of the president of this Corporation.
Section 6. POWERS AND DUTIES OF THE SECRETARY. The secretary shall
be ex officio secretary of the Board of Directors. He shall keep the minutes of
all meetings of the Board of Directors and Stockholders. He shall have charge of
the corporate books and records. He shall keep in custody the seal of this
Corporation, and from time to time affix the seal to any instrument requiring
the same. He shall be authorized to sign certificates of stock with the
president. He shall keep accounts of stock registered and transferred in the
manner prescribed by law. He shall give and serve all notices to the
Stockholders and Directors, except that notice for special meetings of Directors
called at the request of two (2) Directors, as provided in Section 4 of Article
III of these Bylaws, may be issued by such Directors. In general, he shall
perform all the duties incident to his office.
Section 7. POWERS AND DUTIES OF THE TREASURER. The treasurer shall
have the care and custody of and be responsible for all the funds, securities,
evidences of indebtedness and other valuable documents of the Corporation, and
deposit all such funds in the name of the Corporation in such banks, or trust
companies, or other depositaries, or in such safe deposit vaults as the Board of
Directors may designate. The treasurer shall sign, make and endorse in the name
of the Corporation all checks, notes, drafts, bills of exchange, acceptance and
other instruments for the payment of money, and pay out and dispose of same and
receipt therefor, under the
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<PAGE>
direction of the president or the Board of Directors, and at such other times as
shall be required of him, and a full financial report at the annual meeting of
the Stockholders. The treasurer shall keep at the office of the Corporation full
and accurate books of account of all its business and transactions and such
other books of account as the Board of Directors may require, and shall exhibit
the same to any Director of the Corporation upon application therefor. He shall
be authorized to sign certificates of stock with the president. In general, he
shall perform all the duties incident to his office. He shall give the
Corporation a bond for the faithful discharge of his duties in such amount and
with such surety as the Board of Directors may prescribe.
Section 8. ASSISTANT OFFICERS. The Board of Directors may elect one
or more assistants to any officer, and any such assistant shall exercise the
duties of his office in the absence of the officer whom he has been elected to
assist.
Section 9. RETURNS AND STATEMENTS. It shall be the duty of each
officer of this Corporation to make and file any and all returns, reports, lists
or statements required by law to be made and filed by him, and to make full
report to the Board of Directors respecting the affairs of the Corporation in
his charge whenever he may be requested to do so.
Section 10. COMPENSATION. The salaries of all officers shall be
fixed by the Board of Directors, and the fact that any officer is a Director
shall not preclude his from receiving a salary or from voting upon the
resolution providing the same.
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<PAGE>
Section 11. EMERITUS STATUS. The Board of Directors, at its
discretion, may grant the honorarium of emeritus status to any officer serving
or who has previously served the Corporation. The Board of Directors may
authorize and delegate such individual serving in such status such duties and
responsibilities as the Board of Directors determines necessary or desirable for
the corporation to derive the benefit of the experience, wisdom and skills
possessed by such individual serving in such status.
ARTICLE VI
CAPITAL STOCK
Section 1. CERTIFICATES REPRESENTING SHARES OF STOCK. The shares of
stock of the Corporation shall be represented by certificates in such form as
shall be approved by the Board of Directors. Certificates of stock shall be
signed by the chairman of the board or by the president or a vice-president, and
by the secretary or treasurer, or assistant secretary or treasurer, and shall be
sealed with the corporate seal (which may be a facsimile engraved or printed
upon the certificate). Unless the Board of Directors shall determine to the
contrary, any or all such signatures may be facsimile, even though the signature
of a transfer agent or registrar, if any, is also 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 an officer,
transfer agent, or registrar, at the date of its issue.
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<PAGE>
Section 2. TRANSFER AGENT AND REGISTRAR. The Board of Directors may
appoint a transfer agent or agents and a registrar for the stock of the
Corporation. The transfer agent shall be in charge of the issue, transfer, and
cancellation of shares of stock and shall countersign all stock certificates,
which countersignatures may be by facsimile unless the Board of Directors
determines to the contrary. The transfer agent shall maintain stock transfer
books, which shall include a record of the Stockholders, with their names and
addresses and the number of shares held by each. The transfer agent shall
prepare voting lists for meetings of Stockholders, produce and keep open these
lists at meetings, and perform such other duties as may be delegated by the
Board of Directors of the Corporation. Stockholders shall give notice of changes
of their addresses to the transfer agent. The registrar shall be in charge of
preventing the over issue of shares, shall register all stock certificates, and
perform such other duties as may be delegated by the Board of Directors. The
transfer agent and registrar may be one in the same person, corporation or other
entity.
-20-
<PAGE>
Section 4. LOST, STOLEN OR DESTROYED CERTIFICATES. The Corporation
shall issue a new stock certificate in the place of any certificate previously
issued if the holder of record of the certificate (1) makes proof in affidavit
form that it has been lost, destroyed or wrongfully taken; (2) requests the
issue of a new certificate before the Corporation has notice that the
certificate has been acquired by a purchaser for value in good faith
-21-
<PAGE>
and without notice of any adverse claim; (3) gives bond in such form, and with
surety or sureties, with fixed or open penalty, as the Corporation may direct,
to indemnify the Corporation, the transfer agent, and registrar against any
claim that may be made on account of the alleged loss, destruction, or theft of
a certificate; and (4) satisfies any other reasonable requirements imposed by
the Corporation. When a certificate has been lost, apparently destroyed, or
wrongfully taken, and the holder of record fails to notify the Corporation
within a reasonable time after he has notice of it, and the Corporation
registers a transfer the holder of record is precluded from making any claim
against the Corporation.
Section 5. RECORD HOLDERS. This Corporation shall be entitled to
treat the holder of record of any share or shares of its capital stock as the
holder in fact thereof and shall not be bound to recognize any equitable or
other claim to or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice thereof, save as
expressly provided by the laws of Alabama.
ARTICLE VI
MISCELLANEOUS
Section 1. CORPORATE SEAL. The Directors shall provide a suitable
corporate seal, which seal may include the following words and figures:
Corporation
Alabama
Section 2. CONTRACTS, ETC. The Board of Directors may authorize any
officer or officers, agent or agents, employee or employees to enter into any
contract or other instrument on behalf of this Corporation, and
-22-
<PAGE>
such authority may be general or confined to specific instances. Except as
herein provided or as authorized by the Board of Directors, no officer, agent or
employee, other than the president, vice-president, secretary, or treasurer
shall have any power or authority to bind this Corporation by any contract or
engagement, or to pledge its credit or to render it liable, for any purpose or
for any amount.
Section 3. DEPOSITS, CHECKS AND DRAFTS. All checks and drafts or
funds of this Corporation shall be deposited from time to time to the credit of
this Corporation in such banks, or trust companies, or to other depositaries, as
the Board of Directors may from time to time designate. All checks shall be
drawn out of the regular checkbooks of this Corporation and upon the stub of
each such check, the purpose and amount for which the same is drawn shall be
specified. All checks, notes, drafts, bills of exchange, acceptances or other
orders for the payment of money or other evidences of the indebtedness of this
Corporation shall be signed as shall from time to time be designated by
resolution of the Board of Directors.
Section 4. DIVIDENDS. The Directors shall from time to time declare
dividends upon the capital stock from the earned surplus arising from the
business of the Corporation as and when they deem expedient. Before declaring
any dividend there may be reserved out of the accumulated profits such sum or
sums as the Directors from time to time in their discretion think proper for
working capital or as a reserve fund to meet contingencies or for equalizing
dividends, or for such other purposes as, in the opinion of the Directors, is
conducive to the interest of the Corporation.
-23-
<PAGE>
Section 5. INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND
AGENTS; INSURANCE. (a) The Corporation shall indemnify any person who was or is
a party, or is threatened to be made a party, to any threatened, pending or
completed claim, action, suit or proceedings, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
Corporation), by reason of the fact that he 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 expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
(b) The Corporation shall indemnify any person who was or is a
party, or is threatened to be made a party, to any threatened, pending or
completed action or suit by or in the right of the Corporation to procure a
-24-
<PAGE>
judgment in its favor by reason of the fact that he 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
expensed (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable for negligence or misconduct in the performance of
his duty to the Corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
(c) To the extent that a Director, officer, employee or agent of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b), or in defense
of any class, issue, or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(d) Any indemnification under subsections (a) and (b) (unless
ordered by a court) shall be made by the Corporation only as authorized in
-25-
<PAGE>
the specific case upon a determination that indemnification of the Director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) and (b). Such
determination shall be made (1) by the Board of Directors by a majority vote of
a quorum consisting of Directors who were not parties to such action, suit or
proceeding, (2) if such a quorum is not obtainable, or, even if obtainable, a
quorum of disinterested Directors so directs, by independent legal counsel in a
written opinion, or (3) by the Stockholders.
(e) Expenses incurred by an officer or director in defending a civil
or criminal action, suit or proceeding may be paid by the Corporation in advance
of the final disposition of such action, suit or proceeding as authorized by the
Board of Directors in the specific case upon receipt of an undertaking by or on
behalf of the Director or officer to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified by the
Corporation as authorized in this Section. Such expenses incurred by other
employees and agents may be so paid upon time and conditions, if any, as the
Directors deem appropriate.
(f) The indemnification provided by this Section 5 shall not be
deemed exclusive of any other rights to which those seeking indemnification may
be entitled under any bylaw, agreement, vote of Stockholders, or disinterested
Directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to a
person who has ceased to be a Director, officer, employee
-26-
<PAGE>
or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(g) The Corporation shall have the power to purchase and maintain
insurance on behalf of any person who is or was a Director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a Director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the Corporation would have the power to indemnify him
against such liability under the provisions of this Section.
ARTICLE VIII
AMENDMENT OF BYLAWS
Section 1. ALTERATIONS, AMENDMENTS OR REPEALS. The Board of
Directors may make, amend and repeal the Bylaw of the Corporation, at any annual
meeting or at a special meeting called for that purpose. However, the increase
or decrease of the Board of Directors within the limits established by these
Bylaws shall be the right of the Stockholders at any annual meeting or special
meeting called for that purpose; such increase or decrease shall be by majority
vote of all the issued and outstanding stock of the Corporation.
/s/ [ILLEGIBLE]
------------------------
President
/s/ [ILLEGIBLE]
- ----------------------
Secretary
-27-
<PAGE>
Amendment to By Laws dated November 11, 1997
WHEREAS, the Corporation is the owner, directly or indirectly, of
all of the outstanding capital stock of each of Copy Service and Supply, Inc., a
North Carolina corporation, Office Furniture Concepts, Inc., a North Carolina
corporation, Felco Office Systems, Inc., a Texas corporation, American Photocopy
Equipment Company of Pittsburgh, Inc., a Delaware corporation, Berney, Inc., an
Alabama corporation, Southern Copy Systems, Inc., an Alabama corporation, Conway
Office Products, Inc., a New Hampshire corporation, Business Equipment
Unlimited, Inc., a Maine corporation, Cameron Office Products, Inc., a
Massachusetts corporation, Electronic Systems, Inc., a Virginia corporation,
Southern Business Communications, Inc., a Georgia corporation, Quality Business
Systems, Inc., a Washington corporation, and Duplicating Specialties, Inc., an
Oregon corporation; and
WHEREAS, the Board of Directors of the Corporation hereby deem it to
be in the best interests of the Corporation that the Corporation, as the sole
stockholder or the parent of the sole stockholder of each of the Subsidiaries,
hereby amends each of the Subsidiaries' bylaws in order to provide more
efficient and modern means for conducting the business of meetings for such
Subsidiaries' stockholders and boards of directors; NOW, THEREFORE, BE IT
RESOLVED, that the Corporation, as the sole stockholder of each of
the Subsidiaries, hereby elects by written consent of sole stockholder to amend
the Bylaws of each of the Subsidiaries to provide that any authorized person may
call a meeting of the Board of Directors of such company upon 24 hours written
notice (which notice may be given by facsimile transmission);
FURTHER RESOLVED, that the Corporation, as the sole stockholder of
each of the Subsidiaries, hereby elects by written consent of sole stockholder
to amend the Bylaws of each of the Subsidiaries to provide that any meeting of
the Board of Directors of such company may be held in person or by telephone;
FURTHER RESOLVED, that the Corporation, as the sole stockholder of
each of the Subsidiaries, hereby elects by written consent of sole stockholder
to amend the Bylaws of each of the Subsidiaries to provide that any action of
the stockholders of the Corporation may be taken by unanimous written consent
except as otherwise required by law to be held at a meeting of the stockholders
of such company; and
FURTHER RESOLVED, that the Corporation hereby ratifies all actions
previously taken by the officers of the Corporation in connection with the
amendments to its Subsidiaries' Bylaws to comply with all the requirements and
conditions in connection therewith, and all other actions taken incidental
thereto.
-1-
<PAGE>
EXHIBIT 3.4A
Filing Fee plus fee
based on authorized capital stock ($10) This Space For Use By
Secretary of State
MAINE
- ------------------- SECRETARY OF STATE
For Use By The STATE OF MAINE FILED
Secretary of State May 27, 1975
File No. 75D1066 ARTICLES OF INCORPORATION
Fee Paid $10 & $50 /s/ Doris Hayes
C.B. ----- OF ---------------
Date 5-28-75 Agent
- ------------------- BUSINESS EQUIPMENT UNLIMITED
(insert corporate name)
Pursuant to 13--A MRSA ss. 403, the undersigned, acting as incorporator(s)
of a corporation, adopt(s) the following Articles of incorporation:
FIRST: The name of the corporation is Business Equipment Unlimited and
it is located in Maine, at Portland
SECOND: The name of its Clerk and the address of its registered office
shall be:
Name Kenneth M. Curtis
Street & Number One Canal Plaza
City Portland, Maine 04112
THIRD ("X" one box only)
|X| a. The number of directors constituting the initial board of directors
of the corporation is 1, (See ss.1703, 1. A.)
b. If the initial directors have been selected, the names and addresses
of the persons who are to serve as directors until the first annual
meeting of the shareholders or until their successors are elected
and shall qualify are:
Name Address
---- -------
Edward C. Gall 52 Ganniston Drive
Augusta, Maine
____________________________ ____________________________
____________________________
____________________________ ____________________________
____________________________
|_| There shall be no directors initially; the shares of the corporation will
not be sold to more than twenty (20) persons; the business of the
corporation will be managed by the shareholders. (See ss.703, 1. B.)
FOURTH: ("X" one box only)
The board of directors is |_| is not |X| authorized to increase or
decrease the number of directors.
If the board is so authorized, the minimum number, if any, shall be
_________________________________ directors, (See ss.1703, 1. A.) and the
maximum number, if any, shall be _________________________________
directors.
Page 1
<PAGE>
based on authorized
capital stock ($10) This Space For Use By
Secretary of State
For Use By The STATE OF MAINE MAINE
Secretary of State SECRETARY OF STATE
ARTICLES OF INCORPORATION FILED
File No. 75D1066
-------------- OF May 27, 1975
Fee Paid $10. & $50. ----------------- --
-------------- BUSINESS EQUIPMENT UNLIMITED /s/ Doris Hayes
C. B. ------- ---------------------------- ---------------------
----------------- (insert corporate name) AGENT
Date 5-28-75
------------------
Pursuant to 13-A MRSA section 403, the undersigned, acting as
incorporator(s) of a corporation, adopt(s) the following Articles of
Incorporation:
FIRST: The name of the corporation is Business Equipment Unlimited
------------------------------
and it is located in Maine, at Portland
------------------------------
SECOND: The name of its Clerk and the address of its registered
office shall be:
Name Kenneth M. Curtis
--------------------------------------------------------
Street & Number One Canal Plaza
---------------------------------------------
City Portland , Maine 04112
--------------------------------- --------
THIRD: ("X" one box only)
[X] a. The number of directors constituting the initial board of
directors of the corporation is 1 , (See section
-----------
703, 1. A.)
b. If the initial directors have been selected, the names and
addresses of the persons who are to serve as directors until
the first annual meeting of the shareholders or until their
successors are elected and shall qualify are:
Name Address
---- -------
Edward C. Gall 52 Ganniston Drive
- -------------------------------- ----------------------------------------------
Augusta, Maine
----------------------------------------------
- -------------------------------- ----------------------------------------------
----------------------------------------------
- -------------------------------- ----------------------------------------------
----------------------------------------------
[ ] There shall be no directors initially; the shares of the corporation will
not be sold to more than twenty (20) persons; the business of the
corporation will be managed by the shareholders. (See section 703, 1. B.)
FOURTH: ("X" one box only)
The board of directors is [ ] is not [X] authorized to
increase or decrease the number of directors.
If the board is so authorized, the minimum number, if any,
shall be directors, (See section 703,
----------------
1. A.) and the maximum number, if any, shall be
directors.
----------------
<PAGE>
FIFTH: ("X" one box only)
[X] There shall be only one class of shares, viz. common
--------------------
(title of class)
Par value of each share (if none, so state) $100
-----------------
Number of shares authorized 100
------------------
[ ] There shall be two or more classes of shares
The information required by section 403 concerning each such
class is set out in Exhibit attached hereto and made
-------------
a part hereof.
SUMMARY
The aggregate par value of all authorized shares (of all classes) having a par
------------
value is $ 10,000
- ----- -----------------
The total number of authorized shares (of all classes) without par value is
-----------------
none shares.
- ---------------
SIXTH: ("X" one box only)
Meetings of the shareholders may [X] may not [ ] be held outside
the State of Maine.
SEVENTH: ("X" if applicable) There are no preemptive rights. [ ]
EIGHTH: Other provisions of these articles, if any, including provisions
for the regulation of the internal affairs of the corporation,
are set out in Exhibit attached hereto and made a
--------------
part hereof.
Dated May 23, 1975
-----------------------
INCORPORATORS RESIDENCE ADDRESSES
--------------- ---------------------------
/s/ Robert E. Stevens Street Porter's Landing
- -------------------------------------- --------------------------------
Robert E. Stevens Freeport, Maine 04032
- -------------------------------------- --------------------------------------
(type or print name) (city, state and zip code)
Street
- -------------------------------------- --------------------------------
- -------------------------------------- --------------------------------------
(type or print name) (city, state and zip code)
Street
- -------------------------------------- --------------------------------
- -------------------------------------- --------------------------------------
(type or print name) (city, state and zip code)
For Corporate Incorporators
- ------------------------------
Street
- -------------------------------------- --------------------------------
By
------------------------------------ --------------------------------------
(city, state and zip code)
- --------------------------------------
(type or print name and capacity)
--------------------------------
Articles are to be executed
as follows:
If a corporation is an incorporator (section 402), the name of the
corporation should be typed and signed on its behalf by an officer of the
corporation. The address of the principal place of business of the
incorporator corporation should be given. The articles of incorporation
must be accompanied by a certificate of an appropriate officer of the
corporation certifying that the person executing the articles on behalf of
the corporation was duly authorized to do so.
FORM NO. MBCA 6-Rev. 73
<PAGE>
For Use By The This Space For Use By
Secretary of State Secretary of State
STATE OF MAINE
File No 75D1066 MAINE
-------------- ARTICLES OF AMENDMENT SECRETARY OF STATE
Fee Paid $10. & $10. (Amendment by Shareholders FILED
------------- Voting as One Class)
C. B. 441 January 8, 1976
---------------- OF ------------ ----
Date 1-12-76 /s/ Doris Hayes
----------------- Business Equipment Unlimited ------------------
-------------------------------- AGENT
Pursuant to 13-A MRSA sections 805 and 807, the undersigned corporation
adopts these Articles of Amendment
FIRST: All outstanding shares of the corporation were entitled to
vote on the following amendment as one class.
SECOND: The amendment to the Articles of Incorporation of the
corporation set out in Exhibit A attached hereto was adopted by the shareholders
thereof by unanimous written consent January 8 1976.
---------------- --
THIRD: On said date, the number of shares outstanding and entitled
to vote on such amendment and the number of shares voted for and against said
amendment, respectively, were as follows:
Number of Shares Outstanding
and Entitled to Vote Voted For Voted Against
---------------------------- --------- -------------
100 100 0
Totals -------------------- --------- -------------
100 100 0
FOURTH: If such amendment provides for exchange, reclassification or
cancellation of issued shares, the manner in which the same shall be effected is
contained in Exhibit B attached hereto, if it is not set forth in the amendment
itself
No
*FIFTH: If any such amendment effects a change in the number or par
values of authorized shares the number of shares which the corporation has
authority to issue after giving effect to such amendment is as follows:
Series Number Par Value
Class (If Any) of Shares (If Any)
----- -------- --------- ---------
Common None 300 $100
The aggregate par value of all such shares (of all classes and series)
having par value is $ 30,000
---------------- --------------
The total number of all such shares (of all classes and series) without par
-----------
value is none shares
----- --------------
<PAGE>
SIXTH: The address of the registered office of the corporation in the
State of Maine is One Canal Plaza
---------------
Plaza, Portland 04112
- ---------------------------------
(street, city and zip code)
Dated January 8, 1976
---------------------
Business Equipment Unlimited **
-------------------------------------
Legibly print or type (name of corporation)
name and capacity of
all signers By /s/ Kenneth M. Curtis
13-A MRSA section 104 -----------------------------------
Kenneth M. Curtis, Clerk
-------------------------------------
(type or print name and capacity)
I certify that I have custody of the
minutes showing the above action by By
the shareholders -----------------------------------
/s/ Kenneth M. Curtis
- ------------------------------------ -------------------------------------
Kenneth M. Curtis, Clerk (type or print name and capacity)
NOTE: This form should not be used if any class of shares entitled to vote as
a separate class for any of the reasons set out in section 806, or
because the articles so provide. For vote necessary for adoption see
section 805.
EXHIBIT A
---------
The Articles of Incorporation of Business Equipment Unlimited
are amended to increase the number of shares authorized from 100 shares
of common stock, par value $100 per share to 300 shares of common stock,
par value $100 per share.
- -----------------------------------
* To be completed only if Exhibit A or B do not give this required information.
** The name of the corporation should be typed, and the document must be signed
by (1) the Clerk or (2) by the President or a vice-president and by the
Secretary or an assistant secretary or such other officer as the bylaws may
designate as a second certifying officer or (3) if there are no such officers,
then by a majority of the directors or by such directors as may be designated by
a majority of directors then in office or (4) if there are no such directors,
then by the holders, or such of them as may be designated by the holders, of
record of a majority of all outstanding shares entitled to vote thereon or (5)
by the holders of all the outstanding shares of the corporation.
FORM NO. MBCA-9
<PAGE>
For Use By The This Space For Use By
Secretary of State Secretary of State
STATE OF MAINE
File No. 75D1066 MAINE
----------- ARTICLES OF AMENDMENT SECRETARY OF STATE
Fee Paid $10.00 (Amendment by Shareholders FILED
----------- Voting as One Class)
C. B. 52 July 26, 1976
-------------- OF ------------ ----
Date 7-29-76 /s/ Doris Hayes
--------------- BUSINESS EQUIPMENT UNLIMITED ------------------
-------------------------------- AGENT
Pursuant to 13-A MRSA sections 805 and 807, the undersigned corporation
adopts these Articles of Amendment
FIRST: All outstanding shares of the corporation were entitled to
vote on the following amendment as one class
SECOND: The amendment to the Articles of Incorporation of the
corporation set out in Exhibit A attached hereto was adopted by the shareholders
thereof by a written consent of all shareholders dated on July 20 1976
------------- --
THIRD: On said date, the number of shares outstanding and entitled
to vote on such amendment, and the number of shares voted for and against said
amendment, respectively, were as follows:
Number of Shares Outstanding
and Entitled to Vote Voted For Voted Against
---------------------------- -------- -------------
200 200 0
Totals -------------------- -------- -------------
200 200 0
FOURTH: If such amendment provides for exchange, reclassification or
cancellation of issued shares, the manner in which the same shall be effected is
contained in Exhibit B attached hereto, if it is not set forth in the amendment
itself
N/A
*FIFTH: If such amendment effects a change in the number or par
values of authorized shares the number of shares which the corporation has
authority to issue after giving effect to such amendment is as follows:
N/A
Series Number Par Value
Class (If Any) of Shares (If Any)
----- -------- --------- ---------
The aggregate par value of all such shares (of all classes and series) having
------
par value is $ .
--------- -----------
The total number of all such shares (of all classes and series) without par
-----------
value is shares.
----- --------------
<PAGE>
SIXTH: The address of the registered office of the corporation in the State
of Maine is One Canal Plaza
---------------
Portland, Maine 04112
- -------------------------------
(street, city and zip code)
Dated: 7/21/76
--------------------
BUSINESS EQUIPMENT UNLIMITED **
Legibly print or type -----------------------------------
name and capacity of all (name of corporation)
signers 13-A MRSA
section 104 By /s/ Kenneth M. Curtis
---------------------------------
Kenneth M. Curtis, Clerk
-----------------------------------
I certify that I have custody of (type or print name and capacity)
the minutes showing the above
action by the shareholders. By
---------------------------------
/s/ Kenneth M. Curtis
- ------------------------------- -----------------------------------
Kenneth M. Curtis, Clerk (type or print name and capacity)
NOTE: This form should not be used if any class of shares entitled to vote as
a separate class for any of the reasons set out in section 806, or
because the articles so provide. For vote necessary for adoption see
section 805.
EXHIBIT A
---------
The Articles of Incorporation of Business Equipment Unlimited are
hereby amended to provide that the minimum number of directors shall be
two and the maximum number shall be 7. (See section 703, 1.A.)
/s/ Kenneth M. Curtis
---------------------------
Kenneth M. Curtis, Clerk
- ---------------------------------
* To be completed only if Exhibit A or B do not give this required information.
** The name of the corporation should be typed, and the document must be signed
by (1) the Clerk or (2) by the President or a vice-president and by the
Secretary or an assistant secretary or such other officer as the bylaws may
designate as a second certifying officer or (3) if there are no such
officers, then by a majority of the directors or by such directors as may be
designated by a majority of directors then in office or (4) if there are no
such directors, then by the holders, or such of them as may be designated by
the holders, of record of a majority of all outstanding shares entitled to
vote thereon or (5) by the holders of all the outstanding shares of the
corporation.
FORM NO. MBCA-9
<PAGE>
Filing Fee [illegible] This Space For Use By
Secretary of State
For Use By The STATE OF MAINE
Secretary of State MAINE
CHANGE OF CLERK or SECRETARY OF STATE
File No. 75D1066 REGISTERED OFFICE or BOTH FILED
-----------
Fee Paid $5.00 OF April 6, 1977
----------- ------------ ----
C. B. 77C380 BUSINESS EQUIPMENT UNLIMITED /s/ Doris Hayes
-------------- ---------------------------- ------------------
Date 4-13-77 AGENT
---------------
Pursuant to 13-A MRSA section 304 the undersigned corporation advises
you of the following change(s):
FIRST: The name and registered office of its present clerk are
Kenneth M. Curtis
-------------------
One Canal Plaza, Portland, Maine 04112
---------------------------------------------
(street, city, state and zip code)
SECOND: The name and registered office of its successor (new) clerk*
are Robert E. Stevens
-------------------
One Canal Plaza, Portland, Maine 04112
------------------------------------------
(street, city, state and zip code)
THIRD: Upon a change in clerk this must be completed:
[X] Such change was authorized by the board of directors
and the power to make such change is not reserved to
the shareholders by the articles or the bylaws.
[ ] Such change was authorized by the shareholders.
(Complete the following)
I certify that I have custody of the minutes
showing the above action by the shareholders.
/s/ Robert E. Stevens
----------------------------------------
(new clerk, secretary or assistant secretary)
Robert E. Stevens
Dated: January 26, 1977
------------------------
BUSINESS EQUIPMENT UNLIMITED
------------------------------------------
(name of corporation)
MUST BE COMPLETED By /s/ Robert E. Stevens
----------------------------------------
Legibly print or type name (signature)
and capacity of all signers
13-A MRSA section 104. Robert E. Stevens, Clerk
------------------------------------------
(type or print name and capacity)
By
----------------------------------------
(signature)
------------------------------------------
(type or print name and capacity)
- ----------------------------------
* The clerk of a domestic corporation must be a person resident in Maine.
** The name of the corporation should be typed, and the document must be signed
by (1) the Clerk OR (2) by the President or a vice-president and by the
Secretary or an assistant secretary or such other officer as the bylaws may
designate as a second certifying officer or (3) if there are no such
officers, then by a majority of the directors or by such directors as may be
designated by a majority of directors then in office or (4) if there are no
such directors, then by the holders, or such of them as may be designated by
the holders, of record of a majority of all outstanding shares entitled to
vote thereon or (5) by the holders of all of the outstanding shares of the
corporation.
FORM NO. MBCA-3
<PAGE>
[LETTERHEAD OF BUSINESS EQUIPMENT UNLIMITED]
March 15, 1983
Secretary of State
State House
Augusta, Maine 04333
Corporation Director
Gentlemen:
The Board of Directors of with Office
Business Equipment Unlimited/ registered /at 1 Canal Plaza, Portland, Maine has
no objection to Mr. Paul DeSchamp of Augusta, Maine using the name of Business
Equipment Systems.
Sincerely,
Edward C. Gall
President
/s/ Edward C. Gall
Rhoda Conley
Secretary
/s/ Rhoda Conley
EG/be MAINE
SECRETARY OF STATE
File Number 751066D FILED
----------
Fee Paid $5.00 March 15, 1983
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C. B. 764
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Date 3-17-83 ---------------------
----------------- Secretary of State
1 AGENT
<PAGE>
Exhibit 3.4b
BY-LAWS
of
BUSINESS EQUIPMENT UNLIMITED
ARTICLE I
Offices
Section 1. Registered Office. The registered office shall be in the
City of Portland, County of Cumberland, State of Maine.
Section 2. Other Offices. The corporation may also have offices at
such other places both within and without the State of Maine as the board of
directors may from time to time determine or the business of the corporation may
require.
ARTICLE II
Meetings of Shareholders
Section 1. Place and Time. All meetings of the shareholders shall be
held in the City of Portland, State of Maine, at such place as may be fixed from
time to time by the board of directors, or at such other place either within or
without the State of Maine as shall be designated from time to time by the board
of directors and stated in the notice of the meeting. Meetings of shareholders
may be held at such time as shall be stated in the notice of the meeting or in a
duly executed waiver of notice thereof.
Section 2. Annual Meetings. Annual meetings of shareholders shall be
held on the first Monday of June if not a legal holiday, and if a legal holiday,
then on the next secular day following, at 10:30 A.M., or at such other date and
time as shall be designated from time to time by the board of directors and
stated in the notice of the meeting, at which the shareholders shall elect a
board of directors, and transact such other business as may properly be brought
before the meeting.
Section 3. Notice of Annual Meeting. Written notice of the annual
meeting stating the place, date and hour of the meeting shall be given to each
shareholder entitled to vote at such meeting not less than 10 nor more than 50
days before the date of the meeting.
<PAGE>
Section 10. Voting Rights and Proxies. Unless otherwise provided by
statute or by the articles of incorporation, each shareholder shall at every
meeting of the shareholders be entitled to one vote in person or by proxy for
each share held by such shareholder, but no proxy shall be valid after 11 months
from its date, unless the proxy expressly and explicitly provides for a longer
period. Proxies shall be filed with the clerk of the corporation before or at
the time of the meeting.
Section 11. Informal Action. Any action that may be taken at any
meeting of shareholders may be taken informally or irregularly as provided by
statute including by written consent signed by all of the holders of outstanding
shares entitled to vote on such action.
ARTICLE III
Directors
Section 1. Power of Board of Directors. Subject to statute the
articles of incorporation and these by-laws, the business and affairs of the
corporation shall be managed by its board of directors.
Section 2. Number and Selection. Within the limits specified in the
articles of incorporation, the number of directors shall be determined by
resolution of the Board of Directors or by the shareholders. The directors shall
be elected at the annual meeting of the shareholders, except for the members of
the initial board of directors and as provided in Section 3 of this Article.
Each director shall hold office until the expiration of the term for which he is
elected, and until his successor shall have been elected and qualified, or until
his earlier resignation, removal from office, death or incapacity.
Section 3. Vacancies and Newly Created Directorship. Except as
otherwise provided by statutes, vacancies and newly created directorships
resulting from any increase in the number of directors may be filled by a
majority of the directors then in office, though less than a quorum, or by a
sole remaining director, and the directors so chosen shall hold office until the
next annual meeting of shareholders and until their successors are duly elected
and qualified, unless sooner displaced. If there are no directors in office,
then an election of directors may be held in the manner provided by statute.
However, if at the time of filling any vacancy or any newly created
directorship, the directors then in office shall constitute less than a majority
of the numbers of directors provided for immediately prior to any such increase,
the shareholders shall fill any such vacancies or newly created directorship.
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<PAGE>
Section 10. Voting Rights and Proxies. Unless otherwise provided by
statute or by the articles of incorporation, each shareholder shall at every
meeting of the shareholders be entitled to one vote in person or by proxy for
each share held by such shareholder, but no proxy shall be valid after 11 months
from its date, unless the proxy expressly and explicitly provides for a longer
period. Proxies shall be filed with the clerk of the corporation before or at
the time of the meeting.
Section 11. Informal Action. Any action that may be taken at any
meeting of shareholders may be taken informally or irregularly as provided by
statute including by written consent signed by all of the holders of outstanding
shares entitled to vote on such action.
ARTICLE III
Directors
Section 1. Power of Board of Directors. Subject to statute the
articles of incorporation and these by-laws, the business and affairs of the
corporation shall be managed by its board of directors.
Section 2. Number and Selection. Within the limits specified in the
articles of incorporation, the number of directors shall be determined by
resolution of the Board of Directors or by the shareholders. The directors shall
be elected at the annual meeting of the shareholders, except for the members of
the initial board of directors and as provided in Section 3 of this Article.
Each director shall hold office until the expiration of the term for which he is
elected, and until his successor shall have been elected and qualified, or until
his earlier resignation, removal from office, death or incapacity.
Section 3. Vacancies and Newly Created Directorship. Except as
otherwise provided by statutes, vacancies and newly created directorships
resulting from any increase in the number of directors my be filled by a
majority of the directors then in office, though less than a quorum, or by a
sole remaining director, and the directors so chosen shall hold office until the
next annual meeting of shareholders and until their successors are duly elected
and qualified, unless sooner displaced. If there are no directors in office,
then an election of directors may be held in the manner provided by statute.
However, if at the time of filling any vacancy or any newly created
directorship, the directors then in office shall constitute less than a majority
of the numbers of directors provided for immediately prior to any such increase,
the shareholders shall fill any such vacancies or newly created directorship.
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<PAGE>
Meetings of the Board of Directors
Section 4. Place. The board of directors of the corporation may hold
meetings, both regular and special, either within or without the State of Maine,
provided that if outside the State, said place shall be established prior
thereto by the board or approved by a majority of the board.
Section 5. Annual Meeting. The first meeting of each newly elected
board of directors shall be held immediately following the adjournment of the
annual meeting of the shareholders at the same place as the annual meeting of
shareholders and no notice of such meeting shall be necessary to the newly
elected directors in order legally to constitute the meeting, provided a quorum
shall be present. In the event such meeting is not held at such time and place,
the meeting may be held at such time and place as shall be specified in a notice
given as hereinafter provided for special meetings of the board of directors, or
as shall be specified in a written waiver, signed by all of the directors.
Section 6. Regular Meetings. Regular meetings of the board of
directors shall be held without notice at such time and at such place as shall
from time to time be determined by the board.
Section 7. Special Meetings. Special meetings of the board may be
called by the chairman of the board of directors or the president or any two
directors. The caller of the meeting shall set the time and place, subject to
Section 4. Notice of a special meeting shall be given to each director by the
caller of the meeting, or by the clerk if requested in writing by the caller,
with notice to be either by mail 3 days before the meeting or personally or by
telephone or telegram 1 day before the meeting. A meeting by conference phone or
similar communications equipment by means of which all the directors
participating may hear one another does not require notice if all directors are
participating. A written waiver of notice shall be effective.
Section 8. Quorum, Adjournment. At all meetings of the board, a
majority of the directors then in office shall constitute a quorum for the
transaction of business and the act of a majority of the directors present at
any meeting at which there is a quorum shall be the act of the board of
directors. If a quorum shall not be present at any meeting of the board of
directors, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
Section 9. Written Consent in Lieu of Meeting. Any action required or
permitted to be taken at any meeting of the board of directors or of any
committee thereof may be taken without a meeting, if all members of the board or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the board or committee.
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<PAGE>
Section 10. Committees of Directors. The board of directors may
designate one or more committees, including an executive committee, each
committee to consist of one or more of the directors of the corporation. Any
such committee, to the extent provided in the 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,
except as provided by statute. Each committee shall keep regular minutes of its
meetings or doings and report the same to the board of directors when required.
The provisions of Section 2 of Article V shall govern terms, removals and
vacancies.
Section 11. Compensation of Directors. The board of directors shall
have the authority to fix the compensation, if any, of directors. The directors
may be paid their expenses, if any, of attendance at meetings of the board of
directors and may be paid a fixed sum for attendance at meetings. No such
payment shall preclude any director from serving the corporation in any other
capacity and receiving compensation therefor. Members of special or standing
committees may be allowed like compensation for attending committee meetings.
ARTICLE IV
Time of Notices
Notice shall be deemed to be given at the time when properly sent or
given.
ARTICLE V
Officers
Section 1. Titles, Executive Officers, Other Officers. The officers
of the corporation shall be a chairman of the board of directors, if any, a
president, such vice-presidents, if any, as determined by the board of
directors, and a treasurer, which officers shall be the executive officers of
the corporation, and a clerk and such other non-executive officers as may be
elected for offices created by the board of directors.
Section 2. Election, Term and Vacancies. The board of directors shall
elect the officers who shall hold offices until their successors are chosen and
have qualified, or until their earlier resignation or removal from office by the
board of directors. Any vacancy occurring in any office of the corporation shall
be filled by the board of directors.
-5-
<PAGE>
Section 3. The Chairman of the Board. The Chairman of the board of
directors shall preside at all meetings of the shareholders and of the board of
directors. He may sign, with the clerk or any other proper officer of the
corporation thereunto duly authorized by the board of directors, certificates
for shares of the corporation, any deeds, mortgages, bonds or contracts or other
instruments which the board of directors has authorized to be executed except in
cases where the signing and executing thereof shall be expressly delegated by
the board of directors or by these by-laws to some other officer or agent of the
corporation, or shall be required by law to be otherwise signed or executed. In
the absence of the president or in the event of his inability or refusal to act,
the chairman of the board of directors shall perform the duties of the president
as well as the duties of his own office. He shall perform such other duties as
from time to time may be assigned to him by the board of directors.
Section 4. The President. The president shall be the chief
administrative officer of the corporation. He shall see that all orders and
resolutions of the board of directors are carried into effect by the proper
officers, and shall report to the board. In the absence of the chairman of the
board of directors or in the event of his inability or refusal to act, the
president shall preside at all meetings of the shareholders and of the board of
directors and perform the duties of the chairman of the board of directors as
well as the duties of the president. The president may sign with the clerk or
any other proper officer of the corporation thereunto authorized by the board of
directors, certificates for shares of the corporation, any deeds, mortgages,
bonds or contracts or other instruments which the board of directors has
authorized to be executed, except in cases where the signing and execution
thereof shall be expressly delegated by the board of directors or by the by-laws
to some other officer or agent of the corporation or shall be required by law to
be otherwise signed or executed; and in general shall perform all the duties
incident to the office of president and such other duties as may be prescribed
by the board of directors from time to time.
Section 5. The Vice-Presidents. The vice-presidents shall perform
such duties and have such powers as the board of directors or the president may
from time to time prescribe. A vice-president may execute contracts on behalf of
the corporation pertaining to the normal course of his duties. In the absence of
the chairman of the board of directors and of the president or in the event of
their inability or refusal to act, the vice-president (or in the event there be
more than one vice-president, the vice-presidents in the order designated, or in
the absence of any designation, then in the order of their seniority as
vice-presidents) shall perform the duties of the president, and when so acting,
shall have all the powers of and be subject to all the restrictions upon the
president.
<PAGE>
Section 6. The Clerk. The clerk shall have only the following powers
and duties in addition to any provided by statute:
He shall keep, in a book kept for such purposes, the records of all
shareholders' meetings, including records of all votes and minutes of such
meetings; such book shall be kept by him at the registered office of the
corporations or, at another office of the corporation to which the clerk has
ready access; wherever kept, such book shall be deemed to be in the custody of
the clerk. He shall act as voting inspector. He shall keep on file a list of
shareholders entitled to vote at each meeting. He shall keep on file the most
recent list of shareholders. He may certify all votes, resolutions and actions
of the shareholders, and may certify all votes, resolutions and actions of the
board of directors and of its committees.
Section 7. 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 monies 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. He 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 his transactions as
treasurer and of the financial condition of the corporation. If required by the
board of directors, he 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 his office and for the restoration to
the corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation. The
treasurer shall also perform such other duties as from time to time may be
assigned to him by the board of directors.
Section 8. Other and Assistant Officers. Other and assistant officers
shall perform such duties as the board of directors, the president or such other
or assistant officer's supervisory officer may, from time to time, prescribe. A
secretary and assistant secretaries may take minutes, sign, attest and seal all
documents and instruments in lieu of the clerk or secretary and assistant
secretaries and assistant treasurers respectively in the absence of the clerk,
secretary or treasurer or in the event of the inability of such person to act
may perform all functions of that officer.
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<PAGE>
nor more than 50 days prior to any other action. 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, and shall do so
if the meeting is adjourned for 30 days or more.
Section 5. Registered Shareholders. The corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends and to vote as such owner, and shall not be
bound to recognize any equitable or other claim to or interest in such share or
shares on the part of any other person, whether or not it shall have express or
other notice thereof, except as otherwise provided by the laws of Maine.
ARTICLE VII
Indemnification and Insurance
Directors, officers, agents or employees of the corporation, or persons
serving as such for another corporation or enterprise at the request of this
corporation, may receive indemnification and insurance as provided by statute,
subject to board approval when discretionary.
ARTICLE VIII
General Provisions
Section 1. Annual Statement. The board of directors shall present
before or at each annual meeting, and at any special meeting of the shareholders
when called for by vote of the shareholders, a full and clear statement of the
business and condition of the corporation.
Section 2. Checks. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate.
Section 3. Fiscal Year. The fiscal year of the corporation shall be
selected by the board of directors.
Section 4. Seal. The corporate seal shall have inscribed thereon the
name of the corporation, the year of its organization and the name of the State
of incorporation. The seal may be used by causing it or a facsimile thereof to
be impressed or affixed or reproduced or otherwise.
Section 5. Amendments. These by-laws may be altered, amended or
repealed or new by-laws may be adopted by the board of directors.
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<PAGE>
Section 6. Conflict. In the event of any conflict between these
by-laws and the provisions of applicable statutes, the latter shall control.
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<PAGE>
Amendment to By Laws dated November 11, 1997
WHEREAS, the Corporation is the owner, directly or indirectly, of all
of the outstanding capital stock of each Copy Service and Supply, Inc., a North
Carolina corporation, Office Furniture Concepts, Inc., a North Carolina
corporation, Felco Office Systems, Inc., a Texas corporation, American Photocopy
Equipment Company of Pittsburgh, Inc., a Delaware corporation, Berney, Inc., an
Alabama corporation, Southern Copy Systems, Inc., an Alabama corporation, Conway
Office Products, Inc., a New Hampshire corporation, Business Equipment
Unlimited, Inc., a Maine corporation, Cameron Office Products, Inc., a
Massachusetts corporation, Electronic Systems, Inc., a Virginia corporation,
Southern Business Communications, Inc., a Georgia corporation, Quality Business
Systems, Inc., a Washington corporation, and Duplicating Specialties, Inc., an
Oregon corporation; and
WHEREAS, the Board of Directors of the Corporation hereby deem it to be
in the best interests of the Corporation that the Corporation, as the sole
stockholder or the parent of the sole stockholder of each of the Subsidiaries,
hereby amends each of the Subsidiaries' bylaws in order to provide more
efficient and modern means for conducting the business of meetings for such
Subsidiaries' stockholders and boards of directors; NOW, THEREFORE, BE IT
RESOLVED, that the Corporation, as the sole stockholder of each of the
Subsidiaries, hereby elects by written consent of sole stockholder to amend the
Bylaws of each of the Subsidiaries to provide that any authorized person may
call a meeting of the Board of Directors of such company upon 24 hours written
notice (which notice may be given by facsimile transmission);
FURTHER RESOLVED, that the Corporation, as the sole stockholder of each
of the Subsidiaries, hereby elects by written consent of sole stockholder to
amend the Bylaws of each of the Subsidiaries to provide that any meeting of the
Board of Directors of such company may be held in person or by telephone;
FURTHER RESOLVED, that the Corporation, as the sole stockholder of each
of the Subsidiaries, hereby elects by written consent of sole stockholder to
amend the Bylaws of each of the Subsidiaries to provide that any action of the
stockholders of the Corporation may be taken by unanimous written consent except
as otherwise required by law to be held at a meeting of the stockholders of such
company; and
FURTHER RESOLVED, that the Corporation hereby ratifies all actions
previously taken by the officers of the Corporation in connection with the
amendments to its Subsidiaries' Bylaws to comply with all the requirements and
conditions in connection therewith, and all other actions taken incidental
thereto.
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<PAGE>
Exhibit 3.5A
The Commonwealth of Massachusetts
OFFICE OF THE MASSACHUSETTS SECRETARY OF STATE
Michael Joseph Connolly, Secretary
ONE ASHBURTON PLACE, BOSTON, MASS 02108
ARTICLES OF ORGANIZATION
(Under G.L. Ch. 156B)
Incorporators
NAME POST OFFICE ADDRESS
----
Include given name in full in case of natural persons; in case of a
corporation, give state of incorporation.
Dennis S. Cameron Three Ocean Drive, Ipswich, MA 01938
The above-named incorporator(s) do hereby associate (themselves) with the
intention of forming a corporation under the provisions of General Laws, Chapter
156B and hereby state(s):
1. The name by which the corporation shall be known is:
Cameron Office Products, Inc.
2. The purpose for which the corporation is formed is as follows:
To do all things necessary in the manufacture, sale, lease, purchase and repair
of electronic office equipment, as well as any and all support items to be used
with or in conjunction with business and/or office equipment machinery of every
kind and nature; to buy, sell, lease and purchase land or buildings to serve any
or all of the above purposes; and to do or cause to have done any and all such
acts and things as may be necessary, desirable, convenient, or incidental to the
consummation or accomplishment of any or all of the foregoing purposes.
Note: If the space provided under any article or item on this form is
insufficient, additions shall be set forth on separate 8-1/2x11 sheets of paper
leaving at least 1 inch for binding. Additions to more than one article may be
continued on
[ILLEGIBLE]
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Examiner
[ILLEGIBLE]
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Name
Approved
C |_|
P |_|
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R.A.|_|
<PAGE>
3. The Total number of shares and the par value, if any, of each class
of stock within the corporation is authorized as follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
WITHOUT PAR VALUE WITH PAR VALUE
--------------------------------------------------------------------------------
PAR
CLASS OF STOCK NUMBER OF SHARES NUMBER OF SHARES VALUE AMOUNT
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Preferred $
................................................................................
................................................................................
Common 1,000
--------------------------------------------------------------------------------
</TABLE>
*4. If more than one class is authorized, a description of each of the
different classes of stock with, if any, the preferences, voting
powers, qualifications, special or relative rights or privileges as
to each class thereof and any series now established:
None.
*5. The restrictions, if any, imposed by the Articles of Organization
upon the transfer of shares of stock of any class are as follows:
See sheet 5A attached.
*6. Other lawful provisions, if any, for the conduct and regulation of
business and affairs of the corporation, for its voluntary
dissolution, or for limiting, defining, or regulating the powers of
the corporation, or of its directors or stockholders, or of any
class of stockholders:
None.
* If there are no provisions state "None".
<PAGE>
5A
Any stockholder, including the heirs, assigns, executors, or
administrators of a deceased stockholder, desiring to sell or transfer such
stock owned by him or them, shall first offer it to the corporation through the
Board of Directors, In the manner following:
He shall notify the directors of his desire to sell or transfer by notice
or in writing, which notice shall contain the price at which he is willing to
sell or transfer and the name of one arbitrator. The directors shall within
thirty (30) days thereafter either accept the offer, or by notice to him in
writing name a second arbitrator, and these two shall name a third. It shall
then be the duty of the arbitrators to ascertain the value of the stock, and if
any arbitrator shall neglect or refuse to appear at any meeting appointed by the
arbitrators, a majority may act in the absence of such arbitrator.
After the acceptance of the offer, or the report of the arbitrators as to
the value of the stock, the directors shall have thirty (30) days within which
to purchase the same at such valuation, but, if at the expiration of thirty (30)
days, the corporation shall not have exercised the right so to purchase, the
owner of the stock shall be at liberty to dispose of the same in any manner he
may see fit.
No shares of stock shall be sold or transferred on the books of the
corporation until these provisions have been complied with, but the Board of
Directors may in any particular instance waive the requirement.
<PAGE>
7. By-laws of the corporation have been duly adopted and the initial
directors, president, treasurer and clerk, whose names are set out
below, have been duly elected.
8. The effective date of organization of the corporation shall be the
date of filing with the Secretary of the Commonwealth of if later
date is desired specify date (not more than 30 days after the date
of filing.)
January 1, 1987
9. The following information shall not for any purpose be treated as a
permanent part of the Articles of Organization of the corporation.
a. The post office address of the initial principal office of the
corporation of Massachusetts is:
62 Turnpike Road, Rowley, MA 01969
b. The name, residence, and post office address of each of the
initial directors and following officers of the corporation
are as follows:
NAME RESIDENCE AND POST OFFICE ADDRESS
President: Dennis S. Cameron, Three Ocean Drive, Ipswich, MA 01938
Treasurer: Dennis S. Cameron, Three Ocean Drive, Ipswich, MA 01938
Clerk: Dennis S. Cameron, Three Ocean Drive, Ipswich, MA 01938
Directors: Dennis S. Cameron, Three Ocean Drive, Ipswich, MA 01938
c. The date initially adopted on which the corporations fiscal
year ends is:
December 31
d. The date initially fixed in the by-laws for the annual meeting
of stockholders of the corporation is:
First Tuesday of February
e. The name and business address of the resident agent. if any.
of the corporation is:
IN WITNESS WHEREOF and under the penalties of perjury the INCORPORATOR(S)
sign(s) these Articles of Organization this 29th day of December, 1986.
/s/ Dennis S. Cameron
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Dennis S. Cameron
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The signature of each incorporator which is not a natural person must be an
individual who shall show the capacity in which he acts and by signing shall
represent under the penalties of perjury that he is duly authorized on its
behalf to sign these Articles of Organization.
<PAGE>
Exhibit 3.5B
BY-LAWS
OF
CAMERON OFFICE PRODUCTS, INC.
ARTICLE FIRST
DIRECTORS
Section 1. Number. The property, affairs and business of the
corporation shall be managed by a Board of Directors which shall consist of such
number of persons, not less than three, as the stockholders having voting power
may at the annual or a special meeting in lieu of the annual meeting of
stockholders determine and elect, provided however that the number of directors
may be less than three but not less than two whenever there shall be two
stockholders, and not less than one whenever
a. there shall be a single stockholder, or
b. the corporation shall not have issued any of its shares
If a vacancy or vacancies shall occur, for any reason, in the membership of the
Board, other than through removal by stockholder action, at any time when a
stockholders meeting is not in session, the remaining directors or director may,
quorum requirements notwithstanding, elect a successor or successors, to hold
office until the next annual meeting of stockholders and until their successors
are elected.
Section 2. Increase or Decrease. The stockholders of the corporation
may increase or decrease at any meeting the number of directors within the
limits provided in Section 1 above. If the number of directors be increased, the
additional directors shall be elected by the stockholders at the meeting
authorizing the increase. If the number of directors be decreased the decrease
shall become effective to the extent made possible by vacancies in the office of
director or by resignations and no director may be removed solely for the
purpose of effecting such decrease.
Section 3. Removal. Directors may be removed from office with cause
by the Board of Directors or with or without cause by the stockholders at a
meeting called at least in part for the purpose of considering removal, upon the
affirmative vote of a majority in interest of the stock or class of stock
entitled to vote upon the election of the director or directors proposed to be
removed, as the case may be, unless other provisions shall be made in Article
ELEVENTH hereof. Removal may be effected with cause only after reasonable notice
to each director proposed to be removed and the opportunity to be heard by the
body proposing removal.
Section 4. Term of Office. The term of office of a director elected
at the annual meeting of the stockholders shall be one year: provided, however,
that he shall hold his office until his successor shall be elected and
qualified. A director elected by the stockholders at other than the annual
meeting of
<PAGE>
stockholders shall hold office until the next annual meeting of stockholders and
the election and qualification of his successor.
Section 5. Meetings. The Board or Directors shall meet at the
principal office of the corporation or at such other place within the United
States as may from time to time be fixed by resolution of the Board or as may be
specified in the notice of the meeting. Regular meetings of the Board of
Directors shall be held at such time as the Board may by resolution fix; special
meetings may be held at any time upon the call of the President or a Vice
President or the Clerk, or of any two directors, by written (including
telegraphic) notice specifying the date, place and hour (but not necessarily the
purpose) of the meeting served on or sent or mailed to each director not less
than two days before the meeting.
An annual meeting of the Board of Directors may be held without
notice immediately after the annual meeting of stockholders. Notice need not be
given of any regularly scheduled meeting of the Board. Notice of a meeting need
not be given to a director if a written waiver of notice, executed by him before
or after the meeting, is filed with the records of the meeting; notice need not
be given to any director attending a meeting without protesting the lack of
notice prior to or at the commencement of the meeting.
The members of the Board of Directors or of any Committee designated
by said Board of Directors may participate in a meeting of the Board or of any
such Committee by means of a conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other at the same time, and participation by such means shall constitute
presence in person at a meeting.
Section 6. Committees. The Board of Directors may elect from the
Board an Executive Committee or other committee or committees which shall have
and exercise such powers of the Board as may be permitted by law and as shall be
conferred upon such committee by the Board. A majority of any such committee may
fix the time and place of its meetings and approve any action as the act of the
committee, unless the Board of Directors shall otherwise provide. The Board of
Directors shall have power at any time to fill vacancies in, change the
membership of, or discharge any such committee.
Section 7. Management. The Board of Directors shall have the entire
charge, control and management of the corporation and its property and business
and may exercise all or any of its powers. Among other things the Board may,
unless otherwise provided in Article ELEVENTH hereof, (1) authorize the issuance
of the shares of the corporation from time to time in its discretion for such
considerations as the Board shall determine and as may be permitted by law; (2)
determine the amounts to be distributed as dividends; (3) appoint and at its
discretion remove or suspend such subordinate officers, agents and employees as
it from time to time thinks fit, determine their duties, and
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fix and, from time to time as it sees fit, change their salaries and
compensation; (4) appoint any officer, permanently or temporarily as it sees
fit, to have the powers and perform the duties of any other officer; (5) appoint
any persons to be agents of the corporation (with the power to sub-delegate)
upon such terms as it sees fit; and (6) appoint any person or persons to accept
and hold in trust for the corporation any property belonging to the corporation
or in which it is interested and cause such instruments to be executed, and do
and cause to be done such things as it may deem requisite, in relation to any
such trust.
Section 8. Quorum and Voting. Unless otherwise provided in Article
ELEVENTH hereof, a majority of the members of the Board of Directors acting at a
meeting duly assembled, shall constitute a quorum for the transaction of
business, and the act of a majority of the directors present at a meeting at
which a quorum exists shall be the act of the Board of Directors. If at any
meeting of the Board of Directors, a quorum shall not be present, a majority of
the directors present may adjourn the meeting, without further notice, from time
to time until a quorum shall have been obtained.
Section 9. Class Voting. Whenever the Board of Directors shall
consist of directors elected by two or more classes of stockholders having
voting rights, a quorum at all meetings of directors, unless the Articles of
Organization or the provisions of Article ELEVENTH hereof otherwise provide,
shall, Section 8 above notwithstanding, consist of a majority of the directors
then in office of each class, and the vote of a majority of the directors of
each class present at a meeting at which a quorum is had shall be required to
approve any matter before the Board: provided, however, that with respect to the
filling of vacancies among the directors of any class whether arising from
death, resignation, removal, or an increase in the membership of the Board, such
vacancy shall be filled by the remaining director or directors of that class, a
majority of the votes cast by the directors of that class shall be sufficient to
elect, and, for the purpose of such election, the presence of a majority of the
directors of that class in office at the time of such election shall constitute
a quorum.
Section 10. Chairman. The directors may elect from their number a
Chairman of the Board who shall preside at all meetings of the Board of
Directors and may have such additional powers and responsibilities, executive or
otherwise, as may from time to time be vested in him by resolution of the Board
of Directors.
Section 11. Action Without Meeting. Any action required or permitted
to be taken at any meeting of the Board of Directors may be taken without a
meeting if a written consent
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thereto is signed by all members of the Board, and such written consent is filed
with the records of proceedings of the Board.
ARTICLE SECOND
OFFICERS
Section 1. General. The Board of Directors, as soon as may be after
its election in each year, shall elect a President, a Clerk and a Treasurer, and
from time to time may appoint one or more Vice Presidents and such Assistant
Clerks, Assistant Treasurers and such other officers, including a Secretary to
the Board of Directors, agents and employees as it may deem proper. The
President may but need not be chosen from among the directors.
Section 2. Term of Office. The term of office of all officers shall
be one year and until their respective successors are elected and qualify, but
any officer may at any time be removed from office, with or without cause, as
provided by law, by the affirmative vote of a majority of the members of the
Board of Directors then in office at a meeting called for the purpose unless
otherwise provided in Article ELEVENTH hereof. If removal of any officer be
proposed for cause, reasonable notice shall be provided such officer and he
shall be provided an opportunity to be heard by the Board. A vacancy in any
office arising from any cause may be filled for the unexpired portion of the
term by the Board of Directors.
Section 3. President. The President when present shall preside at
all meetings of the stockholders and, if a director, unless a Chairman of the
Board has been appointed and is present, at all meetings of the Board of
Directors. He shall, unless otherwise provided in Article ELEVENTH hereof, be
the chief executive officer of the corporation and shall have general operating
charge of its business. As soon as reasonably possible after the close of each
fiscal year, he shall submit to the Board a report of the operations of the
corporation for such year and a statement of its affairs, and shall from time to
time report to the Board all matters within his knowledge which the interests of
the corporation may require to be brought to its notice. The President shall
perform such duties and have such powers additional to the foregoing as the
Board may designate.
Section 4. Vice President. In the absence or disability of the
President, his powers and duties shall be performed by the Vice President, if
only one, or, if more than one, by the Vice President designated for the purpose
by the Board. Each Vice President shall have such other powers and perform such
other duties as the Board shall from time to time designate.
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Section 5. Treasurer. The Treasurer 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 depositaries as shall be authorized by the
Board. He shall disburse the funds of the corporation as ordered by the Board,
taking proper vouchers for such disbursements. He shall promptly render to the
President and to the Board such statements of his transactions and accounts as
the President and Board respectively may from time to time require. If required
by the Board he shall give bond in such amount, with such security and in such
form as the Board shall determine. The Treasurer shall perform such duties and
have such powers additional to the foregoing as the Board may designate.
Section 6. Assistant Treasurer. In the absence or disability of the
Treasurer, his powers and duties shall be performed by the Assistant Treasurer,
if only one, or, if more than one, by the one designated for the purpose by the
Board. Each Assistant Treasurer shall have such other powers and perform such
other duties as the Board shall from time to time designate.
Section 7. Clerk. The Clerk shall, unless the corporation has
designated a Resident Agent in the manner provided by law, be a resident of the
Commonwealth of Massachusetts. It shall be his duty to record in books kept for
the purpose all votes and proceedings of the stockholders and, if there be no
Secretary, of the Board of Directors. Unless the Board of Directors shall
appoint a transfer agent and/or registrar or other officer or officers for the
purpose, the Clerk shall be charged with the duty of keeping, or causing to be
kept, accurate records of all stock outstanding, stock certificates issued, and
stock transfers; subject to such other or different rules as shall be adopted
from time to time by the Board, such records may be kept solely in the stock
certificate books. The Clerk shall perform such duties and have such powers
additional to the foregoing as the Board shall designate. The Assistant Clerk,
if one be elected or appointed shall perform the duties of the Clerk during the
Clerk's absence as well as such other duties as may be assigned to him by the
Board. In the absence of the Clerk or Assistant Clerk at any meeting of
stockholders or, if there be no Secretary, of the directors, a Clerk pro tempore
shall be chosen by the meeting to perform the duties of the Clerk thereat.
Section 8. Secretary. The Secretary, if there be one, shall attend
all meetings of the Board of Directors and shall record the proceedings thereat
in books provided for the purpose.
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Section 9. Resignation. Any officer and any director may resign at
any time by delivering his resignation to the corporation at its principal
office or to the President, Clerk or Secretary. Such resignation shall be
effective at the time or upon the happening of the condition, if any, specified
therein or, if no such time or condition shall be specified, upon its receipt.
Section 10. Voting of Corporation Securities. Unless otherwise
ordered by the Board of Directors, the President or the Treasurer shall have
full power and authority in the name and behalf of the corporation to waive
notice of, to attend, act and to vote at, and to appoint any person or persons
to act as proxy or attorney-in-fact for this corporation at, any meeting of
stockholders or security holders of any other corporations or organization the
securities of which are held by the corporation, and at such meetings shall
possess and may exercise any and all rights and powers incident to the ownership
of such securities, which, as the owner thereof the corporation may possess and
exercise. The Board of Directors by resolution from time to time may confer like
powers upon any other person or persons.
ARTICLE THIRD
STOCKHOLDERS
Section 1. Meetings. The annual meeting of the stockholders of the
corporation shall be held at the office of the corporation, ,
, or at such other place within the Commonwealth of Massachusetts or
elsewhere within the United States of America as the Board of Directors shall
fix, or in the absence of any such designation, such place as may be designated
by the Clerk in the notice of the meeting or the place to which any annual
meeting shall be adjourned, on the first Tuesday of February at eleven o'clock
in the fore noon in each year to elect a Board of Directors, to hear the reports
of the officers, and to transact other business. If the day fixed for the annual
meeting shall fall upon a legal holiday, the meeting shall be held on the next
succeeding business day not a legal holiday. No change may be made in the date
fixed herein for the annual meeting within sixty days of such date and notice of
any such change shall be given the stockholders entitled to notice of the
meeting at least twenty days before the new date fixed for such meeting. If the
election of directors shall not be held on the day herein designated for an
annual meeting, or at an adjournment thereof, the Board of Directors shall cause
the election to be held at a special meeting of the stockholders as soon
thereafter as conveniently may be. At such special meeting the stockholders may
elect the directors and transact other business with the same force and effect
as at an annual meeting duly called and held.
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Section 2. Closing of Transfer Books. The Board of Directors may in
its discretion fix a date not less than ten days nor more than sixty days prior
to the date of any annual or special meeting of stockholders or prior to the
payment of any dividend or the making of any other distribution as the record
date for determining stockholders having the right to notice of and to vote at
such meeting or any adjournment thereof, or the right to receive such dividend
or distribution. In lieu of fixing such record date, the Board may, subject to
the limitations herein provided, order the closing of the stock transfer records
of the corporation for such purposes. The holders of record of shares of the
corporation on such record date or on the date of closing the stock transfer
records shall, if a dividend or distribution be declared, have the sole right to
receive such dividend or distribution, or, if such shares have a voting right,
the sole right to receive notice of, attend and vote at such meeting.
Section 3. Special Meetings. Special meetings of the stockholders
may be called by the resident or by the directors, and shall be called by the
Clerk, or in the event of his death, absence, incapacity or refusal by any other
officer, upon the written application of one or more stockholders who hold at
least one tenth in interest of the stock entitled to vote thereat. Notice shall
be given in the manner set forth in Section 4 below and shall state the time,
place and purpose of the meeting. Special meetings shall be held at the office
of the Corporation in _________, Massachusetts, or at such other place within
the Commonwealth of Massachusetts or elsewhere within the United States of
America, as the directors may fix, or, if the meeting is called upon the
application of stockholders, at such place as shall be stated in the Application
therefor, or the place to which such meeting may be adjourned: provided,
however, that a special meeting may be held at any place approved in writing by
every stockholder entitled to notice of the meeting or at which every
stockholder entitled to such notice shall be present and represented at the date
and time of the meeting.
Section 4. Notice of Meetings. Written notice of the place, date and
hour, and specifying the purpose of every meeting of stockholders, shall be
given by the Clerk or by any other officer designated by the directors or these
By-Laws, at least seven days before the meeting, to each stockholder entitled to
vote thereat. If a special meeting is called upon written stockholder
application and the Clerk shall be unable or shall refuse to give notice
thereof, notice may be given by any other officer of the corporation. Such
notice may be delivered in hand to each stockholder entitled to notice, at his
residence or usual place of business or mailed to him, postage prepaid,
addressed to his address as it appears in the records of the corporation. No
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notice of any meeting need be given a stockholder if a written waiver of notice
executed before or after the meeting by the stockholder, or his attorney
thereunto authorized, if filed with the records of the meeting, and, if notice
of a special meeting shall be waived by all stockholders entitled to notice
thereof, no call of such special meeting shall be required.
Section 5. Quorum. At all meetings of stockholders unless otherwise
provided in Article ELEVENTH hereof a quorum for the transaction of any business
shall consist of the holders of record, present in person or by proxy, of a
majority in interest of all of the issued and outstanding shares of the stock of
the corporation entitled to vote thereon.
Section 6. Action Without Meeting. Any action required or permitted
at any meeting of the stockholders, including the election of directors or
officers, may be taken without a meeting if a written consent thereto is signed
by the holders of all of the issued and outstanding capital stock entitled to
vote at such meeting and such written consent is filed with the records of the
meetings of stockholders.
Section 7. Voting. Except as otherwise provided by law or by the
Articles of Organization every stockholder entitled to vote at a meeting of
stockholders shall have one vote for each share of stock having the right to
vote at such meeting held by him and registered in his name on the books of the
corporation at the time of the meeting or at the record date fixed by the
directors for the determination of stockholders entitled to vote thereat, if
such date be fixed. Stockholders may vote in person or by proxy in writing filed
with the Clerk at the meeting. No proxy dated more than six months before the
meeting named therein shall be accepted, and no such proxy shall be valid after
the adjournment of the meeting. Except as otherwise required by law, by the
Articles of Organization or by Article ELEVENTH hereof, any matter coming before
any meeting of the stockholders shall be adopted as the act and deed of the
stockholders if approved by a majority in interest of the stock issued,
outstanding and entitled to vote thereon, present or represented at the meeting,
a quorum being present: provided, however, that at all elections of directors
and officers a plurality of the votes cast for any nominee or nominees shall
elect. No ballot shall be required for election of a director or officer unless
requested by the holder of one or more shares entitled to vote thereon or his
representative.
Section 8. Class Voting. Unless the Articles of Organization or the
provision of Article ELEVENTH hereof shall otherwise provide, whenever the
issued and outstanding shares of the corporation shall consist of shares of two
or more classes having a voting right, a quorum at all meetings
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of stockholders shall, Section 5 above notwithstanding, with respect to any
matter, including the election of directors, on which such two or more classes
shall be entitled to vote as a separate class, consist of a majority in interest
of the issued and outstanding stock of each such class; voting on such matter
shall be had by class, and approval of action thereon as the act of the
stockholders of the corporation, shall require the vote of a majority in
interest of the issued and outstanding stock of each class present or
represented at the meeting and entitled to vote thereat: provided, however, that
in the matter of election of directors elected by a particular class of shares a
quorum shall consist of a majority in interest of the issued and outstanding
stock of that class and a plurality of the votes cast by the holders of such
stock at a meeting at which such quorum is present shall elect.
ARTICLE FOURTH
CAPITAL STOCK
Section 1. Stock Certificates. Each stockholder shall be entitled to
a certificate or certificates in such form as the Board shall adopt, stating the
number of shares and the class thereof held by him, and the designation of the
series thereof, if any. Each certificate of stock shall be signed by the
President or a Vice President and by the Treasurer or an Assistant Treasurer;
the signatures of such officers may be facsimiles if the certificate is signed
by a transfer agent or registrar, other than a director, officer or employee of
the corporation. If any officer who has signed or whose facsimile signature has
been placed on any such certificate shall have ceased to be such officer before
such certificate is issued, the certificate may be issued by the corporation
with the same effect as if he were such officer at the time of issue. Every
certificate issued for shares of stock subject to a restriction or transfer
pursuant to the Articles of Organization, these By-Laws or any agreement to
which the corporation is a party, or issued while the corporation is authorized
to issue more than one class of stock, shall have the full text of such
restriction or the full text of the preferences, voting powers, qualifications
and special and relative rights of the stock of each class and series authorized
to be issued, as the case may be, set forth on the face or back of the
certificate or, alternatively, shall contain the statement that the corporation
will furnish a copy thereof to the holder of the certificate without charge upon
written request.
Section 2. Transfer. The stock of the corporation shall be
transferable, so as to affect the rights of the corporation, after satisfaction
of the provisions of the Articles of Organization, or other lawful provisions to
which the corporation
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is a party, imposing a restriction upon transfer unless the same shall be waived
by the Board of Directors by transfer recorded on the books of the corporation,
in person or by duly authorized attorney, upon the surrender of the certificate
or certificates properly endorsed or assigned.
Section 3. Fractional Shares. Fractional shares of stock of any
class may he issued. Fractional shares shall entitle the holder thereof to the
voting and dividend rights and the right to participate in assets upon
liquidation, and shall have and be subject to the preferences, qualifications,
restrictions and special and relative rights, of the class of stock or series in
which issued. In lieu of fractional shares, the corporation may issue scrip in
registered or bearer form entitling the holder thereof to receive a certificate
for a full share upon the surrender of scrip aggregating a full share. Any scrip
issued by the corporation may be issued upon such terms and conditions and in
such manner as the directors shall fix.
Section 4. Equitable Interests. The corporation shall be entitled to
treat the holder of record of any share or shares of stock as the holder in fact
thereof and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person except as may
be otherwise expressly provided by law.
Section 5. Lost Certificates. The directors of the corporation may,
from time to time, determine the conditions upon which a new certificate of
stock may be issued in place of any certificate alleged to have been lost or
destroyed. They may in their discretion require the owner of a lost or destroyed
certificate, or his legal representative, to give a bond to the corporation with
or without surety; surety if required shall be such as the directors deem
sufficient to indemnify the corporation against any loss or claim which may
arise by reason of the issue of a certificate in place of such lost or destroyed
stock certificate.
ARTICLE FIFTH
MAINTENANCE AND INSPECTION OF RECORDS
The corporation shall maintain in the Commonwealth of Massachusetts
the original or attested copies of its Articles of Organization, By-Laws and
records of all meetings of incorporators and stockholders, as well as its stock
and transfer records which shall contain the names of all stockholders and the
record address and amount of stock held by each. Such copies and records may be
maintained at the principal office of the corporation or an office
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of its transfer agent or the office of the Clerk and shall be open at all
reasonable times to the inspection of any stockholder for a proper purpose.
ARTICLE SIXTH
CHECKS, NOTES, DRAFTS AND OTHER INSTRUMENTS
Checks, notes, drafts and other instruments for the payment of money
drawn or endorsed in the name of the corporation may be signed by any officer or
officers or person or persons authorized by the Board of Directors to sign the
same. No officer or person shall sign any such instrument as aforesaid unless
authorized by said Board to do so.
ARTICLE SEVENTH
SEAL
The seal of the corporation shall be circular in form, bearing the
inscription Cameron Office Products, Inc., Incorporated Massachusetts, 1987. The
Treasurer shall have custody of the seal and may affix it (as may any other
officer if authorized by the directors) to any instrument requiring the
corporate seal.
ARTICLE EIGHTH
FISCAL YEAR
The fiscal year of the corporation shall be the year ending with the
31st day of December in each year.
ARTICLE NINTH
CONTROL OVER BY-LAWS
These By-Laws may be altered, amended or repealed and any new
By-Laws adopted at any annual or special meeting of the stockholders by the
affirmative vote of a majority of the shares of capital stock then issued
outstanding and entitled to vote unless a greater proportion shall be required
under the provision of Article ELEVENTH or by the affirmative vote of a majority
of the Board of Directors at any meeting of the Board except with respect to any
provision of the By-Laws which by law, the Articles of Organization and By-Laws
themselves requires action by the stockholders, provided, however, that notice
of a proposal to alter, amend or repeal these By-Laws or adopt new By-Laws shall
be included in the notice of any meeting at which such alteration, amendment or
repeal or adoption is considered and, provided further, that any alteration or
repeal of these By-Laws or any new By-Laws adopted by the Board of Directors may
be amended or repealed by the stockholders.
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ARTICLE TENTH
EFFECT OR PROVISIONS OF LAW AND
ARTICLES OF ORGANIZATION
Each of the provisions of these By-Laws shall be subject to and
controlled by any specific provisions of law or the Articles of Organization
which relate to their subject matter, and shall also be subject to any
exceptions, or more specific provisions, dealing with the subject matter,
appearing elsewhere in these By-Laws as amended from time to time.
ARTICLE ELEVENTH
EXCEPTIONS, IF ANY, TO THE FOREGOING PROVISIONS
OF THESE BY-LAWS
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Amendment to By Laws dated November 11, 1997
WHEREAS, the Corporation is the owner, directly or indirectly, of
all of the outstanding capital stock of each of Copy Service and Supply, Inc., a
North Carolina corporation, Office Furniture Concepts, Inc., a North Carolina
corporation, Felco Office Systems, Inc., a Texas corporation, American Photocopy
Equipment Company of Pittsburgh, Inc., a Delaware corporation, Berney, Inc., an
Alabama corporation, Southern Copy Systems, Inc., an Alabama corporation, Conway
Office Products, Inc., a New Hampshire corporation, Business Equipment
Unlimited, Inc., a Maine corporation, Cameron Office Products, Inc., a
Massachusetts corporation, Electronic Systems, Inc., a Virginia corporation,
Southern Business Communications, Inc., a Georgia corporation, Quality Business
Systems, Inc., a Washington corporation, and Duplicating Specialties, Inc., an
Oregon corporation; and
WHEREAS, the Board of Directors of the Corporation hereby deem it to
be in the best interests of the Corporation that the Corporation, as the sole
stockholder or the parent of the sole stockholder of each of the Subsidiaries,
hereby amends each of the Subsidiaries' bylaws in order to provide more
efficient and modern means for conducting the business of meetings for such
Subsidiaries' stockholders and boards of directors; NOW, THEREFORE, BE IT
RESOLVED, that the Corporation, as the sole stockholder of each of
the Subsidiaries, hereby elects by written consent of sole stockholder to amend
the Bylaws of each of the Subsidiaries to provide that any authorized person may
call a meeting of the Board of Directors of such company upon 24 hours written
notice (which notice may be given by facsimile transmission);
FURTHER RESOLVED, that the Corporation, as the sole stockholder of
each of the Subsidiaries, hereby elects by written consent of sole stockholder
to amend the Bylaws of each of the Subsidiaries to provide that any meeting of
the Board of Directors of such company may be held in person or by telephone;
FURTHER RESOLVED, that the Corporation, as the sole stockholder of
each of the Subsidiaries, hereby elects by written consent of sole stockholder
to amend the Bylaws of each of the Subsidiaries to provide that any action of
the stockholders of the Corporation may be taken by unanimous written consent
except as otherwise required by law to be held at a meeting of the stockholders
of such company; and
FURTHER RESOLVED, that the Corporation hereby ratifies all actions
previously taken by the officers of the Corporation in connection with the
amendments to its Subsidiaries' Bylaws to comply with all the requirements and
conditions in connection therewith, and all other actions taken incidental
thereto.
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<PAGE>
Exhibit 3.6a
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
Capitol Copy Products, Inc., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the stockholders of said corporation by their unanimous written
consent, adopted a resolution proposing and declaring advisable the following
amendment to the Certificate of Incorporation of said corporation:
RESOLVED, that the Restated Certificate of Incorporation of Capitol Copy
Products, Inc., be amended by changing the THIRD Article thereof so that, as
amended, said Article shall be and read as follows:
THIRD: The name of the corporation is hereby changed
to CAPITOL OFFICE SOLUTIONS, INC.
SECOND: That in lieu of a meeting and vote of stockholders, the
stockholders have, by unanimous written consent, consented to said amendment in
accordance with the provisions of Section 228 of the General Corporation Law of
the State of Delaware.
THIRD: That the aforesaid amendment was duly adopted in accordance with
the applicable provisions of Sections 242 and 228 of the General Corporation law
of the State of Delaware.
IN WITNESS WHEREOF, said Capitol Copy Products, Inc. has caused this
certificate to be signed by Armen A. Manoogian, its President, this 23rd day of
October, 1996.
CAPITOL COPY PRODUCTS, INC.
By: /s/ Armen A. Manoogian
--------------------------
Armen A. Manoogian
President
<PAGE>
CERTIFICATE OF MERGER
OF
CAPITOL COPY PRODUCTS, INC.
INTO
NUCAP, INC.
The undersigned corporation DOES HEREBY CERTIFY:
FIRST: That the name and state of incorporation of each of the constituent
corporations of the merger is as follows:
NAME STATE OF INCORPORATION
---- ----------------------
CAPITOL COPY PRODUCTS, INC. DISTRICT OF COLUMBIA
NUCAP, INC. DELAWARE
SECOND: That the agreement of merger between the parties to the merger has
been approved, adopted, certified, executed and acknowledged by each of the
constituent corporations in accordance with the requirements of Section 252 of
the General Corporation Law of the State of Delaware.
THIRD: The surviving corporation of the merger is NUCAP, INC., whose name
shall herewith be changed to CAPITOL COPY PRODUCTS, INC., a Delaware
corporation.
FOURTH: That the Certificate of Incorporation of NUCAP, INC., a Delaware
corporation which is surviving the merger, shall be the Certificate of
Incorporation of the surviving corporation and that the First Article and
Section (a) of the Fourth Article of such Certificate of Incorporation is hereby
amended as follows:
2
<PAGE>
FIRST: The name of the corporation is Capitol Copy Products, Inc.
FOURTH: (a) The total number of shares of all classes of stock which
the corporation shall have authority to issue is 50,000, consisting
of 40,000 shares of Common Stock, par value $.10 per share (the
"Common" stock), and 10,000 shares of Class B Stock, par value $.10
per share (the "Class B" stock).
FIFTH: That the executed agreement of merger is on file at the principal
place of business of the surviving corporation. The address of said principal
place of business is 12000 Old Baltimore Pike, Beltsville, Maryland 20705.
SIXTH: That a copy of the agreement of merger will be furnished on request
and without cost to any stockholder of any constituent corporation.
SEVENTH: The authorized capital stock of each foreign corporation which is
a party to the merger is as follows:
Number of Par Value
Corporation Class Shares Per Share
----------- ----- ------ ---------
Capitol Copy Products, Common 10,000 $1.00
Inc. Stock
Dated: 12 January, 1988
NUCAP, INC.
By: /s/ Armen A. Manoogian
--------------------------
Armen A. Manoogian
President
ATTEST:
By: /s/ George Wm. Erikson
-----------------------
George Wm. Erikson
Secretary
<PAGE>
CERTIFICATE OF INCORPORATION
OF
NUCAP, Inc.
* * * * *
FIRST. The name of the corporation is NUCAP, Inc.
SECOND. The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County
of New Castle; the name of the registered agent at such address is The
Corporation Trust Company.
THIRD. The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware.
FOURTH. (a) The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 3,000,000, consisting of 2,500,000
shares of common stock, par value $.l0 per share (the "Common" stock), and
500,000 shares of Class B stock, par value $.l0 per share (the "Class B" stock).
(b) No holder of shares of the Corporation of any class now or hereafter
authorized shall have any preferential or pre-emptive right to subscribe for,
purchase or receive any shares of the Corporation of any class now or hereafter
authorized, or any
<PAGE>
options or warrants for such shares, which may at any time be issued, sold or
offered for sale by the Corporation.
(c) Except as set forth in this Article FOURTH, the Common shares and Class B
shares shall be identical in all respects and shall have equal rights and
privileges.
A. Dividends and Distributions.
(1) Subject to paragraph (2) of this paragraph A, whenever a dividend (in cash
or property) is paid to holders of Class B shares, the Corporation shall also
pay to holders of Common shares a dividend at least equal in amount per share.
The Corporation may pay dividends to holders of Common shares in excess of
dividends paid, or without paying dividends, to holders of Class B shares.
(2) If at any time a distribution is to be paid in Common shares or Class B
shares (a "share distribution"), such share distribution may be declared and
paid only as follows:
(i) So long as no Common shares are outstanding, Common shares may be paid
to holders of Class B shares; and
(ii) In all other cases, Common shares may be paid only to holders of
Common shares and Class B shares may be paid only to holders of Class B shares.
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<PAGE>
Whenever a share distribution is paid, the same number of shares shall be paid
in respect of each outstanding Common share or Class B share. The Corporation
shall not combine or subdivide shares of either of such classes without at the
same time making a proportionate combination or subdivision of shares of the
other of such classes.
B. Voting. The holders of Class B shares shall have exclusive voting power
except as follows:
(1) With respect to the election of directors, effective with the Annual
Stockholders Meeting in 1988, the holders of Common shares voting as a separate
class shall be entitled to elect that number of directors which constitutes
twenty-five percent of the authorized number of members of the Board of
Directors and, if such twenty-five percent is not a whole number, then the
holders of Common shares shall be entitled to elect the nearest higher whole
number of directors that is at least twenty-five percent of such membership.
Holders of Class B shares voting as a separate class shall be entitled to elect
the remaining directors.
(2) The holders of Common shares shall be entitled to vote as a separate class
on the removal of any director elected by the holders of common shares, and the
holders of Class B shares shall be entitled to vote as a separate class on the
removal of any
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<PAGE>
director elected by the holders of Class B shares.
(3) The holders of the Common shares and the holders of the Class B shares shall
be entitled to vote as separate classes on such other matters as may be required
by law or this Certificate of Incorporation to be submitted to such holders
voting as separate classes.
(4) The holders of Common shares and Class B shares shall in all matters not
specified in paragraph (1), (2) or (3) of this paragraph B vote together as a
single class; provided, however, that the holders of Common shares shall have
one (1) vote for each share and the holders of Class B shares shall have ten
(10) votes for each share.
(5) Any vacancy in the office of a director elected by the holders of the Common
shares may be filled by a vote of such holders voting as a separate class, and
any vacancy in the office of a director elected by the holders of the Class B
shares may be filled by a vote of such holders voting as a separate class, and,
in the absence of a stockholder vote, in the case of a vacancy in the office of
a director elected by either class, such vacancy may be filled by the remaining
directors as provided in the By-Laws. Any director elected by the Board of
Directors to fill a vacancy shall serve the same remaining term as that of his
predecessor and until his or her successor has been chosen and has qualified. If
permitted by the By-Laws, the Board of Directors may increase
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<PAGE>
the number of directors, and any vacancies so created may be filled by the Board
of Directors; provided that, so long as the holders of Common shares have the
rights provided in paragraphs B(l) and B(5) of this Article FOURTH in respect of
the next succeeding annual meeting of stockholders, the Board of Directors may
be so enlarged by the Board of Directors only to the extent that at least
twenty-five percent of the enlarged Board consists of directors elected by the
holders of the Common shares or by persons appointed to fill vacancies created
by the death, resignation or removal of persons elected by the holders of the
Common shares.
(6) The Common shares will not have the rights to elect directors set forth in
paragraphs B(l) and B(5) of this Article FOURTH if, on the record date for any
stockholder meeting at which directors are to be elected, the number of issued
and outstanding Common shares is less than ten percent of the aggregate number
of issued and outstanding Common shares and Class B shares. In such case, all
directors to be elected at such meeting shall be elected by holders of Common
shares and Class B shares voting together as a single class; provided, however,
that with respect to said election the holders of Common shares shall have one
(1) vote for each share, and the holders of Class B shares shall have ten (10)
votes for each share.
(7) Notwithstanding anything in this paragraph B to the contrary, the holders of
Common shares shall have exclusive voting power on all matters at any time when
no Class B shares are issued
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<PAGE>
and outstanding.
C. Conversion. (1) Each holder of record of Class B shares may at any time
or from time to time, in such holder's sole discretion and at such holder's
option, convert any whole number or all of such non-assessable Common shares at
the rate of one Common share for each Class B share surrendered for conversion.
Any such conversion may be effected by any holder of Class B shares surrendering
such holder's certificate or certificates for the Class B shares to be
converted, duly endorsed, at the office of the Corporation or any transfer agent
for the Class B shares, together with a written notice to the Corporation at
such office that such holder elects to convert all or a specified number of
Class B shares and stating the name or names in which such holder desires the
certificate or certificates for such Common shares to be issued. Promptly
thereafter, the Corporation shall issue and deliver to such holder or such
holder's nominee or nominees, a certificate or certificates for the number of
Common shares to which such holder shall be entitled as aforesaid. Such
conversion shall be deemed to have been made at the close of business on the
date of each surrender, and the person or persons entitled to receive the Common
shares issuable on such conversion shall be treated for all purposes as the
record holder or holders of such Common shares on that date.
(2) No fraction of a Common share shall be issued on conversion of any Class B
share but, in lieu thereof, the Corporation shall
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<PAGE>
pay in cash therefor the pro rata fair market value of any such fraction. Such
fair market value on the date of such conversion shall be: (i) if the trading
prices for the Common Stock are reported on the consolidated transaction
reporting system (the "consolidated system") operated by the Consolidated Tape
Association, the average of the high and low prices at which the Common Stock is
reported in the consolidated system to have been traded; (ii) if the principal
market for the Common shares is an exchange and if the trading prices for the
Common shares are not reported in the consolidated system, the average of the
high and low prices at which the Common shares are reported to have traded on
such exchange; (iii) if the principal market for the Common shares is otherwise
than on an exchange and bids and offers for such security are reported in the
automated quotation system operated by the National Association of Securities
Dealers, Inc. ("NASDAQ"), the mean between the highest current independent bid
price and the lowest current independent asked price, reported on "level 2" of
NASDAQ; (iv) if the principal market for the Common shares is otherwise than on
an exchange and bids and offers for the Common shares are not reported in
NASDAQ, the mean between the highest current independent bid price and the
lowest current independent asked price, determined on the basis of reasonable
inquiry; or (v) if there is no market for the Common shares, such price as the
Board in its discretion, acting in good faith, shall determine. If there is a
market for the Common shares and if, on the pertinent date, no transactions or
bid and asked prices, as the case may be, are reported for the Common shares
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<PAGE>
under the relevant clause above, the fair market value of the Common shares
shall be determined on the next day on which transactions or bid and asked
prices, as the case may be, are reported for the Common Stock under such clause.
(3) The Corporation shall at all times reserve and keep available out of the
authorized and unissued Common shares, solely for the purpose of effecting the
conversion of the outstanding Class B shares, such number of Common shares as
shall from time to time be sufficient to effect the conversion of all
outstanding Class B shares, and if, at any time, the number of authorized and
unissued Common shares shall not be sufficient to effect conversion of the then
outstanding Class B shares, the Corporation shall take such corporate action as
may be necessary to increase the number of authorized and unissued Common shares
to such number as shall be sufficient for such purposes.
FIFTH. The name and mailing address of the sole incorporator is as follows:
Name Mailing Address
---- ---------------
George Wm. Erikson c/o CERBERONICS, Inc.
5600 Columbia Pike
Bailey's Crossroads, VA
22041
SIXTH. The Corporation is to have perpetual existence.
SEVENTH. In furtherance and not in limitation of the powers
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<PAGE>
conferred by statute, the Board of Directors is expressly authorized to make,
alter, or repeal the By-Laws of the Corporation.
EIGHTH. Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of section 279 of Title 8 of the
Delaware Code, order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may
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<PAGE>
be, and also on this Corporation.
NINTH. No Director shall be personally liable to the Corporation or any
stockholder for monetary damages for breach of fiduciary duty as a director,
except for any matter in respect of which such director shall be liable under
Section 174 of Title 8 of the Delaware Code (relating to the Delaware General
Corporation Law) or any amendment thereto or successor provision thereto or
shall be liable by reason that, in addition to any and all other requirements
for such liability, he (i) shall have breached his duty of loyalty to the
Corporation or its stockholders, (ii) shall not have acted in good faith or, in
failing to act, shall not have acted in good faith, (iii) shall have acted in a
manner involving intentional misconduct or a knowing violation of law or, in
failing to act, shall have acted in a manner involving intentional misconduct or
a knowing violation of law or (iv) shall have derived an improper personal
benefit. Neither the amendment nor repeal of this Article NINTH, nor the
adoption of any provision of the Certificate of Incorporation inconsistent with
this Article NINTH, shall eliminate or reduce the effect of this Article NINTH
in respect of any matter occurring, or any cause of action, suit or claim that
but for this Article NINTH would accrue or arise, prior to such amendment,
repeal or adoption of an inconsistent provision.
TENTH. 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 by statute, and
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<PAGE>
all rights conferred upon stockholders herein are granted subject to this
reservation.
I, the undersigned, being the sole incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, do make this certificate, hereby declaring and certifying
that this is my act and deed and that the facts herein stated are true, and
accordingly have herewith set my hand this 28th day of August 1987.
/s/ George Wm. Erikson
------------------------
GEORGE Wm. ERIKSON
COMMONWEALTH OF VIRGINIA )
) ss.
COUNTY OF FAIRFAX )
BE IT KNOWN that on this 28th day of August 1987, personally came before
me, a Notary Public in and for the County and Commonwealth aforesaid, George
Wm. Erikson, and he duly executed said Certificate of Incorporation before me
and acknowledged the said Certificate to be his act and deed and that the facts
stated therein are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal of office the day
and year aforesaid.
/s/ CYNTHIA A. LEENERTS
- ---------------------------
CYNTHIA A. LEENERTS
Notary Public
My commission expires on 27 June 1988.
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<PAGE>
Exhibit 3.6B
BYLAWS
OF
CAPITOL COPY PRODUCTS, INC.
ARTICLE I
OFFICES
Section 1. Delaware Office. The office of Capital Copy Products, Inc.
---------------
(hereinafter called the Corporation) within the State of Delaware shall be 1209
Orange Street in the City of Wilmington, County of New Castle.
Section 2. Other Offices. The Corporation may also have an office or
-------------
offices and keep the books and records of the Corporation, except as may
otherwise be required by law, in such other place or places, either within or
without the State of Delaware, as the Board of Directors of the Corporation
(hereinafter called the Board) may from time to time determine or the business
of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. All meetings of stockholders of the
-----------------
Corporation shall be held at the office of the Corporation in the State of
Delaware or at such other place, within or without the State of Delaware, as may
from time to time be fixed by the Board or specified or fixed by the Board or
specified or fixed in the respective notices or waivers of notice thereof.
Section 2. Annual Meetings. The annual meeting of stockholders of the
---------------
Corporation for the election of directors and for the transaction of such other
business as may properly come before the meeting shall be held annually on such
date and at such time as may be fixed by the Board.
Section 3. Special Meetings. Special meetings of stockholders, unless
-----------------
otherwise provided by law, may be called at any time only by the Board pursuant
to a resolution adopted by a majority of the then authorized number of directors
(as determined in accordance with Section 2 of Article III of these Bylaws), or
by the Chairman or the President. Any such call must specify the matter or
matters to be acted upon at such meeting and only such matter or matters shall
be acted upon thereat. Any action required or permitted to be taken by the
stockholders may be taken without a meeting if a majority in interest or all
shares of stock entitled to vote on any action consent in writing to the
adoption of a resolution authorizing the action. If less than unanimous consent
of all stockholders is received, the Secretary shall give prompt written notice
of such action to all other stockholders.
<PAGE>
Section 4. Notice of Meetings. Except as may otherwise be required by
------------------
law, notice of each meeting of stockholders, annual or special, shall be in
writing, shall state the place, date and hour of the meeting and, unless it is
the annual meeting, shall state the purpose or purposes of the meeting, indicate
that the notice is being issued by or at the direction of the person or persons
calling the meeting, and a copy thereof shall be delivered or sent by mail, not
less than 10 or more than 60 days before the date of said meeting, to each
stockholder entitled to vote at such meeting. If mailed, such notice shall be
directed to the stockholder at his address as it appears on the stock records of
the Corporation, unless he shall have filed with the Secretary a written request
that notices to him be mailed to some other address, in which case it shall be
directed to him at such other address. Unless (i) the adjournment is for more
than thirty days, or (ii) the Board shall fix a new record date for any
adjourned meeting after the adjournment, notice of such adjourned meeting need
not be given if the time and place to which the meeting shall be adjourned were
announced at the meeting at which the adjournment was taken.
Section 5. Quorum. At each meeting of stockholders of the Corporation,
------
the holders of a majority of the shares of capital stock of the Corporation
issued and outstanding and entitled to vote shall be present or represented by
proxy to constitute a quorum for the transaction of business, except as
otherwise provided by law.
Section 6. Adjournments. In the absence of a quorum at any meeting of
------------
stockholders or any adjournment or adjournments thereof, the chairman of the
meeting or a majority in interest of those present or represented by proxy and
entitled to vote may adjourn the meeting from time to time until a quorum shall
be present or represented by proxy. At any such adjourned meeting at which a
quorum shall be present or represented by proxy, any business may be transacted
which might have been transacted at the meeting as originally called if a quorum
had been present or represented by proxy thereat.
Section 7. Order of Business. The order of business at all meetings of
-----------------
stockholders shall be determined by the chairman of the meeting.
Section 8. Voting. Except as otherwise provided in the Certificate of
------
Incorporation at each meeting of stockholders, every stockholder of the
Corporation shall be entitled to one vote for every share of capital stock
standing in his name on the stock records of the Corporation (i) at the time
fixed pursuant to Section 6 of Article VII of these Bylaws as the record date
for the determination of stockholders entitled to vote at such meeting or (ii)
if no such record date shall have been fixed, then at the close of business on
the date next preceding the day on which notice thereof shall be given. At each
meeting of stockholders, all matters (except as otherwise provided in Section 3
of Article III of these Bylaws and except in cases where a larger vote is
required by law or by the Certificate of Incorporation of the Corporation or
these Bylaws) shall be decided by a majority of the votes cast at such meeting
by the holders of shares present or represented by proxy and entitled to vote
thereon, a quorum being present.
Section 9. Inspectors. For each election of directors by the
----------
stockholders in any case in which it shall be advisable, in the opinion of the
Board, that the voting upon any other matter shall be conducted by inspectors of
election, the Board shall appoint two inspectors of election. If for any such
election of directors or the voting upon any such matter, any
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<PAGE>
inspector appointed by the Board shall be unwilling or unable to serve, or if
the Board shall fail to appoint inspectors, the chairman of the meeting shall
appoint the necessary inspector or inspectors. The inspectors so appointed,
before entering upon the discharge of their duties, shall be sworn faithfully to
execute the duties of inspectors with strict impartiality, and according to the
best of their ability, and the oath so taken shall be subscribed by them. Such
inspectors shall determine the number of shares outstanding and the voting power
of each, the number of shares represented a the meeting, the existence of a
quorum, the validity and effect of proxies, and shall receive votes or ballots,
hear and determine all challenges and questions arising in connection with the
right to vote, count and tabulate all votes or ballots, determine the result,
and do such acts as are proper to conduct the election or vote with fairness to
all stockholders. On request of the chairman of the meeting or any stockholder
entitled to vote thereat, the inspectors shall make a report in writing of any
challenge, question or matter determined by them and shall execute a certificate
of any fact found by them. No director or candidate for the office of director
shall act as an inspector of election of directors. Inspectors need not be
stockholders.
Section 10. New Business. Any new business to be taken up at any annual
------------
meeting of stockholders shall be stated in writing and filed with the Secretary
at least ten (10) days before the date of the annual meeting, and all business
so stated, proposed and filed shall be considered at the annual meeting, but no
other proposal shall be acted upon at the annual meeting of stockholders. Any
stockholder may make any other proposal at the annual meeting, and the proposal
may be discussed and considered, but unless stated in writing and filed with the
Secretary at least ten (10) days before the meeting, such proposal shall be
postponed for action at an adjourned, special or annual meeting of stockholders
taking place thirty (30) days or more thereafter. This provision shall not
prevent the consideration and approval or disapproval at the annual meeting of
stockholders of reports of officers, directors and committees, but in connection
with such reports no new business shall be acted upon at such annual meeting
unless stated herein provided.
Section 11. Certain Rules of Procedure Relating to Stockholder Meetings.
-----------------------------------------------------------
All stockholder meetings, annual or special, shall be governed in accordance
with the following rules:
(i) Only stockholders of record will be permitted to present
motions from the floor at any meeting of stockholders.
(ii) The chairman of the meeting shall preside over and conduct the
meeting in a fair and reasonable manner, and all questions of
procedure or conduct of the meeting shall be decided solely by
the chairman of the meeting. The chairman of the meeting shall
have all power and authority vested in a presiding officer by
law or practice to conduct an orderly meeting. Among other
things, the chairman of the meeting shall have the power to
adjourn or recess the meeting, to silence or expel persons to
insure the orderly conduct of the meeting, to declare motions
or persons out of order, to prescribe rules of conduct and an
agenda for the meeting, to impose reasonable time limits on
questions and remarks by any
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stockholder, to limit the number of questions a
stockholders may ask, to limit the nature of questions and
comments to one subject matter at a time as dictated by any
agenda for the meeting, to limit the number of speakers or
persons addressing the chairman of the meeting or the
meeting, to determine when the polls shall be closed, to
limit the attendance at the meeting to stockholders of
record, beneficial owners of stock who present letters from
the record holders confirming their status as beneficial
owners, and the proxies of such record and beneficial
holders, and to limit the number of proxies a stockholder
may name.
Section 12. Requests for Stockholders List and Corporation Records.
------------------------------------------------------
Stockholders shall have those rights afforded under the General Corporation Law
of the State of Delaware to inspect a list of stockholders and other related
records and make copies or extracts therefrom. Such request shall be in writing
in compliance with Section 220 of the General Corporation Law of the State of
Delaware. In addition, any stockholder making such a request must agree that any
information so inspected, copied or extracted by the stockholder shall be kept
confidential, that any copies or extracts of such information shall be returned
to the Corporation and that such information shall only be used for the purpose
stated in the request. Information so requested shall be made available for
inspecting, copying or extracting at the principal executive offices of the
Corporation. Each stockholder desiring a photostatic or other duplicate copies
of any of such information requested shall make arrangements to provide such
duplicating or other equipment necessary in the city where the Corporation's
principal executive offices are located. Alternative arrangements with respect
to this Section 12 may be permitted in the discretion of the Chief Executive
Officer of the Corporation or by vote of the Board of Directors.
ARTICLE III
DIRECTORS
Section 1. Powers. The business of the Corporation shall be managed
------
under the direction of the Board. The Board may exercise all such authority and
powers of the Corporation and do all such lawful acts and things as are not by
law or otherwise directed or required to be exercised or done by the
stockholders.
Section 2. Number, Election and Terms. The authorized number of
--------------------------
directors may be determined from time to time by vote of a majority of the then
authorized number of directors; provided however, that such number shall not be
less than one nor more than nine. No decrease in the number of directors
constituting the Board shall shorten the term of any incumbent director.
Section 3. Election. At each meeting of stockholders for the election
--------
of directors at which a quorum is present, the persons receiving a plurality of
the votes shall be elected directors.
Section 4. Place of Meetings. Meetings of the Board shall be held at
-----------------
the Corporation's office in the State of Delaware or at such other place, within
or without such
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<PAGE>
state, as the Board may from time to time determine or as shall be specified or
fixed in the notice or waiver of notice of any such meeting.
Section 5. Regular Meetings. Regular meetings of the Board shall be
----------------
held in accordance with a yearly meeting schedule as determined by the Board; or
such meetings may be held on such other days and at such other times as the
Board may from time to time determine. Notice of regular meetings of the Board
need not be given except as otherwise required by these Bylaws.
Section 6. Special Meetings. Special meetings of the Board may be
----------------
called by the President and shall be called by the Secretary at the request of
any two of the other directors.
Section 7. Notice of Meetings. Notice of each special meeting of the
------------------
Board (and of each regular meeting for which notice shall be required), stating
the time, place and purposes thereof, shall be mailed to each director,
addressed to him at his residence or usual place of business, or shall be sent
to him by telex, cable or telegram so addressed, or shall be given personally or
by telephone, on twenty-four hours notice, or such shorter notice as the person
or persons calling such meeting may deem necessary or appropriate in the
circumstances.
Section 8. Quorum and Manner of Acting. The presence of at least a
---------------------------
majority of the authorized number of directors shall be necessary and sufficient
to constitute a quorum for the transaction of business at any meeting of the
Board or a committee thereof. If a quorum shall not be present at any meeting of
the Board or a committee thereof, a majority of the directors present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present. Except where a
different vote is required by law, the act of a majority of the directors
present at any meeting at which a quorum shall be present shall be the act of
the Board. Any action required or permitted to be taken by the Board may be
taken without a meeting if all the directors consent in writing to the adoption
of a resolution authorizing the action. The resolution and the written consents
thereto by the directors shall be filed with the minutes of the proceedings of
the Board. Any one or more directors may participate in any meeting of the Board
by means of a conference telephone or similar communications equipment allowing
all persons participating in the meeting to hear each other at the same time.
Participation by such means shall constitute presence in person at a meeting of
the Board.
Section 9. Resignation. Any directors may resign at any time by giving
-----------
written notice to the Corporation; provided, however, that written notice to the
Board, the Chairman of the Board, the President or the Secretary shall be deemed
to constitute notice to the Corporation. Such resignation shall take effect
upon receipt of such notice or at any later time specified therein, and, unless
otherwise specified therein, acceptance of such resignation shall not be
necessary to make it effective.
Section 10. Compensation of Directors. The Board may provide for the
--------------------------
payment to any of the directors, other than officers or employees of the
Corporation, of a specified amount for services as a director or member of a
committee of the Board, or of a specified amount for attendance at each regular
or special Board meeting or committee meeting, or of both, and all
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<PAGE>
directors shall be reimbursed for expenses of attendance at any such meeting;
provided, however, that nothing herein contained shall be construed to preclude
any director from serving the Corporation in any other capacity and receiving
compensation therefor.
Section 11. Vacancies, Additional Directors and Removal From Office.
-------------------------------------------------------
If any vacancy occurs in the Board caused by death, resignation, retirement,
disqualification or removal from office of any director, or otherwise, or if any
new directorship is created by an increase in the authorized number of
directors, a majority of the directors then in office, though less than a
quorum, or a sole remaining director, may choose a successor to fill such
vacancy or the newly created directorship; and a director so chosen shall hold
office until the term of the director whose vacancy is filled expires and until
his successor shall be duly elected and shall qualify, or until his earlier
death, resignation, retirement, disqualification or removal, or until the next
annual meeting of stockholders, whichever shall first occur. Any director may
be removed, with or without cause, by the holders of a majority of the shares
then entitled to vote at an election of directors at any special meeting of
stockholders duly called and held for such purpose.
Section 12. Action Without Meeting. Unless otherwise restricted by the
----------------------
Certificate of Incorporation or these Bylaws, any action required or permitted
to be taken at any meeting of the Board, or of any committee thereof as provided
in Article IV of these Bylaws, may be taken without a meeting, if a written
consent thereto is signed by all members of the Board or of such committee, as
the case may be, and such written consent is filed with the minutes of
proceedings of the Board or committee.
ARTICLE IV
COMMITTEES OF THE BOARD
Section 1. Designation, Powers and Name. The Board may, by resolution
passed by a majority of the whole Board, designate one or more committees,
including, if they shall so determine, an Executive Committee, each such
committee to consist of one or more of the directors of the Corporation. If an
Audit Committee or a Compensation Committee is designated, each such committee
shall consist of one or more directors of the Corporation who are not employees
of the Corporation. The committee shall have and may exercise such of the
powers of the Board in the management of the business and affairs of the
Corporation as may be provided in such resolution; provided, however, that no
such committee shall have the power or authority in 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, fix the designations 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
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<PAGE>
Corporation or a revocation of a dissolution, or amending the Bylaws of the
Corporation; and, provided further, that, unless the resolution establishing the
committee expressly so provides, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock. The
committee may authorize the seal of the Corporation to be affixed to all papers
which may require it. The Board may designate one or more directors as alternate
member(s) of any committee, who may replace any absent or disqualified member at
any meeting.
Section 2. Minutes. Each committee of directors shall keep regular
-------
minutes of its proceedings and report the same to the Board when required.
Section 3. Compensation. Members of special or standing committees may
------------
be allowed compensation for attending committee meetings, if the Board shall so
determine.
Section 4. Action by Consent: Participation by Telephone or Similar
--------------------------------------------------------
Equipment. Unless the Board shall otherwise provide, any action required or
- ---------
permitted to be taken by any committee may be taken without a meeting if all
members of the committee consent in writing to the adoption of a resolution
authorizing the action. The resolution and the written consents thereto by the
members of the committee shall be filed with the minutes of the proceedings of
the committee. Unless the Board shall otherwise provide, any one or more members
of any such committee may participate in any meeting of the committee by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other. Participation by
such means shall constitute presence in person at a meeting of the committee.
Section 5. Changes in Committee; Resignations; Removals. The Board
--------------------------------------------
shall have power, by the affirmative vote of a majority of the authorized number
of directors, at any time to change the members of, to fill vacancies in, and to
discharge any committee of the Board. Any member of any such committee may
resign at any time by living notice to the Corporation, provided, however, that
notice to the Board, the Chairman of the Board, the President, the Chairman of
such committee or the Secretary shall be deemed to constitute notice to the
Corporation. Such resignation shall take effect upon receipt of such notice or
at any later time specified therein; and, unless otherwise specified therein,
acceptance of such resignation shall not be necessary to make it effective. Any
member of any such committee may be removed at any time, either with or without
cause by the affirmative vote of a majority of the authorized number of
directors at any meeting of the Board called for that purpose.
ARTICLE V
OFFICERS
Section 1. Officers. The officers of the Corporation shall be a Chairman of
--------
the Board (if such office is created by resolution adopted by the Board and who
may also be designated the President), a President (who may also be designated
the Chief Executive Officer), one or more Vice Presidents (any one or more of
whom may be designated Executive Vice President or Senior Vice President), a
Secretary and a Treasurer. The Board may appoint such
<PAGE>
other officers and agents, including Assistant Vice Presidents, Assistant
Secretaries and Assistant Treasurers, as it shall hold their offices for such
terms and shall exercise such powers and perform such duties as shall be
determined by the Board. Any two or more offices, other than the offices of
President and Secretary, may be held by the same person. No officer shall
execute, acknowledge, verify or countersign any instrument on behalf of the
Corporation in more than one capacity, if such instrument is required by law, by
these Bylaws or by any act of the Corporation to be executed, acknowledged,
verified or countersigned by two or more officers. The Chairman of the Board
shall be elected from among the directors. With the foregoing exception, none
of the other officers need be a director, and none of the officers need be a
stockholder of the Corporation unless otherwise required by the Certificate of
Incorporation.
Section 2. Election and Term of Office. The officers of the
---------------------------
Corporation shall be elected annually by the Board at its first regular meeting
held after the annual meeting of stockholders or as soon thereafter as
conveniently practicable. Each officer shall hold office until his successor
shall have been elected or appointed and shall have qualified or until his death
or the effective date of his resignation or removal, or until he shall cease to
be a director in the case of the Chairman of the Board.
Section 3. Removal and Resignation. Any officer or agent elected or
-----------------------
appointed by the Board may be removed without cause by the affirmative vote of a
majority of the Board whenever, in its judgment, the best interests of the
Corporation shall be served thereby, but such removal shall be without prejudice
to the contractual rights, if any, of the person so removed. Any officer may
resign at any time by giving written notice to the Corporation. Any such
resignation shall take effect at the date of the receipt of such notice or at
any later time specified therein, and unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
Section 4. Vacancies. Any vacancy occurring in any office of the
---------
Corporation by death, resignation, removal or otherwise, may be filled by the
Board for the unexpired portion of the term.
Section 5. Salaries. The salaries of all officers and agents of the
--------
Corporation shall be fixed by the Board or pursuant to its direction; and no
officer shall be prevented from receiving such salary by reason of his also
being a director.
Section 6. Chairman of the Board. The Chairman of the Board (if such
---------------------
office is created by resolution adopted by that Board and who may also hold the
office of President or other offices) shall have such duties as the Board may
prescribe. In the Chairman's absence, such duties shall be attended to by the
President.
Section 7. President. The President shall preside at all meetings of
---------
the Board and at all meetings of the stockholders. The President shall be the
Chief Executive Officer of the Corporation and shall perform such duties and
exercise such powers as usually appertain to such title and such other duties as
may be prescribed by the stockholders, the Board or the Executive Committee (if
any) from time to time. The President shall have the power to appoint and
-8-
<PAGE>
remove subordinate officers, agents and employees, including Assistant
Secretaries and Assistant Treasurers, except that the President may not remove
those elected or appointed by the Board. The President shall keep the Board and
the Executive Committee (if any) fully informed and shall consult them
concerning the business of the Corporation. The President may sign, with the
Secretary or another officer of the Corporation thereunto authorized by the
Board, certificates for shares of the Corporation and any deeds, bonds,
mortgages, contracts, checks, notes, drafts or other instruments, the issue or
execution of which shall have been authorized by resolution by the Board, except
in cases where the signing and execution thereof has been expressly delegated by
these Bylaws or by the Board to some other officer or agent of the Corporation,
or shall be required by law to be otherwise executed. The President shall vote,
or give a proxy to any other officer of the Corporation to vote, all shares of
stock of any other corporation standing in the name of the Corporation. In
general, the President shall perform all other duties normally incident to or as
usually appertain to the office of President and such other duties as may be
prescribed by the stockholders, the Board or the Executive Committee (if any)
from time to time.
Section 8. Vice Presidents. In the absence of the President, or in the
---------------
event of his inability or refusal to act, the Executive Vice President (or in
the event there shall be no Vice President designated Executive Vice President,
any Vice President designated by the Board) shall perform the duties and
exercise the powers of the President. Any Vice President may sign, with the
Secretary or Assistant Secretary, certificates for shares of the Corporation and
any deeds, bonds, mortgages, contracts, checks, notes, drafts or other
instruments, the issue or execution of which shall have been authorized by
resolution of the Board, except in cases where the signing and execution thereof
has been expressly delegated by these Bylaws or by the Board to some other
officer or agent of the Corporation, or shall be required by law to be otherwise
executed. The Vice Presidents shall perform such other duties as from time to
time may be assigned to them by the Chairman of the Board (if any), the
President, the Board or the Executive Committee (if any).
Section 9. Secretary. The Secretary shall (a) record the proceedings
---------
of the meetings of the stockholders, the Board and committees of directors in
the permanent minute books of the Corporation kept for that purpose; (b) see
that all notices are duly given in accordance with the provisions of these
Bylaws and as required by law; (c) be custodian of the corporate records and of
the seal of the Corporation, and see that the seal of the Corporation or a
facsimile thereof is affixed to all certificates for shares of the Corporation
prior to the issue thereof and to all documents, the execution of which on
behalf of the Corporation under its seal is duly authorized in accordance with
the provisions of these Bylaws; (d) keep or cause to be kept a register of the
post office address of each stockholder which shall be furnished by such
stockholder; (e) sign with the Chairman of the Board (if any), the President, or
an Executive Vice President or Vice President, certificates for shares of the
Corporation and any deeds, bond, mortgages, contracts, checks, notes, drafts or
other instruments, the issue or execution of which shall have been authorized by
resolution of the Board, except in cases where the signing and execution thereof
has been expressly delegated by these Bylaws or by the Board to some other
officer or agent of the Corporation, or shall be required by law to be otherwise
executed; (f) have general charge of the stock transfer books of the
Corporation; and (g) in general, perform all duties normally incident to the
office of Secretary and such other duties as from time to time may be assigned
-9-
<PAGE>
by the Chairman of the Board (if any), the President, the Board of Directors or
the Executive Committee (if any).
Section 10. Treasurer. If required by the Board, the Treasurer shall
---------
give a bond for the faithful discharge of his or her duties in such sum and with
such surety or sureties as the Board shall determine. The Treasurer shall (a)
gave charge and custody of and be responsible for all funds and securities of
the Corporation; receive and give receipts for monies due and payable to the
Corporation from any source whatsoever and deposit all such monies in the name
of the Corporation in such banks, trust companies or other depositories as shall
be selected in accordance with the provisions of Section 4 of Article VI of
these Bylaws; (b) prepare, or cause to be prepared, for submission at each
regular meeting of the Board, at each annual meeting of the stockholders, and at
such other times as may be required by the Board, the Chairman of the Board (if
any), the President or the Executive Vice Committee (if any), a statement of
financial condition of the Corporation in such detail as may be required; (c)
sign with the Chairman of the Board (if any), the President, or an Executive
Vice President or Vice President, certificates for shares of the Corporation and
any deeds, bonds, mortgages, contracts, checks, notes, drafts or other
instruments, the issue or execution of which shall have been authorized by
resolution of the Board, except in cases where the signing and execution thereof
has been expressly delegated by these Bylaws or by the Board to some other
officer or agent of the Corporation, or shall be required by law to be otherwise
executed; and (d) in general, perform all the duties incident to the office of
Treasurer and such other duties as from time to time may be assigned by the
Chairman of the Board (if any), the President, the Board or the Executive
Committee (if any).
Section 11. Assistant Secretary or Treasurer. The Assistant
--------------------------------
Secretaries and Assistant Treasurers shall, in general, perform such duties as
shall be assigned to them by the Secretary or the Treasurer, respectively, or by
the Chairman of the Board (if any), the President, the Board or the Executive
Committee (if any). The Assistant Secretaries and Assistant Treasurers shall, in
the absence of the Secretary or Treasurer, respectively, or in their respective
inability or refusal to act, perform all functions and duties which such absent
officers may delegate, but such delegation shall not relieve the absent officer
from the responsibilities and liabilities of their office. The Assistant
Secretaries may sign, with the Chairman of the Board (if any), the President or
Executive Vice Pesident or Vice President, certificates for shares of the
Corporation and any deeds, bonds, mortgages, contracts, checks, notes, drafts or
other instruments, the issue or execution of which shall have been authorized by
a resolution of the Board, except in cases where the signing and execution
thereof has been expressly delegated by these Bylaws or by the Board to some
other officer or agent of the Corporation, or shall be required by law to be
otherwise executed. The Assistant Treasurers shall respectively, if required by
the Board, give bonds for the faithful discharge of their duties in such sums
and with such sureties as the Board shall determine.
-10-
<PAGE>
ARTICLE VI
CONTRACTS, CHECKS, LOANS, DEPOSITS, ETC.
Section 1. Contracts. The Board may authorize any officer or officers,
---------
agent or agents, in the name and on behalf of the Corporation, to enter into any
contract or to execute and deliver any instrument, which authorization may be
general or confined to specific instances; and, unless so authorized by the
Board, no officer, agent or employee shall have any power or authority to bind
the Corporation by any contract or engagement or to pledge its credit or to
render it liable pecuniarily for any purpose or for any amount.
Section 2. Checks, etc. All checks, drafts, bills of exchange or other
-----------
orders for the payment of money out of the funds of the Corporation, and all
notes or other evidences of indebtedness of the Corporation, shall be signed in
the name and on behalf of the Corporation in such manner as shall from time to
time be authorized by the Board, which authorization may be general or confined
to specific instances.
Section 3. Loans. No loan shall be contracted on behalf of the
-----
Corporation, and no negotiable paper shall be issued in its name, unless
authorized by the Board, which authorization may be general or confined to
specific instances. All bonds, debentures, notes and other obligations or
evidences of indebtedness of the Corporation issued for such loans shall be
made, executed and delivered as the Board shall authorize.
Section 4. Deposits. All funds of the Corporation not otherwise
--------
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositaries as may be selected by or in
the manner designated by the Board. The Board or its designees may make such
special rules and regulations with respect to such bank accounts, not
inconsistent with the provisions of these Bylaws, as may be deemed expedient.
ARTICLE VII
CAPITAL STOCK
Section 1. Stock Certificates. Each stockholder shall be entitled to
------------------
have, in such form as shall be approved by the Board, a certificate or
certificates signed by the Chief Executive Officer or the President and by
either the Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary (except that, when any such certificate is countersigned by a transfer
agent or registered by a registrar other than the Corporation itself or any
employee, the signatures of any such officers may be facsimiles, engraved or
printed), which may be sealed with the seal of the Corporation (which seal may
be a facsimile, engraved or printed), certifying the number of shares of capital
stock of the Corporation owned by such stockholder. In case any officer who has
signed or whose facsimile signature has been placed upon any such certificate
shall have ceased to be such officer before such certificate is issued, such
certificate may be issued by the Corporation with the same effect as if he were
such officer at the date of its issue.
-11-
<PAGE>
Section 2. List of Stockholders Entitled to Vote. The officer of the
-------------------------------------
Corporation who has charge of the stock ledger of the Corporation shall prepare
and make or cause to have prepared or made, 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 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 of the
Corporation who is present.
Section 3. Stock Ledger. The stock ledger of the Corporation shall be
------------
the only evidence as to who are the stockholders entitled to examine the stock
ledger, the list required by Section 2 of this Article VII or the books of the
Corporation, or to vote in person or by proxy at any meeting of stockholders.
Section 4. Transfer of Capital Stock. Transfers of shares of capital
-------------------------
stock of the Corporation shall be made only on the stock records of the
Corporation by the holder of record thereof or by his attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary of
the Corporation or the transfer agent thereof, and only on surrender of the
certificate or certificates representing such shares, properly endorsed or
accompanied by a duly executed stock transfer power. The Board may make such
additional rules and regulations as it may deem expedient concerning the issue
and transfer of certificates representing shares of the capital stock of the
Corporation.
Section 5. Lost Certificates. The Board may direct a new certificate
-----------------
to be issued in place of any certificate theretofore issued by the Corporation
alleged to have been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the person claiming the certificate of stock to be lost, stolen
or destroyed. When authorizing such issue of a new certificate, the Board may,
in its discretion and as a condition precedent to the issuance thereof, require
the owner of such lost, stolen or destroyed certificate, or his legal
representative, to give the Corporation a bond in such sum as it may direct as
indemnity against any claim that may be made against the Corporation with
respect to the certificate alleged to have been lost, stolen or destroyed.
Section 6. Fixing of Record Date. 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 entitled to receive payment of any
dividends 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 may fix, in advance, a
record date, which shall not be more than sixty days nor less than ten days
before the date of such meeting, nor more than sixty days prior to any other
action. 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 may fix a new record date for the adjourned
meeting.
-12-
<PAGE>
Section 7. Beneficial Owners. The Corporation shall be entitled to
-----------------
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold such
person liable for calls and assessments, and shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof,
except as otherwise provided by law.
ARTICLE VIII
DIVIDENDS
Section 1. Declaration. Dividends upon the capital stock of the
-----------
Corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board at any regular or special meeting, pursuant
to law. Dividends may be paid in cash, in property or in shares of capital
stock, subject to the provisions of the Certificate of Incorporation.
Section 2. Reserve. Before payment of any dividend, there may be set
-------
aside out of any funds of the Corporation available for dividends such sum or
sums as the Board from time to time, in their absolute discretion, think proper
as a reserve or reserves to meet contingencies or for equalizing dividends, or
for repairing or maintaining any property of the Corporation, or for such other
purpose as the Board shall think conducive to the interests of the Corporation,
and the directors may modify or abolish any such reserve in the manner in which
it is was created.
ARTICLE IX
LIMITATION OF DIRECTORS' LIABILITY
Section 1. Limitation of Liability of Directors to the Corporation and
-----------------------------------------------------------
its Stockholders. No director of the Corporation shall be liable to the
- ----------------
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit.
ARTICLE X
INDEMNIFICATION
Section 1. Indemnification. The Corporation shall indemnify to the
---------------
full extent authorized or permitted by law any person made, or threatened to be
made, a party to any action or proceeding (whether civil or criminal or
otherwise) by reason of the fact that he, his testator or intestate, is or was a
director of officer of the Corporation or by reason of the fact that such
director or officer, at the request of the Corporation, is or was serving any
other corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise, in any capacity.
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<PAGE>
Nothing contained herein shall affect any rights to indemnification to which
employees other than directors and officers may be entitled by law.
Section 2. Advancement of Expenses. Expenses, incurred by an officer
-----------------------
or director in defending a civil or criminal action, suit or proceeding may be
paid by the Corporation in advance of the final disposition of such action, suit
or proceeding as authorized by the Board upon receipt of an undertaking by or on
behalf of such director or officer to repay such amount if it shall ultimately
be determined that he is not entitled to be indemnified by the Corporation as
authorized in this Section.
Section 3. Non-Exclusivity. The indemnification and advancement of
---------------
expenses provided for hereby shall not be deemed exclusive of any other rights
to which a person seeking indemnification or advancement of expenses may be
entitled under any Bylaw, agreement, vote of stockholders or disinterested
directors, or otherwise, both as to action in their official capacity and as to
action in another capacity while holding such office.
Section 4. Continuity. The indemnification and advancement of expenses
----------
provided for hereby shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
ARTICLE XI
SEAL
The Corporation's seal shall be circular in form and shall include the
name of the Corporation, the state and year of its incorporation, and the word
"Seal."
ARTICLE XII
WAIVER OF NOTICE
Whenever any notice is required by law, the Certificate of Incorporation
or these Bylaws, to be given to any director, member of a committee or
stockholder, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto. 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. 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.
-14-
<PAGE>
ARTICLE XIII
AMENDMENTS
These Bylaws may be amended or supplemented in any respect at any time,
either (a) at any meeting of stockholders, provided that any amendment or
supplement proposed to be acted upon at any such meeting shall have been
described or referred to in the notice of such meeting, or (b) at any meeting of
the Board; provided that any amendment or supplement proposed to be acted upon
at any such meeting shall have been described or referred to in the notice of
such meeting or an announcement with respect thereto shall have been made at the
last previous Board meeting, and further provided that no amendment or
supplement adopted by the Board shall vary or conflict with any amendment or
supplement adopted by the stockholders.
I, the undersigned, being the Secretary of the Corporation, DO HEREBY
CERTIFY THAT the foregoing are the Bylaws of said Corporation, as adopted by the
Board of said Corporation on the 30th day of June, 1997.
----
/s/ J. Hovey Kemp
-----------------------------------
J. Hovey Kemp
Assistant Secretary
-15-
<PAGE>
Capitol Copy Products, Inc.
RESOLVED, that the bylaws of Capitol Copy Products, Inc. are hereby
amended as follows:
Section 2 of Article III shall be amended by deleting the first sentence
and replacing it with the following: "The number of directors shall be from one
to ten in number, as determined by resolution of either the shareholders or the
board of directors."
<PAGE>
COS FINANCIAL, INC.
(formerly General Service Leasing, Inc.)
BY-LAWS
ARTICLE I
Stockholders
SECTION 1. Annual Meeting. The annual meeting of the stockholders of
---------------
the Corporation shall be held on a day duly designated by the stockholders in
January, if not a legal holiday, and if a legal holiday, then the next
succeeding day not a legal holiday, for the transaction of such corporate
business as may come before the meeting.
SECTION 2. Special Meetings. Special meetings of the stockholders may
----------------
be called at any time for any purpose or purposes by the Chairman of the Board,
the President, by a Vice President, or by a majority of the Board of Directors,
and shall be called forthwith by the Chairman of the Board, the President, by a
Vice President, the Secretary-Treasurer or any director of the Corporation upon
the request in writing of the holders of a majority of all the shares
outstanding and entitled to vote on the business to be transacted at such
meeting. Such request shall state the purpose or purposes of the meeting.
Business transacted at all special meetings of stockholders shall be confined to
the purposes or purpose stated in the notice of the meeting.
SECTION 3. Place of Holding Meetings. All meetings of stockholders
--------------------------
shall be held at the principal office of the Corporation or elsewhere in the
United States as designated by the Board of Directors.
SECTION 4. Notice of Meetings. Written notice of each meeting of the
-------------------
stockholders shall be mailed, postage prepaid by the Secretary-Treasurer, to
each stockholder of record entitled to vote thereat at his post office address,
as it appears upon the books of the Corporation, at least ten (10) days before
the meeting. Each such notice shall state the place, day, and hour at which the
meeting is to be held and, in the case of any special meeting, shall state
briefly the purpose or purposes thereof.
SECTION 5. Quorum. The presence in person or by proxy of the holders
-------
of record of a majority of the shares of the capital stock of the Corporation
issued and outstanding and entitled to vote thereat shall contitute a quorum at
all meetings of the stockholders, except as otherwise provided by law, by the
Articles of Incorporation or by these By-Laws. If less than a quorum shall be in
attendance at the time for which the meeting shall have been called, the meeting
may be adjourned from time to time by a majority vote of the stockholders
present or represented, without any notice other than by announcement at the
meeting, until a quorum shall attend. At any adjourned meeting at which a quorum
shall attend, any business may be transacted which might have been transacted if
the meeting had been held as originally called.
<PAGE>
SECTION 6. Conduct of Meetings. Meetings of stockholders shall be
-------------------
presided over by the President of the Corporation or if he is not present, by a
Vice President or if none of said officers is present, by chairman to be elected
at the meeting. The Secretary-Treasurer of the Corporation, or if he is not
present, any Assistant Secretary-Treasurer shall act as secretary of such
meetings; in the absence of the Secretary-Treasurer and any Assistant
Secretary-Treasurer, the presiding officer may appoint a person to act as
Secretary-Treasurer of the meeting.
SECTION 7. Voting. At all meetings of stockholders, every stockholder
------
entitled to vote thereat shall have one (1) vote for each share of stock
standing in his name on the books of the Corporation on the date for the
determination of stockholders entitled to vote at such meeting. Such vote may be
either in person or by proxy appointed by an instrument in writing, subscribed
by such stockholder or his duly authorized attorney, bearing a date not more
than three (3) months prior to said meeting, unless said instrument provides for
a longer period. Such proxy shall be dated, but need not be sealed, witnessed or
acknowledged. All elections shall be had and all questions shall be decided by
a majority of the votes cast at a duly constituted meeting, except as otherwise
provided by law, in the Articles of Incorporation or by these By-Laws.
If the chairman of the meeting shall so determine, a vote by ballot may
be taken upon any election or matter, and the vote shall be so taken upon the
request of the holders of ten percent (10%) of the stock entitled to vote on
such election or matter. In either of such events, the proxies and ballots shall
be received and be taken in charge and all questions touching the qualification
of voters and the validity of proxies and the acceptance or rejection of votes,
shall be decided by the tellers. Such tellers shall be appointed by the chairman
of said meeting.
ARTICLE II
Board of Directors
SECTION 1. General Powers. The property and business of the
--------------
Corporation shall be managed under the direction of the Board of Directors of
the Corporation.
SECTION 2. Number and Term of Office. The number of directors shall be
-------------------------
three or such other number, but not less than three as may be designated from
time to time by resolution of a majority of the entire Board of Directors
provided that so long as there are less than three stockholders, the number of
directors may be less than three but not less than the number of stockholders.
Directors need not be stockholders. The directors shall be elected each year at
the annual meeting of stockholders, except as hereinafter provided, and each
director shall serve until his successor shall be elected and shall qualify.
2
<PAGE>
SECTION 3. Filling of Vacancies. In the case of any vacancy in the
--------------------
Board of Directors through death, resignation, disqualification, removal or
other cause, the remaining directors, by affirmative vote of the majority
thereof, may elect a successor to hold office for the unexpired portion of the
term of the director whose place shall be vacant, and until the election of his
successor, or until he shall be removed, prior thereto, by an affirmative vote
of the holders of a majority of the stock.
Similarly and in the event of the number of directors being increased as
provided in these By-Laws, the additional directors so provided for shall be
elected by a majority of the entire Board of Directors already in office, and
shall hold office until the next annual meeting of stockholders and thereafter
until his or their successors shall be elected.
Any director may be removed from office with or without cause by the
affirmative vote of the holders of the majority of the stock issued and
outstanding and entitled to vote at any special meeting of stockholders
regularly called for the purpose.
SECTION 4. Place of Meeting. The Board of Directors may hold their
----------------
meetings and have one or more offices, and keep the books of the Corporation,
either within or outside the State of Maryland, at such place or places as they
may from time to time determined by resolution or by written consent of all the
directors. The Board of Directors may hold their meetings by conference
telephone or other similar electronic communications equipment in accordance
with the provisions of the Maryland Corporation law.
SECTION 5. Regular Meetings. Regular meetings of the Board of
----------------
Directors may be held without notice at such time and place as shall from time
to time be determined by resolution of the Board, provided that notice of every
resolution of the Board fixing or changing the time or place for the holding of
regular meetings of the Board shall be mailed to each director at least three
(3) days before the first meeting held pursuant thereto. The annual meeting of
the Board of Directors shall be held immediately following the annual
stockholders' meeting at which a Board of Directors is elected. Any business may
be transacted at any regular meeting of the Board.
SECTION 6. Special Meetings. Special meetings of the Board of
----------------
Directors shall be held whenever called by direction of the Chairman of the
Board or the President and must be called by the Chairman of the Board, the
President or the Secretary-Treasurer upon written request of a majority of the
Board of Directors. The Secretary-Treasurer shall give notice of each special
meeting of the Board of Directors, by mailing the same at least three (3) days
prior to the meeting or by telegraphing the same at least two (2) days before
the meeting, to each director; but such notice may be waived by any director.
Unless otherwise indicated in the notice thereof, any and all business may be
transacted at any special meetings. At any meeting at which every director
shall be present, even though without notice, any business may be
transacted and any director may in writing waive notice of the time, place and
objectives of any special meeting.
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SECTION 7. Quorum. A majority of the whole number of directors shall
------
constitute a quorum for the transaction of business at all meetings of the Board
of Directors, but, if at any meeting less than a quorum shall be present, a
majority of those present may adjourn the meeting from time to time, and the act
of a majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by law or by the Articles of Incorporation or by these
By-Laws.
SECTION 8. Compensation of Directors. Directors shall not receive any
-------------------------
stated salary for their services as such, but each director shall be entitled to
receive from the Corporation reimbursement of the expenses incurred by him in
attending any regular or special meeting of the Board, and, by resolution of the
Board of Directors, a fixed sum may also be allowed for attendance at each
regular or special meeting of the Board and such reimbursement and compensation
shall be payable whether or not a meeting is adjourned because of the absence of
a quorum. Nothing herein contained shall be construed to preclude any director
from serving the Corporation in any other capacity and receiving compensation
therefor.
SECTION 9. Committees. The Board of Directors may, by resolution
----------
passed by a majority of the whole Board, designate one or more committees, each
committee to consist of two or more of the directors of the Corporation, which,
to the extent provided in the resolution, shall have and may exercise the powers
of the Board of Directors, and may authorize the seal of the Corporation to be
affixed to all papers which may require it. Such committee or committees shall
have such names as may be determined from time to time by resolution adopted by
the Board of Directors.
ARTICLE III
Officers
SECTION 1. Election, Tenure and Compensation. The officers of the
---------------------------------
Corporation shall be a President and a Secretary-Treasurer, and also such other
officers including one or more Vice Presidents and/or one or more assistants to
the foregoing officers as the Board of Directors from time to time may consider
necessary for the proper conduct of the business of the Corporation. The
officers shall be elected annually by the Board of Directors at its first
meeting following the annual meeting of the stockholders except where a longer
term is expressly provided in an employment contract duly authorized and
approved by the Board of Directors. The President and Chairman of the Board
shall be directors and the other officers may, but need not be, directors. Any
two or more of the above offices, except those of President and Vice President,
may be held by the same person, but no officer shall execute, acknowledge or
verify any instrument in more than one capacity if such instrument is required
by law or by these By-Laws to be executed, acknowledged or verified by any two
or more officers. The compensation or salary paid all officers of the
Corporation shall be fixed by resolutions adopted by the Board of Directors.
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In the event that any office other than an office required by law shall
not be filled by the Board of Directors, or, once filled, subsequently becomes
vacant, then such office and all references thereto in these By-Laws shall be
deemed inoperative unless and until such office is filled in accordance with the
provisions of these By-Laws.
Except where otherwise expressly provided in a contract duly authorized
by the Board of Directors, all officers and agents of the Corporation shall be
subject to removal at any time by the affirmative vote of a majority of the
whole Board of Directors, and all officers, agents, and employees shall hold
office at the discretion of the Board of Directors or of the officers appointing
them.
SECTION 2. Powers and Duties of the Chairman of the Board. The
----------------------------------------------
Chairman of the Board shall preside at all meetings of the Board of Directors
unless the Board of Directors shall be a majority vote of a quorum thereof elect
a chairman other than the Chairman of the Board to preside at meetings of the
Board of Directors. He may sign and execute all authorized bonds, contracts or
other obligations in the name of the Corporation; and he shall be ex-officio a
member of all standing committees.
SECTION 3. Powers and Duties of the President. The President shall be
----------------------------------
the chief executive officer of the Corporation and shall have general charge and
control of all its business affairs and properties. He shall preside at all
meetings of the stockholders.
The President may sign and execute all authorized bonds, contracts or
other obligations in the name of the Corporation. He shall have the general
powers and duties of supervision and management usually vested in the office of
president of a corporation. The President shall be ex-officio a member of all
the standing committees. He shall do and perform such other duties as may, from
time to time, be assigned to him by the Board of Directors.
In the event that the Board of Directors does not take affirmative
action to fill the office of Chairman of the Board, the President shall assume
and perform all powers and duties given to the Chairman of the Board by these
By-Laws.
SECTION 4. Powers and Duties of the Vice President. The Board of
---------------------------------------
Directors shall appoint a Vice President and may appoint more than one Vice
President. Any Vice President (unless otherwise provided by resolution of the
Board of Directors) may sign and execute all authorized bonds, contracts, or
other obligations in the name of the Corporation. Each Vice President shall
have such other powers and shall perform such other duties as may be assigned to
him by the Board of Directors or by the President. In case of the absence or
disability of the President, the duties of that office shall be performed by any
Vice President, and the taking of any action by any such Vice President shall be
conclusive evidence of the absence or disability of the President.
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SECTION 5. Secretary-Treasurer. The Secretary-Treasurer shall give, or
-------------------
cause to be given, notice of all meetings of stockholders and directors and all
other notices required by law or by these By-Laws, and in case of his absence or
refusal or neglect to do so any such notice may be given by any person thereunto
directed by the President, or by the directors or stockholders upon whose
written request the meeting is called as provided in these By-Laws. The
Secretary-Treasurer shall record all the proceedings of the meetings of the
stockholders and of the directors in books provided for that purpose, and he
shall perform such other duties as may be assigned to him by the directors or
the President. He shall have custody of the seal of the Corporation and shall
affix the same to all instruments requiring it, when authorized by the Board of
Directors or the President, and attest the same.
The Secretary-Treasurer shall have custody of all the funds and
securities of the Corporation, and he shall keep full and accurate account of
receipts and disbursements in books belonging to the Corporation. He shall
deposit all moneys and other valuables in the name and to the credit of the
Corporation in such depository or depositories as may be designated by the Board
of Directors.
The Secretary-Treasurer shall disburse the funds of the Corporation as
may be ordered by the stockholders, taking proper vouchers for such
disbursements. He shall render to the President and the Board of Directors,
whenever either of them so requests, an account of all his transactions as
Secretary-Treasurer and of the financial condition of the Corporation.
The Secretary-Treasurer shall give the Corporation a bond, if required
by the Board of Directors, in a sum, and with one or more sureties, satisfactory
to the Board of Directors, for the faithful performance of the duties of his
office and for the restoration to the Corporation in case of his death,
resignation, retirement or removal from office of all books, papers, vouchers,
moneys, and other properties of whatever kind in his possession or under his
control belonging to the Corporation.
The Secretary-Treasurer shall perform all the duties generally incident
to the office of the Secretary-Treasurer, subject to the control of the Board of
Directors and the President.
SECTION 6. Assistant Secretary-Treasurer. The Board of Directors may
-----------------------------
appoint an Assistant Secretary-Treasurer or more than one Assistant
Secretary-Treasurer. Each Assistant Secretary-Treasurer shall (except as
otherwise provided by resolution of the Board of Directors) have power to
perform all duties of the Secretary-Treasurer in the absence or disability of
the Secretary-Treasurer and shall have such other powers and shall perform such
other duties as may be assigned to him by the Board of Directors or the
President. In case of the absence or disability of the Secretary-Treasurer,
the duties of the office shall be performed by any Assistant
Secretary-Treasurer, and the taking of any action by any such Assistant
Secretary-Treasurer in place of the Secretary-Treasurer shall be conclusive
evidence of the absence or disability of the Secretary-Treasurer.
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ARTICLE IV
Capital Stock
SECTION 1. Issuance of Certificates of Stock. The certificates for
shares of the stock of the Corporation shall be of such form not inconsistent
with the Articles of Incorporation, or its amendments, as shall be approved by
the Board of Directors. All certificates shall be signed by the President or by
the Vice President and countersigned by the Secretary-Treasurer or by an
Assistant Secretary-Treasurer. All certificates for each class of stock shall be
consecutively numbered. The name of the person owning the shares issued and the
address of the holder, shall be entered in the Corporation's books. All
certificates surrendered to the Corporation for transfer shall be canceled and
no new certificates representing the same number of shares shall be issued until
the former certificate or certificates for the same number of shares shall have
been so surrendered and canceled, unless a certificate of stock be lost or
destroyed, in which event another may be issued in its stead upon proof of such
loss or destruction and unless waived by the President, the giving of a
satisfactory bond of indemnity not exceeding an amount double the value of the
stock. Both such proof and such bond shall be in a form approved by the general
counsel of the corporation, the Transfer Agent of the Corporation and by the
Registrar of the stock.
SECTION 2. Transfer of Shares. Shares of the capital stock of the
Corporation shall be transferred on the books of the Corporation only by the
holder thereof in person or by his attorney upon surrender and cancellation of
certificates for a like number of shares as hereinbefore provided.
SECTION 3. Registered Stockholders. The Corporation shall be entitled
to treat the holder of record of any share or shares of stock as the holder in
fact thereof and accordingly shall not be bound to recognize any equitable or
other claim to or interest in such share or shares in the name of any other
person, whether or not it shall have express or other notice thereof, save as
expressly provided by the laws of Maryland.
SECTION 4. Closing Transfer Books. The Board of Directors may fix the
time not exceeding ten (10) days preceding the date of any meeting of
stockholders or any dividend payment date or any date for the allotment of
rights, during which time the books of the Corporation shall be closed against
transfers of stock, or, in lieu thereof, the directors may fix a date not
exceeding ten (10) days preceding the date of any meeting of stockholders or any
dividend payment date or any date for the allotment of rights, as a record date
for the determination of the stockholders entitled to notice of and to vote at
such meeting or to receive such dividends or rights as the case may be; and
only stockholders of record on such date shall be entitled to notice of and to
vote at such meeting or to receive such dividends or rights as the case may be.
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ARTICLE V
Corporate Seal
SECTION 1. Seal. In the event that the President shall direct the
----
Secretary-Treasurer to obtain a corporate seal, the corporate seal shall be
circular in form and shall have inscribed thereon the name of the Corporation,
the year of its organization and the word "Maryland". Duplicate copies of the
corporate seal may be provided for use in the different offices of the
Corporation but each copy thereof shall be in the custody of the
Secretary-Treasurer of the Corporation or of an Assistant Secretary-Treasurer of
the Corporation nominated by the Secretary-Treasurer.
ARTICLE VI
Bank Accounts and Loans
SECTION 1. Bank Accounts. Such officers or agents of the Corporation
-------------
as from time to time shall be designated by the Board of Directors shall have
authority to deposit any funds of the Corporation in such banks or trust
companies as shall from time to time be designated by the Board of Directors and
such officers or agents as from time to time shall be authorized by the Board of
Directors may withdraw any or all of the funds of the Corporation so deposited
in any bank or trust company, upon checks, drafts or other instruments or orders
for the payment of money, drawn against the account or in the name or on behalf
of this Corporation, and made or signed by such officers or agents; and each
bank or trust company with which funds of the Corporation are so deposited is
authorized to accept, honor, cash and pay, without limit as to amount, all
checks, drafts or other instruments or orders for the payment of money, when
drawn, made or signed by officers or agents so designated by the Board of
Directors until written notice of the revocation of the authority of such
officers or agents by the Board of Directors shall have been received by such
bank or trust company. There shall from time to time be certified to the banks
or trust companies in which funds of the Corporation are deposited, the
signature of the officers or agents of the Corporation so authorized to draw
against the same. In the event that the Board of Directors shall fail to
designate the persons by whom checks, drafts and other instruments or orders for
the payment of money shall be signed, as hereinabove provided in this Section,
all of such checks, drafts and other instruments or orders for the payment of
money shall be signed by the President or a Vice President and countersigned by
the Secretary-Treasurer or an Assistant Secretary-Treasurer of the Corporation.
SECTION 2. Loans. Such officers or agents of this Corporation as from
-----
time to time shall be designated by the Board of Directors shall have authority
to effect loans, advances, or other forms of credit at any time or times for the
Corporation from such banks, trust companies, institutions, corporations, firms
or persons as the Board of Directors shall from time to time
8
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designate, and as security for the repayment of such loans, advances or other
forms of credit to assign, transfer, endorse and deliver, either originally or
in addition or substitution, any or all stocks bonds, rights and interests of
any kind in or to stocks or bonds, certificates of such rights or interests,
deposits, accounts documents covering merchandise, bills and accounts receivable
and other commercial paper and evidences of debt at any time held by the
Corporation; and for such loans, advances or other forms of credit to make,
execute and deliver one or more notes, acceptances or written obligations of
the Corporation on such terms, and with such provisions as to the security or
sale or disposition thereof as such officers or agents shall deem proper; and
also to sell to, or discount or rediscount with, such banks, trust companies,
institutions, corporations, firms or persons any and all commercial paper, bills
receivable, acceptances and other instruments and evidences of debt at any time
held by the Corporation, and to that end to endorse, transfer and deliver the
same. There shall from time to time be certified to each bank, trust company,
institution, corporation, firm or person so designated the signatures of the
officers or agents so authorized; and each such bank, trust company,
institution, corporation, firm or person is authorized to rely upon such
certification until written notice of the revocation by the Board of Directors
of the authority of such officers or agents shall be delivered to such bank,
trust company, institution, corporation, firm or person.
ARTICLE VII
Reimbursements
SECTION 1. Any payments made to an officer or other employee of the
Corporation, such as salary, commission, interest or rent, or entertainment
expense incurred by him, which shall be disallowed in whole or in part as a
deductible expense by the Internal Revenue Service, shall be reimbursed by such
officer or other employee of the Corporation to the full extent of such
disallowance. It shall be the duty of the Directors, as a Board, to enforce
payment of each amount disallowed. In lieu of payment by the officer or other
employee, subject to the determination of the Directors, proportionate amounts
may be withheld from his future compensation payments until the amount owed to
the Corporation has been recovered. Officers or other employees shall incur
certain expenses for which such officers or other employees are not entitled to
reimbursement.
ARTICLE VIII
Miscellaneous Provisions
SECTION 1. Fiscal Year. The fiscal year of the Corporation shall end
-----------
on the last day of December.
SECTION 2. Notices. Whenever, under the provisions of these By-Laws,
-------
notice is required to be given to any director, officer or stockholder, it
shall not be construed to mean
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personal notice, but such notice shall be given in writing, by mail, by
depositing the same in a post office or letter box, in a postpaid sealed
wrapper, addressed to each stockholder, officer or director at such address as
appears on the books of the Corporation, or in default of any other address, to
such director, officer or stockholder, at the general post office in the City of
Beltsville, Maryland, and such notice shall be deemed to be given at the time
the same shall be thus mailed. Any stockholder, director or officer may waive
any notice required to be given under these By-Laws.
ARTICLE IX
Amendments
SECTION 1. Amendment of By-Laws. The Board of Directors shall have the
--------------------
power and authority to amend, alter or repeal these By-Laws or any provision
thereof, and may from time to time make additional By-Laws.
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Exhibit 3.7a
AMENDMENT TO
CERTIFICATE OF INCORPORATION
OF
CAPITOL OFFICE SOLUTIONS, INC.
Capitol Office Solutions, Inc., a Delaware corporation having its
principal office in Beltsville, Maryland (hereinafter called the "Corporation"),
hereby certifies to the Secretary of State for the State of Delaware, that:
FIRST:The Certificate of Incorporation of the Corporation (the "Charter")
is hereby amended by striking out Section 4.1 of Article IV of the Charter in
its entirety and inserting in lieu thereof the following:
ARTICLE IV
4.1 Authorized Shares. The total number of shares of capital stock which
the Corporation has authority to issue is 340,000 shares, consisting of:
(1) 200,000 shares of Class A Common Stock, par value $.01 per share
("Class A Common");
(2) 100,000 shares of Class B Common Stock, par value $.01 per share
("Class B Common"); and
(3) 40,000 shares of Class C Common Stock, par value $.01 per share
("Class C Common").
The Class A Common, Class B Common, and Class C Common and any other
common stock issued hereafter are referred to collectively as the "Common
Stock." The shares of Common Stock shall have the rights, preferences and
limitations set forth below. Capitalized terms used but not otherwise defined in
Section 4.1 or Section 4.2 of this Article IV are defined in Section 4.3.
<PAGE>
IN WITNESS WHEREOF, Capitol Office Solutions, Inc. has caused these
presents to be signed in its name and on its behalf by its President and
witnessed (or attested) by its Secretary on June 30, 1997.
CAPITOL OFFICE SOLUTIONS, INC.
By: /s/ Armen A. Manoogian
--------------------------
Armen A. Manoogian
President
Witness: (Attest)
/s/ Doris Green
- -------------------------
Doris Green
Secretary
THE UNDERSIGNED, President of Capitol Office Solutions, Inc., who executed
on behalf of said corporation the foregoing Articles of Amendment, of which this
certificate is made a part, hereby acknowledges, in the name and on behalf of
said corporation, the foregoing Articles of Amendment to be the corporate act of
said corporation and further certifies that, to the best of his knowledge,
information and belief, the matters and facts set forth therein with respect to
the approval thereof are true in all material respects, under the penalties of
perjury.
/s/ Armen A. Manoogian
--------------------------
Armen A. Manoogian
-2-
<PAGE>
EXHIBIT 3.7b
As amended 8/26/96
CAPITOL OFFICE SOLUTIONS, INC.
******
By-Laws
******
ARTICLE I
OFFICES
The office of the Corporation shall be located in the City and State
designated in the Articles of Incorporation. The Corporation may also maintain
offices as such other places within or without the United States as the Board of
Directors may, from time to time, determine.
ARTICLE II
MEETING OF SHAREHOLDERS
Section 1 - Annual Meetings:
The annual meeting of the shareholders of the Corporation shall be held
within five months after the close of the fiscal year of the Corporation, for
the purpose of electing Directors, and transacting such other business as may
properly come before the meeting.
Section 2 - Special Meetings:
Special meetings of the shareholders may be called at any time by the
Board of Directors or by the President. and shall be called by the President or
the Secretary at the written request of the holders of ten percent (10%) of the
shares then outstanding and entitled to vote thereat, or as otherwise required
under the provisions of the Business Corporation Act.
Section 3 - Place of Meetings:
All meetings of shareholders shall be held at the principal office of the
Corporation, or at such other places as shall be designated in the notices or
waivers of notice of such meetings.
Section 4 - Notice of Meetings:
(a) Written notice of each meeting of shareholders, whether
annual or special, stating the time when and place where it is to be held, shall
be served either personally or by mail, not less than ten or more than fifty
days before the meeting, upon each shareholder of record entitled to vote as
such meeting, and to any other shareholder to whom the giving of notice may be
required by law. Notice of a special meeting shall indicate that it is being
issued by, or at the direction of, the person or persons calling the meeting.
If, at any meeting, action is proposed to be taken that would, if taken, entitle
shareholders to receive payment for their shares pursuant to the Business
Corporation Act, the notice of such meeting shall include a statement of that
purpose and to that effect. If mailed, such notice shall be directed to each
such shareholder at his address, as it appears on the records of the
shareholders of the Corporation, unless he shall have previously filed with the
Secretary of the Corporation a written request that notices intended for him be
mailed to some other address, in which case, it shall be mailed to the address
designated in such request.
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(b) Notice of any meeting need not be given to any person who
may become a shareholder of record after the mailing of such notice and prior to
the meeting, or to any shareholder who attends such meeting, in person or by
proxy, or to any shareholder who, in person or by proxy, submits a signed waiver
of notice either before or after such meeting. Notice of any adjourned meeting
of shareholders need not be given, unless otherwise required by statute.
Section 5 - Quorum:
(a) Except as otherwise provided herein, or by statute, or in
the Articles of Incorporation (such articles and any amendments thereof being
hereinafter collectively referred to as the "Articles of Incorporation"), at all
meetings of shareholders of the Corporation, the presence at the commencement of
such meetings in person or by proxy of shareholders holding of record a majority
of the total number of shares of the Corporation then issued and outstanding and
entitled to vote, shall be necessary and sufficient to constitute a quorum for
the transaction of any business. The withdrawal of any shareholder after the
commencement of a meeting shall have no effect on the existence of a quorum,
after a quorum has been established at such meeting.
(b) Despite the absence of a quorum at any annual or special
meeting of shareholders, the shareholders, by a majority of the votes cast by
the holders of shares entitled to vote thereon, may adjourn the meeting. At any
such adjourned meeting at which a quorum is present, any business may be
transacted which might have been transacted at the meeting as originally called
if a quorum had been present.
Section 6 - Voting:
(a) Except as otherwise provided by statute or by the Articles
of Incorporation, any corporate action, other than the election of Directors to
be taken by vote of the shareholders, shall be authorized by a majority of votes
cast at a meeting of shareholders by the holders of shares entitled to vote
thereon.
(b) Except as otherwise provided by statute or by the Articles
of Incorporation, at each meeting of shareholders, each holder of record of
shares of the Corporation entitled to vote thereat shall be entitled to one vote
for each share registered in his name on the books of the Corporation.
(c) Each shareholder entitled to vote or to express consent or
dissent without a meeting, may do so by proxy; provided, however, that the
instrument authorizing such proxy to act shall have been executed in writing by
the shareholder himself, or by his attorney-in-fact thereunto duly authorized in
writing. No proxy shall be valid after the expiration of eleven months from the
date of its execution, unless the persons executing it shall have specified
therein the length of time it is to continue in force. Such instrument shall be
exhibited to the Secretary at the meeting and shall be filed with the records of
the Corporation.
(d) Any resolution in writing, signed by all of the
shareholders entitled to vote thereon, shall be and constitute action by such
shareholders to the effect therein expressed, with the same force and effect as
if the same had been duly passed by unanimous vote at a duly called meeting of
shareholders and such resolution so signed shall be inserted in the Minute Book
of the Corporation under its proper date.
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ARTICLE III
BOARD OF DIRECTORS
Section 1 - Number, Election and Term of Office:
(a) The number of the Directors of the Corporation shall be
five (5), unless and until otherwise determined by vote of a majority of the
entire Board of Directors. The number of Directors shall not be less than three,
unless all of the outstanding shares are owned beneficially and of record by
less than three shareholders, in which event the number of Directors shall not
be less than the number of shareholders.
(b) Except as may otherwise be provided herein or in the
Articles of Incorporation, the members of the Board of Directors of the
Corporation, who need not be shareholders, shall be elected by a majority of the
votes cast at a meeting of shareholders, by the holders of shares entitled to
vote in the election.
(c) Each Director shall hold office until the annual meeting
of the shareholders next succeeding his election, and until his successor is
elected and qualified, or until his prior death, resignation or removal.
Section 2 - Duties and Powers:
The Board of Directors shall be responsible for the control and management
of the affairs, property and interests of the Corporation, and may exercise all
powers of the Corporation, except as are in the Articles of Incorporation or by
statute expressly conferred upon or reserved to the shareholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 3 - Annual and Regular Meetings; Notice:
(a) A regular annual meeting of the Board of Directors shall
be held immediately following the annual meeting of the shareholders, at the
place of such annual meeting of shareholders.
(b) The Board of Directors, from time to time, may provide by
resolution for the holding of other regular meetings of the Board of Directors,
and may fix the time and place thereof.
(c) Notice of any regular meeting of the Board of Directors
shall not be required to be given and, if given, need not specify the purpose of
the meeting; provided, however, that in case the Board of Directors shall fix or
change the time or place of any regular meeting, notice of such action shall be
given to each Director who shall not have been present at the meeting at which
such action was taken within the time limited, and in the manner set forth in
paragraph (b) of Section 4 of this Article Ill, with respect to special
meetings, unless such notice shall be waived in the manner set forth in
paragraph (c) of such Section 4.
Section 4 - Special Meetings; Notice:
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(a) Special Meetings of the Board of Directors shall be held
whenever called by the President or by one of the Directors, at such time and
place as may be specified in the respective notices or waivers of notice
thereof.
(b) Notice of special meetings shall be mailed directly to
each Director, addressed to him at his residence or usual place of business, at
least two (2) days before the day on which the meeting is to be held, or shall
be sent to him at such place by telegram, radio or cable, or shall be delivered
to him personally or given to him orally, not later than the day before the day
on which the meeting is to be held. A notice, or waiver of notice, except as
required by Section B of this Article III, need not specify the purpose of the
meeting.
(c) Notice of any special meeting shall not be required to be
given to any Director who shall attend such meeting without protesting prior
thereto or at its commencement, the lack of notice to him, or who submits a
signed waiver of notice, whether before or after the meeting. Notice of any
adjourned meeting shall not be required to be given.
Section 5 - Chairman:
At all meetings of the Board of Directors, the Chairman of the Board, if
any and if present, shall preside. If there shall be no Chairman, or he shall be
absent, then the President shall preside, and in his absence, a Chairman chosen
by the Directors shall preside.
Section 6 - Quorum and Adjournments:
(a) At all meetings of the Board of Directors, the presence of
a majority of the entire Board shall be necessary and sufficient to constitute a
quorum for the transaction of business, except as otherwise provided by law, by
the Articles of Incorporation, or by these By-Laws.
(b) A majority of the Directors present at the time and place
of any regular or special meeting, although less than a quorum, may adjourn the
same from time to time without notice, until a quorum shall be present.
Section 7 - Manner of Acting:
(a) At all meetings of the Board of Directors, each Director
present shall have one vote, irrespective of the number of shares of stock, if
any, which he may hold.
(b) Except as otherwise provided by statute, by the Articles
of Incorporation, or by these By-Laws, the action of a majority of the Directors
present at any meeting at which a quorum is present shall be the act of the
Board of Directors. Any action authorized, in writing, by all of the directors
entitled to vote thereon and filed with the minutes of the corporation shall be
the act of the Board of Directors with the same force and effect as if the same
had been passed by unanimous vote at a duly called meeting of the Board.
Section 8 - Vacancies:
Any vacancy in the Board of Directors occurring by reason of an increase
in the number of Directors, or by reason of the death, resignation,
disqualification, removal (unless a vacancy created by the removal of a Director
by the shareholders shall be filled by the shareholders at the meeting at which
the removal was effected) or inability to act of any Director, or otherwise,
shall
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<PAGE>
be filled for the unexpired portion of the term by a majority vote of the
remaining Directors, though less than a quorum, at any regular meeting or
special meeting of the Board of Directors called for that purpose.
Section 9 - Resignation:
Any Director may resign at any time by giving written notice to the Board
of Directors, the President or the Secretary of the Corporation. Unless
otherwise specified in such written notice, such resignation shall take effect
upon receipt thereof by the Board of Directors or such officer, and the
acceptance of such resignation shall not be necessary to make it effective.
Section 10 - Removal:
Any Director may be removed with or without cause ax any time by the
shareholders, at a special meeting of the shareholders called for that purpose,
and may be removed for cause by action of the Board.
Section 11 - Salary:
No stated salary shall be paid to Directors, as such, for their services,
but by resolution of the Board of Directors a fixed sum and expenses of
attendance, if any, may be allowed for attendance at each regular or special
meeting of the Board; provided, however, that nothing herein contained shall be
construed to preclude any Director from serving the Corporation in any other
capacity and receiving compensation therefor.
Section 12 - Contracts:
(a) No contract or other transaction between this Corporation
and any other Corporation shall be impaired, affected or invalidated, nor shall
any Director be liable in any way by reason of the fact that any one or more of
the Directors of this Corporation is or are interested in, or is a Director or
officer, or are Directors or officers of such other Corporation, provided that
such facts are disclosed or made known to the Board of Directors.
(b) Any Director, personally and individually, may be a party
to or may be interested in any contract or transaction of this Corporation, and
no Director shall be liable in any way by reason of such interest, provided that
the fact of such interest be disclosed or made known to the Board of Directors,
and provided that the Board of Directors shall authorize, approve or ratify such
contract or transaction by the vote (no: counting the vote of any such Director)
of a majority of a quorum, notwithstanding the presence of any such Director at
the meeting at which such action is taken. Such Director or Directors may be
counted in determining the presence of a quorum at such meeting. This Section
shall not be construed to impair or invalidate or in any way affect any contract
or other transaction which would otherwise be valid under the law (common,
statutory or otherwise) applicable thereto.
COMMITTEES OF DIRECTORS
Section 13 - Committees:
The Board of Directors, by resolution adopted by a majority of the entire
Board, may from time to time designate from among its members an executive
committee and such other committees, and alternate members thereof, as they deem
desirable, each consisting of three or
5
<PAGE>
more members, with such powers and authority (to the extent permitted by law) as
may be provided in such resolution. Each such committee shall serve at the
pleasure of the Board.
ARTICLE IV
OFFICERS
Section 1 - Number, Qualifications, Election and Term of Office:
The officers of the corporation shall consist of a Chairman of the
Corporation, a Vice Chairman of the Corporation, a President, a Secretary, a
Treasurer and such other officers, including one or more Vice Presidents as the
Board of Directors may from time to time deem advisable. There shall be a Chief
Executive Officer Committee ("CEOC"), which Committee shall consist of the
President, the Chairman and the Vice Chairman of the Corporation, and/or such
other officers or Directors as may from time to time be determined by the Board.
The CEOC, under the direction of the Board of Directors, shall be responsible
for the general and active management of the business of the Corporation, and
shall see that all orders and resolutions of the Board of Directors are carried
into effect. The Committee, as a body, shall perform the functions of the chief
executive officer and shall supervise the officers in the day-to-day management
of the Corporation's business. All decisions of the CEOC shall require the
concurrence of a majority of its members. Any officer may be, but is not
required to be, a Director of the Corporation. Any two or more officer positions
may be held by the same person, except the officer positions of President and
Secretary. The officers of the Corporation shall be elected by the Board of
Directors at the regular annual meeting of the Board following the annual
meeting of shareholders. Each officer shall hold office until the annual meeting
of the Board of Directors next succeeding his election, and until his successor
shall have been elected and qualified, or until his death, resignation or
removal.
As amended
10/1/87
Section 2 - Resignation:
Any officer may resign at any time by giving written notice of such
resignation to the Board of Directors, or to the President or the Secretary of
the Corporation. Unless otherwise specified in such written notice, such
resignation shall take effect upon receipt thereof by the Board of Directors or
by such officer, and the acceptance of such resignation shall not be necessary
to make it effective.
Section 3 - Removal:
Any officer may be removed, either with or without cause, and a successor
elected by the Board at any time.
Section 4 - Vacancies:
A vacancy in any office by reason of death, resignation, inability to act,
disqualification, or any other cause, may at any time be filled for the
unexpired portion of the term by the Board of Directors,
6
<PAGE>
Section 5 - Duties of Officers:
Unless otherwise provided by the Board of Directors, officers of the
Corporation shall have such powers and duties as, with respect to officers
comprising the CEOC, are set forth in Article IV, Section 1 of the Corporation's
By-Laws, and with respect to all other officers of the Corporation, as are
determined by the CEOC.
As amended
10/1/87
Section 6 - Sureties and Bonds:
In case the Board of Directors shall so require, any officer, employee or
agent of the Corporation shall execute to the Corporation a bond in such sum,
and with such surety or sureties as the Board of Directors may direct,
conditioned upon the faithful performance of his duties to the Corporation,
including responsibility for negligence and for the accounting for all property,
funds or securities of the Corporation which may come into his hands.
Section 7 - Shares of Other Corporations:
Whenever the Corporation is the holder of shares of any other corporation,
any right or power of the Corporation as such shareholder (including the
attendance, acting and voting at shareholders' meetings and execution of
waivers, consents, proxies or other instruments) may be exercised on behalf of
the Corporation by the President, any Vice President, or such other person as
the Board of Directors may authorize.
ARTICLE V
SHARE OF STOCK
Section 1 - Certificate of Stock:
(a) The certificates representing shares of the Corporation
shall be in such form as shall be adopted by the Board of Directors, and shall
be numbered and registered in the order issued. They shall bear the holder's
name and the number of shares, and shall be signed by (i) the Chairman of the
Board or the President or a Vice President, and (ii) the Secretary, or any
Assistant Secretary, and may bear the corporate seal.
(b) No certificate representing shares shall be issued until
the full amount of consideration therefor has been paid. except as otherwise
permitted by law.
(c) The Board of Directors may authorize the issuance of
certificates for fractions of a share which shall entitle the holder to exercise
voting rights, receive dividends and participate in liquidating distributions,
in proportion to the fractional holdings; or it may authorize the payment in
cash of the fair value of fractions of a share as of the time when those
entitled to receive such fractions are determined; or it may authorize the
issuance, subject to such conditions as may be permitted by law, of scrip in
registered or bearer form over the signature of an officer or agent of the
Corporation, exchangeable as therein provided for full shares, but such scrip
shall not entitle the holder to any rights of a shareholder, except as therein
provided.
Section 2 - Lost or Destroyed Certificates:
The holder of any certificate representing shares of the Corporation shall
immediately notify the Corporation of any loss or destruction of the certificate
representing the same. The
7
<PAGE>
Corporation may issue a new certificate in the place of any certificate
theretofore issued by it, alleged to have been lost or destroyed. On production
of such evidence of loss or destruction as the Board of Directors in its
discretion may require, the Board of Directors may, in its discretion, require
the owner of the lost or destroyed certificate, or his legal representatives, to
give the Corporation a bond in such sum as the Board may direct, and with such
surety or sureties as may be satisfactory to the Board, to indemnify the
Corporation against any claims, loss, liability or damage it may suffer on
account of the issuance of the new certificate. A new certificate may be issued
without requiring any such evidence or bond when, in the judgment of the Board
of Directors, it is proper so to do.
Section 3 - Transfers of Shares:
(a) Transfers of shares of the Corporation shall be made on
the share records of the Corporation only by the holder of record thereof, in
person or by his duly authorized attorney, upon surrender for cancellation of
the certificate or certificates representing such shares, with an assignment or
power of transfer endorsed thereon or delivered therewith duly executed, with
such proof of the authenticity of the signature and of authority to transfer and
of payment of transfer taxes as the Corporation or its agents may require.
(b) The Corporation shall be entitled to treat the holder of
record of any share or shares as the absolute owner thereof for all purposes
and, accordingly, shall not be bound to recognize any legal, equitable or other
claim to, or interest in, such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise expressly provided by law.
Section 4 - Record Date:
In lieu of closing the share records of the Corporation, the Board of
Directors may fix, in advance, a date not exceeding fifty days, nor less than
ten days, as the record date for the determination of shareholders entitled to
receive notice of, or to vote at, any meeting of shareholders, or to consent so
any proposal without a meeting, or for the purpose of determining shareholders
entitled so receive payment of any dividends, or allotment of any rights, or for
the purpose of any other action. If no record date is fixed, the record date for
the determination of shareholders entitled so 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 no notice is given, the day on which the
meeting is held; the record date for determining shareholders for any other
purpose shall be at the close of business on the day on which the resolution of
the Directors relating thereto is adopted. When a determination of shareholders
of record entitled to notice of or so vote at any meeting of shareholders has
been made as provided for herein, such determination shall apply so any
adjournment thereof, unless the Directors fix a new record date for the
adjourned meeting.
ARTICLE VI
DIVIDENDS
Subject so applicable law, dividends may be declared and paid out of any
funds available therefor, as often, in such amounts, and at such time or times
as the Board of Directors may determine.
8
<PAGE>
ARTICLE VII
FISCAL YEAR
The fiscal year of the Corporation shall be fixed by the Board of
Directors from time to time, subject to applicable law.
ARTICLE VIII
CORPORATE SEAL
The corporate seal, if any, shall be in such form as shall be approved
from time to time by the Board of Directors.
ARTICLE IX
AMENDMENTS
Section 1 - By Shareholders:
All By-Laws of the Corporation shall be subject to alteration or repeal,
and new By-Laws may be made, by a majority vote of the shareholders at the time
entitled to vote in the election of Directors.
Section 2 - By Directors:
The Board of Directors shall have power to make, adopt, alter, amend and
repeal, from time to time, By-Laws of the Corporation; provided, however, that
the shareholders entitled to vote with respect thereto as in this Article IX
above-provided may alter, amend or repeal By-Laws made by the Board of
Directors, except that the Board of Directors shall have no power to change the
quorum for meetings of shareholders or of the Board of Directors, or to change
any provisions of the By-Laws with respect to the removal of Directors or the
filling of vacancies in the Board resulting from the removal by the
shareholders. If any By-Laws regulating an impending election of Directors is
adopted, amended or repealed by the Board of Directors, there shall be set forth
in the notice of the next meeting of shareholders for the election of Directors,
the by-law so adopted. amended or repealed, together with a concise statement of
the changes made.
The undersigned certify the foregoing By-Laws have been adopted as the
first By-Laws of the Corporation, in accordance with the requirements of the
Business Corporation Act.
Dated: May 8, 1976
-END-
9
<PAGE>
AMENDMENT TO BYLAWS from Unanimous Consent of Capitol
Acquisition Sub., Inc. dated November 19, 1998
"(4) Newco. as sole Stockholder of Capitol, Amendments to Bylaws of
Capitol and Election of Directors of Capitol
RESOLVED, that immediately subsequent to the consummation of Newco's
and Global's acquisition of Capitol (the "Capitol Acquisition"), the bylaws of
Capitol (the "Capitol Bylaws") shall be amended as follows:
Section 1(a) of Article III of the Capitol Bylaws shall be amended
to replace the first sentence with the following: "The number of
directors shall be from one to ten in number, as determined by the
shareholders of the corporation."
Paragraphs (a) and (b) of Section 3 of Article Ill of the Capitol
Bylaws shall be deleted in their entirety and replaced with a new
paragraph (a) to read as follows:
"Special meetings of the Board of Directors shall be held upon
notice to the Directors and at such time and place as shall be
specified in such notice, and may be called by the Chairman on 24
hours notice to each director, either personally or by mail,
overnight courier or by facsimile. A notice need not specify the
purpose of the meeting."
Paragraph (c) of Section 3 of Article III of the Capitol Bylaws
shall be re-ordered as paragraph (b) of Section 3 of Article III of
the Capitol Bylaws.
Section 5 of Article III of the Capitol Bylaws shall be amended by
deleting the following phrase therefrom: "the President shall
preside, and in his absence,".
Section 1 of Article IV of the Capitol Bylaws shall be amended by
replacing the entirety of the fir st sentence of such Section 1 with
the following: "Unless otherwise provided for in the Certificate of
Incorporation, the Board of Directors may elect or appoint a
Chairman of the Board of Directors, the President, any number of
Vice Presidents chosen by the Board of Directors, the Treasurer, the
Secretary and any number of Assistant Secretaries chosen by the
Board of Directors."
RESOLVED, that immediately subsequent to the consummation of the
Capitol Acquisition, the size of Capitol's Board of Directors (the "Capitol
Board") shall be set at three (3) members.
FURTHER RESOLVED, that immediately subsequent to the Capitol
Acquisition, (i) all of the directors of Capitol ("Capitol") shall be removed,
in accordance with the Capitol Bylaws, (ii) Thomas S. Johnson, William C.
Kessinger and Stephen Rolla shall be appointed to fill the vacancies on the
Capitol Board created thereby and that they shall each serve
10
<PAGE>
until such time as his successor is duly elected and qualified, and (iii) Thomas
S. Johnson shall be appointed as the Chairman of the Capitol Board to serve
until such time as his successor is duly elected and qualified.
FURTHER RESOLVED, that the existing directors of Capitol are hereby
removed and replaced by these resolutions."
11
<PAGE>
Exhibit 3.8a
CERTIFICATE OF INCORPORATION
of
CARR BUSINESS MACHINES OF GREAT NECK INC.
Pursuant to Section 402 of the Business Corporation Law I, the
undersigned, for the purpose of forming a corporation pursuant to Section 402 of
the Business Corporation Law of the State of New York, do hereby make, sign, and
acknowledge and file this Certificate for that purpose, as follow:
FIRST:The name of the proposed corporation is:
CARR BUSINESS MACHINES OF GREAT NECK INC.
SECOND: The purposes for which the said corporation is to be formed
are as follows:
To take, purchase, exchange, hire, lease or otherwise acquire real
estate and property either improved or unimproved and any interest or right
therein, and to own, hold, control, maintain, manage or develop the same in any
State of the United States, or the District of Columbia.
To, purchase, exchange, hire or otherwise acquire such personal
property, chattels, rights, easements, permits, privileges and franchise as may
lawfully be purchased, exchanged, hired or acquired under the Business
Corporation Law of the State of New York.
To erect, construct, maintain, improve, rebuild, enlarge, alter,
manage and control directly or through ownership of stock in any corporation,
any and all kinds of buildings, houses, hotels, stores, offices, warehouses,
mills, shops, factories, machinery and plants, and any and all structures, and
erections which may at any time be necessary, useful or advantageous in the
judgment of the board of directors, for the purposes of the corporation, and
which can lawfully be done under the Business Corporation Law.
<PAGE>
To sell, manage, improve, develop, assign, transfer, convey, lease,
sublease, pledge or otherwise alienate or dispose of, and to mortgage, or
otherwise encumber the land, buildings, real property, chattels real and other
property of the company, real and personal and wheresoever situate, and any and
all legal and equitable rights therein.
To manufacture, produce and otherwise prepare and to buy and
otherwise acquire, sell, lease, import, export, trade and deal; in, use, store,
transport, distribute and dispose of, deal in and with goods, wares,
merchandise, products, supplies, materials, and any and all commodities of
whatsoever nature and character.
To buy, lease, or otherwise acquire the whole or any part of the
business, good-will and assets of any person, firm or corporation engaged in the
same or any similar business to that for which this corporation is organized.
To acquire, purchase, hold and dispose of the stocks, bonds, and
other evidences of indebtedness of any corporation, domestic or foreign, and to
exercise all rights and privileges appertaining thereto.
To borrow or raise money for any of its corporate purposes and to
issue its notes, drafts, bills of exchange, warrants, bonds, debentures, or
other securities therefor.
To loan to any person firm or corporation any of its surplus funds,
either with or without security.
To purchase, hold, sell and transfer the share of its own capital
stock; provided it shall not use its funds for the purchase of its own shares of
capital stock when such use would cause any impairment of its capital, except as
otherwise permitted by law, and provided further that shares of its own capital
stock belonging to it shall not be noted upon directly or indirectly.
To have one or more offices and to carry on and transact business in
any State, District or territory of the United States or in any foreign country.
To buy, sell, manufacture, repair, and service, counting typewriting
and other office machines and supplies and parts there for, and stationery and
office, supplies, furniture, and other articles associated therewith, and any
and all other machinery, tools and equipment connected with such articles and
business, both
( 2 )
<PAGE>
wholesale and retail, domestic and foreign; to act as agent, manufacturer's
representative, sales representative therefor, and to establish agencies for
others in the buying and selling of said products, equipment, suppliers and
items incidental thereto, including raw materials and finished products, as
freely as any natural person might or could do, anywhere.
In general, to carry on any similar business and to have and
exercise all the powers conferred by the laws of New York upon corporations
formed under the Act aforesaid, and to do any or all of the things herein set
forth to the same extent as natural persons might or could do.
THIRD: The total number of shares that may be issued by the
corporation is 200 shares, all of which are to be without par value.
FOURTH: The office of the corporation is to be located in the
incorporated area of Merrick, Town of Hempstead, County of Nassau and State of
New York.
FIFTH: The Secretary of State is designated as the agent of the
corporation upon whom process in any action or proceeding against the
corporation may be served. The address to which the Secretary of State shall
mail a copy of process in any action or proceeding against the corporation,
which may be served upon him, is ,275 West Sunrise Highway, Merrick, New York.
SIXTH: The subscriber of the Certificate is of full age.
SEVENTH: The accounting period for which the corporation intends to
establish for its first franchise tax report is calendar year ending March 31.
( 3 )
<PAGE>
EIGHTH: The corporation may issue and sell its shares without par
value for such consideration as, from time to time, may be fixed by the Board of
Directors.
IN WITNESS WHEREOF, I have made, signed and acknowledged this
Certificate this 10th day of December, 1975.
/s/ Clifford J. Schorer, Jr. (L.S.)
-------------------------------------------
CLIFFORD J. SCHORER, JR.
275 West Sunrise Highway
Merrick, New York
( 4 )
<PAGE>
STATE OF NEW YORK)
: SS.:
COUNTY OF NASSAU )
On this 19th day of December, 1975, before me personally came CLIFFORD J.
SCHORER, JR. to me known, who, being by me duly sworn, did depose and say that
he resides at 16 Norton Place, Freeport, New York; that he is the President and
Secretary of CARR BUSINESS MACHINES INC., the corporation described in and which
executed the foregoing instrument; that he knows the seal of said corporation;
that the seal affixed to said instrument is such corporate seal; that it was so
affixed by order of the Board of Directors of said corporation and that he
signed his name by like order and he did also acknowledge to me that he
executed the foregoing certificate.
/s/ William P. McHale
---------------------------------------------------------
WILLIAM P. McHALE
Notary Public, State of New York
No. 30-7843415
Qualified In Nassau County
Commission Expires March 39, 1976
<PAGE>
CERTIFICATE
OF
CARR BUSINESS MACHINES, INC.
The undersigned, President and Secretary of CARR BUSINESS MACHINES,
INC., does hereby certify the following is a complete and true copy of the
resolution adopted at a meeting of the Board of Directors of said corporation,
duly called and held at 130 North Franklin Street, Hempstead, New, York, on
November 3, 1975, at which a quorum was present; and that the said resolution
has not been rescinded or modified and it now in full force and effect, to wit:
"RESOLVED: That the Board of Directors of CARR BUSINESS MACHINES,
INC. are of the opinion that the name CARR BUSINESS MACHINES OF GREAT NECK, INC.
does not so nearly resemble the corporate title of CARR BUSINESS MACHINES; INC.
as to tend to confuse or deceive within the meaning of Section 301 of the
Business Corporation Law of the State of New York; and further Resolved, that
consent is hereby given to the incorporation of a corporation under the
corporate title of CARR BUSINESS MACHINES OF GREAT NECK, INC."
IN WITNESS WHEREOF, I have hereunto set the hand and seal of this
19th day of December, 1975.
/s/ Clifford J. Schorer
-------------------------------------------
Clifford J. Schorer, Jr., President and
Secretary
( 6 )
<PAGE>
STATE OF NEW YORK)
: SS.:
COUNTY OF NASSAU )
On the 10th day of December, l975, before me personally came
CLIFFORD J. SCHORER, JR., to me known to be the person described in and who
executed the foregoing Certificate of Incorporation, and that he thereupon duly
acknowledged to me that he executed the same.
/s/ William P. McHale
--------------------------------------------------------
WILLIAM P. McHALE
Notary Public, State of New York
No. 30-7843415
Qualified In Nassau County
Commission Expires March 39, 1976
<PAGE>
Exhibit 3_8b
By-Laws
of
CARR BUSINESS MACHINES OF GREAT NECK INC.
ARTICLE I - OFFICES
The principal office of the corporation shall be in the Town of Hempstead
County of Nassau State of New York. The corporation may also have offices at
such other places within or without the State of New York as the board may from
time to time determine or the business of the corporation may require.
ARTICLE II - SHAREHOLDERS
1. PLACE OF MEETINGS.
Meetings of shareholders shall be held at the principal office of the
corporation or at such place within or without the State of New York as the
board shall authorize.
2. ANNUAL MEETING.
The annual meeting of the shareholders shall be held on the 15th day of
April at 10 A.M. in each year if not a legal holiday, and, if a legal holiday,
then on the next business day following at the same hour, when the shareholders
shall elect a board and transact such other business as may properly come before
the meeting.
3. SPECIAL MEETINGS.
Special meetings of the shareholders may be called by the board or by the
president and shall be called by the president or the secretary at the request
in writing of a majority of the board or at the request in writing by
shareholders owning a majority in amount of the shares issued and outstanding.
Such request shall state the purpose or purposes of the proposed meeting.
Business transacted at a special meeting shall be confined to the purposes
stated in the notice.
4. FIXING RECORD DATE.
For the purpose of determining the shareholders entitled to notice of or
to vote at any meeting of shareholders or any adjournment thereof, or to express
consent to or dissent from any proposal without a meeting, or for the purpose of
determining shareholders entitled to receive payment of any dividend or the
allotment of any rights, or for the purpose of any other
By-Laws A
<PAGE>
action, the board shall fix, in advance, a date as the record date for any such
determination of shareholders. Such date shall not be more than fifty nor less
than ten days before the date of such meeting, nor more than fifty days prior to
any other action. If no record date is fixed it shall be determined in
accordance with the provisions of law.
5. NOTICE OF MEETINGS OF SHAREHOLDERS.
Written notice of each meeting of shareholders shall state the purpose or
purposes for which the meeting is called, the place, date and hour of the
meeting and unless it is the annual meeting, shall indicate that it is being
issued by or at the direction of the person or persons calling the meeting.
Notice shall be given either personally or by mail to each shareholder entitled
to vote at such meeting, not less than ten nor more than fifty days before the
date of the meeting. If action is proposed to be taken that might entitle
shareholders to payment for their shares, the notice shall include a statement
of that purpose and to that effect. If mailed, the notice is given when
deposited in the United States mail, with postage thereon prepaid, directed to
the shareholder at his address as it appears on the record of shareholders, or,
if he shall have filed with the secretary a written request that notices to him
be mailed to some other address, then directed to him at such other address.
6. WAIVERS.
Notice of meeting need not be given to any shareholder who signs a waiver
of notice, in person or by proxy, whether before or after the meeting. The
attendance of any shareholder at a meeting, in person or by proxy, without
protesting prior to the conclusion of the meeting the lack of notice of such
meeting, shall constitute a waiver of notice by him.
7. QUORUM OF SHAREHOLDERS.
Unless the certificate of incorporation provides otherwise, the holders of
a majority of the shares entitled to vote thereat shall constitute a quorum at a
meeting of shareholders for the transaction of any business, provided that when
a specified item of business is required to be voted on by a class or classes,
the holders of a majority of the shares of such class or classes shall
constitute a quorum for the transaction of such specified item of business.
When a quorum is once present to organize a meeting, it is not broken by
the subsequent withdrawal of any shareholders.
The shareholders present may adjourn the meeting despite the absence of a
quorum.
By-Laws B
<PAGE>
Every shareholder entitled to vote at a meeting of shareholders or to
express consent or dissent without a meeting may authorize another person or
persons to act for him by proxy.
Every proxy must be signed by the shareholder or his attorney-in-fact. No
proxy shall be valid after expiration of eleven months from the date thereof
unless otherwise provided in the proxy. Every proxy shall be revocable at the
pleasure of the shareholder executing it, except as otherwise provided by law.
9. QUALIFICATION OF VOTERS.
Every shareholder of record shall be entitled at every meeting of
shareholders to one vote for every share standing in his name on the record of
shareholders, unless otherwise provided in the certificate of incorporation.
10. VOTE OF SHAREHOLDERS.
Except as otherwise required by statute or by the certificate of
incorporation;
(a) directors shall be elected by a plurality of the votes cast at a
meeting of shareholders by the holders of shares entitled to vote in the
election;
(b) all other corporate action shall be authorized by a majority of the
votes cast.
11. WRITTEN CONSENT OF SHAREHOLDERS.
Any action that may be taken by vote may be taken without a meeting on
written consent, setting forth the action so taken, signed by the holders of all
the outstanding shares entitled to vote thereon or signed by such lesser number
of holders as may be provided for in the certificate of incorporation.
ARTICLE III - DIRECTORS
1. BOARD OF DIRECTORS.
Subject to any provision in the certificate of incorporation the business
of the corporation shall be managed by its board of directors, each of whom
shall be at least 18 years of age and need not be shareholders.
2. NUMBER OF DIRECTORS.
The number of directors shall be one
When all of the shares are owned by less than three shareholders, the number of
directors may be less than three but not less than the number of shareholders.
By-Laws C
<PAGE>
3. ELECTION AND TERM OF DIRECTORS.
At each annual meeting of shareholders, the shareholders shall elect
directors to hold office until the next annual meeting. Each director shall hold
office until the expiration of the term for which he is elected and until his
successor has been elected and qualified, or until his prior resignation or
removal.
4. NEWLY CREATED DIRECTORSHIPS AND VACANCIES.
Newly created directorships resulting from an increase in the number of
directors and vacancies occurring in the board for any reason except the removal
of directors without cause may be filled by a vote of a majority of the
directors then in office, although less than a quorum exists, unless otherwise
provided in the certificate of incorporation. Vacancies occurring by reason of
the removal of directors without cause shall be filled by vote of the
shareholders unless otherwise provided in the certificate of incorporation. A
director elected to fill a vacancy caused by resignation, death or removal shall
be elected to hold office for the unexpired term of his predecessor.
5. REMOVAL OF DIRECTORS.
Any or all of the directors may be removed for cause by vote of the
shareholders or by action of the board. Directors may be removed without cause
only by vote of the shareholders.
6. RESIGNATION.
A director may resign at any time by giving written notice to the board,
the president or the secretary of the corporation. Unless otherwise specified in
the notice, the resignation shall take effect upon receipt thereof by the board
or such officer, and the acceptance of the resignation shall not be necessary to
make it effective.
7. QUORUM OF DIRECTORS.
Unless otherwise provided in the certificate of incorporation, a majority
of the entire board shall constitute a quorum for the transaction of business or
of any specified item of business.
8. ACTION OF THE BOARD.
Unless otherwise required by law, the vote of a majority of the directors
present at the time of the vote, if a quorum is present at such time, shall be
the act of the board. Each director present shall have one vote regardless of
the number of shares, if any, which he may hold.
By-Laws D
<PAGE>
9. PLACE AND TIME OF BOARD MEETINGS.
The board may hold its meetings at the office of the corporation or at
such other places, either within or without the State of New York, as it may
from time to time determine.
10. REGULAR ANNUAL MEETING.
A regular annual meeting of the board shall be held immediately following
the annual meeting of shareholders at the place of such annual meeting of
shareholders.
11. NOTICE OF MEETINGS OF THE BOARD, ADJOURNMENT.
(a) Regular meetings of the board may be held without notice at such time
and place as it shall from time to time determine. Special meetings of the board
shall be held upon notice to the directors and may be called by the president
upon three days notice to each director either personally or by mail or by wire;
special meetings shall be called by the president or by the secretary in a like
manner on written request of two directors. Notice of a meeting need not be
given to any director who submits a waiver of notice whether before or after the
meeting or who attends the meeting without protesting prior thereto or at its
commencement, the lack of notice to him.
(b) A majority of the directors present, whether or not a quorum is
present, may adjourn any meeting to another time and place. Notice of the
adjournment shall be given all directors who were absent at the time of the
adjournment and, unless such time and place are announced at the meeting, to the
other directors.
12. CHAIRMAN.
At all meetings of the board the president, or in his absence, a chairman
chosen by the board shall preside.
13. EXECUTIVE AND OTHER COMMITTEES.
The board, by resolution adopted by a majority of the entire board, may
designate from among its members an executive committee and other committees,
each consisting of three or more directors. Each such committee shall serve at
the pleasure of the board.
14. COMPENSATION.
No compensation shall be paid to directors, as such, for their services,
but by resolution of the board a fixed sum and expenses for actual attendance,
at each regular or special meeting of the board may be author-
By-Laws E
<PAGE>
ized. Nothing herein contained shall be construed to preclude any director from
serving the corporation in any other capacity and receiving compensation
therefor.
ARTICLE IV - OFFICERS
1. OFFICES, ELECTION, TERM.
(a) Unless otherwise provided for in the certificate of incorporation, the
board may elect or appoint a president, one or more vice-presidents, a secretary
and a treasurer, and such other officers as it may determine, who shall have
such duties, powers and functions as hereinafter provided.
(b) All officers shall be elected or appointed to hold office until the
meeting of the board following the annual meeting of shareholders.
(c) Each officer shall hold office for the term for which he is elected or
appointed and until his successor has been elected or appointed and qualified.
2. REMOVAL, RESIGNATION, SALARY, ETC.
(a) Any officer elected or appointed by the board may be removed by the
board with or without cause.
(b) In the event of the death, resignation or removal of an officer, the
board in its discretion may elect or appoint a successor to fill the unexpired
term.
(c) Any two or more offices may be held by the same person, except the
offices of president and secretary.
(d) The salaries of all officers shall be fixed by the board.
(e) The directors may require any officer to give security for the
faithful performance of his duties.
3. PRESIDENT.
The president shall be the chief executive officer of the corporation; he
shall preside at all meetings of the shareholders and of the board; he shall
have the management of the business of the corporation and shall see that all
orders and resolutions of the board are carried into effect.
4. VICE-PRESIDENTS.
During the absence or disability of the president, the vice-president, or
if there are more than one, the executive vice-president, shall have all
By-Laws F
<PAGE>
the powers and functions of the president. Each vice-president shall perform
such other duties as the board shall prescribe.
5. SECRETARY.
The secretary shall:
(a) attend all meetings of the board and of the shareholders;
(b) record all votes and minutes of all proceedings in a book to be kept
for that purpose;
(c) give or cause to be given notice of all meetings of shareholders and
of special meetings of the board;
(d) keep in safe custody the seal of the corporation and affix it to any
instrument when authorized by the board;
(e) when required, prepare or cause to be prepared and available at each
meeting of shareholders a certified list in alphabetical order of the names of
shareholders entitled to vote thereat, indicating the number of shares of each
respective class held by each;
(f) keep all the documents and records of the corporation as required by
law or otherwise in a proper and safe manner.
(g) perform such other duties as may be prescribed by the board.
6. ASSISTANT-SECRETARIES.
During the absence or disability of the secretary, the
assistant-secretary, or if there are more than one, the one so designated by the
secretary or by the board, shall have all the powers and functions of the
secretary.
7. TREASURER.
The treasurer shall:
(a) have the custody of the corporate funds and securities;
(b) keep full and accurate accounts of receipts and disbursements in the
corporate books;
(c) deposit all money and other valuables in the name and to the credit of
the corporation in such depositories as may be designated by the board;
(d) disburse the funds of the corporation as may be ordered or authorized
by the board and preserve proper vouchers for such disbursements;
(e) render to the president and board at the regular meetings of the
board, or whenever they require it, an account of all his transactions as
By-Laws G
<PAGE>
treasurer and of the financial condition of the corporation;
(f) render a full financial report at the annual meeting of the
shareholders if so requested;
(g) be furnished by all corporate officers and agents at his request, with
such reports and statements as he may require as to all financial transactions
of the corporation;
(h) perform such other duties as are given to him by these by-laws or as
from time to time are assigned to him by the board or the president.
8. ASSISTANT-TREASURER.
During the absence or disability of the treasurer, the assistant-
treasurer, or if there are more than one, the one so designated by the secretary
or by the board, shall have all the powers and functions of the treasurer.
9. SURETIES AND BONDS.
In case the board shall so require, any officer or agent of the
corporation shall execute to the corporation a bond in such sum and with such
surety or sureties as the board may direct, conditioned upon the faithful
performance of his duties to the corporation and including responsibility for
negligence and for the accounting for all property, funds or securities of the
corporation which may come into his hands.
ARTICLE V - CERTIFICATES FOR SHARES
1. CERTIFICATES.
The shares of the corporation shall be represented by certificates. They
shall be numbered and entered in the books of the corporation as they are
issued. They shall exhibit the holder's name and the number of shares and shall
be signed by the president or a vice-president and the treasurer or the
secretary and shall bear the corporate seal.
2. LOST OR DESTROYED CERTIFICATES.
The board may direct a new certificate or certificates to be issued in
place of any certificate or certificates theretofore issued by the corporation,
alleged to have been lost or destroyed, upon the making of an affidavit of that
fact by the person claiming the certificate to be lost or destroyed. When
authorizing such issue of a new certificate or certificates, the board may, in
its discretion and as a condition precedent to the issuance thereof, require the
owner of such lost or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it shall
By-Laws H
<PAGE>
require and/or give the corporation a bond in such sum and with such surety or
sureties as it may direct as indemnity against any claim that may be made
against the corporation with respect to the certificate alleged to have been
lost or destroyed.
3. TRANSFERS OF SHARES.
(a) Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, and cancel the old certificate; every such transfer shall be entered on
the transfer book of the corporation which shall be kept at its principal
office. No transfer shall be made within ten days next preceding the annual
meeting of shareholders.
(b) The corporation shall be entitled to treat the holder of record of any
share as the holder in fact thereof and, accordingly, shall not be bound to
recognize any equitable or other claim to or interest in such share on the part
of any other person whether or not it shall have express or other notice
thereof, except as expressly provided by the laws of New York.
4. CLOSING TRANSFER BOOKS.
The board shall have the power to close the share transfer books of the
corporation for a period of not more than ten days during the thirty day period
immediately preceding (1) any shareholders' meeting, or (2) any date upon which
shareholders shall be called upon to or have a right to take action without a
meeting, or (3) any date fixed for the payment of a dividend or any other form
of distribution, and only those shareholders of record at the time the transfer
books are closed, shall be recognized as such for the purpose of (1) receiving
notice of or voting at such meeting, or (2) allowing them to take appropriate
action, or (3) entitling them to receive any dividend or other form of
distribution.
ARTICLE VI - DIVIDENDS
Subject to the provisions of the certificate of incorporation and to
applicable law, dividends on the outstanding shares of the corporation may be
declared in such amounts and at such time or times as the board may determine.
Before payment of any dividend, there may be set aside out of the net profits of
the corporation available for dividends such sum or sums as the board from time
to time in its absolute discretion deems proper as a reserve fund to meet
contingencies, or for equalizing dividends, or for repairing or maintaining any
property of the corporation, or for such other
By-Laws I
<PAGE>
purpose as the board shall think conducive to the interests of the corporation,
and the board may modify or abolish any such reserve.
ARTICLE VII - CORPORATE SEAL
The seal of the corporation shall be circular in form and bear the name of
the corporation, the year of its organization and the words "Corporate Seal, New
York." The seal may be used by causing it to be impressed directly on the
instrument or writing to be sealed, or upon adhesive substance affixed thereto.
The seal on the certificates for shares or on any corporate obligation for the
payment of money may be a facsimile, engraved or printed.
ARTICLE VIII - EXECUTION OF INSTRUMENTS
All corporate instruments and documents shall be signed or counter-signed,
executed, verified or acknowledged by such officer or officers or other person
or persons as the board may from time to time designate.
ARTICLE IX - FISCAL YEAR
The fiscal year shall begin the first day of April in each year.
ARTICLE X - REFERENCES TO CERTIFICATE OF INCORPORATION
Reference to the certificate of incorporation in these by-laws shall
include all amendments thereto or changes thereof unless specifically excepted.
ARTICLE XI - BY-LAW CHANGES
AMENDMENT, REPEAL, ADOPTION, ELECTION OF DIRECTORS.
(a) Except as otherwise provided in the certificate of incorporation the
by-laws may be amended, repealed or adopted by vote of the holders of the shares
at the time entitled to vote in the election of any directors. By-laws may also
be amended, repealed or adopted by the board but any by-law adopted by the board
may be amended by the shareholders entitled to vote thereon as hereinabove
provided.
(b) If any by-law regulating an impending election of directors is
adopted, amended or repealed by the board, there shall be set forth in the
notice of the next meeting of shareholders for the election of directors the
by-law so adopted, amended or repealed, together with a concise statement of the
changes made.
By-Laws J
<PAGE>
AMENDMENT TO BYLAWS from Special Meeting of Carr Acquisition
Corporation dated September 16, 1998
"(4) Newco, as Shareholder of Carr, Amendments to Bylaws of Carr and
Election of Directors of Carr
RESOLVED, that immediately subsequent to the consummation of Newco's
and Global's acquisition of Carr Business Machines of Great Neck Inc. d/b/a Carr
Business Systems (the "Carr Acquisition"), the bylaws of Carr Business Machines
of Great Neck Inc. d/b/a Carr Business Systems (the "Carr Bylaws") shall be
amended as follows:
Article III shall be amended by adding a new Paragraph 15 to the end
of such Article III which reads as follows: "Any action that may be
taken by vote of the directors may be taken without a meeting on
written consent, setting forth the action so taken, signed by all of
the directors. Any meeting may be held by telephone conference
call."
Paragraph 2 of Article Ill of the Carr Bylaws shall be amended to
replace the first sentence with the following: "The number of
directors shall be from one to ten in number, as determined by the
shareholders of the corporation."
Paragraph 11(a) of Article Ill of the Carr Bylaws shall be amended
by replacing the entire second sentence of such Paragraph 11(a) with
the following: "Special meetings of the board shall be held upon
notice to the directors and may be called by the Chairman on 24
hours notice to each director, either personally or by mail,
overnight courier or by facsimile. Any Meeting of the Board of
Directors may be held by telephone conference call."
Paragraph 12 of Article III of the Carr Bylaws shall be amended by
replacing the entirety of such Paragraph 12 with the following: "At
all meetings of the board, the Chairman, or in his absence, a
chairman chosen by the board, shall preside."
Paragraph 1(a) of Article IV of the Carr Bylaws shall be amended by
replacing the entirety of the first sentence of such Paragraph 1(a)
with the following: "Unless otherwise provided for in the
certificate of incorporation, the board may elect or appoint a
Chairman of the Board of Directors, the President, any number of
Vice Presidents chosen by the board, the Treasurer, the Secretary
and any number of Assistant Secretaries chosen by the board."
Paragraph 3 of Article IV of the Carr Bylaws shall be amended by
replacing the tide to read "Chairman and President" and by adding
the following sentence to the beginning of such Paragraph 3: "The
Chairman shall (when present) preside at all meetings of the Board
of Directors and Shareholders; and shall ensure that all orders and
resolutions of the Board of Directors and Shareholders are carried
<PAGE>
into effect. The Chairman may execute bonds, mortgages and other
contracts, under the seal of the corporation, if required, 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."
RESOLVED, that immediately subsequent to the consummation of the
Carr Acquisition, the size of Carr Business Machines of Great Neck Inc. d/b/a
Carr Business Systems' Board of Directors (the "Carr Board") shall be set at
three (3) members.
FURTHER RESOLVED, that immediately subsequent to the Carr
Acquisition, (i) all of the directors of Carr Business Machines of Great Neck
Inc. d/b/a Carr Business Systems ("Carr") shall be removed, in accordance with
the bylaws of Carr, (ii) Thomas S. Johnson, William C. Kessinger and Paul A.
Schulman shall be appointed to fill the vacancies on the Carr Board created
thereby and that they shall each serve until such time as his successor is duly
elected and qualified, and (iii) Thomas S. Johnson shall be appointed as the
Chairman of the Carr Board to serve until such time as his successor is duly
elected and qualified.
FURTHER RESOLVED, that the shareholders agreement of the former
shareholders of Carr Business Machines of Great Neck Inc. is null and void and
that the existing directors of Carr are hereby removed and replaced by these
resolutions."
<PAGE>
Exhibit 3.9a
=============================
Filed this 24th day of
March 1980
Commonwealth of Pennsylvania
Department of State
/s/ William R. Davis
Secretary of the Commonwealth
=============================
Box for Certification
APPLICANT'S ACC'T NO.
[ILLEGIBLE]
80-19 182
Filing Fee: $75 (Line for numbering)
MB-7 705510
Articles of Incorporation- COMMONWEALTH OF PENNSYLVANIA
Domestic Business Corporation DEPARTMENT OF STATE
Close Corporation CORPORATION BUREAU
- --------------------------------------------------------------------------------
Center Business Products, Inc.
------------------------------
(NAME OF CORPORATION)
A CLOSE CORPORATION
In compliance with the requirements of section 373 of the Business
Corporation Law, act of May 5, 1933 (P.L. 364)(15 P.S. #1373) the undersigned,
desiring to be incorporated as a business corporation which is a close
corporation, hereby certifies (certify) that:
1. The name of the corporation is:
Centre Business Products, Inc
- --------------------------------------------------------------------------------
2. The location and post office address of the initial registered office of the
corporation in this Commonwealth is:
102 W. Shirley Street (P.O. Box 7)
- --------------------------------------------------------------------------------
(NUMBER) (STREET)
Mount Union Pennsylvania 17066
- --------------------------------------------------------------------------------
(CITY) (ZIP CODE)
3. The corporation is incorporated under the Business Corporation Law of the
Commonwealth of Pennsylvania for the following purpose or purposes: To engage in
and to do any lawful act concerning any or all lawful business as for which
corporations may be incorporated under the Pennsylvania Business Corporation
Law.
4. The term for which the corporation is to exist is: perpetual
5. The aggregate number of shares which the corporation shall have authority to
issue is: 100 shares of common stock without par value
<PAGE>
6. the following provisions shall regulate the status of the corporation as a
close corporation.
(a) (Strike out [ILLEGIBLE]) below, whichever is not applicable.)
(1) All of the issued shares of the corporation of all classes, exclusive
of treasury shares shall be held of record by not more than 30 (NUMBER NOT TO
EXCEED 30) persons.
(b) All of the issued shares of all classes of the corporation shall
be subject to one or more of the restrictions on transfer permitted by section
613.1 of the Business Corporation Law (15 P.S. #1613.1).
(c) The corporation shall make no offering of any of its shares of
any class which would constitute a "public offering" within the meaning of the
Securities Act of 1933 as amended.
7.
8. (Optional: BCL (S)382) The business and affairs of the corporation shall be
managed by the shareholders of the corporation rather than by a board of
directors.
9. (Optional: BCL (S)376B) The status of the corporation as a "close
corporation" within the meaning of the Business Corporation Law shall not be
terminated without the affirmative vote or written consent of (shareholders
holding two-thirds (FRACTION AT LEAST TWO-THIRDS) of the) shares of all classes
of the corporation.
10. (Optional: BCL (S)384B) (shareholders holding two-thirds (FRACTION) of the
shares) of the corporation may apply for the appointment of a provisional
director of the corporation in the manner and upon the circumstances provided by
statute.
11. (Optional: BCL (S)386) (shareholders holding two-thirds (FRACTION) of the
shares) of the corporation shall have the right at will to cause the corporation
to be dissolved by proceeding in the manner provided by statute.
12. The name(s) and post office address(es) of each incorporator(s) and the
number and class of shares subscribed by such incorporator(s) is (are):
NAME ADDRESS NUMBER AND CLASS OF SHARES
(including street and number, if any)
- --------------------------------------------------------------------------------
Richard J. Payne R.D.#5, Box 399E 100 shs. common stock
- --------------------------------------------------------------------------------
Bellefonte, Pa. 16823
(no street address available)
- --------------------------------------------------------------------------------
IN TESTIMONY WHEREOF, the incorporator(s) has (have) signed and sealed
these Articles of Incorporation this 19 day of March 1980
_____________________________(SEAL) /s/ Richard J. Payne (SEAL)
-----------------------------
Richard J. Payne (SEAL)
-----------------------------
2
<PAGE>
=============================
Filed this 19th day of
February A.D. 1988
Commonwealth of Pennsylvania
Department of State
/s/ [ILLEGIBLE]
Secretary of the Commonwealth
=============================
APPLICANT'S ACCOUNT NO.
[ILLEGIBLE]
Filing Fee: $45 88151120
COC-26 (Line for numbering)
705510
Certificate of Corrections
Domestic Nonprofit COMMONWEALTH OF PENNSYLVANIA
Corporation and Foreign DEPARTMENT OF STATE
Corporation Not-for-Profit CORPORATION BUREAU
- --------------------------------------------------------------------------------
In compliance with the requirements of 15 Pa. S.S. 136 (relating to
certificate of correction) the undersigned domestic nonprofit corporation or
foreign corporation not-for-profit, desiring to correct an inaccurate record of
corporate action or correct defective or erroneous execution of a document, does
hereby certify that:
1. The name of the corporation is:
Centre Business Products, Inc., a close corporation
- --------------------------------------------------------------------------------
2. The location and post office address of the initial registered office of the
corporation in this Commonwealth is (the Department of State is hereby
authorized to correct the following statement to conform to the records of the
Department):
P.O. Box 7 102 W. Shirley Street
- --------------------------------------------------------------------------------
(NUMBER) (STREET)
Mount Union Pennsylvania 17066
- --------------------------------------------------------------------------------
(CITY) (ZIP CODE)
3. The statute by or under which it was incorporated is:
Business Corporation Law of PA. 15 P. S. 1001, et seq.
- --------------------------------------------------------------------------------
4. The inaccuracy or defect, which appears in Department of State Form DSCB:
BCL-373 (FORM NUMBER) filed March 24, 1980 and recorded in Roll 80-19 Film
182-184 et seq., is the first word of the corporate name should be Centre,
rather than Center, so that the name of the corporation would be Centre Business
Products, Inc., a close corporation
5. (Check one of the following):
|_| The portion of the document requiring correction in corrected form
is set forth in Exhibit A, attached hereto and made a part hereof.
|X| The original document to which this certificate relates shall be
deemed reexecuted.
|_| The original document to which this certificate relates shall be
deemed stricken from the records of the Department.
3
<PAGE>
IN TESTIMONY WHEREOF, the undersigned corporation has caused this
certificate to be signed by a duly authorized officer and its corporate seal,
duly [ILLEGIBLE] by another such officer, to be hereunto affixed, this 15th day
of February 1988
CENTRE BUSINESS PRODUCTS, INC
----------------------------------------
NAME OF CORPORATION
By: /s/ C. Arnold McClure
------------------------------------
(SIGNATURE)
President
----------------------------------------
(TITLE: PRESIDENT, VICE PRESIDENT, ETC.)
By: /s/ Linda McClure
- ----------------------------------------
(SIGNATURE)
Secretary
- ----------------------------------------
(TITLE: PRESIDENT, VICE PRESIDENT, ETC.)
(CORPORATE SEAL)
INSTRUCTIONS FOR COMPLETING FORM:
A. The statement in Paragraph 4 should identify the defective document
by specifying (1) its DSCB Form number, (2) the filing date, and (3)
the initial roll and film number endorsed by the Department on the
defective document; if available.
B. The third alternate of Paragraph 5 does not apply to a certificate
of correction filed with respect to original Articles of
Incorporation, but this form may be used to correct original
Articles of Incorporation.
4
<PAGE>
Exhibit 3.9b
BY-LAWS
ARTICLE I - OFFICES
1. The registered office of the corporation shall be at PO Box 7, Mount
Union, PA 17066
2. The corporation may also have offices at such other places as the Board
of Directors may from time to time appoint or the business of the corporation
may require.
ARTICLE II - SEAL
1. The corporate seal shall have inscribed thereon the name of the
corporation, the year of its organization and the words "Corporate Seal,
Pennsylvania".
ARTICLE III - SHAREHOLDERS' MEETING
1. Meetings of the shareholders shall be held at the registered office of
the corporation or at such other place or places, either within or without the
Commonwealth of Pennsylvania, as may from time to time be selected.
2. The annual meeting of the shareholders shall be held on the 15 of
September in each year if not a legal holiday, and if a legal holiday, then on
the next secular day following at 11 o'clock A.M., when they shall elect a Board
of Directors, and transact such other business as may properly be brought before
the meeting. If the annual meeting
<PAGE>
shall not be called and held during any calendar year, any shareholder may call
such meeting at any time thereafter.
3. The presence, in person or by proxy, of shareholders entitled to cast
at least a majority of the votes which all shareholders are entitled to cast on
the particular matter shall constitute a quorum for the purpose of considering
such matter, and, unless otherwise provided by statute the acts, at a duly
organized meeting, of the shareholders present, in person or by proxy, entitled
to cast at least a majority of the votes which all shareholders present are
entitled to cast shall be the acts of the shareholders. The shareholders present
at a duly organized meeting can continue to do business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum. Adjournment or adjournments of any annual or special meeting may be
taken, but any meeting at which directors are to be elected shall be adjourned
only from day to day, or for such longer periods not exceeding fifteen days
each, as may be directed by shareholders who are present in person or by proxy
and who are entitled to cast at least a majority of the votes which all such
shareholders would be entitled to cast at an election of directors until such
directors have been elected. If a meeting cannot be organized because a quorum
has not attended, those present may, except as otherwise provided by statute,
adjourn the meeting to such time and place as they may determine, but in the
case of any meeting called for the election of directors, those who attend the
second of such adjourned meetings, although less than a quorum, shall
nevertheless constitute a quorum for the purpose of electing directors. There
will be one vote per share's quorum will be constituted by majority of
outstanding stock.
4. Every shareholder 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. Every proxy shall
be executed in writing by the shareholders, or by his duly authorized attorney
in fact, and filed with the Secretary of the corporation. A proxy, unless
coupled with an interest, shall be revocable at will, notwithstanding any other
agreement or any provision in the proxy to the contrary, but the revocation of a
proxy shall not be effective until notice thereof has been given to the
Secretary of the corporation. No unrevoked proxy shall be valid after eleven
months from the date of its execution, unless a longer time is expressly
provided therein, but in no event shall a proxy, unless coupled with an
interest, be voted on after three years from the date of its execution. A proxy
shall not be revoked by the death or incapacity of the maker unless before the
vote is counted or the authority is exercised, written notice of such death or
incapacity is given to the Secretary of the corporation. A shareholder shall not
sell his vote or execute a proxy to any person for any sum of money or anything
of value. A proxy coupled with an interest shall include an unrevoked proxy in
favor of a creditor of a shareholder and
<PAGE>
such proxy shall be valid so long as the debt owed by him to the creditor
remains unpaid. Elections for directors need not be by ballot, except upon
demand made by a shareholder at the election and before the voting begins.
Except as otherwise provided in the Articles, in each election of directors
cumulative voting shall be allowed. No share shall be voted at any meeting upon
which any installment is due and unpaid.
5. Written notice of the annual meeting shall be given to each shareholder
entitled to vote thereat, at least 5 days prior to the meeting.
6. In advance of any meeting of shareholders, the Board of Directors may
appoint judges of election, who need not be shareholders, to act at such meeting
or any adjournment thereof. If judges of election be not so appointed, the
chairman of any such meeting may, and on the request of any shareholder or his
proxy shall, make such appointment at any meeting. The number of judges shall be
one or three. If appointed at a meeting on the request of one or more
shareholders or proxies, the majority of shares present and entitled to vote
shall determine whether one or three judges are to be appointed. On request of
the chairman of the meeting, or of any shareholder or his proxy, the judges
shall make a report in writing of any challenge or question or matter determined
by them, and execute a certificate of any fact found by them. No person who is a
candidate for office shall act as a judge.
<PAGE>
7. Special meetings of the shareholders may be called at any time by the
President, or the Board of Directors, or shareholders entitled to cast at least
one-fifth of the votes which all shareholders are entitled to cast at the
particular meeting. At any time, upon written request of any person or persons
who have duly called a special meeting, it shall be the duty of the Secretary to
fix the date of the meeting, to be held not more than sixty days after the
receipt of the request, and to give due notice thereof. If the Secretary shall
neglect or refuse to fix the date of the meeting and give notice thereof, the
person or persons calling the meeting may do so.
8. Business transacted at all special meetings shall be confined to the
objects stated in the call and matters germane thereto, unless all shareholders
entitled to vote are present and consent.
9. Written notice of a special meeting of the shareholders stating the
time and place and object thereof, shall be given to each shareholder entitled
to vote thereat at least 5 days before such meeting, unless a greater period of
notice is required by statute in a particular case.
10. The officer or agent having charge of the transfer books shall make at
least five days before each meeting of shareholders, a complete list of the
shareholders entitled to vote at the meeting, arranged in alphabetical order,
with the address of and the number of shares held by each, which list
<PAGE>
shall be subject to inspection by any shareholder at any time during usual
business hours. Such list shall also be produced and kept open at the time and
place of the meeting, and shall be subject to the inspection of any shareholder
during the whole time of the meeting. The original share ledger or transfer
book, or a duplicate thereof kept in this Commonwealth, shall be prima facie
evidence as to who are the shareholders entitled to examine such list or share
ledger or transfer book, or to vote in person or by proxy, at any meeting of
shareholders.
ARTICLE IV - DIRECTORS
1. The business of this corporation shall be managed by its Board of
Directors, 2 in number. The directors need not be residents of this Commonwealth
or shareholders in the corporation. They shall be elected by the shareholders at
the annual meeting of shareholders of the corporation, and each director shall
be elected for the term of one year, and until his successor shall be elected
and shall qualify. Whenever all the shares of the corporation are owned
beneficially and of record by either one or two shareholders, the number of
directors may be less than three but not less than the number of shareholders.
Whenever there are three or more shareholders, there must be at least three
directors.
2. In addition to the powers and authorities by these By-Laws expressly
conferred upon them, the Board may exercise all such powers of the corporation
and do all such lawful acts and things as are not by statute or by the Articles
or by these By-Laws directed or required to be exercised or done by the
shareholders.
3. The meetings of the Board of Directors may be held at such place within
this Commonwealth, or elsewhere, as a majority of the directors may from time to
time appoint, or as may be designated in the notice calling the meeting.
4. Each newly elected Board may meet at such place and time as shall be
fixed by the shareholders at the meeting at which such directors are elected and
no notice shall be necessary to the newly elected directors in order legally to
constitute the meeting, or they may meet at such place and time as may be fixed
by the consent in writing of all the directors.
5. Regular meetings of the Board shall be held without notice annually at
the registered office of the corporation, or at such other time and place as
shall be determined by the Board.
6. Special meetings of the Board may be called by the President on 5 days'
notice to each director, either personally or by mail or by telegram; special
meetings shall be called by the President or Secretary in like manner and on
like notice on the written request of a majority of the directors in office.
7. A majority of the directors in office shall be necessary to constitute
a quorum for the transaction of business, and the acts of a majority of the
directors present at a meeting at which a quorum is present shall be the acts of
the Board of Directors. Any action which may be taken at a meeting of the
directors may be taken without a meeting if a consent or consents in writing,
setting forth the action so taken, shall be signed by all of the directors and
shall be filed with the Secretary of the corporation.
8. Directors as such, shall not receive any stated salary for their
services, but by resolution of the Board, a fixed sum and expenses of
attendance, if any, may be allowed for attendance at each regular or special
meeting of the Board PROVIDED, that nothing herein contained shall be construed
to preclude any director from serving the corporation in any other capacity and
receiving compensation therefor.
ARTICLE V - OFFICERS
1. The executive officers of the corporation shall be chosen by the
directors and shall be a President, Secretary and Treasurer. The Board of
Directors may also choose a Vice President and such other officers and agents as
it shall deem necessary, who shall hold their offices for such terms and shall
have such authority and shall perform such duties as from time to time shall be
prescribed by the Board. Any number of offices may be held by the same person.
It shall not be necessary for the officers to be directors.
<PAGE>
2. The salaries of all officers and agents of the corporation shall be
fixed by the Board of Directors.
3. The officers of the corporation shall hold office for one year and
until their successors are chosen and have qualified. Any officer or agent
elected or appointed by the Board may be removed by the Board of Directors
whenever in its judgment the best interests of the corporation will be served
thereby.
4. The President shall be the chief executive officer of the corporation;
he shall preside at all meetings of the shareholders and directors; he shall
have general and active management of the business of the corporation, shall see
that all orders and resolutions of the Board are carried into effect, subject,
however, to the right of the directors to delegate any specific powers, except
such as may be by statute exclusively conferred on the President, to any other
officer or officers of the corporation. He shall execute bonds, mortgages and
other contracts requiring a seal, under the seal of the corporation. He shall be
EX-OFFICIO a member of all committees, and shall have the general powers and
duties of supervision and management usually vested in the office of the
President of a corporation.
5. The Secretary shall attend all sessions of the Board and all meetings
of the shareholders and act as clerk thereof, and record all the votes of the
corporation and the minutes of all its transactions in a book to be kept for
that purpose; and shall perform like duties for all committees of the Board of
<PAGE>
Directors when required. He shall give, or cause to be given, notice of all
meetings of the shareholders and of the Board of Directors, and shall perform
such other duties as may be prescribed by the Board of Directors or President,
and under whose supervision he shall be. He shall keep in safe custody the
corporate seal of the corporation, and when authorized by the Board, affix the
same to any instrument requiring it.
6. The Treasurer shall have 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 keep the moneys of the corporation in a
separate account to the credit of the corporation. He shall disburse the funds
of the corporation as may be ordered by the Board, taking proper vouchers for
such disbursements, and shall render to the President and directors, at the
regular meetings of the Board, or whenever they may require it, an account of
all his transactions as Treasurer and of the financial condition of the
corporation.
ARTICLE VI - VACANCIES
1. If the office of any officer or agent, one or more, becomes vacant for
any reason, the Board of Directors may choose a successor or successors, who
shall hold office for the unexpired term in respect of which such vacancy
occurred.
2. Vacancies in the Board of Directors, including vacancies resulting from
an increase in the number of directors,
<PAGE>
shall be filled by a majority of the remaining members of the Board though less
than a quorum, and each person so elected shall be a director until his
successor is elected by the shareholders, who may make such election at the next
annual meeting of the shareholders or at any special meeting duly called for
that purpose and held prior thereto.
ARTICLE VII - CORPORATE RECORDS
1. There shall be kept at the registered office or principal place of
business of the corporation an original or duplicate record of the proceedings
of the shareholders and of the directors, and the original or a copy of its
By-Laws, including all amendments or alterations thereto to date, certified by
the Secretary of the corporation. An original or duplicate share register shall
also be kept at the registered office or principal place of business or at the
office of a transfer agent or registrar, giving the names of the shareholders,
their respective addresses and the number and classes of shares held by each.
2. Every shareholder shall, upon written demand under oath stating the
purpose thereof, have a right to examine, in person or by agent or attorney,
during the usual hours for business for any proper purpose, the share register,
books or records of account, and records of the proceedings of the shareholders
and directors, and make copies or extracts therefrom. A proper purpose shall
mean a purpose reasonably related to such person's
<PAGE>
interest as a shareholder. In every instance where an attorney or other agent
shall be the person who seeks the right to inspection, the demand under oath
shall be accompanied by a power of attorney or such other writing which
authorizes the attorney or other agent to so act on behalf of the shareholder.
The demand under oath shall be directed to the corporation at its registered
office in this Commonwealth or at its principal place of business.
ARTICLE VIII - SHARE CERTIFICATES, DIVIDENDS, ETC.
1. The share certificates of the corporation shall be numbered and
registered in the share ledger and transfer books of the corporation as they are
issued. They shall bear the corporate seal and shall be signed by the president
and secretary
2. Transfer of shares shall be made on the books of the corporation upon
surrender of the certificates therefor, endorsed by the person named in the
certificate or by attorney, lawfully constituted in writing. No transfer shall
be made which is inconsistent with law.
3. The Board of Directors may fix a time, not more than fifty days, prior
to the date of any meeting of shareholders, or the date fixed for the payment of
any dividend or distribution, or the date for the allotment of rights, or the
date when any change or conversion or exchange of shares will be made or go into
effect, as a record date for the determination of the shareholders entitled to
notice of, or to vote at, any such meeting, or entitled to receive payment of
any such dividend or distribution, or to receive any such allotment of rights,
or to exercise the rights in respect to any such change, conversion, or exchange
of shares. In such case, only such shareholders as shall be shareholders of
record on the date so fixed shall be entitled to notice of, or to vote at, such
meeting or to receive payment of such dividend, or to receive such allotment of
rights, or to exercise such rights, as the case may be, notwithstanding any
transfer of any shares on the books of the corporation after any record date
fixed as aforesaid. The Board of Directors may close the books of the
corporation against transfers of shares during the whole or any part of such
period, and in such case, written or printed notice thereof shall be mailed at
least ten days before the closing thereof to each shareholder of record at the
address appearing on the records of the corporation or supplied by him to the
corporation for the purpose of notice. While the stock transfer books of the
corporation are closed, no transfer of shares shall be made thereon. If no
record date is fixed for the determination of shareholders entitled to receive
notice of, or vote at, at shareholders' meeting, transferees of shares which are
transferred on the books of the corporation within ten days next preceding the
date of such meeting shall not be entitled to notice of or to vote at such
meeting.
<PAGE>
4. In the event that a share certificate shall be lost, destroyed or
mutilated, a new certificate may be issued therefor upon such terms and
indemnity to the corporation as the Board of Directors may prescribe.
5. The Board of Directors may declare and pay dividends upon the
outstanding shares of the corporation, from time to time and to such extent as
they deem advisable, in the manner and upon the terms and conditions provided by
statute and the Articles of Incorporation.
6. Before payment of any dividend there may be set aside out of the net
profits of the corporation such sum or sums as the directors, from time to time,
in their absolute discretion, think proper as a reserve fund to meet
contingencies, or for equalizing dividends, or for repairing or maintaining any
property of the corporation, or for such other purpose as the directors shall
think conducive to the interests of the corporation, and the directors may
abolish any such reserve in the manner in which it was created.
ARTICLE IX - MISCELLANEOUS PROVISIONS
1. All checks or demands for money and notes of the corporation shall be
signed by such officer or officers as the Board of Directors may from time to
time designate.
2. The fiscal year shall begin on the first day of July each year.
<PAGE>
3. Whenever written notice is required to be given to any person, it may
be given to such person, either personally or by sending a copy thereof through
the mail, or by telegram, charges prepaid, to his address appearing on the books
of the corporation, or supplied by him to the corporation for the purpose of
notice. If the notice is sent by mail or by telegraph, it shall be deemed to
have been given to the person entitled thereto when deposited in the United
States mail or with a telegraph office for transmission to such person. Such
notice shall specify the place, day and hour of the meeting and, in the case of
a special meeting of shareholders, the general nature of the business to be
transacted.
4. Whenever any written notice is required by statute, or by the Articles
or By-Laws of this corporation, a waiver thereof in writing, signed by the
person or persons entitled to such notice, whether before or after the time
stated therein, shall be deemed equivalent to the giving of such notice. Except
in the case of a special meeting of shareholders, neither the business to be
transacted at nor the purpose of the meeting need be specified in the waiver of
notice of such meeting. Attendance of a person, either in person or by proxy, at
any meeting shall constitute a waiver of notice of such meeting, except where a
person attends a meeting for the express purpose of objecting to the transaction
of any business because the meeting was not lawfully called or convened.
<PAGE>
5. One or more directors or shareholders may participate in a meeting of
the Board, of a committee of the Board or of the shareholders, by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other.
6. Except as otherwise provided in the Articles or By-Laws of this
corporation, any action which may be taken at a meeting of the shareholders or
of a class of shareholders may be taken without a meeting, if a consent or
consents in writing, setting forth the action so taken, shall be signed by all
of the shareholders who would be entitled to vote at a meeting for such purpose
and shall be filed with the Secretary of the corporation.
7. Any payments made to an officer or employee of the corporation such as
a salary, commission, bonus, interest, rent, travel or entertainment expense
incurred by him, which shall be disallowed in whole or in part as a deductible
expense by the Internal Revenue Service, shall be reimbursed by such officer or
employee to the corporation to the full extent of such disallowance. It shall be
the duty of the directors, as a Board, to enforce payment of each such amount
disallowed. In lieu of payment by the officer or employee, subject to the
determination of the directors, proportionate amounts may be withheld from his
future compensation payments until the amount owed to the corporation has been
recovered.
<PAGE>
ARTICLE X - ANNUAL STATEMENT
1. The President and Board of Directors shall present at each annual
meeting a full and complete statement of the business and affairs of the
corporation for the preceding year. Such statement shall be prepared and
presented in whatever manner the Board of Directors shall deem advisable and
need not be verified by a certified public accountant.
ARTICLE XI - AMENDMENTS
1. These By-Laws may be amended or repealed by the vote of shareholders
entitled to cast at least a majority of the votes which all shareholders are
entitled to cast thereon, at any regular or special meeting of the shareholders,
duly convened after notice to the shareholders of that purpose.
<PAGE>
Exhibit 3.10a
-------------------
For office use only
-------------------
CERTIFICATE OF INCORPORATION ACCOUNT NO.
STOCK CORPORATION
-------------------
[ILLEGIBLE] INITIALS
STATE OF CONNECTICUT
VOL 11171485 SECRETARY OF THE STATE [ILLEGIBLE]
-------------------
The undersigned incorporator(s) hereby form(s) a corporation under the Stock
Corporation Act of the State of Connecticut:
1. The name of the corporation is: Connecticut Business Systems of Hartford,
Inc.
2. The nature of the business to be transacted, or the purposes to be promoted
or carried out by the corporation, are as follows
To engage in any lawful act or activity for which corporations may be
formed under the laws of the State of Connecticut.
<PAGE>
(Continued)
3. The designation of each class of shares, the authorized number of shares of
each such class, and the par value (if any) of each share thereof are as
follows:
5,000 shares of common stock having no par value
4. The terms, limitations and relative rights and preferences of each class of
shares and series thereof (if any), or an express grant or authority to the
board of directors pursuant to Section 33-341. 1959 Supp. Conn. G.S., are as
follows:
None.
5. The minimum amount of stated capital with which the corporation shall
commence business is One Thousand and 00/100 ($1,000.00) dollars (Not less than
one thousand dollars)
6. (7) Other provisions
None.
Dated at East Hartford, Connecticut this 21st day of June, 1988
We hereby declare, under the penalties of false statement, that the statements
made in the foregoing certificate are true.
This certificate of incorporation must be signed by one or more incorporators
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
NAME OF INCORPORATOR (Print or Type) NAME OF INCORPORATOR (Print or Type) NAME OF INCORPORATOR (Print or Type)
1. Peter R. Wenzke 2. 3.
- ----------------------------------------------------------------------------------------------------------------
SIGNED (Incorporator) SIGNED (Incorporator) SIGNED (Incorporator)
1. 2. 3.
- ----------------------------------------------------------------------------------------------------------------
NAME OF INCORPORATOR (Print or Type) NAME OF INCORPORATOR (Print or Type) NAME OF INCORPORATOR (Print or Type)
4. 5. 6.
- ----------------------------------------------------------------------------------------------------------------
SIGNED (Incorporator) SIGNED (Incorporator) SIGNED (Incorporator)
4. 5. 6.
- ----------------------------------------------------------------------------------------------------------------
FRANCHISE FEE FILING FEE CERTIFICATION FEE TOTAL FEES
For Office Use Only
$ 50- $ 30 & 20 $ $ 100
FILED -----------------------------------------------------------
SIGNED (For Secretary of the State)
[ILLEGIBLE]
cc plu 6/22/88
-----------------------------------------------------------
CERTIFIED COPY SENT ON (Date) INITIALS
Rec [ILLEGIBLE]
-----------------------------------------------------------
TO
Robinson & Coles attn: Gary Scarpini
One Commercial Plaza, Hartford, CT 06102-3607
-----------------------------------------------------------
[ILLEGIBLE] [ILLEGIBLE] [ILLEGIBLE]
-----------------------------------------------------------
</TABLE>
<PAGE>
-------------------
For office use only
APPOINTMENT OF STATUTORY AGENT FOR SERVICE -------------------
DOMESTIC CORPORATION ACCOUNT NO.
[ILLEGIBLE]
-------------------
VOL 1117 INITIALS
TO: The Secretary of the State of Connecticut -------------------
<TABLE>
<S> <C> <C>
=======================================================================================================================
NAME OF CORPORATION
Connecticut Business Systems of Hartford, Inc.
- -----------------------------------------------------------------------------------------------------------------------
APPOINTMENT
- -----------------------------------------------------------------------------------------------------------------------
The above corporation appoints as its statutory agent for service, one of the following:
- -----------------------------------------------------------------------------------------------------------------------
NAME OF NATURAL PERSON WHO IS RESIDENT BUSINESS ADDRESS ZIP CODE
OF CONNECTICUT
Robinson & Cole
J. Thomas Vincent One Commercial Plaza, Hartford, CT 06103-3597
-----------------------------------------------------------------------------
RESIDENCE ADDRESS ZIP CODE
19 Glen Hollow, West Hartford, CT 06117
- -----------------------------------------------------------------------------------------------------------------------
NAME OF CONNECTICUT CORPORATION ADDRESS OF PRINCIPAL OFFICE IN CONN (If none, enter address of [ILLEGIBLE],
statutory agent for services)
- -----------------------------------------------------------------------------------------------------------------------
NAME OF CORPORATION not Organized under ADDRESS OF PRINCIPAL OFFICE IN CONN (If non, enter "Secretary of the State
the Laws of Conn * of Connecticut")
- -----------------------------------------------------------------------------------------------------------------------
* When not [ILLEGIBLE]
- -----------------------------------------------------------------------------------------------------------------------
AUTHORIZATION
- -----------------------------------------------------------------------------------------------------------------------
NAME OF INCORPORATOR (Print or Type) SIGNED (Incorporator) Date
ORIGINAL
APPOINTMENT Peter R. Wenzke /s/ Peter R. Wenzke June 21, 1988
----------------------------------------------------------------------------
NAME OF INCORPORATOR (Print or Type) SIGNED (Incorporator)
(Must [ILLEGIBLE] signed
by authority
of incoporation) ----------------------------------------------------------------------------
NAME OF INCORPORATOR (Print or Type) SIGNED (Incorporator)
- -----------------------------------------------------------------------------------------------------------------------
NAME OF PRESIDENT, VICE PRESIDENT, OR SEC SIGNED (President, or Vice Date
SUBSEQUENT President, or Secretary)
APPOINTMENT
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
ACCEPTANCE
- -----------------------------------------------------------------------------------------------------------------------
Accepted NAME OF STATUTORY AGENT FOR SERVICE (Print or Type) Signed (Notary Agent for service)
J. Thomas Vincent /s/ J. Thomas Vincent
=======================================================================================================================
-----------------------------------------------------------
For Office Use Only FRANCHISE FEE FILING FEE CERTIFICATION FEE TOTAL FEES
FILED $ $ $ $
-----------------------------------------------------------
[ILLEGIBLE] SIGNED (For Secretary of the State)
-----------------------------------------------------------
CERTIFIED COPY SENT ON (Date) INITIALS
-----------------------------------------------------------
TO
-----------------------------------------------------------
[ILLEGIBLE] [ILLEGIBLE] [ILLEGIBLE]
-----------------------------------------------------------
</TABLE>
<PAGE>
CERTIFICATE OF MERGER
OF
CONNECTICUT BUSINESS SYSTEMS, INC.
(A DELAWARE CORPORATION)
WITH AND INTO
CONNECTICUT BUSINESS SYSTEMS OF HARTFORD, INC.
(A CONNECTICUT CORPORATION)
The undersigned, Connecticut Business Systems of Hartford, Inc., a
corporation duly organized and existing under and by virtue of the laws of the
State of Connecticut, and Connecticut Business Systems, Inc., a corporation duly
organizing and existing under and by virtue of the laws of the State of
Delaware, do hereby certify with respect to their merger, pursuant to and in
accordance with Section 33-285, 33-367, 33-368 and 33-371 of the Connecticut
Stock Corporations Act (Chapter 599 of the General Statutes of Connecticut),
that:
1. The names of the merging corporations are Connecticut Business Systems
of Hartford, Inc., a Connecticut corporation, and Connecticut Business Systems,
Inc., a Delaware corporation, and the surviving corporation is Connecticut
Business Systems of Hartford, Inc., a Connecticut corporation.
2. The name which the surviving corporation is to have after the merger is
"Connecticut Business Systems, Inc."
3. No changes in the certificate of incorporation of the surviving
corporation are to be effected by the merger, other than the change of its name
to "Connecticut Business Systems, Inc."
4. A plan and agreement of merger with respect to the merger has been
approved or adopted by both of the merging corporations in the manner and to the
extent provided for in the applicable provisions of Chapter 599 of the General
Statutes of Connecticut, said plan and agreement of merger as approved or
adopted is on file at the principal place of business of the surviving
corporation which is 265 Prestige Park Road, East Hartford, Connecticut 06108,
and, in addition to complying with any other section of Chapter 599 of the
General Statutes of Connecticut, the surviving corporation will furnish a copy
of said plan and agreement of merger, on request and without cost, to any
shareholder of any of the merging corporations.
5. With respect to Connecticut Business Systems, Inc., a Delaware
corporation, the shareholder vote required to adopt and approve the plan and
agreement of merger was a majority of the outstanding shares of said
corporation, the number of shares of said corporation outstanding and entitled
to vote on the plan and agreement of merger was 1,000 shares, and all of the
1,000 shares were voted for the adoption and approval of the plan and agreement
of merger.
6. With respect to Connecticut Business Systems of Hartford, Inc., a
Connecticut corporation, the shareholder vote required to adopt and approve the
plan and agreement of merger was two-thirds of the outstanding shares of said
corporation, the number of shares of said corporation outstanding and entitled
to vote on the plan and agreement of merger was 200 shares, and all
<PAGE>
of said 200 shares were voted for the adoption and approval of the plan and
agreement of merger.
7. The date the merger shall become effective is July 1, 1988.
8. We hereby declare, under the penalties of false statement, that the
statements contained in this certificate are true.
IN WITNESS WHEREOF, the undersigned merging corporations have caused this
certificate to be executed by their duly authorized officers as of June 29,
1988.
Connecticut Business Systems Connecticut Business Systems, Inc.
of Hartford, Inc. (a Delaware corporation)
(a Connecticut corporation)
By /s/ Michael E. Shea By /s/ Michael E. Shea
---------------------------------- ----------------------------------
Michael E. Shea Michael E. Shea
President President
By /s/ Peter R. Wenzke By /s/ Rebecca Shea
---------------------------------- ----------------------------------
Peter R. Wenzke Rebecca Shea
Secretary Secretary
FILED
STATE OF COMMECTICUT
JUN 30 1988
[ILLEGIBLE]
<PAGE>
Exhibit 3.10b
BYLAWS
OF
CONNECTICUT BUSINESS SYSTEMS, INC.
ARTICLE I
NAME AND LOCATION
1. Name. The name of the Corporation is Connecticut Business Systems, Inc.
(hereinafter the "Corporation").
2. Principal Office. The principal office shall be such place as the Board
of Directors may from time to time designate for the transaction of corporate
business.
ARTICLE II
CAPITAL STOCK
1. Stock Certificates. All certificates of stock shall be signed by the
President or a Vice President and by the Secretary, Assistant Secretary,
Treasurer or Assistant Treasurer of the Corporation and sealed with the
corporate seal or a facsimile thereof.
2. Stock Transfer. Transfers of stock shall be made only on the books of
the Corporation and the old certificate, properly endorsed, shall be surrendered
and cancelled before a new certificate is issued.
3. Stock Books. The stock books of the Corporation shall be closed against
transfers of stock for a period of five (5) days before the date of payment of a
dividend and before each annual meeting of the Shareholders.
4. Lost Certificates. The Board of Directors may, in case any share
certificate is lost, stolen, destroyed or mutilated, authorize the issuance of a
new certificate in lieu thereof, upon such terms and conditions, including
reasonable indemnification of the Corporation, as the Board of Directors shall
determine.
ARTICLE III
MEETINGS OF SHAREHOLDERS
1. Annual Meeting. The annual meeting of Shareholders shall be held on
such day during the third month after the end of the Corporation's fiscal year
as the Board of Directors shall determine, at such hour as shall be specified in
the notice of the meeting. The annual meeting shall be held at the principal
office of the Corporation, or at such other place as shall be designated by the
Board of Directors. At such meeting the Shareholders shall elect the Directors
and transact such other business as may be properly brought before the meeting.
2. Special Meetings. Meetings of Shareholders for any purpose may be held
at such time or place within or without the State of Connecticut as shall be
stated in the notice of the meeting or in a duly executed waiver of notice. A
special meeting of the Shareholders may be called by the President, or by a
-1-
<PAGE>
majority of the Directors, and shall be held at any time upon call by the
President or Secretary when either the President or Secretary is requested in
writing to call such meeting by a majority of the Directors or one or more
Shareholders holding not less than one-tenth of the voting power of all shares
entitled to vote at the meeting. The notice for any special meeting shall state
the general purposes for which the meeting is called, and no other business may
be transacted at the meeting.
3. Notice and Waiver. Notice of the time and place of all annual and
special meetings of Shareholders shall be given by the Secretary to each
Shareholder entitled to vote at such meeting, by mailing or delivering such
notice at the Shareholder's residence, usual place of business or last-known
post-office address of record not less than seven nor more than fifty days
before the date thereof, but this requirement as to notice may be waived at any
time by the Shareholders in writing. The attendance of any person at a meeting
without protesting prior to the commencement of the meeting the lack of proper
notice shall be deemed to be a waiver by him of notice of the meeting.
4. Presiding Officer. The President of the Corporation, or in the absence
of the President, such other officer or Shareholder as shall be designated by
the Shareholders present, shall preside at Shareholder meetings.
5. Voting and Proxies. At every meeting, each Shareholder shall be
entitled to one vote for each outstanding share of stock, regardless of class,
held in his name, which vote may be cast in person or by proxy, on each matter
submitted to a vote at
-2-
<PAGE>
such meeting of Shareholders, unless, and except to the extent that voting
rights of shares of any class are increased, limited or denied by the
Certificate of Incorporation. Persons holding stock in a fiduciary capacity
shall have the same voting rights upon shares of stock so held as any holder of
shares would have. All votes shall, if requested by the presiding officer or by
any Shareholder, be by ballot, and the name of each Shareholder voting shall be
written thereon with the number of shares held by him. Any Shareholder may
designate an agent to vote at Shareholder meetings, by a writing signed by him
for that purpose, and such proxy shall entitle the person thus authorized to
vote at all meetings of the Shareholders held during the eleven months next
succeeding the date of such instrument unless a longer or shorter term is
expressly provided therein.
6. Quorum and Adjournment. The holders of a majority of shares entitled to
vote present in person or by proxy at any meeting of Shareholders shall
constitute a quorum for such meeting except as may otherwise be provided in
these Bylaws, the Certificate of Incorporation or the Connecticut Stock
Corporation Act. If, however, a quorum is not present at any meeting of the
Shareholders, the holders of a majority of shares present in person or
represented by proxy at such meeting shall have the power to adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
a quorum shall be present or represented. At a reconvening of such adjourned
-3-
<PAGE>
meeting, at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed.
7. Action by Shareholders. Except as may otherwise be specifically
provided in these Bylaws, in the Certificate of Incorporation or in the
Connecticut Stock Corporation Act, the affirmative vote, at a meeting of
Shareholders duly held and at which a quorum is present, of a numerical majority
of the voting power of all the shares entitled to vote on the subject matter
shall be the act of the Shareholders.
8. Action Without a Meeting. Any action which may be taken at a meeting of
the Shareholders may be taken without a meeting if a consent in writing, setting
forth the action so taken or to be taken, shall be signed by all of the
Shareholders entitled to vote with respect to the subject matter thereof and
said consent shall be filed in the minute book of the Corporation.
ARTICLE IV
DIRECTORS
1. Authority, Number and Qualifications. The business, property and
affairs of the Corporation shall be under the care and management of its Board
of Directors. Directors need not be Shareholders and need not be residents of
Connecticut. The Corporation shall have not more than eight (8) nor less than
three (3) directorships, except that where all the issued and outstand-
-4-
<PAGE>
ing shares of common stock of the Corporation are owned beneficially and of
record by less than three Shareholders, the number of directorships may be less
than three but not less than the number of Shareholders. The number of
directorships shall be the number fixed by resolution of the Shareholders or
Directors, or, in the absence thereof, shall be the number of Directors elected
at the preceding annual meeting of Shareholders.
2. Quorum, Adjournment and Action by Board of Directors. A numerical
majority of the directorships at the time shall constitute a quorum for the
transaction of business; and the act of a numerical majority of the Directors at
the time shall be the act of the Board of Directors, unless the presence of or
act of a greater number is specifically required by these Bylaws, the
Certificate of Incorporation, or the Connecticut Stock Corporation Act. If a
quorum shall not be present at any meeting of Directors, a majority of the
Directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
3. Action Without a Meeting. Any action which may be taken at a meeting of
the Directors or a committee of the Board of Directors may be taken without a
meeting if a consent in writing, setting forth the action so taken, or to be
taken, shall be signed by all of the Directors or all of the committee members
entitled to vote with respect to the subject matter thereof and the number of
such Directors or committee members, as the case may be, constitutes a quorum
for such action. Such consent shall be filed with the minutes of the Directors'
meetings.
-5-
<PAGE>
4. Meeting By Conference Telephone. A Director or a member of a committee
of 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 communications
equipment enabling all Directors participating in the meeting to hear one
another, and participation in a meeting shall constitute presence in person at
such meeting.
5. Terms and Vacancies. The Directors, other than the first Board of
Directors, shall be elected annually, at the annual meeting of the Shareholders
for a term extending until the next annual meeting of the Shareholders; and each
Director shall hold office for the term for which he is elected and until his
successor has been elected and qualified. Any vacancy or vacancies occurring in
the Board, other than a vacancy created by an increase in the number of
directorships, may be filled for the unexpired term by action of the sole
remaining Director in office or by the concurring vote of a majority of the
remaining Directors in office, though such remaining Directors are less than a
quorum, though the number of Directors at the meeting is less than a quorum, and
though such majority is less than a quorum. If a vacancy or the vacancies are
not filled by the Directors, they shall be filled by election at an annual
meeting, or at a special meeting of Shareholders called for that purpose. A
Director elected to fill a vacancy shall be elected for the unexpired portion of
the term of his predecessor in office. Any directorship to be filled because of
an increase in the number of Directors shall be by election at an annual meeting
or at a
-6-
<PAGE>
special meeting of Shareholders called for that purpose. A Director elected to
fill a newly created directorship shall serve until the next succeeding annual
meeting of Shareholders and until his successor shall have been elected and
qualified.
6. Annual and Special Meetings. Annual meetings of the Directors shall be
held immediately after the annual meeting of the Shareholders; and regular and
special meetings of the Directors may be held at such times and places, either
within or without Connecticut, as, in the opinion of the President or a majority
of the Directors, the interests of said Corporation shall require, reasonable
notice having been given thereof. A written waiver signed at any time by the
person or persons entitled to notice shall be the equivalent to the giving of
notice. The attendance of any Director at a meeting without protesting prior to
the commencement of the meeting the lack of proper notice shall be deemed to be
a waiver by him of notice of the meeting. The Directors may choose from among
their number a chairman to preside over meetings of the Directors.
7. Resignations. The resignation of any Director shall be in writing and
shall be effective immediately upon receipt by the Corporation if no time is
specified, or at such later time as the resigning Director may specify.
8. Removal of Directors. Any Director may be removed with or without cause
at any time by the act of the Shareholders; and the vacancy in the Board caused
by any such removal may be filled by the act of the Shareholders.
-7-
<PAGE>
ARTICLE V
9. Executive and Other Committees. The Board, by resolution adopted by the
affirmative vote of Directors holding a majority of the directorships, may
designate two or more Directors to constitute an executive committee or other
committees, which committees shall have and may exercise such authority as is
delegated to them by the Board. The members of the executive committee may elect
a Chairperson from among their number to preside over meetings of the executive
committee.
-8-
<PAGE>
OFFICERS
1. Office, Appointment, Term and Vacancies. The officers of the
Corporation shall consist of a President, Secretary and Treasurer. The Directors
shall appoint the foregoing officers of the Corporation and may appoint, in
addition to the foregoing, the following officers: one or more Vice Presidents,
one or more Assistant Treasurers, one or more Assistant Secretaries, and such
other offices as the Board of Directors may designate. Any two or more offices
may be held by the same person except the offices of President and Secretary.
Officers shall be appointed at the annual Directors' meeting for a term
extending until the next annual Directors' meeting. Each officer shall hold
office for the term for which he is appointed and until his successor has been
appointed and qualified. Any vacancy or vacancies occurring in any office of the
Corporation may be filled for the unexpired term by action of the sole remaining
Director in office or by the
-9-
<PAGE>
concurring vote of a majority of the remaining Directors, though such remaining
Directors are less than a quorum, though the number of Directors at the meeting
are less than a quorum, and though such majority is less than a quorum.
2. President. It shall be the duty of the President to be the chief
executive officer of the Corporation and he shall have general supervision over
the business of the Corporation, subject to the control of the Board of
Directors. He shall preside at each meeting of the Shareholders, unless the
Board of Directors designates another presiding officer or Director. He shall
see that all orders and resolutions of the Board are carried into effect. In
general he shall perform all duties incident to the office of President and such
other duties as may from time to time be assigned to him, or specifically
required to be performed by him, by these Bylaws, by the Board of Directors or
by law.
3. Vice President. It shall be the duty of the Vice President, in the
absence of the President, to perform the President's duties, and such officer
shall also perform such other duties as may be assigned to him, or specifically
required to be performed by him, by these Bylaws, by the Board of Directors or
by the President. The Board of Directors may from time to time designate
additional Vice Presidents with such duties as the Board of Directors deems
appropriate.
4. Secretary. It shall be the duty of the Secretary to act as Secretary of
and keep the minutes of all meetings of the Board of Directors and of
Shareholders; to cause to be given notice of all meetings of Shareholders and of
Directors; to be
-10-
<PAGE>
custodian of the seal of the Corporation and to affix the seal, or cause it to
be affixed, to all certificates for shares of stock of the Corporation and to
all documents, the execution of which on behalf of the Corporation under its
seal, shall have been specifically or generally authorized by the Board of
Directors; to have charge of the record of Shareholders and also of the other
books, records and papers of the Corporation relating to its organization as a
Corporation and to see that the reports, statements and other documents required
by law are properly kept or filed; and in general, to perform all the duties
incident to the office of Secretary and such other duties as may from time to
time be assigned to him by the Board of Directors or by the President.
5. Assistant Secretary. It shall be the duty of the Assistant Secretary,
in the absence of the Secretary, to perform the Secretary's duties, and such
officer shall also perform such other duties as may be assigned to him, or
specifically required to be performed by him, by the Board of Directors or by
the President.
6. Treasurer. The Treasurer shall supervise the receipt and custody of the
Corporation's funds; cause to be kept correct and complete books and records of
account, including full and accurate accounts of receipts and disbursements in
books belonging to the Corporation; assume responsibility for all funds and
securities of the Corporation; sign certificates of stock with another
designated officer; prepare, distribute and retain all reports and records
required by law regarding the
-11-
<PAGE>
Corporation's financial status; and perform such other duties as may be assigned
to him, or specifically required to be performed by him, by the Board of
Directors or by the President.
7. Assistant Treasurer. It shall be the duty of the Assistant Treasurer,
in the absence of the Treasurer, to perform the Treasurer's duties, and such
officer shall also perform such other duties as may be assigned to him, or
specifically required to be performed by him, by the Board of Directors or by
the President.
8. Removal. Any officer of the Corporation may be removed, with or without
cause, at any time by resolution adopted by the affirmative vote of Directors
holding a majority of the directorships.
ARTICLE VI
AMENDMENTS
These Bylaws may be repealed or amended only by the Shareholders and such
repeal or amendment of Bylaws by Shareholders shall require the affirmative vote
of a majority of the voting power of shares entitled to vote thereon. No
existing Bylaws shall be amended or repealed, other than by unanimous written
consent of the Shareholders, unless written notice of such proposed action shall
have been given in the call for the meeting of Shareholders at which such
amendment or repeal is to be acted upon.
-12-
<PAGE>
ARTICLE VII
SEAL
The seal of the Corporation shall be in the form approved by the Board of
Directors.
ARTICLE VIII
BOOKS AND RECORDS
There shall be kept correct and complete books and records of account and
minutes of the proceedings of the Corporation's Shareholders and Directors.
There shall also be maintained at the principal office of the Corporation a
record of the Corporation's Shareholders, giving the names and addresses of all
Shareholders and the number and class of shares held by each.
ARTICLE IX
FISCAL YEAR
The fiscal year of the Corporation shall be fixed by action of the Board
of Directors.
-13-
<PAGE>
EXHIBIT 3.11A
RECORD OF ORGANIZATION
CONWAY OFFICE PRODUCTS, INC.
ARTICLES OF AGREEMENT
In accordance with the provisions of Chapter 294 of the Revised Statutes
Annotated of New Hampshire, and all acts amendatory thereof or additional or
supplementary thereto, we, the undersigned, being all of lawful age, do hereby
associate ourselves together by these written Articles of Agreement for the
purpose of forming a corporation under the Laws of the State of New Hampshire.
Article I. The name of this corporation shall be Conway Office Products,
Inc.
Article II. The principal place of business of the corporation shall be in
the City of Nashua, County of Hillsborough and State of New Hampshire.
Article III. The nature of the business of the corporation and the objects
or purposes to be transacted, promoted or carried on by it are as follows:
To engage in the business, whether under license agreement, franchise
agreement or otherwise, of selling, renting, leasing and servicing office
copying equipment and other types of general office machinery, accessories, and
equipment, and further, to buy, sell, process, hold or otherwise deal or
speculate in supplies and materials for office copying equipment and general
office machinery, accessories, and equipment.
<PAGE>
-2-
To purchase, acquire, hold, improve, demolish, abandon, assign, sell,
lease, rent and/or license the use of real estate and/or personal property; to
mortgage, pledge and/or encumber the same; to erect, manage, maintain, alter
and/or demolish buildings and/or other structures and improvements thereon.
To design, manufacture, produce, import, export, buy and sell at wholesale
and/or retail, lease, handle, install, erect, repair, service, distribute,
contract in respect of, and otherwise generally prepare for market and deal in
and with, on margin or otherwise, whether as principal, agent, factor, broker,
licensor, licensee, on commission, on its own behalf or on behalf of others, or
otherwise, goods, wares, commodities, merchandise, and real and personal
property of every kind and description, including but not limited to stocks and
bonds of domestic and foreign corporations, good will, licenses, letters patent,
privileges, inventions, improvements, processes, copyrights, trade names,
trade-marks and franchises, relating to or useful in any business of the
Corporation.
To acquire and pay for in cash, or in stock and bonds of this Corporation
or otherwise, the good will, rights, franchises, assets and property and to
undertake or assume the whole or any part of the obligations or liabilities of
any person, firm, association or corporation.
To issue bonds, debentures or obligations of this Corporation from time to
time for any of the objects or purposes of the Corporation and to secure the
same by mortgage, pledge, deed of trust, or otherwise.
To adopt and place in full operation and effect such pension
<PAGE>
-3-
and/or profit sharing plan or plans for its officers, employees and agents as
its shareholders may determine.
To purchase, hold, cancel, reissue, sell, transfer or otherwise deal in
its own securities in accordance with said Chapter as amended, provided that
such securities when owned by the Corporation shall not be voted upon directly
or indirectly.
To do or transact at any time any other lawful business either within or
without the State of New Hampshire, except nothing herein contained shall be
construed to authorize the Corporation to transact business in any other state,
territory or country, contrary to the provisions of the laws thereof, and that
nothing in these purposes and powers shall be construed to give the Corporation
any rights, powers or privileges not permitted by the Laws of the State of New
Hampshire to corporations under Revised Statutes Annotated of New Hampshire
Chapter 294, and acts amendatory thereto.
Article IV. Meetings of the stockholders may be held either within or
without the State of New Hampshire, provided, however, that no stockholders'
meeting held outside the State of New Hampshire shall be valid unless within ten
(10) days thereafter there shall be filed with the Clerk of the Corporation a
record of such meeting, in accordance with the requirements of RSA 294:81, sworn
to under penalties of perjury by the Clerk Pro Tempore.
Article V. The authorized capital stock of this Corporation shall consist
of three hundred (300) shares of no par value stock. All stock shall be issued
at such times and on such terms as the incorporators, at
<PAGE>
-4-
the organization meeting or any adjournment thereof, or the Directors may
authorize and determine. No pre-emptive rights shall inure to any shares of
capital stock authorized hereunder and no stockholder shall have pre-emptive or
preferential rights of subscription or purchase of any capital stock of this
Corporation.
Article VI. The shares of stock of this Corporation shall be subject to
the restrictions set forth herein, except in the case of
(A) A transfer of shares to or in trust principally for the benefit of
one or more of the descendants of, or a husband or wife of, a
stockholder;
(B) A transfer of the shares of a deceased stockholder to the surviving
spouse, heirs, children, or legatees of such a deceased holder
whether by testamentary instrument or operation of law; and
(C) A transfer as to which the Clerk certifies under oath that the
stockholders, other than the prospective transferor, have consented
thereto in writing,
compliance with the subsequent provisions of the Article shall be a condition
precedent to the validity of any transfer of any of said shares, whether
pursuant to sale, gift, legal process or other transaction, and neither the
Corporation nor any stockholder shall be required to recognize any transfer
invalidated by noncompliance.
The stockholder desiring to transfer shall mail to the Clerk an offer to
sell, stating the price, which must be in dollars, and the number of shares, and
his agreement that the offer may be accepted
<PAGE>
-5-
within thirty (30) days; that the offer shall be irrevocable for said period,
and that payment of the price shall not be due until ten (10) days after
acceptance. The offer must be accepted as a whole, but more than one stockholder
may participate in such acceptance. On receipt of the offer, the Clerk shall
forthwith mail copies thereof to all stockholders. Within fifteen (15) days of
the mailing of said copies, each stockholder desiring to purchase all or part of
the offered shares shall deliver a written statement of his desire to the Clerk
with his agreement to purchase such smaller number of the shares as the Clerk
may allocate to him. Failure of any stockholder to deliver such a statement
shall terminate his rights as to acceptance of said offer. On expiration of said
fifteen (15) days, the Clerk forthwith shall allocate the offered shares among
the stockholders desiring to accept (hereinafter called participating
stockholders) according to their respective desires as nearly as may be; with
recognition of conflicting desires for more than the available shares
proportionately to the then record holdings of each and allocation by lot of
whole shares to avoid fractions, but allocating all shares so that no
stockholder shall be required to purchase more than he desires. On said
allocation, the Clerk shall mail all participating stockholders copies thereof.
The participating stockholders shall be obligated to each other to accept the
offer according to the allocation but by unanimous agreement may vary the
allocation or omit some of them or include other stockholders. If there is only
a single participating stockholder and he desires to accept all offered shares,
the Clerk shall so notify him. The participating stockholder
<PAGE>
-6-
or stockholders shall accept the offer by mailing an acceptance to the offeror.
If, pursuant to the foregoing, the offer is not accepted within thirty (30) days
after it was made, or if the Clerk shall have certified at the expiration of the
aforesaid fifteen (15) day period that no stockholder desires to accept or if,
the offer being accepted, the price is not paid within ten (10) days of
acceptance, a sale made within ninety (90) days next after said thirty-,
fifteen-, or ten-day period, whichever is applicable, shall be valid, but only
if within said ninety (90) days the stock is tendered for shares and at the same
price (or a higher stated price) as those set forth in the offer, and if the
facts stated in the affidavit are true.
A bona fide pledgee may comply with the foregoing provisions of this
subsection in the name of the pledgor, and transfers shall be made on such
compliance as if compliance had been by the stockholder.
"Mailing" as used in this subsection shall mean mailing at the Nashua, New
Hampshire Post Office by ordinary mail, except that the offer and the acceptance
shall be made by registered mail (but not deliver to addressee only). The offer
and the acceptance shall be effective on mailing. Mailed communications to a
stockholder shall be addressed to his address shown on the books of the
Corporation. "Delivery" shall in any case be equivalent to mailing, and shall
mean delivery in hand or at the person's place of business when open for
business with some individual in attendance.
A copy of these restrictions shall be affixed to each Certificate of Stock
issued and reference to the restrictions shall appear on the
<PAGE>
-7-
face of said Certificates.
ARTICLE VII. The first meeting of the incorporators shall be held at the
offices of Hamblett, Kerrigan, LaTourette & Lopez at 11 Concord Street, in the
City of Nashua and State of New Hampshire, on the 3rd day of MARCH 1976, at 8:30
o'clock in the FORE noon.
Names Addresses
----- ---------
/s/ James B. Conway 18 Royal Crest Drive, Apt. 4,
- --------------------- Nashua, New Hampshire. 03060
James B. Conway
/s/ Jane B. Conway 4 Southington Street,
- --------------------- Nashua, New Hampshire. 03060
Jane B. Conway
/s/ Ann N. Conway 18 Royal Crest Drive, Apt. 4,
- --------------------- Nashua, New Hampshire. 03060
Ann N. Conway
<PAGE>
ORGANIZATION MEETING
In accordance with the Articles of Agreement, the organization meeting of
Conway Office Products, Inc. was held at the offices of Hamblett, Kerrigan,
LaTourette & Lopez, City of Nashua, County of Hillsborough, State of New
Hampshire, on the 30TH day of MARCH, 1976, at 8:30 o'clock in the fore noon.
There were present:
James B. Conway
Jane B. Conway
Ann N. Conway
being all of the incorporators.
On motion therefor, Jane B. Conway was made Temporary Clerk and was duly
sworn before a Notary Public in open meeting.
On motion duly made and seconded, it was unanimously voted that the
Corporation adopt the following By-Laws to govern the conduct of its affairs:
<PAGE>
On motion duly made and seconded, it was voted to proceed to the election
of officers and directors and the following officers and directors were
unanimously elected:
Name Address Office
---- ------- ------
18 Royal Crest Drive, Apt. 4
James B. Conway Nashua, New Hampshire 03060 President
18 Royal Crest Drive, Apt. 4
Mary Jane Conway Nashua, New Hampshire 03060 Vice President
18 Royal Crest Drive, Apt. 4
James B. Conway Nashua, New Hampshire 03060 Treasurer
4 Southington Street
Jane B. Conway Nashua, New Hampshire 03060 Clerk
18 Royal Crest Drive, Apt. 4
James B. Conway Nashua, New Hampshire 03060 Director
18 Royal Crest Drive, Apt. 4
Ann N. Conway Nashua, New Hampshire 03060 Director
4 Southington Street
Jane B. Conway Nashua, New Hampshire 03060 Director
The President noted to the incorporators that under Section 1244 of the
Internal Revenue Code of 1954 as amended by the Technical Changes Act and Small
Business Relief Code of 1958, it might be advisable for the incorporators to
consider qualifying the stock of this Corporation as "Section 1244 Stock" or
"Small Business Stock".
The President noted that under the law, in order for the stock of this
Corporation to qualify so that the stockholders, in the event of loss, could
apply such loss on this stock as an ordinary instead of a capital loss for
individual income tax purposes, it would be necessary to adopt a formal plan.
<PAGE>
Whereupon a formal plan was presented, and upon motion duly made and
seconded, it was
VOTED: That the subscription for and issuance of the capital stock
of this Corporation or the offering for sale, by the Corporation, of its
stock and the purchase of it during the next two years be only under the
conditions set forth in the following plan:
A PLAN FOR THE
OFFERING OF AND SUBSCRIPTION FOR
THE CAPITAL STOCK OF
CONWAY OFFICE PRODUCTS, INC.
Whereas, the authorized capital stock of Conway Office Products, Inc. as
authorized by the Articles of Agreement of the Corporation is represented by
three hundred (300) shares of no par value common stock, and
Whereas, it is the desire of the incorporators that such stock as is
subscribed for and purchased be qualified as "Small Business Stock" so that same
may be entitled to the ordinary loss benefits as granted by Section 1244 of the
Internal Revenue Code of 1954 and amendments thereto, including the Technical
Changes Act of 1958,
NOW THEREFORE,
1. This Corporation shall offer for subscription and issue its authorized
capital stock for a period of two (2) years, effective upon the plan's adoption
this 30TH day of MARCH, 1976, and terminating on the 29TH day of MARCH, 1978, or
upon such earlier date as the Board of Directors shall vote to terminate the
<PAGE>
plan, provided nevertheless that the aggregate amount received therefor plus the
amount of money or other property received during said two (2) year period as a
contribution to capital or paid-in surplus shall not exceed $500,000.00; and
thereafter shall not offer or issue any portion of same not then sold or
subscribed for, and further, during said two (2) year period shall not offer any
other stock of any class, nature or description.
2. This Corporation shall and must issue its capital stock as above
referred to only for money or property, other than stock or securities, and in
no event shall any stock be issued for services.
3. This plan shall be amendable only by the consent of all of the
stockholders of record during the two (2) year period above referred to.
After the adoption of the foregoing plan, on motion, duly made and
seconded, it was unanimously
VOTED: That the stock presently to be issued pursuant to such plan
shall be one hundred (100) shares of no par common stock for the sum of
Two Hundred Forty Dollars ($240.00) each in cash or a total sum of
Twenty-Four Thousand Dollars ($24,000.00).
VOTED: That the remaining two hundred (200) shares of the authorized
no par common stock shall be issued at such times and to such persons as
the Board of Directors may from time to time determine; provided, however,
that such issuance shall be in accordance with the Plan heretofore adopted
and provided further that the consideration therefor shall
<PAGE>
in actual value in money be at least equal to the par value thereof.
There being no further business to come before the meeting, on
motion duly made and seconded, it was unanimously
VOTED: To adjourn.
A true record, attest:
/s/ Jane B. Conway
-------------------
Temporary Clerk
<PAGE>
We, the undersigned, being the Treasurer and all of the members of the
Board of Directors elected at the organization meeting of Conway Office
Products, Inc. hereinbefore set forth, do hereby severally take oath that the
foregoing is a true record of the organization of the said Corporation and
contains the original of the Articles of Agreement, the date of the said
organization meeting, the names and addresses of the officers and Directors and
the original record of the organization meeting, except the By-Laws, duly
attested by the Temporary Clerk, and that the consideration for which the stock
with par value is to be presently issued is, to the best of the knowledge,
information and belief of the undersigned, of actual value in money as
represented in the foregoing record.
/s/ James B. Conway
----------------------
Treasurer
/s/ James B. Conway
----------------------
Director
/s/ Jane B. Conway
----------------------
Director
/s/ Ann N. Conway
----------------------
Director
State of New Hampshire }
} ss
County of Hillsborough }
Subscribed and sworn to before
me this 30TH day of MARCH 1976.
/s/ ILLEGIBLE
- ------------------- [NOTARY PUBLIC SEAL]
Notary Public
<PAGE>
STATE OF NEW HAMPSHIRE
Filing fee: $ 25.00 Form No. 14
+ Licensing tee: $ 1,540.00 (See Section 136 II RSA 293-A:61
Total fees $ 1,565.00 and Note 6)
Use black print or type.
Leave 1" margins both sides.
FILED
ARTICLES OF AMENDMENT MAR 1987
to the NEW HAMPSHIRE
ARTICLES OF INCORPORATION SECRETARY OF STATE
OF
CONWAY OFFICE PRODUCTS, INC.
----------------------------
PURSUANT TO THE PROVISIONS OF SECTION 61 OF THE NEW HAMPSHIRE BUSINESS
CORPORATION ACT, THE UNDERSIGNED CORPORATION ADOPTS THE FOLLOWING ARTICLES OF
AMENDMENT TO ITS ARTICLES OF INCORPORATION:
FIRST: The name of the corporation is CONWAY OFFICE PRODUCTS, INC.
SECOND: The following amendments of the Articles of Incorporation were
adopted by the shareholders, (Note 1) of the corporation on December 28, l986,
in the manner prescribed by the New Hampshire business Corporation Act: (Insert
Amendments)
RESOLVED: Amend Article V of the Articles of Agreement of Conway
Office Products, Inc., by deleting present Article V in its
entirety and substituting in place thereof the following, the
effect of which is to increase the authorized capital stock
from three hundred (300) shares of no par value stock to
thirty thousand (30,000) shares,:
"ARTICLE V. The authorized capital stock of this Corporation
shall consist of thirty thousand (30,000) shares of no par
value stock. All stock shall be issued at such times and on
such terms as the incorporators, at the organization meeting
or any adjournment thereof, or the Directors may authorize and
determine. No pre-emptive rights shall inure to any shares of
capital stock authorized hereunder, and no stockholders shall
have pre-emptive or preferential rights of subscription or
purchase of any capital stock of this Corporation."
[if more space is needed, attach additional sheets(s)]
page 1 of 3
<PAGE>
(ARTICLES OF AMENDMENT TO THE Form No. 14
ARTICLES OF INCORPORATION) (Cont.)
THIRD: The number of shares of the corporation outstanding at the time of
such adoption was -100-; and the number of shares entitled to vote thereon
was -98-; -2- shares were held by the Corporation as Treasury stock.
FOURTH: The designation and number of outstanding shares of each class
entitled to vote thereon as a class were as follows: (Note 2)
Class Number of Shares
----- ----------------
No par value, common capital stock -98- shares
FIFTH: The number of shares voted for such amendment was -98-; and the
number of shares voted against such amendment was -0- (Note 2)
SIXTH: The number of shares of each class entitled to vote thereon as a
class voted for and against such amendment, respectively, was: (Note 2)
Class Number of Shares voted
----- ----------------------
For Against
--- -------
NOT APPLICABLE
SEVENTH: The manner in which any exchange, reclassification, or
cancellation of issued shares provided for in the amendment shall be effected is
as follows: (Note 3)
NOT APPLICABLE
page 2 of 3
<PAGE>
(ARTICLES OF AMENDMENT TO THE Form No. 14
ARTICLES OF INCORPORATION) (Cont.)
EIGHTH: The manner in which such amendment effects a change in the amount
of stated capital, and the amount of stated capital, expressed in dollars, as
changed by such amendment, are as follows: (Note 2)
NOT APPLICABLE
Dated February 17, 1987.
CONWAY OFFICE PRODUCTS, INC.(note 4)
(Initials JBC) /s/ James Conway (note 5)
----------------------------
Its President
(Initials ANC) /s/ Ann N. Conway (note 5)
----------------------------
Its Secretary
Notes: 1. Change to "board of directors" if no shares have been issued.
2. If inapplicable, omit.
3. This article may be omitted if the subject matter is set forth
in the amendment or if it is inapplicable.
4. Exact corporate name of corporation adopting the Articles of
Amendment.
5. Signatures and titles of officers signing for the corporation.
Must be signed by President or Vice-President and Secretary or
Assistant Secretary.
6. If amendment increases the authorized stock, include fee
according to schedule under RSA 293-A:136 II less amount
previously paid in for original record and any increases,
provided however that the minimum fee shall be $30.00.
Mail duplicate originals, with total fees to:
Secretary or State, Rm. 204, State House, Concord, NH 03301-4989
page 3 of 3
<PAGE>
Filing fee: $ 25.00 Form No. 14
* License fee: $______ (See Section 136 II, IV RSA 293-A:61
Total fees $______ and Note 7)
Use black print or type.
Leave 1" margins both sides.
ARTICLES OF AMENDMENT FILED FILED
to the SEP 30 1988
ARTICLES OF INCORPORATION NEW HAMPSHIRE
OF SECRETARY OF STATE
Conway Office Products, Inc.
PURSUANT TO THE PROVISIONS OF SECTION 61 OF THE NEW HAMPSHIRE BUSINESS
CORPORATION ACT, THE UNDERSIGNED CORPORATION ADOPTS THE FOLLOWING ARTICLES OF
AMENDMENT TO ITS ARTICLES OF INCORPORATION:
FIRST: The name of the corporation is Conway Office Products, Inc.
SECOND: The following amendments of the Articles of Incorporation were
adopted by the shareholders (Note 1) of the corporation on July 1, 1988, in the
manner prescribed by the New Hampshire Business Corporation Act: (Insert
Amendments) (Note 2)
Amend Article V of the Articles of Agreement of Conway Office Products, Inc., by
deleting present Article V in its entirety and substituting in place thereof the
following, the effect of which is to change the par value of the authorized
capital stock from "no par value" to a par value of $1.00 per share:
"ARTICLE V. The authorized capital stock of this Corporation shall consist of
thirty thousard (30,000) shares of stock having a "par value" of $1.00 per
share. All stock shall be issued at such times and on such terms as the
incorporators, at the organization meeting or any adjournment thereof, or the
Directors may authorize and determine. No pre-emptive rights shall inure to any
shares of capital stock authorized hereunder, and no stockholders shall have
pre-emptive or preferential rights of subscription or purchase of any capital
stock of this Corporation."
[if more space is needed, attach additional sheet(s)]
page 1 of 3
<PAGE>
(ARTICLES OF AMENDMENT TO THE Form No. 14
ARTICLES OF INCORPORATION) (Cont.)
OF Conway Office Products, Inc.
THIRD: The number of shares of the corporation outstanding at the time of
such adoption was 9,950; and the number of shares entitled to vote thereon was
9,950
FOURTH: The designation and number of outstanding shares of each class
entitled to vote thereon as a class were as follows: (Note 3)
Class Number of Shares
----- ----------------
Common capital stock 9,950
FIFTH: The number of shares voted for such amendment was 9,950; and the
number of shares voted against such amendment was 0 (Note 3)
SIXTH: The number of shares of each class entitled to vote thereon as a
class voted for and against such amendment, respectively, was: (Note 3)
Number of Shares voted
Class ----------------------
----- For Against
--- -------
Common capital stock 9,950 0
SEVENTH: The manner in which any exchange, reclassification, or
cancellation of issued shares provided for in the amendment shall be effected is
as follows: (Note 4)
page 2 of 3
<PAGE>
(ARTICLES OF AMENDMENT TO THE Form No. 14
ARTICLES OF INCORPORATION) (Cont.)
OF Conway Office Products, Inc.
EIGHTH: The manner in which such amendment effects a change in the amount
of stated capital, and the amount of stated capital, expressed in dollars, as
changed by such amendment, are as follows: (Note 3)
The stated capital of the corporation will be $30,000.00
Dated August 31, 1988
Conway Office Products, Inc. (Note 5)
-----------------------------
By /s/ James Conway (Note 6)
--------------------------
Signature of its President
James Conway
-----------------------------
Print or type name
and /s/ Ann N. Conway (Note 6)
-------------------------
Signature of its Secretary
Ann N.Conway
-----------------------------
Print or type name
Notes:
1. Change to "board of directors" if no shares have been issued.
2. If amendment is relating to the authorized capital stock, this form must
be accompanied by a certificate from the New Hampshire Insurance
Commissioner, 169 Manchester Street, Concord, N.H. 03301, that he has
received a statement pertaining to the corporation's capital stock
pursuant to RSA 421-B:13, I-a.
3. If inapplicable, omit.
4. This article may be omitted if the subject matter is set forth in the
amendment or if it is inapplicable.
5. Exact corporate name of corporation adopting the Articles of Amendment.
6. Signatures and titles of officers signing for the corporation. Must be
signed by President or Vice-President and Secretary or Assistant
Secretary.
7. If amendment increases the authorized stock, include fee according to
schedule under RSA 293-A:136 II less amount previously paid in for
original authorization and prior increases, provided however that the
minimum fee shall be $30.00.
Mail fee and DUPLICATE ORIGINALS (ORIGINAL SIGNATURES ON BOTH) to:
Secretary of State, Rm. 204, State House, Concord, NH 03301-4989
page 3 of 3
<PAGE>
EXHIBIT 3.11B
BY-LAWS
CONWAY OFFICE PRODUCTS, INC.
Article 1. The name of the Corporation shall be Conway Office Products,
Inc. and the principal place of business of the Corporation in the State of New
Hampshire shall be located in the City of Nashua, County of Hillsborough.
Other offices or places of business may be established by the Board
of Directors from time to time at such places either within or without the State
of New Hampshire as the Board of Directors may see fit.
Article 2. The seal of the Corporation shall be circular in form bearing
the name of the Corporation and the State and year of its incorporation.
Article 3. Certificates of stock of the Corporation shall be signed by the
President and Treasurer.
Article 4. The regular annual meeting of the stockholders shall be held at
the office of the Corporation in said Nashua each year on such date as may be
fixed from time to time by the Board of Directors, preference being given to a
date not less than sixty nor more than ninety days after the close of the fiscal
year. The fiscal year shall be established by the President. The annual meeting
may be held at any other place either within or outside the State of New
Hampshire which my be designated in a writing to be filed with the records of
the meeting. If the annual meeting is held outside the State, the filing
<PAGE>
-2-
requirements of RSA 294:81 must be satisfied. Written notice of the annual
meeting shall be given to each stockholder of record by mailing the same to the
last known address of such stockholder, by giving it in hand to the stockholder
or by leaving it at the last known address of the stockholder, at least one week
prior to the day of meeting. A quorum for the transaction of business shall
consist of a majority of the stock issued and outstanding, represented either in
person or by proxy.
Special meetings of the stockholders may be called at any time by
the President, the Treasurer, any two Directors or the holder or holders of
twenty percent (20%) of the shares of the capital stock of the Corporation.
Notice of a special meeting shall be given in the manner prescribed for annual
meetings and the notice of a special meeting shall also state the object
thereof.
Every shareholder entitled to vote may do so either in person or by
proxy. Every proxy whether for a special or regular meeting must be dated and
signed by the shareholder, his legally appointed fiduciary, trustee or
attorney-in-fact. No proxy shall be valid after expiration of three (3) months
from the date of its execution, unless otherwise expressly and conspicuously
provided in the proxy and no proxy shall be valid after the final adjournment of
any such meeting.
Article 5. The affairs of the Corporation shall be managed by a board of
not less than three nor more than five directors, who shall be elected by the
majority vote of the stockholders at each annual
<PAGE>
-3-
meeting. Any vacancy occurring in the Board of Directors shall be filled by the
remaining Directors if there be at least two (2) of them and otherwise at a
special meeting of stockholders duly called for that purpose. The Directors
shall have the power to authorize the President and Treasurer to transfer and to
mortgage real estate owned by the Corporation and the Directors shall exercise
all the powers that may be exercised by the Corporation under the laws of the
State of New Hampshire, the Articles of Agreement and the By-Laws, only by
majority vote.
Regular and special meetings of the Board of Directors shall be held
on such notice, at such time and places within or without the State of New
Hampshire as the Directors may from time to time determine. The period of notice
required for stockholders' meeting shall be sufficient for all meetings of
Directors and such shorter period as may be fixed by the Directors shall be
sufficient. A majority of the Directors shall be necessary to constitute a
quorum.
Article 6. In addition to the Board of Directors, the officers of this
Corporation shall consist of a President, Vice-President, Treasurer, Clerk and
such other officers as shall from time to time be chosen and appointed by the
Board of Directors. The Board of Directors may from time to time increase or
decrease the authority and duties of any officer whether appointed by them or
elected pursuant to these By-Laws. All of these officers shall be elected by the
Board of Directors at a meeting to be held as soon as practicable after the
close of the annual meeting. One person may hold more than one office. Directors
and officers need not be stockholders.
<PAGE>
-4-
The President shall preside at all meetings of the Directors and
stockholders, and shall be the principal executive officer of the Corporation.
The Vice-President shall have the powers and perform the duties of
the President in the absence of incapacity of the President.
The Treasurer shall have charge of all the financial affairs of the
Corporation, shall keep an account of the same, shall deposit all money and
valuables of the Corporation in the name of and to the credit of the
Corporation.
The Clerk shall keep a record of the stockholders' meetings and
perform such other duties as are imposed by law upon the Clerk. The Clerk shall
give notices of all meetings but such notices may be given in the event of the
absence, disability or refusal of the Clerk by the President or Treasurer.
Article 7. In case of the death, disability, or resignation of one or more
officers, the Directors shall fill the vacancy for the unexpired term.
Article 8. Any officer, including a Director, may resign at any time by
resignation in writing delivered to the Corporation. Any officer elected by the
Board of Directors may be removed by the Board of Directors at any time for or
without cause. Any officer or Director elected by the stockholders may be
removed at any time for or without cause at any regular or special meeting of
the stockholders by a vote of the holders of a majority of the stock outstanding
and entitled to
<PAGE>
-5-
vote.
Article 9. These By-Laws may be amended or new By-Laws adopted by a vote
of the holders of two-thirds (2/3) of the shares of stock outstanding and
entitled to vote, unless a greater proportion is required by law, represented,
in person or by proxy, at meetings of stockholders but the call for such meeting
must state the proposed amendment.
Article 10. Should the day fixed herein or by any notice fall upon Sunday
or any legal holiday, the meeting shall be held on the next succeeding business
day at the same hour and place. Any notice required herein may be waived by the
consent in writing of the person who would have received such notice and such
writing shall be filed with the records of the meeting.
I, Jane B. Conway, Temporary Clerk and Clerk, do hereby certify that the
foregoing is a true and correct copy of the By-Laws adopted by Conway Office
Products, Inc., at its organization meeting.
/s/ Jane B. Conway
--------------------------
Temporary Clerk
/s/ Jane B. Conway
--------------------------
Clerk
<PAGE>
-4-
The President then stated that upon the recommendation of counsel; it was
desirable to amend the By-Laws in order to take advantage of recent amendments
of RSA 294 which make management of corporate affairs more convenient. After
discussion, upon motion duly made and seconded, it was unanimously
VOTED:
(1) Amend present "Article 5" by deleting it in its entirety and
substituting in place thereof the following:
"Article 5. The affairs of the corporation shall be managed by
a board of not less than three nor
<PAGE>
-5-
more than seven directors who shall be elected by the majority
vote of the stockholders at each annual meeting and who shall
serve until their successors are duly qualified and elected.
Notwithstanding anything in the foregoing to the contrary, if
the laws of the State of New Hampshire so permit, the officers
of the corporation shall be managed by a board of not less
than three nor more than seven directors, provided that if
there shall be less than three stockholders of the
corporation, the number of directors may equal the number of
stockholders, said directors to be elected by the majority
vote of the stockholders at each annual meeting. Any vacancy
occurring in the Board of Directors shall be filled by the
remaining director if there be at least two (2) of them, and
otherwise at a special meeting of the stockholders duly called
for that purpose. The directors shall have the power to
authorize the President, Treasurer, and/or any other officer
to transfer and to mortgage real estate owned by the
corporation and the directors shall exercise all the powers
that may be exercised by the corporation under the laws of the
State of New Hampshire, the Articles of Agreement and the
By-Laws, only by majority vote.
Regular and special meetings of the Board of Directors shall
be held on such notice, at such times and places within or
without the State of New Hampshire as the directors may from
time to time determine. The period of notice required for
stockholders' meetings shall be sufficient for all meetings of
directors and such shorter period as may be fixed by the
directors shall be sufficient. A majority of the directors
shall be necessary to constitute a quorum.
In addition to the directors, the officers of the corporation
shall include a president, a treasurer and a clerk, all of
whom except the president shall be chosen by ballot at the
annual meeting of the stockholders in each year, and the
president shall be chosen by and from said directors at the
meeting of the directors immediately following the annual
meeting of the stockholders. All of the said officers and
directors shall hold their respective offices until their
successors are chosen and qualified. None of the officers or
directors shall be required to be stockholders."
<PAGE>
-6-
(2) Add new Article 5(A) by inserting between Article 5 as amended
this date and existing Article 6 the following:
"Article 5(A). To the extent that the laws of the State of New
Hampshire so permit, any action required or permitted to be
taken at a meeting of the stockholders, or of the directors,
as the case may be, may be taken and shall be legal and valid
if written consents, setting forth the action so taken, are
signed by the holders of all outstanding shares entitled to
vote on such action, or by all the directors, as the case may
be, and such consents are thereupon filed with the Clerk of
the corporation as part of the corporate records. Such written
consents shall have the same effect as a unanimous vote of the
stockholders, or of the directors, as the case may be, and may
be stated as such in any certificate or document required or
permitted to be filed with the Secretary of State, and in any
certificate or document prepared or certified by any officer
or the Clerk of the corporation for any purpose."
(3) Add new Article II, as follows:
"Article II. So as to induce persons of sound judgment to be
employed by and/or serve the Corporation as officers,
Directors, fiduciary appointees and in other positions of
judgment and responsibility specifically designated by the
Board of Directors, and as partial consideration for such
service, the Corporation by its Board of Directors shall
reimburse, exonerate, hold harmless and indemnify, as the case
may be:
(A) Any person who was or is a party or is threatened to be
made a party to any threatened, pending, contemplated or
completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, other than an
action by or in the right of the Corporation, by reason
of the fact that he is or was a Director, officer,
fiduciary appointee or other eligible person
specifically designated by the Board claiming such
indemnification of the Corporation, or is or was serving
at the request of the Corporation as a Director,
officer, fiduciary appointee or other eligible
<PAGE>
-7-
person specifically designated by the Board claiming
such indemnification of another corporation,
partnership, joint venture, trust or other enterprise,
against expenses, including attorneys' fees, judgments,
fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and
in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation or
those objects of his fiduciary responsibility, and, with
respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful,
and provided further that expenses incurred with respect
to any claim, action, suit or proceeding of the
character described herein may with the approval of the
Board be advanced by the Corporation prior to final
disposition thereof, upon receipt of an undertaking by
or on behalf of the recipient, to repay all such
advances unless the Board shall finally authorize the
payment of indemnification with respect to such expenses
in the manner hereinabove provided. The termination of
any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be
in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his
conduct was unlawful.
(B) Any person who was or is a party or is threatened to be
made a party to any threatened, pending, contemplated or
completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason
of the fact that he is or was a Director, officer,
fiduciary appointee specifically designated by the Board
or other Eligible person claiming such indemnification
of the Corporation
<PAGE>
-8-
or is or was serving at the request of the Corporation
as a Director, officer, fiduciary appointee specifically
designated by the Board or other eligible person
claiming such indemnification of another corporation,
partnership, joint venture, trust or other enterprise
against expenses, including attorneys' fees, actually
and reasonably incurred by him in connection with the
defense or settlement of such action or suit if he acted
in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the
Corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable
for negligence or misconduct in the performance of his
duty to the Corporation unless and only to the extent
that the Superior Court or the court in which such
action or suit was brought shall determine upon
application that, despite the adjudication of liability
but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity
for such expenses which the Superior Court or such other
court shall deem proper, and provided further that
expenses incurred with respect to any claim, action,
suit or proceeding of the character described herein may
with the approval of the Board be advanced by the
Corporation prior to final disposition thereof, upon
receipt of an undertaking by or on behalf of the
recipient, to repay all such advances unless the Board
shall finally authorize the payment of indemnification
with respect to such expenses in the manner hereinabove
provided.
To the extent that a Director, officer, employee, agent, or
fiduciary appointee specifically designated by the Board of
the Corporation has been successful on the merits or otherwise
in defense of any action, suit or proceeding referred to above
in paragraphs (A) and (B), or in defense of any claim, issue
or matter therein, he shall be indemnified against expenses,
including attorneys' fees, actually and
<PAGE>
-9-
reasonably incurred by him in connection therewith, if, in
each instance, the Board shall find by a vote which is
sufficient for the purpose without counting the vote of any
Director who is a party to the claim, action, suit or
proceeding in question (and without counting any such
interested Director in determining the presence of a quorum of
the Board), that the Director, officer, fiduciary appointee
specifically designated by the Board or other eligible person
claiming such indemnification is entitled to receive the same,
and, in case of settlement, that amount paid in settlement, or
the portion thereof as to which indemnification is to be given
is reasonable in the light of all of the circumstances. He may
enforce the right to indemnification granted by this section
by a separate action against the Corporation, in an order for
indemnification is not entered by a court in the action, suit
or proceeding wherein he was successful on the merits."
--------------------------
Jane B. Conway, Clerk
<PAGE>
Exhibit 3.12A
Jan 4 12:22 PM '84
FILED
THAD BURE
SECRETARY OF STATE
NORTH CAROLINA
ARTICLES OF INCORPORATION
OF
COPY SERVICE AND SUPPLY, INC.
The undersigned, being of the age of eighteen years or more, does hereby
make and acknowledge these Articles of Incorporation for the purpose of forming
a business corporation under and by virtue or the laws of the State of North
Carolina:
1. The name of the corporation is Copy Service and Supply, Inc.
2. The period of duration is perpetual.
3. The purposes for which the corporation is organized are:
To engage in any lawful act or activity for which corporations may
be organized under Chapter 55 of the North Carolina General
Statutes.
To engage in the business of selling office equipment and supplies
and to engage in the business of servicing office equipment.
4. The corporation shall have authority to issue one hundred thousand
(100, 000) shares of common stock with a par value of one dollar
($1.00) per share.
5. The minimum amount of consideration to be received by the
corporation for its shares before it shall commence business is five
hundred dollars ($500.00) in cash or property of equivalent value.
6. The address of the initial registered office of the corporation in
the State of North Carolina is 225 North Center Street, Statesville,
Iredell County, North Carolina; and the name of the initial
registered agent at such address is Crystal Smith.
7. The number of directors constituting the initial board of directors
shall be one (1); and the name and address of the person who is to
serve as director until the first meeting of shareholders, or until
his successor be elected and qualify, is: Terry Smith, Route 2, Box
221-B, Sherrill's Ford, North Carolina 28673.
8. The name and address of the incorporator are James R. Eades, 224
Water St., Statesville, North Carolina. All parties understand and
agree that the duties of the incorporator shall terminate with the
filing of these Articles of Incorporation.
<PAGE>
IN WITNESS WHEREOF, I have hereunto set my hand this 30th day of December,
1983.
/s/ James R. Eades
----------------------------
James R. Eades, Incorporator
NORTH CAROLINA
IREDELL COUNTY
I, Hazel J. Eades, a notary public in and for said county and state, do
hereby certify that James R. Eades personally appeared before me this 30th day
of December, 1983, and acknowledged the due execution of the foregoing Articles
of Incorporation.
/s/ Hazel J. Eades
------------------------------------
Notary Public
My commission expires: June 13, 1987
<PAGE>
0-0034435
FILED
2:03 p.m.
JAN 28 1998
EFFECTIVE __________
ELAINE F MARSHALL
SECRETARY OF STATE
NORTH CAROLINA
ARTICLES OF MERGER
OF
OFFICE FURNITURE CONCEPTS, INC.
INTO
COPY SERVICE AND SUPPLY, INC.
Pursuant to ss. 55-11-05 of the General Statutes of North Carolina, the
undersigned corporation as the surviving corporation in a merger, hereby submits
the following Articles of Merger.
I. The name of the surviving corporation is COPY SERVICE AND SUPPLY, INC.,
a corporation organized under the laws of the State of North Carolina; the name
of the corporation to be merged is OFFICE FURNITURE CONCEPTS, INC., a
corporation organized under the laws of the State of North Carolina.
II. Attached is a copy of the Plan of Merger that was duly adopted in the
manner prescribed by law by the boards of directors of each of the corporations
participating in the merger.
III. With respect to the surviving corporation, shareholder approval was
not required for the merger.
IV. With respect to the merged corporation, shareholder approval was
required for the merger, and the merger was approved by the shareholders as
required by Chapter 55 of the North Carolina General Statutes.
V. These articles will be effective upon filing.
This is the 9th day of January, 1998.
COPY SERVICE AND SUPPLY, INC.
By: /s/ Thomas S. Johnson
-------------------------
Thomas S. Johnson
Chairman
<PAGE>
PLAN OF MERGER
A. Corporations Participating in Merger.
Office Furniture Concepts, Inc., (the "Merging Corporation") will merge
into Copy Service And Supply, Inc., which will be the surviving corporation (the
"Surviving Corporation").
B. Name of Surviving Corporation.
After the merger, the Surviving Corporation will have the name "Copy
Service And Supply, Inc."
C. Merger.
The merger of the Merging Corporation into the Surviving Corporation will
be effected pursuant to the terms and conditions of this Plan. Upon the merger's
becoming effective, the corporate existence of the Merging Corporation will
cease, and the corporate existence of the Surviving Corporation will continue.
The time when the merger becomes effective is hereinafter referred to as the
"Effective Time."
D. Conversion and Exchange of Shares.
At the Effective Time, the outstanding shares of the corporations
participating in the merger will be converted and exchanged as follows:
1. Surviving Corporation. The outstanding shares of the Surviving
Corporation will not be converted, exchanged, or altered in any manner as a
result of the merger and will remain outstanding as shares of the Surviving
Corporation.
2. Merging Corporation. Each outstanding share of the Merging Corporation
will be converted into and exchanged for $0.001, to be paid in cash.
3. Fractional Shares. No fractional shares will be issued. Any shareholder
of the Merging Corporation who would otherwise be entitled to receive
five-tenths (.5) or more of a share will instead receive an additional whole
share; and any shareholder who would otherwise be entitled to less than
five-tenths (.5) of a share will not receive any consideration for such
fractional interest.
<PAGE>
E. Amendments to Articles of Incorporations.
There shall be no amendments to the Articles of Incorporation of the
Surviving Corporation pursuant to the merger.
F. Abandonment.
After approval of this Plan by the shareholders of the Merging Corporation
and the Surviving Corporation, and at any time prior to the merger's becoming
effective, the board of directors of the Surviving Corporation may, in their
discretion, abandon the merger.
<PAGE>
Exhibit 3.12B
BY-LAWS
OF
Copy Service and Supply, Inc.
ARTICLE I - OFFICES
The principal office of the corporation in the State of North Carolina
shall be located in the city of Statesville, County of Iredell. The corporation
may have such other offices, either within or without the State of incorporation
as the board of directors may designate or as the business of the corporation
may from time to time require.
ARTICLE II - STOCKHOLDERS
1. ANNUAL MEETING.
The annual meeting of the stockholders shall be held on the 28th day of
December in each year, beginning with the year 1984 at the hour eleven o'clock
AM., for the purpose of electing directors and for the transaction of such other
business as may come before the meting. If the day fixed for the annual meeting
shall be a legal holiday such meting shall be held on the next succeeding
business day.
2. SPECIAL MEETINGS.
Special meetings of the stockholders, for any purpose or purposes unless
otherwise prescribed by statute, may be called by the president or by the
directors, and shall be called by the president at the request of the holders of
not less than ten per cent of all the outstanding shares of the corporation
entitled to vote at the meeting.
3. PLACE OF MEETING.
The directors may designate any place, either within or without the State
unless otherwise prescribed by statute, as the place of meeting for any annual
meting or for any special meeting called by the directors. A waiver of notice
signed by all stockholders entitled to vote at a meeting may designate
By-Laws 1
<PAGE>
any place, either within or without the state unless other. wise prescribed by
statute, as the place for holding such meeting. If no designation is made, or if
a special meeting be otherwise called, the place of meeting shall be the
principal office of the corporation.
4. NOTICE OF MEETING.
Written or printed notice stating the place, day and and hour of the
meeting and, in case of a special meeting, the purpose or purposes for which the
meeting is called, shall be delivered not less than ten nor more than fifty days
before the date of the meeting, either personally or by mail, by or at the
direction of the president, or the secretary, or the officer or persons calling
the meeting, to each stockholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail, addressed to the stockholder at his address as it appears on the
stock transfer books of the corporation, with postage thereon prepaid.
5. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE.
For the purpose of determining stockholders entitled to notice of or to
vote at any meeting of stockholders or any adjournment thereof, or stockholders
entitled to receive payment of any dividend, or in order to make a determination
of stockholders for any other proper purpose, the directors of the corporation
may provide that the stock transfer books shall be closed for a stated period
but not to exceed, in any case, fifty days. If the stock transfer books shall be
closed for the purpose of determining stockholders entitled to notice of or to
vote at a meeting of stockholders, such books shall be closed for at least ten
days immediately preceding such meeting. In lieu of closing the stock transfer
books, the directors may fix in advance a date as the record date for any such
determination of stockholders, such date in any case to be not more than sixty
days and, in case of a meeting of stockholders, not less than ten days prior to
the date on which the particular action requiring such determination of
stockholders is to be taken. If the stock transfer books are not closed and no
record date is fixed for the determination, of stockholders entitled to notice
of or to vote at a meeting of stockholders, or stockholders entitled to receive
payment of a dividend, the date on which notice of the meeting is mailed or the
date on which the resolution of the directors declaring such dividend is
adopted, as the case may be, shall be the record date for such determination of
stockholders. When a determination of stockholders entitled to vote at any
meeting of stockholders
By-Laws 2
<PAGE>
has been made as provided in this section, such determination shall apply to any
adjournment thereof.
6. VOTING LISTS.
The officer or agent having charge of the stock transfer books for shares
of the corporation shall make, at least ten days before each meeting of
stockholders, a complete list of the stockholders entitled to vote at such
meeting, or any adjournment thereof, arranged in alphabetical order, with the
address of and the number of shares held by each, which list, for a period of
ten days prior to such meeting, shall be kept on file at the principal office of
the corporation and shall be subject to inspection by any stockholder at any
time during usual business hours. Such list shall also be produced and kept open
at the time and place of the meeting and shall be subject to the inspection of
any stockholder during the whole time of the meeting. The original stock
transfer book shall be prima facie evidence as to who are the stockholders
entitled to examine such list or transfer books or to vote at the meeting of
stockholders.
7. QUORUM.
At any meeting of stockholders a majority of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of stockholders. If less than said number of
the outstanding shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified. The stockholders present at a duly organized meeting may
continue to transact business until adjournment, nothwithstanding the withdrawal
of enough stockholders to leave less than a quorum.
8. PROXIES.
At all meetings of stockholders, a stockholder may vote by proxy executed
in writing by the stockholder or by his duly authorized attorney in fact. Such
proxy shall be filed with the secretary of the corporation before or at the time
of the meeting.
9. VOTING.
Each stockholder entitled to vote in accordance with the terms and
provisions of the certificate of incorporation and these by-laws shall be
entitled to one vote, in person or by
By-Laws 3
<PAGE>
proxy, for each share of stock entitled to vote held by such stockholders. Upon
the demand of any stockholder, the vote for directors and upon any question
before the meeting shall be by ballot. All elections for directors shall be
decided by plurality vote; all other questions shall be decided by majority vote
except as otherwise provided by the Certificate of Incorporation or the laws of
this State.
10. ORDER OF BUSINESS.
The order of business at all meetings of the stockholders, shall be as
follows:
1. Roll Call.
2. Proof of notice of meeting or waiver of notice.
3. Reading of minutes of preceding meeting.
4. Reports of Officers.
5. Reports of Committees.
6. Election of Directors.
7. Unfinished Business.
8. New Business.
11. INFORMAL ACTION BY STOCKHOLDERS.
Unless otherwise provided by law, any action required to be taken at a
meeting of the shareholders, or any other action which may be taken at a meeting
of the shareholders, may be taken without a meeting if a consent in writing,
setting forth the action so taken, shall be signed by all of the shareholders
entitled to vote with respect to the subject matter thereof.
By-Laws 4
<PAGE>
ARTICLE III - BOARD OF DIRECTORS
1. GENERAL POWERS.
The business and affairs of the corporation shall be managed by its board
of directors. The directors shall in all cases act as a board, and they may
adopt such rules and regulations for the conduct of their meetings and the
management of the corporation, as they may deem proper, not inconsistent with
these by-laws and the laws of this State.
2. NUMBER, TENURE AND QUALIFICATIONS.
The number of directors of the corporation shall be one (1)-------. Each
director shall hold office until the next annual meeting of stockholders and
until his successor shall have been elected and qualified.
3. REGULAR MEETINGS.
A regular meeting of the directors, shall be held without other notice
than this by-law immediately after, and at the same place as, the annual meeting
of stockholders. The directors may provide, by resolution, the time and place
for the holding of additional regular meetings without other notice than such
resolution.
4. SPECIAL MEETINGS.
Special meetings of the directors may be called by or at the request of
the president or any two directors. The person or persons authorized to call
special meetings of the directors may fix the place for holding any special
meeting of the directors called by them.
5. NOTICE.
Notice of any special meeting shall be given at least three days
previously thereto by written notice delivered personally, or by telegram or
mailed to each director at his business address. If mailed, such notice shall be
deemed to be delivered when deposited in the United States mail so addressed,
with postage thereon prepaid. If notice be given by telegram, such notice shall
be deemed to be delivered when the telegram is delivered to the telegraph
company. The attendance of a director at a meeting shall constitute a waiver of
notice of such meeting, except where a director attends a meeting for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened.
By-Laws 5
<PAGE>
6. QUORUM.
At any meeting of the directors one (1) shall constitute a quorum for the
transaction of business, but if less than said number is present at a meeting, a
majority of the directors present may adjourn the meeting from time to time
without further notice.
7. MANNER OF ACTING.
The act of the majority of the directors present at a meeting at which a
quorum is present shall be the act of the directors.
8. NEWLY CREATED DIRECTORSHIPS AND VACANCIES.
Newly created directorships resulting from an increase in the number of
directors and vacancies occurring in the board for any reason except the removal
of directors without cause may be filled by a vote of a majority of the
directors then in office, although less than a quorum exists. Vacancies
occurring by reason of the removal of directors without cause shall be filled by
vote of the stockholders. A director elected to fill a vacancy caused by
resignation, death or removal shall be elected to hold office for the unexpired
term of his predecessor.
9. REMOVAL OF DIRECTORS.
Any or all of the directors may be removed for cause by vote of the
stockholders or by action of the board. Directors may be removed without cause
only by vote of the stockholders.
10. RESIGNATION.
A director may resign at any time by giving written notice to the board,
the president or the secretary of the corporation. Unless otherwise specified in
the notice, the resignation shall take effect upon receipt thereof by the board
or such officer, and the acceptance of the resignation shall not be necessary to
make it effective.
11. COMPENSATION.
No compensation shall be paid to directors, as such, for their services,
but by resolution of the board a fixed sum and expenses for actual attendance at
each regular or special meeting of the board may be authorized. Nothing herein
contained shall be construed to preclude any director from service in the
corporation in any other capacity and receiving compensation therefor.
By-Laws 6
<PAGE>
12. PRESUMPTION OF ASSENT.
A director of the corporation who is present at a meeting of the directors
at which action on any corporate matter is taken shall be presumed to have
assented to the action taken unless his dissent shall be entered in the minutes
of the meeting or unless he shall file his written dissent to such action with
the person acting as the secretary of the meeting before the adjournment thereof
or shall forward such dissent by registered mail to the secretary of the
corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a director who voted in favor of such action.
13. EXECUTIVE AND OTHER COMMITTEES.
The board, by resolution, may designate from among its members an
executive committee and other committees, each consisting of three or more
directors. Each such committee shall serve at the pleasure of the board.
By-Laws 7
<PAGE>
ARTICLE IV - OFFICERS
1. NUMBER.
The officers of the corporation shall be a president, a vice-president, a
secretary and a treasurer, each of whom shall be elected by the directors. Such
other officers and assistant officers as may be deemed necessary may be elected
or appointed by the directors.
2. ELECTION AND TERM OF OFFICE.
The officers of the corporation to be elected by the directors shall be
elected annually at the first meeting of the directors held after each annual
meeting of the stockholders. Each officer shall hold office until his successor
shall have been duly elected and shall have qualified or until his death or
until he shall resign or shall have been removed in the manner hereinafter
provided.
3. REMOVAL.
Any officer or agent elected or appointed by the directors may be removed
by the directors whenever in their judgment the best interests of the
corporation would be served thereby, but such removal shall be without prejudice
to the contract rights, if any, of the person so removed.
4. VACANCIES.
A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, may be filled by the directors for the unexpired
portion of the term.
5. PRESIDENT.
The president shall be the principal executive officer of the corporation
and, subject to the control of the directors, shall in general supervise and
control all of the business and affairs of the corporation. He shall, when
present, preside at all meetings of the stockholders and of the directors. He
may sign, with the secretary or any other proper officer of the corporation
thereunto authorized by the directors, certificates for shares of the
corporation, any deeds, mortgages, bonds, contracts, or other instruments which
the directors have authorized to be executed, except in cases where the signing
and execution thereof shall be expressly delegated by the directors or by these
by-laws to some other officer or agent of the corporation, or shall be required
by law to be otherwise signed or executed; and in general shall
By-Laws 8
<PAGE>
perform all duties incident to the office of president and such other duties as
may be prescribed by the directors from time to time.
6. VICE-PRESIDENT.
In the absence of the president or in event of his death, inability or
refusal to act, the vice-president shall perform the duties of the president,
and when so acting, shall have all the powers of and be subject to all the
restrictions upon the president. The vice-president shall perform such other
duties as from time to time may be assigned to him by the president or by the
directors.
7. SECRETARY.
The secretary shall keep the minutes of the stockholders' and of the
directors' meetings in one or more books provided for that purpose, see that all
notices are duly given in accordance with the provisions of these by-laws or as
required, be custodian of the corporate records and of the seal of the
corporation and keep a register of the post office address of each stockholder
which shall be furnished to the secretary by such stockholder, have general
charge of the stock transfer books of the corporation and in general perform all
duties incident to the office of secretary and such other duties as from time to
time may be assigned to him by the president or by the directors.
8. TREASURER.
If required by the directors, the treasurer shall give a bond for the
faithful discharge of his duties in such sum and with such surety or sureties as
the directors shall determine. He shall have charge and custody of and be
responsible for all funds and securities of the corporation; receive and give
receipts for moneys due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the corporation in such
banks, trust companies or other depositories as shall be selected in accordance
with these by-laws and in general perform all of the duties incident to the
office of treasurer and such other duties as from time to time may be assigned
to him by the president or by the directors.
9. SALARIES.
The salaries of the officers shall be fixed from time to time by the
directors and no officer shall be prevented from receiving such salary by reason
of the fact that he is also a director of the corporation.
By-Laws 9
<PAGE>
ARTICLE V - CONTRACTS, LOANS, CHECKS AND DEPOSITS
1. CONTRACTS.
The directors may authorize any officer or officers, agent or agents, to
enter into any contract or execute and deliver any instrument in the name of and
on behalf of the corporation, and such authority may be general or confined to
specific instances.
2. LOANS.
No loans shall be contracted on behalf of the corporation and no evidences
of indebtedness shall be issued in its name unless authorized by a resolution of
the directors. Such authority may be general or confined to specific instances.
3. CHECKS, DRAFTS, ETC.
All checks, drafts or other orders for the payment of money, notes or
other evidences of indebtedness issued in the name of the corporation, shall be
signed by such officer or officers, agent or agents of the corporation and in
such manner as shall from time to time be determined by resolution of the
directors.
4. DEPOSITS.
All funds of the corporation not otherwise employed shall be deposited
from time to time to the credit of the corporation in such banks, trust
companies or other depositaries as the directors may select.
ARTICLE VI - CERTIFICATES FOR SHARES AND THEIR TRANSFER
1. CERTIFICATES FOR SHARES.
Certificates representing shares of the corporation shall be in such form
as shall be determined by the directors. Such certificates shall be signed by
the president and by the secretary or by such other officers authorized by law
and by the directors. All certificates for shares shall be consecutively
numbered or otherwise identified. The name and address of the stockholders, the
number of shares and date of issue, shall be entered on the stock transfer books
of the corporation. All certificates surrendered to the corporation for transfer
shall be canceled and no new certificate shall be issued until the
By-Laws 10
<PAGE>
former certificate for a like number of shares shall have been surrendered and
canceled, except that in case of a lost, destroyed or mutilated certificate a
new one may be issued therefor upon such terms and indemnity to the corporation
as the directors may prescribe.
2. TRANSFERS OF SHARES.
(a) Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, and cancel the old certificate; every such transfer shall be entered on
the transfer book of the corporation which shall be kept at its principal
office.
(b) The corporation shall be entitled to treat the holder of record of any
share as the holder in fact thereof, and, accordingly, shall not be bound to
recognize any equitable or other claim to or interest in such share on the part
of any other person whether or not it shall have express or other notice
thereof, except as expressly provided by the laws of this state.
ARTICLE VII - FISCAL YEAR
The fiscal year of the corporation shall begin on the 1st day of January
in each year.
ARTICLE VIII - DIVIDENDS
The directors may from time to time declare, and the corporation may pay,
dividends on its outstanding shares in the manner and upon the terms and
conditions provided by law.
ARTICLE IX - SEAL
The directors shall provide a corporate seal which shall be circular in
form and shall have inscribed thereon the name of the corporation, the state of
incorporation, year of incorporation and the words, `Corporate Seal".
By-Laws 11
<PAGE>
ARTICLE X - WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is required to be
given to any stockholder or director of the corporation under the provisions of
these by-laws or under the provisions of the articles of incorporation, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice.
ARTICLE XI - AMENDMENTS
These by-laws may be altered, amended or repealed and new by-laws may be
adopted by a vote of the stockholders representing a majority of all the shares
issued and outstanding, at any annual stockholders' meeting or at any special
stockholders' meeting when the proposed amendment has been set out in the notice
of such meeting.
By-Laws 12
<PAGE>
Amendment to By Laws dated November 11, 1997
WHEREAS, the Corporation is the owner, directly or indirectly, of
all of the outstanding capital stock of each of Copy Service and Supply, Inc., a
North Carolina corporation, Office Furniture Concepts, Inc., a North Carolina
corporation, Felco Office Systems, Inc., a Texas corporation, American Photocopy
Equipment Company of Pittsburgh, Inc., a Delaware corporation, Berney, Inc., an
Alabama corporation, Southern Copy Systems, Inc., an Alabama corporation, Conway
Office Products, Inc., a New Hampshire corporation, Business Equipment
Unlimited, Inc., a Maine corporation, Cameron Office Products, Inc., a
Massachusetts corporation, Electronic Systems, Inc., a Virginia corporation,
Southern Business Communications, Inc., a Georgia corporation, Quality Business
Systems, Inc., a Washington corporation, and Duplicating Specialties, Inc., an
Oregon corporation; and
WHEREAS, the Board of Directors of the Corporation hereby deem it to
be in the best interests of the Corporation that the Corporation, as the sole
stockholder or the parent of the sole stockholder of each of the Subsidiaries,
hereby amends each of the Subsidiaries' bylaws in order to provide more
efficient and modern means for conducting the business of meetings for such
Subsidiaries' stockholders and boards of directors; NOW, THEREFORE, BE IT
RESOLVED, that the Corporation, as the sole stockholder of each of
the Subsidiaries, hereby elects by written consent of sole stockholder to amend
the Bylaws of each of the Subsidiaries to provide that any authorized person may
call a meeting of the Board of Directors of such company upon 24 hours written
notice (which notice may be given by facsimile transmission);
FURTHER RESOLVED, that the Corporation, as the sole stockholder of
each of the Subsidiaries, hereby elects by written consent of sole stockholder
to amend the Bylaws of each of the Subsidiaries to provide that any meeting of
the Board of Directors of such company may be held in person or by telephone;
FURTHER RESOLVED, that the Corporation, as the sole stockholder of
each of the Subsidiaries, hereby elects by written consent of sole stockholder
to amend the Bylaws of each of the Subsidiaries to provide that any action of
the stockholders of the Corporation may be taken by unanimous written consent
except as otherwise required by law to be held at a meeting of the stockholders
of such company; and
FURTHER RESOLVED, that the Corporation hereby ratifies all actions
previously taken by the officers of the Corporation in connection with the
amendments to its Subsidiaries' Bylaws to comply with all the requirements and
conditions in connection therewith, and all other actions taken incidental
thereto.
-1-
<PAGE>
EXHIBIT 3.13A
NOTICE OF INCORPORATION
OF
GENERAL SERVICE LEASING, INC.
Approved and resolved for record by the State Department of Assessments and
Taxation of Maryland January 6, 1983 at 9:39 o'clock A. M. as in conformity
--------------- ---- -----
with law and ordered recorded.
----------------
Recorded in Libor 2573, folio 01219, one of the Charter Records of the State
---- -----
Department of Assessments and Taxation of Maryland.
----------------
Bonus tax paid $ 20.00 Recording fee paid $ 30.00 Special Fee paid $
----- ----- -----
----------------
To the clerk of the Circuit Court of Prince Georges County
------- ---------------------
IT IS HEREBY CERTIFIED, that the within instrument, together with all
endorsements thereon, has been received, approved and recorded by the State
Department of Assessments and Taxation of Maryland.
WITNESS my hand and seal of the said Department at Baltimore.
SEAL of Maryland
By: _______________ Custodian
<PAGE>
ARTICLES OF INCORPORATION
OF
GENERAL SERVICE LEASING, INC.
FIRST: The undersigned, THOMAS C. SULLIVAN, whose post office address is
1900 M Street, N.W., Suite 601, Washington, D.C. 20036, being at least
eighteen (18) years of age, does hereby form a corporation under and by virtue
of the general laws of the State of Maryland.
SECOND: The name of the corporation (which is hereinafter referred to as the
"Corporation") is:
GENERAL SERVICE LEASING, INC.
THIRD: The purposes for which the Corporation is formed are as follows:
(1) To purchase or otherwise acquire equipment and other property of every
class and description, including specifically, but not limited to,
photocopying equipment, and to lease, sell, exchange or otherwise deal
and trade in and with such equipment and other property and to engage
in any and all activities incidental thereto.
(2) To acquire by lease, purchase, gift, devise, contract, concession, or
otherwise and to hold, own, develop, explore, exploit, improve,
operate, lease, enjoy, control, manage, or otherwise dispose of any and
all real estate, lands, buildings, options, concessions, grants, land
patents, franchises, rights, privileges, easements, tenements, estates,
hereditaments, interests, and properties of every kind, nature and
description whatsoever, wherever situated.
(3) To act as a consultant, give advice, and assist other persons,
partnerships, and corporations in matters related to the business of
the Corporation or in any other matter, and to collect fees or any
other consideration for providing the above services.
<PAGE>
(4) To carry on such other business or businesses as may be necessary,
convenient, or desirable to accomplish the above purposes, and to do
all other things incidental thereto which are not forbidden by law or
by these Articles of Incorporation.
(5) To do any and all acts permitted by law.
(6) The foregoing purposes shall be exercisable within and outside the
State of Maryland.
FOURTH: The post office address of the principal office of the Corporation
in Maryland is 12000 Old Baltimore Pike, Beltsville, Prince Georges County,
Maryland 20705. The name and post office address of the resident agent of the
Corporation in Maryland is S. Myron Browner, CPA, 11510 Georgia Avenue, Wheaton,
Montgomery County, Maryland 20902. Said resident agent is a citizen of Maryland
and actually resides therein.
FIFTH: The total number of shares of stock which the Corporation has
authority to issue is one hundred thousand (100,000) shares at One Cent ($.01)
par value per share, all of which are voting, common stock of one class.
SIXTH: The number of directors of the Corporation shall be three (3), which
number may be increased or decreased pursuant to the Bylaws of the Corporation,
but shall never be less than three (3), and the names of the directors who shall
act until the first annual meeting or until their successors are duly chosen and
qualified are:
Gerald D. Snover
Arvin P. Gamble
John Wondolowski
SEVENTH: The following provisions are hereby adopted for the purpose of
defining, limiting and regulating the powers of the Corporation and of the
directors and stockholders:
(1) The Board of Directors of the Corporation is hereby empowered to
authorize and direct the issuance from time to time of its shares of
its stock of any class, whether now or hereafter authorized, and
securities convertible into shares of its stock of any class, whether
now or hereafter authorized, for such consideration as the Board of
Directors may deem advisable,
2
<PAGE>
subject to such limitations and restrictions, if any, as may be set
forth in the Articles of Incorporation or the Bylaws of the Corporation
or as otherwise required by law.
(2) No holder of stock of any class shall be entitled as a matter of right
to subscribe for or purchase any part of any new or additional issue of
stock of any class or of securities convertible into stock of any class,
whether now or hereafter authorized or whether issued for money, for a
consideration other than money, or by way of dividend.
(3) Any director individually, or any firm of which any director may be a
member, or any corporation or association of which any director may be
an officer or director or in which any director may be interested as the
holder of any amount of its capital stock or otherwise, may be a party
to, or may be pecuniarily or otherwise interested in, any contract or
transaction of the Corporation, and in the absence of fraud no contract
or other transaction shall be thereby affected or invalidated, provided
that in case a director, or a firm of which a director is a member, is
so interested, such fact shall be disclosed to or shall have been known
to the Board of Directors or a majority thereof. Any director or officer
of the Corporation who is also a director or officer of or interested in
such other corporation or association, or who, or the firm of which he
is a member, is so interested, may be counted in so determining the
existence of a quorum at any meeting of the Board of Directors of the
Corporation which shall authorize any such contract or transaction, and
may vote thereat or authorize any such contract or transaction.
(4) Any contract, transaction, or act of the Corporation or of the directors
which shall be ratified by a majority of a quorum of the stockholders
having voting powers at any annual meeting, or at any special meeting
called for such purpose, shall so far as permitted by law be as valid
and as binding as though ratified by every stockholder of the
Corporation.
3
<PAGE>
(5) Unless the Bylaws or other document or resolution otherwise provide, any
officer or employee of the Corporation (other than a director) may be
removed at any time with or without cause by the Board of Directors or
by any committee or superior officer upon whom such power of removal may
be conferred by the Bylaws or by authority of the Board of Directors.
EIGHTH: The duration of the Corporation shall be perpetual.
IN WITNESS WHEREOF, I have signed these Articles of Incorporation and
acknowledged the same to be my act on the 5th day of January, 1983.
WITNESS:
Karen C. Walker /s/ Thomas C. Sullivan
- --------------- ----------------------
Thomas C. Sullivan
4
<PAGE>
THE ARTICLES OF REVIVAL
OF
GENERAL SERVICE LEASING, INC.
CHANGING ITS NAME TO:
COS FINANCIAL, INC.
APPROVED AND RECEIVED FOR RECORD BY THE STATE DEPARTMENT OF ASSESSMENTS AND
TAXATION OF MARYLAND NOVEMBER 15, 1996 AT 10:25 O'CLOCK A.M. AS IN CONFORMITY
WITH LAW AND ORDERED RECORDED.
------------------
ORGANIZATION AND RECORDING SPECIAL
CAPITALIZATION FEE PAID FEE PAID FEE PAID
$ $20.00 $30.00
_____ _____ _____
------------------
01520436
IT IS HEREBY CERTIFIED, THAT THE WITHIN INSTRUMENT, TOGETHER WITH ALL
ENDORSEMENTS THEREON, HAS BEEN RECEIVED, APPROVED AND RECORDED BY THE STATE
DEPARTMENT OF ASSESSMENTS AND TAXATION OF MARYLAND.
THE CORPORATION TRUST
INCORPORATED
32 SOUTH STREET
BALTIMORE, MD 21202
10303101499
- --------------------------------------------------------------------------------
STATE OF MARYLAND A 541402
-----------------
I hereby certify that this is a true and complete copy of the 4 page document
on file in this office DATED 4-27-97
STATE DEPARTMENT OF ASSESSMENTS AND TAXATION
[SEAL OF STATE OF MARYLAND APPEARS HERE]
BY: /S/ XXXXXX XXXXXXXXXXXXXXXX, Custodian
----------------------------
This stamp replaces our previous certification system. Effective 6/96
<PAGE>
ARTICLES OF REVIVAL
FOR
General Service Leasing Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert exact name of corporation as it appears on records of the State
Department of Assessments and Taxation)
FIRST: The name of the corporation at the time the charter was forfeited was
General Service Leasing Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECOND: The name which the corporation will use after revival is
COS Financial, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THIRD: The address of the principal office in this state is
12000 Old Baltimore Pike
- --------------------------------------------------------------------------------
Beltsville, MD 20705
- --------------------------------------------------------------------------------
FOURTH: The name and address of the resident agent is
The Corporation Trust Incorporated
- --------------------------------------------------------------------------------
32 South Street
- --------------------------------------------------------------------------------
Baltimore, MD 21202
- --------------------------------------------------------------------------------
FIFTH: These Articles of Revival are for the purpose of reviving the charter of
the corporation.
SIXTH: At or prior to the filing of these Articles of Revival, the corporation
has (a) Paid all fees required by law; (b) Filed all annual reports which
should have been filed by the corporation if its charter had not been forfeited;
(c) Paid all state and local taxes, except taxes on real estate, and all
interest and penalties due by the corporation or which would have become due if
the charter had not been forfeited whether or not barred by limitations.
<PAGE>
The last acting president, vice president, secretary, and treasurer of
the corporation are unable or unwilling to sign the Articles. There are less
than the required number of directors able and willing to sign the Articles,
therefore, the undersigned who were elected as directors for the purpose of
reviving the charter of the corporation severally acknowledge the Articles to be
their act.
/s/ Robert Erikson
------------------------------------
Robert Erikson, Director
/s/ George Wm. Erikson
------------------------------------
George Wm. Erikson, Director
/s/ Armen A. Manoogian
------------------------------------
Armen A. Manoogian, Director
<PAGE>
AFFIDAVIT FOR REVIVAL OF A CHARTER
I, Armen A. Manoogian, Director of General Service Leasing, Inc.
---------------------------- -----------------------------
(insert name and title) (insert name of corporation)
hereby declare that the previously mentioned corporation has paid all
State and local taxes except taxes on real estate, and all interest and
penalties due by the corporation or which would have become due if the charter
had not been forfeited whether or not barred by limitations.
11/11/96
---------------------------
I hereby certify that on 11/11/96 before me, the subscriber, a notary
--------
public of the State of Maryland, in and for PB County Armen Manoogian
--------- ---------------
personally appeared and made oath under the penalties of perjury that the
matters and facts set forth in this affidavit are true to the best of his
knowledge, information and belief.
As witness my hand and notarial seal
/s/ Alithea M. Kanios
------------------------------------
My Commission expires May 2000.
--------
<PAGE>
EXHIBIT 3.14a
FORM 8CA-47 ARTICLES OF INCORPORATION
Filing requirements - Present 2 originally signed and
fully executed copies in exact duplicate
For Inserts - Use White Paper - Size 8 1/2 x 11
- ----------------------------
(Do not write in this space)
Date Paid 11/19/82
Initial License Fee $2.00
Franchise Tax $16.67
Filing Fee $75.00
------
Clerk $93.67
- ----------------------------
TO: JIM EDGAR, Secretary of State
I/We, the incorporator(s), being one or more natural persons of the age of
twenty-one years or more or a corporation for the purpose of forming a
corporation under "The Business Corporation Act" of the State of Illinois, do
hereby adopt the following Articles of Incorporation:
ARTICLE ONE The name of the corporation is DISTINCTIVE COPY PRODUCTS
--------------------------------
-----------------------------------------------------------------
ARTICLE TWO The name and address of the initial registered agent and
registered office are:
Registered Agent Holland Clark Capper
--------------------------------------------
First Name Middle Name Last Name
Registered Office 39 South LaSalle Street 1420
--------------------------------------------
Number Street (Do not use P.O. Box) Suite
Chicago 60603 Cook
--------------------------------------------
City Zip Code County
ARTICLE THREE The duration of the corporation is [X] perpetual OR ______ years.
ARTICLE FOUR The purposes for which the corporation is organized are:
To buy, sell, lease, rent, own, service and otherwise deal with and in
business equipment and business supplies of all kinds and character within and
without the State of Illinois;
To purchase, lease, sell, develop and improve real property in conjunction
with other purposes contained herein or otherwise.
ARTICLE FIVE Paragraph 1: The class, number of shares, the par value, if
any, of each class which the corporation is authorized to
issue, the number the corporation proposes to issue without
further report to the Secretary of State, and the
<PAGE>
consideration (expressed in dollars) to be received by the
corporation therefor, are:
Total
consideration
*Par Value Number of shares Number of shares to be received
Class Series per share authorized to be issued therefor
- --------------------------------------------------------------------------------
Common $NPV 10,000 4,000 $4,000.00
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
*(Use NPV if no Par Value) Total $4,000.00
---------
Paragraph 2: The preferences, qualifications, limitations,
restrictions and the special or relative rights in respect of
the shares of each class are: NONE
ARTICLE SIX The corporation will not commence business until at least one
thousand dollars has been received as consideration for the
issuance of shares.
<PAGE>
ARTICLE SEVEN The number of directors to be elected at the first meeting of
the shareholders is 3
ARTICLE EIGHT (Complete EITHER A or B)
[X] A. All the property of the corporation is to be located in
this State and all of its business is to be transacted at or
from places of business in this State, or the incorporator(s)
elect to pay the initial franchise tax on the basis of the
entire consideration to be received for the issuance of
shares.
[ ] B. Paragraph 1: It is estimated that the value of all property
to be owned by the Corporation for the following year wherever
located will be $ _________________
Paragraph 2: It is estimated that the value of the
property to be located within the State of Ilitois during the
following year will be: $ _________________
Paragraph 3: It is estimated that the gross amount of
business which will be transacted by the corporation during
the following year will be $ _________________
Paragraph 4: It is estimated that the gross amount of
business which will be transacted in or from places of
business in the State of Illinois during the following year
will be: $ _________________
I/WE the incorporator(s) declare that I/we have examined the foregoing Articles
of Incorporation and that the statements contained therein are, to the best of
my/our knowledge and belief, true, correct and complete. Executed this 15th day
of November, 1982.
(Signatures must be in ink. Carbon copy, xerox or rubber stamp signatures are
not acceptable.)
NOTE: If a corporation acts as incorporator the name of the corporation and the
state of incorporation shall be shown and the execution must be by its President
or Vice-President and verified by him, and the corporate seal shall be affixed
and attested by its Secretary or an Assistant Secretary.
Signature and Names Post Office Address
1. /s/ C. Joseph Mokszycki 1. 26223 North Hill Avenue
----------------------------------- -----------------------------------
Signature Street
C. JOSEPH MOKSZYCKI Wauconda, Illinois 60044
----------------------------------- -----------------------------------
Name (please print) City, Town State Zip
2. /s/ Holland C. Capper 2. 39 South LaSalle Street
----------------------------------- -----------------------------------
Signature Street
HOLLAND C. CAPPER Chicago, Illinois 60603
----------------------------------- -----------------------------------
Name (please print) City, Town State Zip
3. /s/ Natalie A. Starzyk 3. 18124 Burnham Avenue
----------------------------------- -----------------------------------
Signature Street
NATALIE A. STARZYK Lansing, Illinois 60438
----------------------------------- -----------------------------------
Name (please print) City, Town State Zip
FORM BCA-47
===============================
ARTICLES OF INCORPORATION
under the
BUSINESS CORPORATION ACT
-------------------------------
For determination of proper fees, please
consult The Business Corporation Act.
FILED
NOV 19 1982
JIM EDGAR
Secretary of State
PAID
RETURN TO:
Corporation Department
Secretary of State
Springfield, Illinois 62756
Telephone (217) 782-0961
<PAGE>
BCA-1O.30 (Rev Jul. 1984)
Submit in Duplicate
Remit payment in Check or Money
Order, payable to "Secretary of
State"
DO NOT SEND CASH
File # 5291-029
- ----------------------------
This Space For Use By
Secretary of State
Date 7-8-85
License Fee $
Franchise Tax $25.00
Filing Fee $
Clerk
- ----------------------------
JIM EDGAR
Secretary of State
State of Illinois
ARTICLES OF AMENDMENT
Pursuant to the provisions of "The Business Corporation Act of 1983", the
undersigned corporation hereby adopts these Articles of Amendment to its
Articles of Incorporation
ARTICLE ONE The name of the corporation is Distinctive Copy Products, Inc.
----------------------------------
---------------------------------------------------------(Note 1)
ARTICLE TWO The following amendment of the Articles of Incorporation was
adopted on June 9, 1985 in the matter indicated below ("X" one
box only)
[_] By a majority of the incorporators, provided no directors were
named in the articles of incorporation and no directors have
been elected, or by a majority of the board of directors, in
accordance with Section 10.10, the corporation having issued
no shares as of the time of adoption of this amendment.
(Note 2)
[_] By a majority of the board of directors, in accordance with
Section 10.15, shares having been issued but shareholder
action not being required for the adoption of the
amendment.
(Note 3)
[_] By the shareholders, in accordance with Section 10.20, a
resolution of the board of directors having been duly adopted
and submitted to the shareholder's. At a meeting of
shareholders not less than the minimun number of votes
required by statute and by the articles of incorporation were
voted in favor of the amendment.
(Note 4)
[_] By the shareholders in accordance with Sections 10.20 and
7.10, a resolution of the board of drectors having been duly
adopted and submitted to the shareholders. A consent in
writing has been signed by shareholders having not less than
the minimum number of votes requried by statute and by the
article: of incorporation Shareholders who have not consented
in writing have been given notice in accordancr with Section
7.10.
(Note 4)
[X] By the shareholders, in accordance with Sections 1023 and 7.
10, a resolution of the board of director's have been duly
adopted and submitted to the shareholders. A consent in writing
has been signed by all the shareholders entitled to vote on
this amendment
(Note 4)
(INSERT AMENDMENT)
(Any article being amended is required to be set forth in its entirety.)
(Suggested language for an amendment to change the corporate name is RESOLVED,
that the Articles of Incorporation be amended to read as follows:)
RESOLVED, that the Articles of Incorporation be amended to read as follows:
Effective immediately, the name of the corporation shall be changed to
Distinctive Business Products, Inc.
- --------------------------------------------------------------------------------
(NEW NAME)
All changes other than name include on part 2
(over)
<PAGE>
Page 2
Resolution
<PAGE>
Page 3
ARTICLE THREE The manner in which any exchange, reclassification or
cancellation of issued shares, or a reduction of the number of
authorized shares of any class below the number of issued
shares of that class, provided for or effected by this
amendment, is as follows (If not applicable, insert "No
change")
No change.
ARTICLE FOUR (a) The manner in which said amendment effects a change in the
amount of paid-in-capita1* is as follows (If not applicable,
insert "No change")
No change.
(b) The amount of paid-in-capital as changed by this amendment
is as follows (If not applicable, insert "No change")
No change.
Before Amendment After Amenoment
Paid-in Capital $ ______________ $ ______________
The undersigned corporation has caused these articles to be signed by its duly
authorized officers, each of whom affirm, under penalties of perjury, that the
facts stated herein are true.
Dated June 18th, 1985 Distinctive Copy Products
----------------------------------
(Exact Name of Corporation)
attested by /s/ /s/ C. Joseph Mokszycki by /s/ John R. [ILLEGIBLE]
------------------------------ ----------------------------------
(Signature of Secretary or (Signature of President or
Assistant Secretary) Vice President)
C. Joseph Mokszycki John R. [ILLEGIBLE], President
------------------------------ ----------------------------------
(Type or Print Name and Title) (Type or Print Name and Title)
* "Paid-in Capital" replaces the terms Stated Capitol and Paid-in Surplus and is
equal to the total of these accounts.lAw acrounn.
<PAGE>
EXHIBIT 3.14b
BY-LAWS
OF
DISTINCTIVE COPY PRODUCTS, INC.
ARTICLE I
REGISTERED OFFICE AND REGISTERED AGENT
The corporation shall continuously maintain in the State of Illinois a
registered office and a registered agent whose office is identical with such
registered office. The corporation may also maintain such other offices and
agents, within and without the State of Illinois, as the Board of Directors may
from time to time approve or the business of the corporation may from time to
time require.
ARTICLE II
SHAREHOLDERS
SECTION 1. ANNUAL MEETING. An annual meeting of shareholders shall be held
each year for the purpose of electing directors and for the transaction of such
other business as may properly come before the meeting. The annual meeting for
each year shall be held on such date, not later than 180 days after the end of
the fiscal year, as the Board of Directors shall from time to time determine. If
the day fixed for an annual meeting shall be a legal holiday, such meeting shall
be held on the next succeeding business day.
SECTION 2. SPECIAL MEETINGS. Special meetings of shareholders may be
called either by the President, by the Board of Directors, or by the holders of
not less than one-fifth of all the outstanding shares of any class of stock for
the purpose or purposes stated in the call of the meeting.
SECTION 3. PLACE OF MEETING. The Board of Directors may designate any
place, either within or without the State of Illinois, as the place of meeting
for any annual meeting or for any special meeting called by the Board of
Directors. If no designation is made, or if a special meeting is called by a
person other than the Board of Directors, the place of meeting shall be the
principal business office of the corporation or, if the corporation has no
principal business office, the registered office of the corporation in the State
of Illinois.
SECTION 4. NOTICE OF MEETINGS. Written notice stating the place, date and
hour of the meeting, and in the case of a special meeting, the purpose or
purposes for which
<PAGE>
the meeting is called, shall be delivered not less than ten nor more than sixty
days before the date of each meeting of shareholders, or, in the case of a
merger or consolidation, not less than twenty nor more than sixty days before
the meeting, either personally or by mail, by or at the direction of the
President, the Secretary, or the person or persons calling the meeting, to each
shareholder of record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail,
addressed to the shareholder at his address as it appears on the records of the
corporation, with postage thereon prepaid. When a meeting is adjourned to
another time or place, notice need not be given of the adjourned meeting if the
time and place thereof are announced at the meeting at which the adjournment is
taken.
SECTION 5. FIXING OF RECORD DATE. For the purpose of determining 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 to receive payment of any dividend or other distribution
or any allotment of rights, or to exercise any rights in respect of any change,
conversion or exchange of shares, or for the purpose of any other lawful action,
the Board of Directors of the corporation may fix in advance a record date which
shall not be more than sixty days and, for a meeting of shareholders, not less
than ten days, or, in the case of a merger or consolidation, not less than
twenty days, before the date of such meeting. If no record date is fixed, the
record date for the determination of shareholders entitled to notice of and to
vote at a meeting of shareholders shall be the date on which notice of the
meeting is mailed, and the record date for the determination of shareholders for
any other purpose shall be the date on which the Board of Directors takes action
thereon. 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.
SECTION 6. VOTING LISTS. The officer or agent having charge of the
transfer books for shares of the corporation shall make, at least ten days
before each meeting of shareholders, a complete list of the shareholders
entitled to vote at such meeting, arranged in alphabetical order, showing the
address of and the number of shares of each class of stock registered in the
name of the shareholder, which list, for a period often days prior to such
meeting, shall be kept on file at the registered office of the corporation and
shall be open to inspection by any shareholder, for any purpose germane to the
meeting, at any time during usual business hours. Such list shall also be
produced and kept open at the time and place of the meeting and may be inspected
by any shareholder during the whole time of the meeting. The original share
ledger or transfer book, or a duplicate thereof kept in the State of Illinois,
shall be prima facie evidence as to who are the shareholders entitled to examine
such list or share ledger or transfer book and to vote at any meeting of
shareholders.
SECTION 7. QUORUM. The holders of a majority of the outstanding shares of
the corporation entitled to vote, present in person or represented by proxy,
shall constitute a
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<PAGE>
quorum at any meeting of shareholders; provided, however, that if less than a
majority of the outstanding shares entitled to vote are present in person or
represented by proxy at a meeting, a majority of the shares so present or
represented may adjourn the meeting at any time without further notice. If a
quorum is present in person or represented by proxy, the affirmative vote of the
majority of the shares entitled to vote present in person or represented by
proxy at the meeting shall be the act of the shareholders, unless the vote of a
greater number or voting by classes is required by law, these bylaws, or the
articles of incorporation. At any adjourned meeting at which a quorum shall be
present in person or represented by proxy, any business may be transacted which
might have been transacted at the original meeting. Withdrawal of shareholders
from any meeting shall not cause the failure of a duly constituted quorum at the
meeting.
SECTION 8. PROXIES. Each shareholder 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, which proxy shall be filed with the Secretary of the corporation before
or at the time of the meeting. No such proxy shall be valid after eleven months
from the date of its execution, unless otherwise provided in the proxy.
SECTION 9. VOTING OF SHARES. Except as otherwise provided herein, each
outstanding share, regardless of class, shall be entitled to one vote upon each
matter submitted to vote at a meeting of shareholders.
SECTION 10. VOTING OF SHARES BY CERTAIN HOLDERS. Shares standing in the
name of another corporation, domestic or foreign may be voted by such officer,
agent or proxy as the by-laws of such corporation may prescribe, or, in the
absence of such provision, as the board of directors of such corporation may
determine.
Shares standing in the name of a deceased person, a minor ward or an
incompetent person, may be voted by his administrator, executor, court appointed
guardian, or conservator, either in person or by proxy, without a transfer of
such shares into the name of such administrator, executor, court appointed
guardian, or conservator.
Shares standing in the name of a trust or a trustee may be voted by a
trustee of such trust or such trustee, as the case may be, either in person or
by proxy.
Shares standing in the name of a receiver may be voted by such receiver,
and shares held by or under the control of a receiver may be voted by such
receiver without the transfer thereof into his name if authority so to do be
contained in an appropriate order of the court by which such receiver was
appointed.
-3-
<PAGE>
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Shares of its own stock held by the corporation shall not be voted,
directly or indirectly, at any meeting of shareholders and shall not be counted
in determining the total number of outstanding shares at any given time;
provided, however, that shares of its own stock held by the corporation in a
fiduciary capacity may be voted and shall be counted in determining the total
number of outstanding shares at any given time.
SECTION 11. INSPECTORS. At any meeting of shareholders, the presiding
officer may (and, upon the request of any shareholder, shall) appoint one or
more persons as inspectors for such meeting.
Such inspectors shall ascertain and report the number of shares
represented at the meeting based upon their determination of the validity and
effect of proxies, shall count all votes and report the results of each election
and vote, and shall do such other acts as are proper to conduct the election and
voting with impartiality and fairness to all the shareholders.
Each report of an inspector shall be in writing and signed by him or by a
majority of them if there be more than one inspector acting at such meeting. If
there is more than one inspector, the report of a majority shall be the report
of the inspectors. The report of the inspector or inspectors on the number of
shares represented at the meeting and the results of the voting shall be prima
facie evidence thereof.
SECTION 12. VOTING BY BALLOT. Voting on any question or in any election
may be by voice unless the presiding officer shall order, or any shareholder
shall demand, that voting be by ballot.
ARTICLE III
DIRECTORS
SECTION 1. GENERAL POWERS. The business of the corporation shall be
managed by its Board of Directors.
SECTION 2. NUMBER, TENURE AND QUALIFICATIONS. The number of directors of
the corporation shall be three. Each director shall hold office until the next
annual
-4-
<PAGE>
meeting of shareholders or until his successor shall have been elected and
qualified. Directors need not be residents of Illinois or shareholders of the
corporation.
SECTION 3. REGULAR MEETINGS. An annual meeting of the Board of Directors
shall be held, without notice other than this by-law, immediately after the
annual meeting of shareholders. The Board of Directors may provide, by
resolution, the time and place for the holding of additional regular meetings,
without notice other than such resolution.
SECTION 4. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by or at the request of the President or any director. The person
or persons calling a special meeting may fix the time and place for holding the
meeting.
SECTION 5. NOTICE. Notice of any special meeting shall be given to each
director not less than 24 hours prior to the time of the meeting. Notice of a
meeting may be given to a director by mail, telegram, fax, electronic mail or
telephone. If mailed, notice shall be deemed to be delivered when delivered to
the residence or business address of the director. The attendance of a director
at any meeting shall constitute a waiver of notice of such meeting, except where
a director attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
meeting of the Board of Directors need be specified in the notice or waiver of
notice of such meeting.
SECTION 6. QUORUM. A majority of directors shall constitute a quorum for
transaction of business at any meeting of the Board of Directors; provided,
however, that, if less than a majority of the directors are present at a
meeting, the director or directors present may adjourn the meeting at any time
without further notice.
SECTION 7. MANNER OF ACTING. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors.
SECTION 8. VACANCIES. Any vacancy occurring in the Board of Directors and
any directorship to be filled by reason of an increase in the number of
directors, may be filled by election at an annual meeting of shareholders or at
a special meeting of shareholders called for such purpose.
SECTION 9. ACTION WITHOUT A MEETING. Unless specifically prohibited by the
articles of incorporation, (i) any action required to be taken at a meeting of
the Board of Directors and or any other action which may be taken at a meeting
of the Board of Directors may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all the directors
entitled to vote with respect to the subject matter thereof, and (ii) any
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<PAGE>
action required to be taken at a meeting of a committee of the Board of
Directors and or any other action which may be taken at a meeting of a committee
of the Board of Directors may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all the members
of such committee entitled to vote with respect to the subject matter thereof.
Any such consent signed by all the directors or members of a committee shall
have the same effect as a unanimous vote at a meeting of the Board of Directors
or such committee, as the case may be, and may be stated as such in any document
filed with the Secretary of State or any other person.
SECTION 10. PRESUMPTION OF ASSENT. A director who is present at a meeting
of the Board of Directors at which any action is taken shall be conclusively
presumed to have assented to the action taken unless his dissent shall be
entered in the minutes of the meeting or unless he shall file his written
dissent to such action with the person acting as the Secretary of the meeting
before the adjournment thereof or shall forward such dissent by registered mail
to the Secretary of the corporation immediately after the adjournment of the
meeting. Such right to dissent shall not apply to a director who voted in favor
of such action.
ARTICLE IV
OFFICERS
SECTION 1. NUMBER. The officers of the corporation shall include a
President and a Secretary and may include one or more Vice Presidents, a
Treasurer, and such other officers as may be elected or appointed from time to
time by the Board of Directors.
SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the corporation
shall be elected annually by the Board of Directors at the annual meeting of the
Board of Directors held after each annual meeting of shareholders. If the
election of officers shall not be held at such annual meeting, such election
shall be held as soon thereafter as may be convenient. Vacancies may be filled
and new Offices may be created and filled at any meeting of the Board of
Directors. Each officer shall hold office until his successor shall have been
duly elected and shall have qualified or until his death, he shall resign, or he
shall have been removed. Election as an officer shall not of itself create any
contractual rights or obligations or create any employee/employer relationship.
SECTION 3. REMOVAL. Any officer elected or appointed by the Board of
Directors may be removed by the Board of Directors whenever in its judgment the
best interests
-6-
<PAGE>
of the corporation would be served thereby, and such removal shall be without
prejudice to or impairment of any contractual rights or obligations of the
person so removed.
SECTION 4. PRESIDENT. The President shall be the chief executive officer
of the corporation. Subject to the direction and control of the Board of
Directors and except in those instances in which such authority, duty or
responsibility is specifically reserved to some other person or persons by the
Board of Directors, the President shall be in charge of the business of the
corporation, shall see that the resolutions and directions of the Board of
Directors are carried into effect, and, in general, shall have and discharge all
authority, duties and responsibilities incident to the office of President and
such other authority, duties and responsibilities as may be assigned to him by
the Board of Directors. The President shall preside at all meetings of
shareholders and, if he is a director, at all meetings of the Board of Directors
at which he is present. Except in those instances in which the authority to
execute is expressly reserved to another person or persons or a different mode
of execution is expressly prescribed by the Board of Directors or these by-laws,
the President may execute for the corporation certificates for its shares and
contracts, leases, deeds, mortgages, bonds, and other documents instruments, and
he may accomplish such execution either under or without the seal of the
corporation and either individually or with the Secretary, any Assistant
Secretary, or any other officer thereunto authorized by the Board of Directors,
according to the requirements of the form of the instrument. The President may
open bank accounts for the corporation and designate the persons authorized to
sign checks and take other actions with respect to such bank accounts. The
President may vote all securities which the corporation is entitled to vote
except as and to the extent such authority shall be reserved to a different
person by the Board of Directors.
SECTION 5. THE VICE-PRESIDENTS. The Vice-President (or in the event there
be more than one Vice-President, each Vice-President), if any, shall assist the
President in the discharge of his duties as the President or the Board of
Directors may direct and shall perform such other duties as from time to time
may be assigned to him by the President or by the Board of Directors. In the
absence of the President or in the event of his inability or refusal to act, the
Vice-President (or in the event there be more than one Vice-President, the
Vice-Presidents in the order designated by the Board of Directors, or, if the
Board of Directors has not made such a designation, in the order designated by
the President, or, in the absence of any such designation, then in the order of
seniority of tenure as Vice-President), if any, may perform the duties of the
President, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the President. Except in those instances in which the
authority to execute is expressly reserved to another person or a different mode
of execution is expressly prescribed by the President or the Board of Directors
or these by-laws, the Vice-President (or each of them if there are more than
one), if any, may execute for the corporation certificates for its shares and
contracts, leases, deeds, mortgages, bonds or other instruments which the
President or the Board of Directors has authorized to be executed, and he may
accomplish such execution either under
-7-
<PAGE>
or without the seal of the corporation and either individually or with the
Secretary, any Assistant Secretary, or any other officer thereunto authorized by
the President or the Board of Directors, according to the requirements of the
form of the instrument.
SECTION 6. THE TREASURER. The Treasurer, if any, shall be the principal
accounting and financial officer of the corporation. The Treasurer, if any,
shall: (a) have charge of and be responsible for the maintenance of adequate
books of account for the corporation; (b) have charge and custody of all funds
and securities of the corporation, and be responsible therefor and for the
receipt and disbursement thereof; and (c) perform all the duties incident to the
office of Treasurer and such other duties as from time to time may be assigned
to him by the President or the Board of Directors.
SECTION 7. THE SECRETARY. The Secretary shall: (a) record the minutes of
the meetings of shareholders and the Board of Directors in one or more books
provided for that purpose; (b) see that all notices are duly given in accordance
with the provisions of these by-laws or as required by law; (c) be custodian of
the corporate records and of the seal of the corporation; (d) keep a register of
the post office address of each shareholder which shall be furnished to the
Secretary by such shareholder; (e) sign with the President, or a Vice-President,
or any other officer thereunto authorized by the President or the Board of
Directors, certificates for shares of the corporation, the issue of which shall
have been authorized by the Board of Directors, and contracts, leases, deeds,
mortgages, bonds, or other instruments which the President or the Board of
Directors has authorized to be executed, according to the requirements of the
form of the instrument, except when a different mode of execution is expressly
reserved by the President or the Board of Directors or these by-laws; if) have
general charge of the stock transfer books of the corporation; (g) certify upon
the request of the President the adoption of standard banking resolutions
(without such resolutions having been adopted by the Board of Directors); and
(h) perform all duties incident to the office of Secretary and such other duties
as from time to time may be assigned to him by the President or the Board of
Directors.
SECTION 8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. The assistant
Treasurers and Assistant Secretaries shall perform such duties as shall be
assigned to them by the Treasurer or the Secretary, respectively, or by the
President or the Board of Directors. The Assistant Secretaries may sign with the
President, or a Vice-President, or any other officer thereunto authorized by the
Board of Directors, certificates for shares of the corporation, the issuance of
which shall have been authorized by the Board of Directors, and any contracts,
deeds, mortgages, bonds, or other instruments which the Board of Directors has
authorized to be executed, according to the requirements of the form of the
instrument, except when a different mode of execution is expressly prescribed by
the Board of Directors or these by-laws.
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<PAGE>
ARTICLE V
CERTIFICATES FOR SHARES AND
THEIR TRANSFER
SECTION 1. CERTIFICATES FOR SHARES. Certificates representing shares of
the corporation shall be signed by the President or a Vice-President or such
other officer as shall be designated by resolution of the Board of Directors and
by the Secretary or an Assistant Secretary, and shall be sealed with the seal or
a facsimile of the seal of the corporation. Each certificate representing shares
shall be consecutively numbered or otherwise identified, and shall also state
the name of the person to whom issued, the number and class of shares (with
designation of series, if any), the date of issue, that the corporation is
organized under Illinois law, and the par value or a statement that the shares
are without par value. If the corporation is authorized and does issue shares of
more than one class or more than one series within a class, the certificate
shall also contain such information or statement as may be required by law.
The name and address of each shareholder, the number and class of shares
held and the date on which the certificates for the shares were issued shall be
entered on the books of the corporation. The person in whose name shares stand
on the books of the corporation shall be deemed the owner thereof for all
purposes as regards the corporation.
SECTION 2. LOST CERTIFICATES. If a certificate representing shares has
allegedly been lost or destroyed, the Board of Directors may in its discretion,
except as may be required by law, direct that a new certificate be issued upon
such indemnification and other reasonable requirements as it may impose.
SECTION 3. TRANSFER OR SHARES. Transfer of shares of the corporation shall
be recorded on the books of the corporation and, except in the case of a lost or
destroyed certificate, on surrender for cancellation of the certificate for such
shares. A certificate presented for transfer must be duly endorsed and
accompanied by proper guaranty of signature and other appropriate assurances
that the endorsement is effective.
ARTICLE VI
FISCAL YEAR
The fiscal year of the corporation shall be the calendar year unless
another fiscal year is fixed by resolution of the Board of Directors to be the
fiscal year.
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<PAGE>
ARTICLE VII
WAIVER OF NOTICE
Whenever any notice is required to be given under the provisions of these
by-laws or under the provisions of the articles of incorporation or under the
provisions of the Illinois Business Corporation Act, a waiver thereof in
writing, signed by the person or persons entitled to such notice, whether before
or after the time stated therein, shall be deemed equivalent to the giving of
such notice.
ARTICLE VIII
AMENDMENTS
The power to make, alter, amend, or repeal the by-laws of the corporation
shall be vested in the Board of Directors, unless reserved to the shareholders
by the articles of incorporation. The by-laws may contain any provisions for the
regulation and management of the affairs of the corporation not inconsistent
with law or the articles of incorporation.
ARTICLE IX
INDEMNIFICATION
SECTION 9.1. RIGHT TO INDEMNIFICATION. The corporation shall indemnify and
hold harmless, to the fullest extent permitted by applicable law, as it
presently exists or may hereafter be amended, any person who (i) was or is a
director of the corporation, or was or is a legal representative of a person who
was or is a director of the corporation, and (ii) was or is made or is
threatened to be made a party or is otherwise involved in any action, suit, or
proceeding, whether civil, criminal, administrative, or investigative (a
"proceeding"), by reason of the fact that he, or a person for whom he is the
legal representative, was or is a director or officer of the corporation or was
or is serving at the request of the corporation as a director, officer,
employee, or agent of another corporation or of a partnership, joint venture,
trust, enterprise, or nonprofit entity, including service with respect to
employee benefit plans, from and against any and all liability or loss suffered
and expenses (including attorneys' fees) reasonably incurred by such person in
connection with such proceeding (or any part thereof); provided, however, that
the corporation shall be required to indemnify a person in connection with a
-10-
<PAGE>
proceeding (or any part thereof) initiated by such person only if such
proceeding (or such part thereof) was authorized by the Board of Directors of
the corporation.
SECTION 9.2. PREPAYMENT OF EXPENSES. The corporation may, in its
discretion, pay the expenses (including attorneys' fees) incurred in defending
any proceeding in advance of its final disposition; provided, however, that the
payment of expenses incurred in advance of the final disposition of a proceeding
shall be made only upon receipt of an undertaking by the person receiving the
advance to repay all amounts advanced if it should be ultimately determined that
such person is not entitled to be indemnified by the corporation with respect to
such proceeding.
SECTION 9.3. CLAIMS. If a claim for indemnification under Section 9.1
hereof is not paid in full within sixty days after a written claim therefor has
been received by the corporation, the claimant may file suit to recover the
unpaid amount of such claim and, if successful in whole or in part, shall be
entitled to be paid the expenses (including attorneys' fees) of prosecuting and
enforcing such claim. In any such action, the corporation shall have the burden
of proving that the claimant was not entitled to the requested indemnification.
SECTION 9.4. NON-EXCLUSIVITY OF RIGHTS. The rights conferred on any person
under this Article IX are not exclusive of any other rights that such person may
have or hereafter acquire under any statute, the certificate of incorporation,
these bylaws, any Agreement, any vote of stockholders or disinterested
directors, or otherwise. Nothing in this Article IX shall preclude or restrict
the corporation from indemnifying persons in addition to persons who were or are
directors of the corporation and persons who were or are legal representatives
of persons who were or are directors of the corporation.
SECTION 9.5. OTHER INDEMNIFICATION. The corporation's obligation, if any,
to indemnify 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 from such other corporation, partnership,
joint venture, trust, enterprise, or nonprofit enterprise.
SECTION 9.6. AMENDMENT OR REPEAL. Any repeal or modification of the
provisions of this Article IX 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 X
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
-11-
<PAGE>
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 that
authorizes the contract or transaction, or solely because his or their votes are
counted for such purpose, if: (1) the material facts as to his or their
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board of Directors or the committee thereof authorizing or
ratifying the contract or transaction, and the Board of Directors or such
committee, as the case may be, in good faith authorizes or ratifies the contract
or transaction by the affirmative vote of a majority of the disinterested
directors who are members of the Board of Directors or such committee, as the
case may be, even though the disinterested directors are less than a quorum; or
(2) the material facts as to his or their 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 approved or ratified in good
faith by the affirmative vote of the stockholders, even though all or some of
the stockholders voting for the approval thereof are not disinterested; or (3)
the contract or transaction is fair 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 a
committee thereof that authorizes the contract or transaction.
-12-
<PAGE>
Exhibit C Resolutions
AMENDMENT TO BYLAWS from Global Imaging Systems, Inc. Unanimous Consent
dated December 22, 1998
"(3) Global, as Shareholder of Distinctive, Amendments to Bylaws of
Distinctive and Election of Directors of Distinctive
RESOLVED, that immediately subsequent to the consummation of Global's
acquisition of Distinctive Business Products, Inc. (the "Distinctive
Acquisition"), the bylaws of Distinctive Business Products, Inc. (the
"Distinctive Bylaws") shall be amended as follows:
Article II of the Distinctive Bylaws shall be amended to add the
following new Section to the end of Article II: "SECTION 13. ACTION
WITHOUT A MEETING. Unless specifically prohibited by the articles of
incorporation, any action required to be taken at a meeting of
shareholders may be taken without a meeting if a consent in writing,
setting forth the action so taken, shall be signed by the
shareholders entitled to vote with respect to the subject matter
thereof. Any such consent signed by all the shareholders shall have
the same effect as a unanimous vote at a meeting of the shareholders
and may be stated as such in any document filed with the Secretary
of State or any other person."
Section 2 of Article III of the Distinctive Bylaws shall be amended
to replace the first sentence with the following: "The number of
directors of the corporation shall be from one to ten in number, as
determined by the shareholders of the corporation."
Section 2 of Article III of the Distinctive Bylaws shall be amended
to add the following sentence to the end of such section:: "At all
meetings of the board, the Chairman, or in his absence, a chairman
chosen by the board, shall preside."
Section 1 of Article IV of the Distinctive Bylaws shall be amended
by replacing such the entirety of Section 1 (including the heading)
with the following: "SECTION 1. OFFICES. The officers of the
corporation shall include a Chairman, a President, a Treasurer and a
Secretary and may include one or more Vice Presidents, Assistant
Treasurers and Assistant Secretaries as may be appointed from time
to time by the Board of Directors.
Section 4 of Article IV of the Distinctive Bylaws shall be amended
by replacing the Title of such section with "CHAIRMAN AND PRESIDENT"
and by adding the beginning to the beginning of such section: "The
Chairman shall (when present) preside at all meetings of the Board
of Directors and Shareholders; and shall ensure that all orders and
resolutions of the Board of Directors and Shareholders are carried
into effect. The Chairman may execute bonds, mortgages and other
contracts, under the seal of the corporation, if required,
<PAGE>
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."
RESOLVED, that immediately subsequent to the consummation of the
Distinctive Acquisition, the size of Distinctive Business Products, Inc.'s Board
of Directors (the "Distinctive Board") shall be set at three (3) members.
FURTHER RESOLVED, that immediately subsequent to the Distinctive
Acquisition, (i) all of the directors of Distinctive Business Products, Inc.
("Distinctive") shall be removed, in accordance with the bylaws of Distinctive,
(ii) Thomas S. Johnson, William C. Kessinger and John R. Cosich shall be
appointed to fill the vacancies on the Distinctive Board created thereby and
that they shall each serve until such time as his successor is duly elected and
qualified, and (iii) Thomas S. Johnson shall be appointed as the Chairman of the
Distinctive Board to serve until such time as his successor is duly elected and
qualified."
-2-
<PAGE>
Exhibit 3.15a
FILE NO. 76875
[STAMP]
--------------------------------------
FILED
IN THE OFFICE OF THE CORPORATION
COMMISSIONER OF THE STATE OF OREGON
MAR 20 1968
FRANK J. HEALY
CORPORATION COMMISSIONER
--------------------------------------
RESTATED ARTICLES OF INCORPORATION
DUPLICATING SPECIALTIES. INC.
An Oregon Corporation
We, the undersigned, do hereby certify that the following are the
Restated Articles of Incorporation of Duplicating Specialties, Inc., an Oregon
corporation, adopted March 18, 1968, and that these Restated Articles of
Incorporation supersede and take the place of the heretofore existing Articles
of Incorporation and Amendments thereto.
ARTICLE I
The name of the corporation is DUPLICATING SPECIALTIES, INC. and its
duration is perpetual.
ARTICLE II
The purposes and powers of the corporation are:
1. To manufacture, process, develop, design, purchase, acquire,
sell, lease, consign, distribute, store and dispose of duplicating, reproduction
and copying equipment and supplies and the servicing thereof and other tangible
and intangible property of every kind, whether related or unrelated to any such
property being manufactured, produced, sold or dealt in by this corporation.
2. To finance distributor, wholesale and retail sales to customers
and affiliates of this corporation.
3. To acquire, develop, plat, dedicate to public use, use, occupy,
manage, improve, subdivide, equip, furnish, rent, sell or otherwise dispose of
and deal in real property of every kind.
4. To lend money, property and credit and finance any part of its
operations, purchases or transfers of its property, or those of its agents,
affiliates, suppliers or customers, and take or give any kind of property, or
interests therein, as security therefor and for property so transferred.
5. To carry on all or any of its operations and business and
exercise any of its powers, in any of the states, districts, territories or
dependent areas of the United States, and any and all foreign countries, and to
have one or more offices, plants or facilities therein.
6. To sell, convey, lease, transfer, exchange, discount, encumber
and otherwise dispose of all or any part of this corporation's property, income
good will, licenses, permits and other assets, tangible or intangible and to
take therefor property or interests therein of all kinds; to compromise, settle,
waive, release or discharge claims, indebtedness and liabilities of all kinds;
to grant franchises, concessions and covenants; and to make gifts of its
property and assets for educational, charitable, religious, civic and welfare
purposes.
Page 1 - RESTATED ARTICLES OF INCORPORATION
<PAGE>
7. To apply for, develop, purchase, lease or otherwise acquire, and
register, own, hold, use, sell, assign and otherwise dispose of, and generally
deal in any and all kinds of copyrights, trade-marks, trade names, privileges,
licenses, trade secrets and processes, formulae, inventions and Improvements of
every kind, patents, patent rights and letters patent and grants, both foreign
and domestic, and to use, operate and manufacture under the same, and to sell,
assign and grant licenses in respect thereto.
8. To purchase or otherwise acquire, hold, own, pledge, transfer or
otherwise dispose of shares and other securities of this corporation so long as
it shall not purchase, either directly or indirectly, its own shares when such
use would impair its capital contrary to the laws of the State of Oregon.
9. To engage in any lawful activity and to do anything in the
operation of this corporation or for the accomplishment of any of its purposes
or for the exercise of any power herein set forth which shall appear necessary
or beneficial to this corporation in connection therewith.
10. To do any and all of the things herein set forth either alone or
jointly with others, and either as principal for its own account or as agent,
trustee, contractor, broker, factor, partner, co-venturer or otherwise to the
same extent as a natural person might or could do in the State of Oregon or
elsewhere, including the use or granting of long-term contracts with respect to
this corporation's business, officers, operations, management, property, rights
or credit.
11. To promote, participate in, invest in, use or dispose of any
interest in, or act with, for or through any parent, subsidiary or affiliated
corporation, partnership, joint venture, syndicate or other association or
concern, with or without compensation, and to allow or utilize common officers
and directors and enter contracts with respect to designation of same.
12. To exercise, in addition to those powers herein enumerated, all
of the powers now or hereafter conferred by the laws of the State of Oregon and
any other state or country in which it may be operating. The enumeration of
specific purposes or powers shall not be ehdl to limit or restrict in any manner
the powers of this corporation.
ARTICLE III
The authorized capital shall consist of 500 shares of common stock,
par value $100 per share.
ARTICLE IV
The rights, privileges and powers of the shareholders of this
corporation are as follows:
1. No shareholder of any class of capital stock as such shall have
the preferential or pre-emptive right to subscribe for or purchase any stock of
any class, any rights, warrants or options with respect thereto, or any
obligation convertible into or exchangeable for any such stock or other
securities acquired by the corporation after the issue thereof, regardless of
the consideration therefor.
2. Each shareholder shall have one vote for each share held of
record on all matters submitted for shareholder approval, and no share-
Page 2 - RESTATED ARTICLES OF INCORPORATION
<PAGE>
shall be entitled to cumulate his votes for the election of directors.
3. The shareholders shall have power to remove the directors, in
whole or in part, at any time without cause.
4. Amendments to the Articles of Incorporation may be adopted by
vote of the holders of a majority of the voting power of all shareholders unless
a higher vote is required by statute.
ARTICLE V
The members of the governing board shall be known as directors, and
the number thereof shall be fixed by the by-laws of this corporation, but shall
be not less than three. The number fixed may be increased or decreased within
the limits above specified from time to time by amendment to the by-laws.
In furtherance and addition to, and not in limitation of the powers
converred on directors by statute, the board of directors is expressly
authorized, without the necessary of shareholder action:
1. To manage the business and officers of this corporation to
appoint and remove all officers, agents, fiduciaries, employees, contractors,
counsel, auditors and others and fix their powers, duties anc compensation; and
to appoint a manager with general powers in the ordinary course of the business
of this corporation, to obligate this corporation, to buy, sell or otherwise
dispose of or encumber property and to prosecute, compromise and discharge its
claims.
2. To exercise all powers converred on this corporation, and not
expressly reserved to shareholders by statute and these Articles of
Incorporation and amendments thereto, and all powers necessary or proper to
carry out the purposes of this corporation.
3. To fill any vacancy on the board of directors occurring by reason
of an increase in the number of directors or otherwise and to fix the
compensation of directors, unless prohibited by statute.
4. To adopt, amend or repeal the by-laws of this corporation.
5. To create and issue warrants, options, conversion rights and
other rights with respect to capital stock or other securities of this
corporation.
6. To distribute assets of this corporation to the shareholders in
partial liquidation out of stated capital or capital surplus, in cash, property
or securities, if such distribution is otherwise lawful.
ARTICLE VI
The corporation shall indemnify, exonerate, reimburse or defend any
present or former director, officer, employee, affiliate, agent or contractor of
this corporation for expenses, claims, liabilities, indebtedness, penalties,
damage or injury incurred by or caused by them in such capacity
Page 3 - RESTATED ARTICLES OF INCORPORATION
<PAGE>
except for their own negligence, knowing unauthorized acts or defalcations not
ratified, confirmed or adopted or the benefit thereof received by this
corporation.
ARTICLE VII
No contract or other transaction between this corporation and any
other corporation or concern shall be invalid or voidable merely by reason of
the fact that one or more shareholders, directors or officers of this
corporation are interested in or are directors or officers of such other
corporation or concern. Any shareholders, director or officer of this
corporation may be a party to, interested in or profit from any contract or
transaction with this corporation, provided that the relationship, interest or
profit is disclosed to the board of directors of this corporation and the
contract or transaction is duly approved by action of a majority of the
directors present when such action is taken or consenting thereto (without
counting the vote of any directors so interested or related, if cast; provided
that such director may be counted for purposes of determine existence of a
quorum). No such shareholder, director or officer shall be disqualified from
acting as such nor be liable for any loss incurred under or by reason of such
transaction or contract merely by reason of such relationship or interest. Where
such director's vote is necessary to the entering of such transaction or
contract, the contract or transaction shall be voidable if it is unfair to this
corporation or its shareholders.
ARTICLE VIII
The Company shall recognize as valid any agreement among two or more
of its shareholders which has the effect of binding one or more of the parties
thereto, and their successors in interest who acquire such interest with notice
of the agreement, to vote for or acquiesce in the election of one or more
directors, or any other matter properly submitted to a vote of a voting trust,
proxy or pooling arrangement, or to an agreement restricting transfer of such
shares or granting options, rights of first refusal or buy-and-sell with respect
to such shares, provided that a copy of such agreement and
Page 4 - RESTATED ARTICLES OF INCORPORATION
<PAGE>
all amendments and modifications thereof shall be kept on file with the company.
No such agreement shall be effective to the extent that it violates any positive
law of the State of Oregon or the United States of America, nor shall it bind or
require any director or officer to act other than in conformity with his duties
under the laws of the State of Oregon.
ARTICLE IX
No securities of this corporation or certificates representing such
securities shall be transferred in violation of any law or of any restriction on
such transfer set forth in the Articles of Incorporation or amendments thereto,
the by-laws or any buy-and-sell, right of first refusal or other agreement
restricting such transfer which has been filed with the corporation, and, if
certificates have been issued, reference to which restrictions is made on the
certificates representing such securities. The corporation shall not be bound by
any restriction not so filed and noted. The corporation may rely in good faith
upon the opinion of its counsel as to such legal or contractual violation,
unless the issue has been finally determined by a court of competent
jurisdiction. The corporation and any party to any such agreement shall have the
right to have a restrictive legend imprinted upon any such certificates any any
certificates issued in replacement or exchange therefor or with respect thereto.
The date of the adoption of these Restated Articles of Incorporation
by the shareholders is March 18, 1968.
The stated capital of the corporation at said time was $3,000 and
shall not be altered upon recapitalization.
Thirty (30) shares of common stock were outstanding at said time,
which is the number of shares entitled to vote thereon.
Twenty (20) shares of common stock were voted in favor of the
resolution authorizing the restatement of the Articles of Incorporation, and ten
(10) shares were voted against same.
DUPLICATING SPECIALTIES, INC.
By /s/ [ILLEGIBLE]
--------------------------------
President
/s/ [ILLEGIBLE]
--------------------------------
Secretary
Page 5 - RESTATED ARTICLES
OF INCORPORATION
<PAGE>
STATE OF OREGON )
) ss
County of Multnomah )
I, [ILLEGIBLE], being first duly sworn, say that I am the president
of Duplicating Specialties, Inc., that I have read the foregoing Restated
Articles of Incorporation and that the statements therein contained are true.
/s/ [ILLEGIBLE]
--------------------------------
Subscribed and sworn to before me this 19th day of March, 1968.
/s/ [ILLEGIBLE]
--------------------------------
Notary Public for Oregon
My commission expires: 10/28/68
Page 6 - RESTATED ARTICLES OF INCORPORATION
<PAGE>
RESTATED
ARTICLES OF INCORPORATION
OF
DUPLICATING SPECIALTIES, INC.
The following are the Restated Articles of Incorporation of
Duplicating Specialities, Inc., an Oregon corporation, and these Restated
Articles of Incorporation supercede and take the place of the existing Articles
of Incorporation.
I.
The name of the corporation is Duplicating Specialities, Inc.
II.
The aggregate number of shares which the corporation shall have
authority to issue is 500 shares of common. The shares of common have unlimited
voting rights and are entitled to receive the net assets of the corporation. The
par value of the common is $100 per share.
III.
No director of the corporation shall be personally liable to the
corporation or its shareholders for monetary damages for conduct as a director;
provided that this Article III shall not eliminate the liability of a director
for any act or omission for which such elimination of liability is not permitted
under the Oregon Business Corporation Act. No amendment to the Oregon Business
Corporation Act that further limits the acts or omissions for which elimination
of liability is permitted shall affect the liability of a director for any act
or omission that occurs prior to the effective date of such amendment.
IV.
The corporation is authorized to purchase shares of common from
present and former employees, consultants and directors pursuant to the
arrangements approved by the Board of Directors when applying the provisions of
the Oregon Business Corporation Act to determine the lawfulness of any such
purchase.
PAGE 1 - RESTATED ARTICLES OF INCORPORATION
<PAGE>
V.
A. Indemnification. The corporation shall indemnify to the fullest
---------------
extent not prohibited by law any Person who was or is a party or is threatened
to be made a party to any Proceeding against all expenses (including attorneys'
fees), judgments, fines, and amounts paid in settlement actually and reasonably
incurred by the Person in connection with such Proceeding. Notwithstanding the
foregoing, the corporation shall not indemnify any Person from or on account of
acts or omissions of such Persons of a type for which liability could not be
eliminated for a director under ORS 60.047(2)(d).
B. Advancement of Expenses. Expenses incurred by a Person in
-----------------------
defending a Proceeding shall in all cases be paid by the corporation in advance
of the final disposition of such Proceeding at the written request of such
Person, if the Person;
1. furnishes the corporation a written affirmation of the
Person's good faith belief that such Person has met the standard of conduct
described in the Oregon Business Corporation Act or is entitled to be
indemnified by the corporation under any other indemnification rights granted by
the corporation to such Person; and
2. furnishes the corporation a written undertaking to repay
such advance to the extent it is ultimately determined by a court that such
Person is not entitled to be indemnified by the corporation under this Article
or under any other indemnification rights granted by the corporation to such
Person.
Such advances shall be made without regard to the Person's
ability to repay such advances and without regard to the Person's ultimate
entitlement to indemnification under this Article or otherwise.
C. Definition of "Proceeding" and "Person". The term "Proceeding"
--------------------------------------
means any threatened, pending, or completed action, suit, or proceeding, whether
brought in the right of the corporation or otherwise and whether of a civil,
criminal, administrative, or investigative nature, in which an individual may be
or may have been involved as a party or otherwise by reason of the fact that the
individual is or was a director or officer of the corporation or a fiduciary
within the meaning of the Employee Retirement Income Security Act of 1974 with
respect to any employee benefit plan of the corporation, or is or was serving at
the request of the corporation as a director, officer, or fiduciary of an
employee benefit plan of another corporation, partnership, joint venture, trust,
or other enterprise, whether or not serving in such capacity at the time any
liability or expense is incurred for which indemnification or advancement of
expenses can be provided under this Article. The term "Person" means any
individual serving in a capacity described in this Paragraph.
D. Non-Exclusivity and Continuity of Rights. This Article: (i) shall
----------------------------------------
not be deemed exclusive of any other rights to which those indemnified may be
entitled under any statute, agreement, general or specific action of the board
of directors, vote of stockholders or otherwise, both as to action in the
official capacity of the Person indemnified and as to action in another capacity
while holding office, (ii) shall continue as to a Person who has ceased to be a
director or
PAGE 2 - RESTATED ARTICLES OR INCORPORATION
<PAGE>
officer, (iii) shall inure to the benefit of the heirs, executors, and
administrators of such Person, and (iv) shall extend to all claims for
indemnification or advancement of expenses made after the adoption of this
Article.
E. Amendments. Any repeal of this Article shall only be prospective
----------
and no repeal or modification hereof shall adversely affect the rights under
this Article in effect at the time of the alleged occurrence of any action or
omission to act that is the cause of any Proceeding.
PAGE 3 - RESTATED ARTICLES OF INCORPORATION
<PAGE>
Exhibit 3.15b
RESTATED
BYLAWS
OF
DUPLICATING SPECIALTIES, INC.
ARTICLE I
OFFICES
1.1 Principal Office. The principal office of the corporation shall
be located at 15860 SW Upper Boones Ferry Road, Lake Oswego, Oregon. The
corporation may have such other offices as the Board of Directors may designate
or as the business of the corporation may from time to time require.
1.2 Registered Office. The registered office of the corporation
required by the Oregon Business Corporation Act to be maintained in the State of
Oregon may be, but need not be, identical with the principal office in the State
of Oregon, and the address of the registered office may be changed from time to
time by the Board of Directors.
ARTICLE II
SHAREHOLDERS
2.3 Annual Meeting. The annual meeting of the shareholders shall be
held on the second Wednesday of November of each year, unless a different date
and time are fixed by the Board of Directors and stated in the notice of the
meeting. The failure to hold an annual meeting at the time stated herein shall
not affect the validity of any corporate action.
2.4 Special Meetings. Special meetings of the shareholders may be
called by the President or by the Board of Directors and shall be called by the
President (or in the event of absence, incapacity, or refusal of the President,
by the Secretary or any other officer) at the request of the holders of not less
than one-tenth of all the outstanding shares of the corporation entitled to vote
at the meeting. The requesting shareholders shall sign, date, and deliver to the
Secretary a written demand describing the purpose or purposes for holding the
special meeting.
2.5 Place of Meetings. Meetings of the shareholders shall be held at
the principal business office of the corporation or at such other place, within
or without the State of Oregon, as may be determined by the Board of Directors.
2.6 Notice of Meetings. Written notice stating 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 shall be mailed to each shareholder
entitled to vote at the meeting at the shareholder's address
PAGE 1 - RESTATED BYLAWS
<PAGE>
shown in the corporation's current record of shareholders, with postage thereon
prepaid, not less than 10 nor more than 60 days before the date of the meeting.
2.7 Waiver of Notice. A shareholder may at any time waive any notice
required by law, the Articles of Incorporation, or these Bylaws. The waiver must
be in writing, be signed by the shareholder entitled to the notice, and be
delivered to the corporation for inclusion in the minutes for filing with the
corporate records. A shareholder's attendance at a meeting waives objection to
lack of notice or defective notice of the meeting, unless the shareholder at the
beginning of the meeting objects to holding the meeting or transacting business
at the meeting. The shareholder's attendance also waives objection to
consideration of a particular matter at the meeting that is not within the
purpose or purposes described in the meeting notice, unless the shareholder
objects to considering the matter when it is presented.
2.8 Record Date
(a) For the purpose of determining shareholders entitled to
notice of a shareholders' meeting, to demand a special meeting, or to vote or to
take any other action, the Board of Directors may fix a future date as the
record date for any such determination of shareholders, such date in any case to
be not more than 70 days before the meeting or action requiring a determination
of shareholders. The record date shall be the same for all voting groups.
(b) A determination of shareholders entitled to notice of or
to vote at a shareholders' meeting is effective for any adjournment of the
meeting unless the Board of Directors fixes a new record date, which it must do
if the meeting is adjourned to a date more than 120 days after the date fixed
for the original meeting.
(c) If a court orders a meeting adjourned to a date more than
120 days after the date fixed for the original meeting, it may provide that the
original record date continue in effect or it may fix a new record date.
2.9 Shareholders' List for Meeting. After the record date for a
shareholders' meeting is fixed by the Board of Directors, the Secretary of the
corporation shall prepare an alphabetical list of the names of all its
shareholders entitled to notice of the shareholders' meeting. The list must be
arranged by voting group and within each voting group by class or series of
shares and show the address of and number of shares held by each shareholder.
The shareholders' list must be available for inspection by any shareholder,
beginning two business days after notice of the meeting is given for which the
list was prepared and continuing through the meeting, at the corporation's
principal office or at a place identified in the meeting notice in the city
where the meeting will be held. The corporation shall make the shareholders'
list available at the meeting, and any shareholder or the shareholder's agent or
attorney is entitled to inspect the list at any time during the meeting or any
adjournment. Refusal or failure to prepare or make available the shareholders'
list does not affect the validity of action taken at the meeting.
2.10 Quorum; Adjournment. Shares entitled to vote as a separate
voting group may take action on a matter at a meeting only if a quorum of those
shares exists with respect to that matter. A majority of the votes entitled to
be cast on the matter by the voting group constitutes a
PAGE 2 - RESTATED BYLAWS
<PAGE>
quorum of that voting group for action in that matter. A majority of shares
represented at the meeting, although less than a quorum, may adjourn the meeting
from time to time to a different time and place without further notice to any
shareholder of any adjournment. At such adjourned meeting at which a quorum is
present, any business may be transacted that might have been transacted at the
meeting originally held. Once a share is represented for any purpose at a
meeting, it shall be deemed present for quorum purposes for the remainder of the
meeting and for any adjournment of that meeting, unless a new record date is set
for the adjourned meeting.
2.11 Voting Requirements; Action Without Meeting. Unless otherwise
provided in the Articles of Incorporation, each outstanding share entitled to
vote shall be entitled to one vote upon each matter submitted to a vote at a
meeting of shareholders. If a quorum exists, action on a matter, other than the
election of directors, is approved if the votes cast by the shares entitled to
vote favoring the action exceed the votes cast opposing the action, unless a
greater number of affirmative votes is required by law or the Articles of
Incorporation. If a quorum exists, directors are elected by a plurality of the
votes cast by the shares entitled to vote unless otherwise provided in the
Articles of Incorporation. No cumulative voting for directors shall be permitted
unless the Articles of Incorporation so provide. Action required or permitted by
law to be taken at a shareholders' meeting may be taken without a meeting if the
action is taken by all the shareholders entitled to vote on the action. The
action must be evidenced by one or more written consents describing the action
taken, signed by all the shareholders entitled to vote on the action and
delivered to the corporation for inclusion in the minutes for filing with the
corporate records. Action taken under this section is effective when the last
shareholder signs the consent, unless the consent specifies an earlier or later
effective date. If the law requires that notice of proposed action be given to
nonvoting shareholders and the action is to be taken by unanimous consent of the
voting shareholders, the corporation must give its nonvoting shareholders
written notice of the proposed action at least 10 days before the action is
taken. The notice must contain or be accompanied by the same material that,
under the Oregon Business Corporation Act, would have been required to be sent
to nonvoting shareholders in a notice of meeting at which the proposed action
would have been submitted to the shareholders for action.
2.12 Proxies.
(a) A shareholder may vote shares in person or by proxy by
signing an appointment, either personally or by the shareholder's
attorney-in-fact. An appointment of a proxy shall be effective when received by
the Secretary or other officer of the corporation authorized to tabulate votes.
An appointment is valid for 11 months unless a longer period is provided in the
appointment form. An appointment is revocable by the shareholder unless the
appointment form conspicuously states that it is irrevocable and the appointment
is coupled with an interest that has not been extinguished.
(b) The death or incapacity of a shareholder appointing a
proxy shall not affect the right of the corporation to accept the proxy's
authority unless notice of the death or incapacity is received by the Secretary
or other officer authorized to tabulate votes before the proxy exercises the
proxy's authority under the appointment.
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2.13 Corporation's Acceptance of Votes.
(a) If the name signed on a vote, consent, waiver, or proxy
appointment corresponds to the name of a shareholder, the corporation, if acting
in good faith, is entitled to accept the vote, consent, waiver, or proxy
appointment and give it effect as the act of the shareholder.
(b) If the name signed on a vote, consent, waiver, or proxy
appointment does not correspond to the name of a shareholder, the corporation,
if acting in good faith, is nevertheless entitled to accept the vote, consent,
waiver, or proxy appointment and give it effect as the act of the shareholder
if:
(i) The shareholder is an entity and the name signed
purports to be that of an officer or agent of the entity;
(ii) The name signed purports to be that of an
administrator, executor, guardian, or conservator representing the shareholder
and, if the corporation requests, evidence of fiduciary status acceptable to the
corporation has been presented with respect to the vote, consent, waiver, or
proxy appointment;
(iii) The name signed purports to be that of a receiver
or trustee in bankruptcy of the shareholder and, if the corporation requests,
evidence of this status acceptable to the corporation has been presented with
respect to the vote, consent, waiver, or proxy appointment;
(iv) The name signed purports to be that of a pledgee,
beneficial owner, or attorney-in-fact of the shareholder and, if the corporation
requests, evidence acceptable to the corporation of the signatory's authority to
sign for the shareholder has been presented with respect to the vote, consent,
waiver, or proxy appointment; or
(v) Two or more persons are the shareholder as
co-tenants or fiduciaries and the name signed purports to be the name of at
least one of the co-owners and the person signing appears to be acting on behalf
of all co-owners.
(c) The corporation is entitled to reject a vote, consent,
waiver, or proxy appointment if the Secretary or other officer or agent
authorized to tabulate votes, acting in good faith, has reasonable basis for
doubt about the validity of the signature on it or about the signatory's
authority to sign for the shareholder.
(d) The shares of the corporation are not entitled to vote if
they are owned, directly or indirectly, by another corporation, and the
corporation owns, directly or indirectly, a majority of the shares entitled to
vote for directors of the other corporation; provided, however, the corporation
may vote any shares, including the corporation's shares, held by it in a
fiduciary capacity.
(e) The corporation and its officer or agent who accepts or
rejects a vote, consent, waiver, or proxy appointment in good faith and in
accordance with the standards of this
PAGE 4 - RESTATED BYLAWS
<PAGE>
provision shall not be liable in damages to the shareholder for the consequences
of the acceptance or rejection. Corporate action based on the acceptance or
rejection of a vote, consent, waiver, or proxy appointment under this provision
is valid unless a court of competent jurisdiction determines otherwise.
ARTICLE III
BOARD OF DIRECTORS
3.14 Duties. All corporate powers shall be exercised by or under the
authority of the Board of Directors and the business and affairs of the
corporation shall be managed by or under the direction of the Board of
Directors.
3.15 Number, Election, and Qualification. The number of directors of
the corporation shall be a minimum of one and a maximum of ten, as determined
from time to time by the Board of Directors. The shareholders or Board of
Directors may change from time to time the number of directors. If the Articles
of Incorporation establish the number of directors, then, after shares are
issued, only the shareholders may change the number of directors. The directors
shall hold office until the next annual meeting of shareholders. Directors need
not be residents of the State of Oregon or shareholders of the corporation. The
number of directors may be increased or decreased from time to time by amendment
of the Bylaws, but no decrease shall have the effect of shortening the term of
any incumbent director.
3.16 Chairman of the Board of Directors. The directors may elect a
director to serve as Chairman of the Board of Directors to preside at all
meetings of the Board of Directors and to fulfill any other responsibilities
delegated by the Board of Directors.
3.17 Regular Meetings. A regular meeting of the Board of Directors
shall be held without other notice than this Section 3.4 immediately after, and
at the same place as, the annual meeting of shareholders. The Board of Directors
may provide, by resolution, the time and place, either within or without the
State of Oregon, for the holding of additional regular meetings without other
notice than the resolution.
3.18 Special Meetings. Special meetings of the Board of Directors
may be called by or at the request of the President or any director. The person
or persons authorized to call special meetings of the Board of Directors may fix
any place, either within or without the State of Oregon, as the place for
holding any special meeting of the Board of Directors called by them.
3.19 Notice. Notice of the date, time, and place of any special
meeting of the Board of Directors shall be given at least three days prior to
the meeting by any means provided by law. If mailed, notice shall be deemed to
be given upon deposit in the United States mail addressed to the director at the
director's business address, with postage thereon prepaid. If by telegram,
notice shall be deemed to be given when the telegram is delivered to the
telegraph company. Notice by all other means shall be deemed to be given when
received by the director or a person at the director's business or residential
address whom the person giving notice reasonably believes will deliver or report
the notice to the director within 24 hours. The attendance of a director at a
PAGE 5 - RESTATED BYLAWS
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meeting shall constitute a waiver of notice of such meeting, except where a
director attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of. any
regular or special meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting.
3.20 Waiver of Notice. A director may at any time waive any notice
required by law, the Articles of Incorporation, or these Bylaws. Unless a
director attends or participates in a meeting, a waiver must be in writing, must
be signed by the director entitled to notice, must specify the meeting for which
notice is waived, and must be filed with the minutes or corporate records.
3.21 Quorum. A majority of the number of directors fixed by Section
3.2 shall constitute a quorum for the transaction of business at any meeting of
the Board of Directors.
3.22 Manner of Acting.
(f) The act of the majority of the directors present at a
meeting at which a quorum is present shall be the act of the Board of Directors,
unless a different number is provided by law, the Articles of Incorporation, or
these Bylaws.
(g) Members of the Board of Directors may hold a board meeting
by conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other. Participation in
such a meeting shall constitute presence in person at the meeting.
(h) Any action that is required or permitted to be taken by
the directors at a meeting may be taken without a meeting if a consent in
writing setting forth the action so taken shall be signed by all of the
directors entitled to vote on the matter. The action shall be effective on the
date when the last signature is placed on the consent or at such earlier or
later time as is set forth therein. Such consent, which shall have the same
effect as a unanimous vote of the directors, shall be filed with the minutes of
the corporation.
3.23 Vacancies. Any vacancy, including a vacancy resulting from an
increase in the number of directors, occurring on the Board of Directors may be
filled by the shareholders, the Board of Directors, or the affirmative vote of a
majority of the remaining directors if less than a quorum of the Board of
Directors, or by a sole remaining director. If the vacant office is filled by
the shareholders and was held by a director elected by a voting group of
shareholders, then only the holders of shares of that voting group are entitled
to vote to fill the vacancy. Any directorship not so filled by the directors
shall be filled by election at an annual meeting or at a special meeting of
shareholders called for that purpose. A director elected to fill a vacancy shall
be elected to serve until the next annual meeting of shareholders and until a
successor shall be duly elected and qualified. A vacancy that will occur at a
specific later date, by reason of a resignation or otherwise, may be filled
before the vacancy occurs, and the new director shall take office when the
vacancy occurs.
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<PAGE>
3.24 Compensation. By resolution of the Board of Directors, the
directors may be paid their expenses, if any, of attendance at each meeting of
the Board of Directors and may be paid a fixed sum for attendance at each
meeting of the Board of Directors or a stated salary as director. No such
payment shall preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
3.25 Presumption of Assent. A director of the corporation who is
present at a meeting of the Board of Directors or a committee of the Board of
Directors shall be presumed to have assented to the action taken (a) unless the
director's dissent to the action is entered in the minutes of the meeting, (b)
unless a written dissent to the action is filed with the person acting as the
secretary of the meeting before the adjournment thereof or forwarded by
certified or registered mail to the Secretary of the corporation immediately
after the adjournment of the meeting or (c) unless the director objects at the
meeting to the holding of the meeting or transacting business at the meeting.
The right to dissent shall not apply to a director who voted in favor of the
action.
3.26 Director Conflict of Interest.
(a) A transaction in which a director of the corporation has a
direct or indirect interest shall be valid notwithstanding the director's
interest in the transaction if the material facts of the transaction and the
director's interest are disclosed or known to the Board of Directors or a
committee thereof and it authorizes, approves, or ratifies the transaction by a
vote or consent sufficient for the purpose without counting the votes or
consents of directors with a direct or indirect interest in the transaction; or
the material facts of the transaction and the director's interest are disclosed
or known to shareholders entitled to vote and they, voting as a single group,
authorize, approve, or ratify the transaction by a majority vote; or the
transaction is fair to the corporation.
(b) A conflict of interest transaction may be authorized,
approved, or ratified if it receives the affirmative vote of a majority of
directors on the Board of Directors or a committee thereof who have no direct or
indirect interest in the transaction. If a majority of such directors vote to
authorize, approve, or ratify the transaction, a quorum is present for the
purpose of taking action.
(c) A conflict of interest transaction may be authorized,
approved, or ratified by a majority vote of shareholders entitled to vote
thereon. Shares owned by or voted under the control of a director or an entity
controlled by a director who has a direct or indirect interest in the
transaction are entitled to vote with respect to a conflict of interest
transaction. A majority of the shares, whether or not present, that are entitled
to be counted in a vote on the transaction constitutes a quorum for the purpose
of authorizing, approving, or ratifying the transactions.
(d) A director has an indirect interest in a transaction if
(i) another entity in which the director has a material financial interest or in
which the director is a general partner is a party to the transaction or (ii)
another entity of which the director is a director, officer, or trustee is a
party to the transaction and the transaction is or should be considered by the
Board of Directors.
PAGE 7 - RESTATED BYLAWS
<PAGE>
3.27 Removal. The shareholders may remove one or more directors with
or without cause at a meeting called expressly for that purpose, unless the
Articles of Incorporation provide for removal for cause only. If a director is
elected by a voting group of shareholders, only those shareholders may
participate in the vote to remove the director.
3.28 Resignation. Any director may resign by delivering written
notice to the Board of Directors, its chairperson, or the corporation. Such
resignation shall be effective, unless the notice specifies a later effective
date, (a) on receipt, (b) five days after its deposit in the United States
mails, if mailed postpaid and correctly addressed, or (c) on the date shown on
the return receipt, if sent by registered or certified mail, return receipt
requested, and the receipt is signed by addressee. Once delivered, a notice of
resignation is irrevocable unless revocation is permitted by the Board of
Directors.
ARTICLE IV
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
4.1 Designation of Executive Committee. The Board of Directors may
designate two or more directors to constitute an executive committee. The
designation of an executive committee, and the delegation of authority to it,
shall not operate to relieve the Board of Directors, or any member thereof, of
any responsibility imposed by law. No member of the executive committee shall
continue to be a member thereof after ceasing to be a director of the
corporation. The Board of Directors shall have the power at any time to increase
or decrease the number of members of the executive committee, to fill vacancies
thereon, to change any member thereof, and to change the functions or terminate
the existence thereof. The creation of the executive committee and the
appointment of members to it shall be approved by a majority of the directors in
office when the action is taken, unless a greater number is required by the
Articles of Incorporation or these Bylaws.
4.2 Powers of Executive Committee. During the interval between
meetings of the Board of Directors, and subject to such limitations as may be
imposed by resolution of the Board of Directors, the executive committee may
have and may exercise all the authority of the Board of Directors in the
management of the corporation, provided that the committee shall not have the
authority of the Board of Directors with respect to the following matters:
authorizing distributions; approving or proposing to the shareholders actions
that are required to be approved by the shareholders under the Articles of
Incorporation or these Bylaws or by law; filling vacancies on the Board of
Directors or any committee thereof; amending the Articles of Incorporation,
adopting, amending, or repealing bylaws; approving a plan of merger not
requiring shareholder approval; authorizing or approving a reacquisition of
shares, except according to a formula or method prescribed by the Board of
Directors; authorizing or approving the issuance or sale or contract for sale of
shares or determining the designation and relative rights, preferences, and
limitations of a class or series of shares except within limits specifically
prescribed by the Board of Directors.
PAGE 8 - RESTATED BYLAWS
<PAGE>
4.3 Procedures; Meetings; Quorum.
(a) The Board of Directors shall appoint a chairperson from
among the members of the executive committee and shall appoint a secretary who
may, but need not, be a member of the executive committee. The chairperson shall
preside at all meetings of the executive committee and the secretary of the
executive committee shall keep a record of its acts and proceedings, which shall
be filed with the minutes of the corporation.
(b) Regular meetings of the executive committee, of which no
notice shall be necessary, shall be held on such days and at such places as
shall be fixed by resolution adopted by the executive committee. Special
meetings of the executive committee shall be called at the request of the
President or of any member of the executive committee, and shall be held upon
such notice as is required by these Bylaws for special meetings of the Board of
Directors.
(c) Attendance of any member of the executive committee at a
meeting shall constitute a waiver of notice of the meeting. A majority of the
executive committee, from time to time, shall be necessary to constitute a
quorum for the transaction of any business, and the act of a majority of the
members present at a meeting at which a quorum is present shall be the act of
the executive committee. Members of the executive committee may hold a meeting
of such committee by conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other, and
participation in such meeting shall constitute presence in person at the
meeting.
(d) Any action that is required or permitted to be taken at a
meeting of the executive committee may be taken without a meeting if a consent
in writing setting forth the action so taken shall be signed by all members of
the executive committee entitled to vote on the matter. The action shall be
effective on the date when the last signature is placed on the consent or at
such earlier or later time as is set forth therein. Such consent, which shall
have the same effect as a unanimous vote of the members of the executive
committee, shall be filed with the minutes of the corporation.
(e) The Board of Directors may approve a reasonable fee for
the members of the executive committee as compensation for attendance at
meetings of the executive committee.
4.4 Other Committees. By the approval of a majority of the directors
when the action is taken (unless a greater number is required by the Articles of
Incorporation), the Board of Directors, by resolution, may create one or more
additional committees, appoint directors to serve on them, and define the duties
of such committee or committees. Each such committee shall have two or more
members, who shall serve at the pleasure of the Board of Directors. Such
additional committee or committees shall not have the powers proscribed in
Section 4.2.
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ARTICLE V
OFFICERS
5.1 Number. The officers of the corporation shall be a President and
a Secretary. Such other officers and assistant officers as are deemed necessary
or desirable may be appointed by the Board of Directors and shall have such
powers and duties prescribed by the Board of Directors or the officer authorized
by the Board of Directors to prescribe the duties of other officers. A duly
appointed officer may appoint one or more officers or assistant officers if such
appointment is authorized by the Board of Directors. Any two or more offices may
be held by the same person.
5.2 Appointment and Term of Office. The officers of the corporation
shall be appointed annually by the Board of Directors at the first meeting of
the Board of Directors held after the annual meeting of the shareholders. If the
officers shall not be appointed at the meeting, a meeting shall be held as soon
thereafter as is convenient for such appointment of officers. Each officer shall
hold office until a successor shall have been duly appointed and qualified or
until the officer's death, resignation, or removal.
5.3 Qualification. An officer need not be a director, shareholder,
or a resident of the State of Oregon.
5.4 Resignation and Removal. An officer may resign at any time by
delivering notice of such resignation to the corporation. A resignation is
effective on receipt unless the notice specifies a later effective date. If the
corporation accepts a specified later effective date, the Board of Directors may
fill the pending vacancy before the effective date, but the successor may not
take office until the effective date. Once delivered, a notice of resignation is
irrevocable unless revocation is permitted by the Board of Directors. Any
officer appointed by the Board of Directors may be removed at any time with or
without cause. Appointment of an officer shall not of itself create contract
rights. Removal or resignation of an officer shall not affect the contract
rights, if any, of the corporation or the officer.
5.5 Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification, or otherwise may be filled by the Board
of Directors for the unexpired portion of the term.
5.6 President The President shall be the chief executive officer of
the corporation and shall be in general charge of its business and affairs,
subject to the control of the Board of Directors. The President shall preside at
all meetings of shareholders and at all meetings of directors (unless there is
an acting Chairman of the Board presiding at the meeting). The President may
execute on behalf of the corporation all contracts, agreements, stock
certificates, and other instruments. The President shall from time to time
report to the Board of Directors all matters within the President's knowledge
affecting the corporation that should be brought to the attention of the Board
of Directors. The President shall vote all shares of stock in other corporations
owned by the corporation and is empowered to execute proxies, waivers of notice,
consents, and other
PAGE 10 - RESTATED BYLAWS
<PAGE>
instruments in the name of the corporation with respect to such stock. The
President shall perform other duties assigned by the Board of Directors.
5.7 Vice Presidents. In the absence of the President or in the event
of the President's death or inability or refusal to act, the Vice President (or,
in the event there be more than one Vice President, the Vice Presidents in the
order designated at the time of their election, or in the absence of any
designation, then in the order of their election), if any, shall perform the
duties of the President and, when so acting, shall have all the powers of and be
subject to all the restrictions upon the President. Any Vice President shall
perform other duties assigned by the President or by the Board of Directors.
5.8 Secretary. The Secretary shall prepare the minutes of all
meetings of the directors and shareholders, shall have custody of the minute
books and other records pertaining to the corporate business, and shall be
responsible for authenticating the records of the corporation. The Secretary
shall countersign all instruments requiring the seal of the corporation and
shall perform other duties assigned by the Board of Directors. In the event no
Vice President exists to succeed to the President under the circumstances set
forth in Section 5.7 above, the Secretary shall make such succession.
5.9 Assistant Secretaries. The Assistant Secretaries, when
authorized by the Board of Directors or the Bylaws, may sign, with the President
or Vice President, certificates for shares of the corporation the issuance of
which shall have been authorized by resolution of the Board of Directors. The
Assistant Secretaries shall, if required by the Board of Directors, give bonds
for the faithful discharge of their duties in such sums and with such sureties
as the Board of Directors shall determine. The Assistant Secretaries shall, in
general, perform such duties as shall be specifically assigned to them in
writing by the President or the Board of Directors.
5.10 Salaries. The salaries of the officers shall be fixed from time
to time by the Board of Directors, and no officer shall be prevented from
receiving such salary because the officer is also a director of the corporation.
ARTICLE VI
ISSUANCE OF SHARES
6.1 Certificates for Shares.
(a) Certificates representing shares of the corporation shall
be in a form determined by the Board of Directors. Such certificates shall be
signed, either manually or in facsimile, by two officers of the corporation, at
least one of whom shall be the President or a Vice President, and may be sealed
with the seal of the corporation or a facsimile thereof. All certificates for
shares shall be consecutively numbered or otherwise identified.
(b) Every certificate for shares of stock that are subject to
any restriction on transfer pursuant to the Articles of Incorporation, the
Bylaws, applicable securities laws, agreements among or between shareholders, or
any agreement to which the corporation is a party shall
PAGE 11 - RESTATED BYLAWS
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have conspicuously noted on the face or back of the certificate either (i) the
full text of the restriction or (ii) a statement of the existence of such
restriction and that the corporation retains a copy of the restriction. Every
certificate issued when the corporation is authorized to issue more than one
class or series of stock shall set forth on its face or back either (i) the full
text of the designations, relative rights, preferences, and limitations of the
shares of each class and series authorized to be issued and the authority of the
Board of Directors to determine variations for future series or (ii) a statement
of the existence of such designations, relative rights, preferences, and
limitations and a statement that the corporation will furnish a copy thereof to
the holder of such certificate upon written request and without charge.
(c) The name and mailing address of the person to whom the
shares represented thereby are issued, with the number of shares and date of
issue, shall be entered on the stock transfer books of the corporation. Each
shareholder shall have the duty to notify the corporation of his or her mailing
address. All certificates surrendered to the corporation for transfer shall be
canceled, and no new certificate shall be issued until the former certificate
for a like number of shares shall have been surrendered and canceled, except
that in case of a lost, destroyed, or mutilated certificate a new one may be
issued therefor upon such terms and indemnity to the corporation as the Board of
Directors prescribes.
6.2 Transfer of Shares. A transfer of shares of the corporation
shall be made only on the stock transfer books of the corporation by the holder
of record thereof or by the holder's legal representative, who shall furnish
proper evidence of authority to transfer, or by the holder's attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary of
the corporation. The person in whose name shares stand on the books of the
corporation shall be deemed by the corporation to be the owner thereof for all
purposes.
6.3 Transfer Agent and Registrar. The Board of Directors may from
time to time appoint one or more transfer agents and one or more registrars for
the shares of the corporation, with such powers and duties as the Board of
Directors determines by resolution. The signatures of officers upon a
certificate may be facsimiles if the certificate is manually signed on behalf of
a transfer agent or by a registrar other than the corporation itself or an
employee of the corporation.
6.4 Officer Ceasing to Act. If the person who signed a share
certificate, either manually or in facsimile, no longer holds office when the
certificate is issued, the certificate is nevertheless valid.
ARTICLE VII
CONTRACTS, LOANS, CHECKS, AND OTHER INSTRUMENTS
7.1 Contracts. The Board of Directors may authorize any officer or
officers and agent or agents to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances.
PAGE 12 - RESTATED BYLAWS
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7.2 Loans. No loans shall be contracted on behalf of the corporation
and no evidence of indebtedness shall be issued in its name unless authorized by
a resolution of the Board of Directors. Such authority may be general or
confined to specific instances.
7.3 Checks; Drafts. All checks, drafts, or other orders for the
payment of money and notes or other evidences of indebtedness issued in the name
of the corporation shall be signed by such officer or officers and agent or
agents of the corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors.
7.4 Deposits. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies, or other depositories as the Board of Directors may
select.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
8.5 Seal. The Board of Directors from time to time may provide for a
seal of the corporation, which shall be circular in form and shall have
inscribed thereon the name of the corporation, the state of incorporation and
the words "Corporate Seal."
8.6 Severability. Any determination that any provision of these
Bylaws is for any reason inapplicable, invalid, illegal, or otherwise
ineffective shall not affect or invalidate any other provision of these Bylaws.
ARTICLE I
AMENDMENTS
These Bylaws may be altered, amended, or repealed and new bylaws may
be adopted by the Board of Directors at any regular or special meeting, subject
to repeal or change by action of the shareholders of the corporation.
/s/ Dean Groves, Secy.
--------------------------------
Dean Groves, Secretary
ADOPTED: September 25, 1997.
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Amendment to By Laws dated November 11, 1997
WHEREAS, the Corporation is the owner, directly or indirectly, of
all of the outstanding capital stock of each of Copy Service and Supply, Inc., a
North Carolina corporation, Office Furniture Concepts, Inc., a North Carolina
corporation, Felco Office Systems, Inc., a Texas corporation, American Photocopy
Equipment Company of Pittsburgh, Inc., a Delaware corporation, Berney, Inc., an
Alabama corporation, Southern Copy Systems, Inc., an Alabama corporation, Conway
Office Products, Inc., a New Hampshire corporation, Business Equipment
Unlimited, Inc., a Maine corporation, Cameron Office Products, Inc., a
Massachusetts corporation, Electronic Systems, Inc., a Virginia corporation,
Southern Business Communications, Inc., a Georgia corporation, Quality Business
Systems, Inc., a Washington corporation, and Duplicating Specialties, Inc., an
Oregon corporation; and
WHEREAS, the Board of Directors of the Corporation hereby deem it to
be in the best interests of the Corporation that the Corporation, as the sole
stockholder or the parent of the sole stockholder of each of the Subsidiaries,
hereby amends each of the Subsidiaries' bylaws in order to provide more
efficient and modern means for conducting the business of meetings for such
Subsidiaries' stockholders and boards of directors; NOW, THEREFORE, BE IT
RESOLVED, that the Corporation, as the sole stockholder of each of
the Subsidiaries, hereby elects by written consent of sole stockholder to amend
the Bylaws of each of the Subsidiaries to provide that any authorized person may
call a meeting of the Board of Directors of such company upon 24 hours written
notice (which notice may be given by facsimile transmission);
FURTHER RESOLVED, that the Corporation, as the sole stockholder of
each of the Subsidiaries, hereby elects by written consent of sole stockholder
to amend the Bylaws of each of the Subsidiaries to provide that any meeting of
the Board of Directors of such company may be held in person or by telephone;
FURTHER RESOLVED, that the Corporation, as the sole stockholder of
each of the Subsidiaries, hereby elects by written consent of sole stockholder
to amend the Bylaws of each of the Subsidiaries to provide that any action of
the stockholders of the Corporation may be taken by unanimous written consent
except as otherwise required by law to be held at a meeting of the stockholders
of such company; and
FURTHER RESOLVED, that the Corporation hereby ratifies all actions
previously taken by the officers of the Corporation in connection with the
amendments to its Subsidiaries' Bylaws to comply with all the requirements and
conditions in connection therewith, and all other actions taken incidental
thereto.
-1-
<PAGE>
Exhibit 3.16a
CERTIFICATE OF INCORPORATION
OF
EASTERN COPY PRODUCTS, INC.
Under Section 402 of the Business Corporation Law
The undersigned, for the purpose of forming a corporation pursuant
to Section 402 of the Business Corporation Law of the State of New York, does
hereby certify and set forth:
1. The name of the corporation is
EASTERN COPY PRODUCTS, INC.
2. The purpose for which this corporation is formed is as follows,
to wit:
To engage in any mercantile or trading business of any kind or
character whatever, within or without the state of New York,
buy and sell, as broker or agent or on its own account, at
wholesale and retail, import and export, acquire, own,
exchange, barter, transfer, contract, lease, encumber, prepare
for market, package, distribute, ship, install, service,
repair, alter, conduct, operate, and more particularly but
without limiting the generality of the foregoing, to carry on
in all its branches and to generally deal in copy product
machines, equipment and supplies.
3. The office of this corporation is to be located in:
City of Syracuse
County of Onondaga
State of New York
4. The aggregate number of shares which this corporation shall have
authority to issue is two hundred (200) shares of one class only, which shares
are without par value.
-1-
<PAGE>
5. The Secretary of State of the State of New York is hereby
designated the agent of this corporation upon whom process against this
corporation may be served. The post office address to which the Secretary of
State shall mail a copy of any process against this corporation served upon him
as agent of this corporation is:
2606 Erie Boulevard East
Syracuse, New York 13224
6. The corporation intends to establish the period beginning the 1st
day of January, 1976 and ending the 31st day of July, 1976 as its first fiscal
year for reporting the franchise tax on business corporations imposed by article
nine-a of the New York tax law.
IN WITNESS WHEREOF, the undersigned has executed, signed and
acknowledged this certificate of incorporation this 16th day of December, 1975.
/s/ Michael E. Kleinhans
-----------------------------------
Michael E. Kleinhans
116 Welsh Drive
Camillus, New York 13031
STATE OF NEW YORK )
COUNTY OF ONONDAGA )
On this 16th day of December, 1975 before me personally came MICHAEL
E. KLEINHANS to me known and known to me to be the person described in and who
executed the foregoing certificate of incorporation and he duly acknowledged to
me that he executed the same.
/s/ Barry R. Hill
-----------------------------------
BARRY R. HILL
Notary Public
[STAMP]
BARRY R. HILL
Notary Public, in the State of New York
No. [ILLEGIBLE]
[ILLEGIBLE]
My Commission Expires March 30, 1976
-2-
<PAGE>
F 0909000367
CERTIFICATE OF CHANGE OF THE
CERTIFICATE OF INCORPORATION OF
EASTERN COPY PRODUCTS, INC.
[STAMP] INFO [STAMP] INFO
Under Section 805-A of the Business Corporation Law
IT IS HEREBY CERTIFIED THAT:
(1) The name of the corporation is:
EASTERN COPY PRODUCTS, INC.
(2) The Certificate of Incorporation was filed by the Department of State
on the 23rd day of December, 1975.
(3) The Certificate of Incorporation is changed as follows:
Paragraph Five (5) of the Certificate of Incorporation is hereby amended
to reflect the following changes:
The Secretary of State is designated as agent of the Corporation upon whom
process against it may be served. The post office address to which the Secretary
of State shall mail a copy of any process against the Corporation served upon
him is:
c/o The Corporation
1224 West Genesee Street
Syracuse, NY 13204
(5) The change to the Certificate of Incorporation was authorized by a
vote of the Board of Directors, followed by a vote of the holders of a majority
of all outstanding shares entitled to vote thereon at a meeting of shareholders.
IN WITNESS - WHEREOF, this certificate has been subscribed this 10th day of July
1991 by the undersigned who affirm that the statements made herein are true
under the penalties of perjury.
/s/ Michael Kleinhans /s/ Judy Kleinhans
- -------------------------------- ----------------------------------
Michael Kleinhans, President Judy Kleinhans, Secretary
<PAGE>
F960119000001
CSC 45
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
EASTERN COPY PRODUCTS, INC.
UNDER SECTION 805 OF THE BUSINESS CORPORATION LAW
The undersigned, being the Secretary of Eastern Copy Products, Inc., does
hereby certify and set forth:
1. The name of the corporation is Eastern Copy Products, Inc.
2. The certificate of incorporation of Eastern Copy Products, Inc., was
filed by the Department of State on December 23, 1975.
3. The Certificate of Incorporation is to be amended so as to add the
following provision, relating to authorization of new shares:
Paragraph Six (6) is to be added as follows:
6. The unanimous consent of the shareholders of the
corporation required for the authorization of new shares or the
issuance of authorized by unissued shares.
4. The amendment to the certificate of incorporation was authorized by the
vote of the Board of Directors followed by the affirmative vote of the holders
of all outstanding shares entitled to vote thereon at a meeting of the
shareholders of said corporation duly called and held on the 12th day of
December, 1995.
IN WITNESS WHEREOF, the undersigned has executed and signed this
certificate this 12th day of December, 1995.
/s/ Michael Kleinhans
-------------------------------
MICHAEL KLEINHANS, PRESIDENT
/s/ Judy A. Kleinhans
-------------------------------
JUDY A. KLEINHANS, SECRETARY
<PAGE>
STATE OF NEW YORK )
COUNTY OF ONONDAGA) SS.:
JUDY A. KLEINHANS being first duly sworn deposes and says that she is the
Secretary of Eastern Copy Products, Inc., that she has read the foregoing
amendment to the certificate of incorporation and knows the contents thereof,
and that the statements therein contained are true.
/s/ Judy A. Kleinhans
-------------------------------
JUDY A. KLEINHANS, SECRETARY
Sworn to before me this
12th day of December, 1995.
/s/ Harold P. Goldberg
- -----------------------------
NOTARY PUBLIC
[STAMP]
HAROLD P GOLDBERG
NOTARY PUBLIC, State of New York
No 02004989686
Qualified in Onondaga County
Commission Expires 12/11/99
<PAGE>
Exhibit 3.16B
BY-LAWS
of
EASTERN COPY PRODUCTS, INC.
ARTICLE I - OFFICES
The principal office of the corporation shall be in the City of Syracuse
County of Onondaga State of New York. The corporation may also have offices at
such other places within or without the State of New York as the board may from
time to time determine or the business of the corporation may require.
ARTICLE II - SHAREHOLDERS
1. PLACE OF MEETINGS.
Meetings of shareholders shall be held at the principal office of the
corporation or at such place within or without the State of New York as the
board shall authorize.
2. ANNUAL MEETING.
The annual meeting of the shareholders shall be held on the 15th day of
July at 10:00 A. M. in each year if not a legal holiday, and, if a legal
holiday, then on the next business day following at the same hour, when the
shareholders shall elect a board and transact such other business as may
properly come before the meeting.
3. SPECIAL MEETINGS.
Special meetings of the shareholders may be called by the board or by the
president and shall be called by the president or the secretary at the request
in writing of a majority of the board or at the request in writing by
shareholders owning a majority in amount of the shares issued and outstanding.
Such request shall state the purpose or purposes of the proposed meeting.
Business transacted at a special meeting shall be confined to the purposes
stated in the notice.
4. FIXING RECORD DATE.
For the purpose of determining the shareholders entitled to notice of or
to vote at any meeting of shareholders or any adjournment thereof, or to express
consent to or dissent from any proposal without a meeting, or for the purpose of
determining shareholders entitled to receive payment of any dividend or the
allotment of any rights, or for the purpose of any other
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action, the board shall fix, in advance, a date as the record date for any such
determination of shareholders. Such date shall not be more than fifty nor less
than ten days before the date of such meeting, nor more than fifty days prior to
any other action. If no record date is fixed it shall be determined in
accordance with the provisions of law.
5. NOTICE OF MEETINGS OF SHAREHOLDERS.
Written notice of each meeting of shareholders shall state the purpose or
purposes for which the meeting is called, the place, date and hour of the
meeting and unless it is the annual meeting, shall indicate that it is being
issued by or at the direction of the person or persons calling the meeting.
Notice shall be given either personally or by mail to each shareholder entitled
to vote at such meeting, not less than ten nor more than fifty days before the
date of the meeting. If action is proposed to be taken that might entitle
shareholders to payment for their shares, the notice shall include a statement
of that purpose and to that effect. If mailed, the notice is given when
deposited in the United States mail, with postage thereon prepaid, directed to
the shareholder at his address as it appears on the record of shareholders, or,
if he shall have filed with the secretary a written request that notices to him
be mailed to some other address, then directed to him at such other address.
6. WAIVERS.
Notice of meeting need not be given to any shareholder who signs a waiver
of notice, in person or by proxy, whether before or after the meeting. The
attendance of any shareholder at a meeting, in person or by proxy, without
protesting prior to the conclusion of the meeting the lack of notice of such
meeting, shall constitute a waiver of notice by him.
7. QUORUM OF SHAREHOLDERS.
Unless the certificate of incorporation provides otherwise, the holders of
a majority of the shares entitled to vote thereat shall constitute a quorum at a
meeting of shareholders for the transaction of any business, provided that when
a specified item of business is required to be voted on by a class or classes,
the holders of a majority of the shares of such class or classes shall
constitute a quorum for the transaction of such specified item of business.
When a quorum is once present to organize a meeting, it is not broken by
the subsequent withdrawal of any shareholders.
The shareholders present may adjourn the meeting despite the absence of a
quorum.
By-Laws B
<PAGE>
8. PROXIES.
Every shareholder entitled to vote at a meeting of shareholders or to
express consent or dissent without a meeting may authorize another person or
persons to act for him by proxy.
Every proxy must be signed by the shareholder or his attorney-in-fact. No
proxy shall be valid after expiration of eleven months from the date thereof
unless otherwise provided in the proxy. Every proxy shall be revocable at the
pleasure of the shareholder executing it, except as otherwise provided by law.
9. QUALIFICATION OF VOTERS.
Every shareholder of record shall be entitled at every meeting of
shareholders to one vote for every share standing in his name on the record of
shareholders, unless otherwise provided in the certificate of incorporation.
10. VOTE OF SHAREHOLDERS.
Except as otherwise required by statute or by the certificate of
incorporation;
(a) directors shall be elected by a plurality of the votes cast at a
meeting of shareholders by the holders of shares entitled to vote in the
election;
(b) all other corporate action shall be authorized by a majority of the
votes cast.
11. WRITTEN CONSENT OF SHAREHOLDERS.
Any action that may be taken by vote may be taken without a meeting on
written consent, setting forth the action so taken, signed by the holders of all
the outstanding shares entitled to vote thereon or signed by such lesser number
of holders as may be provided for in the certificate of incorporation.
ARTICLE III - DIRECTORS
1. BOARD OF DIRECTORS.
Subject to any provision in the certificate of incorporation the business
of the corporation shall be managed by its board of directors, each of whom
shall be at least 21 years of age and need not be shareholders.
2. NUMBER OF DIRECTORS. (AMENDED)
The number of directors shall be three (3)
When all of the shares are owned by less than three shareholders, the number of
directors may be less than three but not less than the number of shareholders.
One of the three directors shall be appointed by Konica Business Machines USA,
Inc., in accordance with a certain contract between this corporation and this
entity.
By-Laws C
<PAGE>
3. ELECTION AND TERM OF DIRECTORS.
At each annual meeting of shareholders, the shareholders shall elect
directors to hold office until the next annual meeting. Each director shall hold
office until the expiration of the term for which he is elected and until his
successor has been elected and qualified, or until his prior resignation or
removal.
4. NEWLY CREATED DIRECTORSHIPS AND VACANCIES.
Newly created directorships resulting from an increase in the number of
directors and vacancies occurring in the board for any reason except the removal
of directors without cause may be filled by a vote of a majority of the
directors then in office, although less than a quorum exists, unless otherwise
provided in the certificate of incorporation. Vacancies occurring by reason of
the removal of directors without cause shall be filled by vote of the
shareholders unless otherwise provided in the certificate of incorporation. A
director elected to fill a vacancy caused by resignation, death or removal shall
be elected to hold office for the unexpired term of his predecessor.
5. REMOVAL OF DIRECTORS.
Any or all of the directors may be removed for cause by vote of the
shareholders or by action of the board. Directors may be removed without cause
only by vote of the shareholders.
6. RESIGNATION.
A director may resign at any time by giving written notice to the board,
the president or the secretary of the corporation. Unless otherwise specified in
the notice, the resignation shall take effect upon receipt thereof by the board
or such officer, and the acceptance of the resignation shall not be necessary to
make it effective.
7. QUORUM OF DIRECTORS.
Unless otherwise provided in the certificate of incorporation, a majority
of the entire board shall constitute a quorum for the transaction of business or
of any specified item of business.
8. ACTION OF THE BOARD.
Unless otherwise required by law, the vote of a majority of the directors
present at the time of the vote, if a quorum is present at such time, shall be
the act of the board. Each director present shall have one vote regardless of
the number of shares, if any, which he may hold.
By-Laws D
<PAGE>
9. PLACE AND TIME OF BOARD MEETINGS.
The board may hold its meetings at the office of the corporation or at
such other places, either within or without the State of New York, as it may
from time to time determine.
10. REGULAR ANNUAL MEETING.
A regular annual meeting of the board shall be held immediately following
the annual meeting of shareholders at the place of such annual meeting of
shareholders.
11. NOTICE OF MEETINGS OF THE BOARD, ADJOURNMENT.
(a) Regular meetings of the board may be held without notice at such time
and place as it shall from time to time determine. Special meetings of the board
shall be held upon notice to the directors and may be called by the president
upon three days notice to each director either personally or by mail or by wire;
special meetings shall be called by the president or by the secretary in a like
manner on written request of two directors. Notice of a meeting need not be
given to any director who submits a waiver of notice whether before or after the
meeting or who attends the meeting without protesting prior thereto or at its
commencement, the lack of notice to him.
(b) A majority of the directors present, whether or not a quorum is
present, may adjourn any meeting to another time and place. Notice of the
adjournment shall be given all directors who were absent at the time of the
adjournment and, unless such time and place are announced at the meeting, to the
other directors.
12. CHAIRMAN.
At all meetings of the board the president, or in his absence, a chairman
chosen by the board shall preside.
13. EXECUTIVE AND OTHER COMMITTEES.
The board, by resolution adopted by a majority of the entire board, may
designate from among its members an executive committee and other committees,
each consisting of three or more directors. Each such committee shall serve at
the pleasure of the board.
14. COMPENSATION.
No compensation shall be paid to directors, as such, for their services,
but by resolution of the board a fixed sum and expenses for actual attendance,
at each regular or special meeting of the board may be author-
By-Laws E
<PAGE>
ized. Nothing herein contained shall be construed to preclude any director from
serving the corporation in any other capacity and receiving compensation
therefor.
ARTICLE IV - OFFICERS
1. OFFICES, ELECTION, TERM.
(a) Unless otherwise provided for in the certificate of incorporation, the
board may elect or appoint a president, one or more vice-presidents, a secretary
and a treasurer, and such other officers as it may determine, who shall have
such duties, powers and functions as hereinafter provided.
(b) All officers shall be elected or appointed to hold office until the
meeting of the board following the annual meeting of shareholders.
(c) Each officer shall hold office for the term for which he is elected or
appointed and until his successor has been elected or appointed and qualified.
2. REMOVAL, RESIGNATION, SALARY, ETC.
(a) Any officer elected or appointed by the board may be removed by the
board with or without cause.
(b) In the event of the death, resignation or removal of an officer, the
board in its discretion may elect or appoint a successor to fill the unexpired
term.
(c) Any two or more offices may be held by the same person, except the
offices of president and secretary.
(d) The salaries of all officers shall be fixed by the board.
(e) The directors may require any officer to give security for the
faithful performance of his duties.
3. PRESIDENT.
The president shall be the chief executive officer of the corporation; he
shall preside at all meetings of the shareholders and of the board; he shall
have the management of the business of the corporation and shall see that all
orders and resolutions of the board are carried into effect.
4. VICE-PRESIDENTS.
During the absence or disability of the president, the vice-president, or
if there are more than one, the executive vice-president, shall have all
By-Laws F
<PAGE>
the powers and functions of the president. Each vice-president shall perform
such other duties as the board shall prescribe.
5. SECRETARY.
The secretary shall:
(a) attend all meetings of the board and of the shareholders;
(b) record all votes and minutes of all proceedings in a book to be kept
for that purpose;
(c) give or cause to be given notice of all meetings of shareholders and
of special meetings of the board;
(d) keep in safe custody the seal of the corporation and affix it to any
instrument when authorized by the board;
(e) when required, prepare or cause to be prepared and available at each
meeting of shareholders a certified list in alphabetical order of the names of
shareholders entitled to vote thereat, indicating the number of shares of each
respective class held by each;
(f) keep all the documents and records of the corporation as required by
law or otherwise in a proper and safe manner.
(g) perform such other duties as may be prescribed by the board.
6. ASSISTANT-SECRETARIES.
During the absence or disability of the secretary, the assistant-
secretary, or if there are more than one, the one so designated by the secretary
or by the board, shall have all the powers and functions of the secretary.
7. TREASURER.
The treasurer shall:
(a) have the custody of the corporate funds and securities;
(b) keep full and accurate accounts of receipts and disbursements in the
corporate books;
(c) deposit all money and other valuables in the name and to the credit of
the corporation in such depositaries as may be designated by the board;
(d) disburse the funds of the corporation as may be ordered or authorized
by the board and preserve proper vouchers for such disbursements;
(e) render to the president and board at the regular meetings of the
board, or whenever they require it, an account of all his transactions as
By-Laws G
<PAGE>
treasurer and of the financial condition of the corporation;
(f) render a full financial report at the annual meeting of the
shareholders if so requested;
(g) be furnished by all corporate officers and agents at his request, with
such reports and statements as he may require as to all financial transactions
of the corporation;
(h) perform such other duties as are given to him by these by-laws or as
from time to time are assigned to him by the board or the president.
8. ASSISTANT-TREASURER.
During the absence or disability of the treasurer, the
assistant-treasurer, or if there are more than one, the one so designated by the
secretary or by the board, shall have all the powers and functions of the
treasurer.
9. SURETIES AND BONDS.
In case the board shall so require, any officer or agent of the
corporation shall execute to the corporation a bond in such sum and with such
surety or sureties as the board may direct, conditioned upon the faithful
performance of his duties to the corporation and including responsibility for
negligence and for the accounting for all property, funds or securities of the
corporation which may come into his hands.
ARTICLE V - CERTIFICATES FOR SHARES
1. CERTIFICATES.
The shares of the corporation shall be represented by certificates. They
shall be numbered and entered in the books of the corporation as they are
issued. They shall exhibit the holder's name and the number of shares and shall
be signed by the president or a vice-president and the treasurer or the
secretary and shall bear the corporate seal.
2. LOST OR DESTROYED CERTIFICATES.
The board may direct a new certificate or certificates to be issued in
place of any certificate or certificates theretofore issued by the corporation,
alleged to have been lost or destroyed, upon the making of an affidavit of that
fact by the person claiming the certificate to be lost or destroyed. When
authorizing such issue of a new certificate or certificates, the board may, in
its discretion and as a condition precedent to the issuance thereof, require the
owner of such lost or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it shall
By-Laws H
<PAGE>
require and/or give the corporation a bond in such sum and with such surety or
sureties as it may direct as indemnity against any claim that may be made
against the corporation with respect to the certificate alleged to have been
lost or destroyed.
3. TRANSFERS OF SHARES.
(a) Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, and cancel the old certificate; every such transfer shall be entered on
the transfer book of the corporation which shall be kept at its principal
office. No transfer shall be made within ten days next preceding the annual
meeting of shareholders.
(b) The corporation shall be entitled to treat the holder of record of any
share as the holder in fact thereof and, accordingly, shall not be bound to
recognize any equitable or other claim to or interest in such share on the part
of any other person whether or not it shall have express or other notice
thereof, except as expressly provided by the laws of New York.
4. CLOSING TRANSFER BOOKS.
The board shall have the power to close the share transfer books of the
corporation for a period of not more than ten days during the thirty day period
immediately preceding (1) any shareholders' meeting, or (2) any date upon which
shareholders shall be called upon to or have a right to take action without a
meeting, or (3) any date fixed for the payment of a dividend or any other form
of distribution, and only those shareholders of record at the time the transfer
books are closed, shall be recognized as such for the purpose of (1) receiving
notice of or voting at such meeting, or (2) allowing them to take appropriate
action, or (3) entitling them to receive any dividend or other form of
distribution.
ARTICLE VI - DIVIDENDS
Subject to the provisions of the certificate of incorporation and to
applicable law, dividends on the outstanding shares of the corporation may be
declared in such amounts and at such time or times as the board may determine.
Before payment of any dividend, there may be set aside out of the net profits of
the corporation available for dividends such sum or sums as the board from time
to time in its absolute discretion deems proper as a reserve fund to meet
contingencies, or for equalizing dividends, or for repairing or maintaining any
property of the corporation, or for such other
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purpose as the board shall think conducive to the interests of the corporation,
and the board may modify or abolish any such reserve.
ARTICLE VII - CORPORATE SEAL
The seal of the corporation shall be circular in form and bear the name of
the corporation, the year of its organization and the words "Corporate Seal, New
York." The seal may be used by causing it to be impressed directly on the
instrument or writing to be sealed, or upon adhesive substance affixed thereto.
The seal on the certificates for shares or on any corporate obligation for the
payment of money may be a facsimile, engraved or printed.
ARTICLE VIII - EXECUTION OF INSTRUMENTS
All corporate instruments and documents shall be signed or counter-signed,
executed, verified or acknowledged by such officer or officers or other person
or persons as the board may from time to time designate.
ARTICLE IX - FISCAL YEAR
The fiscal year shall begin the first day of August in each year.
ARTICLE X - REFERENCES TO CERTIFICATE OF INCORPORATION
Reference to the certificate of incorporation in these by-laws shall
include all amendments thereto or changes thereof unless specifically excepted.
ARTICLE XI - BY-LAW CHANGES
AMENDMENT, REPEAL, ADOPTION, ELECTION OF DIRECTORS.
(a) Except as otherwise provided in the certificate of incorporation the
by-laws may be amended, repealed or adopted by vote of the holders of the shares
at the time entitled to vote in the election of any directors. By-laws may also
be amended, repealed or adopted by the board but any by-law adopted by the board
may be amended by the shareholders entitled to vote thereon as hereinabove
provided.
(b) If any by-law regulating an impending election of directors is
adopted, amended or repealed by the board, there shall be set forth in the
notice of the next meeting of shareholders for the election of directors the
by-law so adopted, amended or repealed, together with a concise statement of the
changes made.
By-Laws J
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Amendment to By Laws dated November 11, 1997
WHEREAS, the Corporation is the owner, directly or indirectly, of
all of the outstanding capital stock of each of Copy Service and Supply, Inc., a
North Carolina corporation, Office Furniture Concepts, Inc., a North Carolina
corporation, Felco Office Systems, Inc., a Texas corporation, American Photocopy
Equipment Company of Pittsburgh, Inc., a Delaware corporation, Berney, Inc., an
Alabama corporation, Southern Copy Systems, Inc., an Alabama corporation, Conway
Office Products, Inc., a New Hampshire corporation, Business Equipment
Unlimited, Inc., a Maine corporation, Cameron Office Products, Inc., a
Massachusetts corporation, Electronic Systems, Inc., a Virginia corporation,
Southern Business Communications, Inc., a Georgia corporation, Quality Business
Systems, Inc., a Washington corporation, and Duplicating Specialties, Inc., an
Oregon corporation; and
WHEREAS, the Board of Directors of the Corporation hereby deem it to
be in the best interests of the Corporation that the Corporation, as the sole
stockholder or the parent of the sole stockholder of each of the Subsidiaries,
hereby amends each of the Subsidiaries' bylaws in order to provide more
efficient and modern means for conducting the business of meetings for such
Subsidiaries' stockholders and boards of directors; NOW, THEREFORE, BE IT
RESOLVED, that the Corporation, as the sole stockholder of each of
the Subsidiaries, hereby elects by written consent of sole stockholder to amend
the Bylaws of each of the Subsidiaries to provide that any authorized person may
call a meeting of the Board of Directors of such company upon 24 hours written
notice (which notice may be given by facsimile transmission);
FURTHER RESOLVED, that the Corporation, as the sole stockholder of
each of the Subsidiaries, hereby elects by written consent of sole stockholder
to amend the Bylaws of each of the Subsidiaries to provide that any meeting of
the Board of Directors of such company may be held in person or by telephone;
FURTHER RESOLVED, that the Corporation, as the sole stockholder of
each of the Subsidiaries, hereby elects by written consent of sole stockholder
to amend the Bylaws of each of the Subsidiaries to provide that any action of
the stockholders of the Corporation may be taken by unanimous written consent
except as otherwise required by law to be held at a meeting of the stockholders
of such company; and
FURTHER RESOLVED, that the Corporation hereby ratifies all actions
previously taken by the officers of the Corporation in connection with the
amendments to its Subsidiaries' Bylaws to comply with all the requirements and
conditions in connection therewith, and all other actions taken incidental
thereto.
-1-
<PAGE>
EXHIBIT 3.17A
ARTICLES OF INCORPORATION
We hereby associate to form a stock corporation under the provisions of
Chapter 1 of Title 13.1 of the Code of Virginia and to that end, set forth the
following:
A. The name of the corporation is ELECTRONIC SYSTEMS, INC.
B. The purposes for which the corporation is organized are:
1. To own, operate and maintain a sales and service organization to
buy, sell, import, export, exchange, lease, trade, and generally deal in office
machinery of all types including, but not limited to, typewriters, dictating
machines, adding, addressing, billing, duplicating, tabulating, bookkeeping, and
accounting machines, computing machines, parts and supplies therefor and
appliances thereto, and all other articles incident or desirable in
connection therewith; also any and all other kinds of machinery and tools, parts
and supplies therefor, and appliances thereto, and to do and transact all
business, contracts and agreements of every kind and description, including the
right to sell, acquire, improve and lease real property, which may be necessary,
desirable or expedient in connection with the operation of such business. In
addition, the corporation shall have the power to engage in any lawful activity
not required to be stated in these Articles. These activities include, but are
not limited to, such activities and powers enumerated in S.S. 13.1-2.1, 13.1-3.1
and 13.1-4 of the Code of Virginia of 1950 as amended.
<PAGE>
- 2 -
2. To survey, subdivide, plot, grade, improve, pave and develop its
lands for the purpose of building, sale or otherwise, and to do and perform all
things needful and lawful for the development of same.
3. The enumeration of objects, special powers and purposes herein
shall not be deemed to exclude in any way or limit by inference any powers,
objects or purposes which by force of the laws of the Commonwealth of Virginia,
now or hereinafter in effect, or implied by any reasonable construction of the
law, and the expression of one thing shall not be deemed to exclude another,
although it be of like nature.
C. The aggregate number of shares which the corporation shall have
authority to issue is 5,000 and the par value shall be $10.00.
D. There shall be preemptive rights of a stockholder to acquire unissued
shares of the corporation's stock.
E. The initial registered office of the corporation is located in the city
of Norfolk, Virginia, and its post office address is #7 Koger Executive Center,
Norfolk, Virginia 23502. The name of its initial registered agent is William G.
Kamarek, who is a resident of Virginia and whose business address is the same as
the address of the initial registered office of the corporation.
F. The initial number of stockholders shall be one and the initial
director shall be one. The name and address of the initial director is:
<PAGE>
- 3 -
William G. Kamarek # 7 Koger Executive Center
Suite 116
Norfolk, Virginia 23502
The Incorporator and initial director being one and the same person, no
written notice by the incorporator to the director was necessary.
Given under my hand this 22nd day of August, 1980 in the city of Norfolk
Virginia
/s/ William G. Kamarek
------------------------------
William G. Kamarek
Incorporator
<PAGE>
EXHIBIT 3.17b
AMENDMENT TO THE
BYLAWS
OF
ELECTRONIC SYSTEMS, INC.
Effective Date: February 10, 1996
AMENDMENT - ARTICLE 11, Section 1
"The entire board of directors (hereinafter, "Board of Directors" or
"Board") shall consist of five (5) members, unless the shares of the
Corporation are owned by a lesser number of shareholders, in which
instance the number of directors shall equal at least the number of
shareholders."
BYLAWS
OF
ELECTRONIC SYSTEMS, INC.
ARTICLE I
SHAREHOLDERS' MEETINGS
Section 1. Annual Meeting. The annual meeting of the shareholders
for the election of directors and the transaction of such other business as may
properly come before it shall be held at the principal office of the Corporation
in the city of Norfolk, state of Virginia, or at such place within or without
the state of Virginia as shall be set forth in the notice of meeting. The
meeting shall be held on ________________ of each and every year, at 2:30 p.m.
The Secretary shall give personally or by mail, not less than 10 nor more than
50 days before the date of the meeting to each shareholder entitled to vote at
such meeting, written notice stating the place, date, and hour of the meeting.
If mailed, the notice shall be addressed to the shareholder at his address as it
appears on the record of shareholders of the Corporation unless he shall have
filed with the Secretary of the Corporation a written request that notices
intended for him are to be mailed to a different address, in which case it shall
be mailed to the address designated in the request. Any notice of meetings may
be waived by a shareholder by submitting a signed waiver either before or after
the meeting, or by attendance at the meeting.
Section 2. Special Meeting. Special meetings of shareholders, other
than those regulated by statute, may be called at any time by a majority of the
directors or the President, and must be called by the President upon written
request of the holders of 10% of the outstanding shares entitled to vote at such
special meeting. Written notice of such meetings, stating the place within or
without the state of Virginia, the date and hour of the meeting, the purpose or
purposes for which it is called, and the name of the person by whom or at whose
direction the meeting is called, shall be given not less than 10 nor more than
50 days before the date set for the meeting. The notice shall be given to each
shareholder of record in the same manner as the notice of the annual meeting. No
business other than that specified in the notice of meeting shall be transacted
at any
<PAGE>
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such special meeting. Notice of special meeting may be waived by submitting a
signed waiver or by attendance at the meeting.
Section 3. Quorum. The presence, in person or by proxy, of the
holders of a majority of the outstanding shares entitled to vote thereat shall
be necessary to constitute a quorum for the transaction of business at all
meetings of shareholders. If, however, such quorum shall not be present or
represented at any meeting of the shareholders, the shareholders entitled to
vote thereat, present in person, or represented by proxy, shall have the power
to adjourn the meeting to a future date at which a quorum shall be present or
represented. At such adjourned meeting, any business may be transacted which
might have been transacted at the meeting as originally called.
Section 4. Record Date. The directors may fix in advance a date not
less than 10 nor more than 50 days, prior to the date of any meeting of the
shareholders or prior to the last day on which the consent or dissent of or
action by the shareholders may be effectively expressed for any purpose without
a meeting, as the record date for the determination of shareholders.
Section 5. Voting. A shareholder entitled to vote at a meeting may
vote at such meeting in person or by proxy. Except as otherwise provided by law
or the Articles of Incorporation, every shareholder shall be entitled to one
vote for each share standing in his name on the record of shareholders. Except
as herein or in the Articles of Incorporation otherwise provided, all corporate
action shall be determined by vote of a majority of the votes cast at a meeting
of shareholders by the holders of shares entitled to vote thereon.
Section 6. Proxies. Every proxy must be dated and signed by the
shareholder or by his attorney-in-fact. No proxy shall be valid after the
expiration of 11 months from the date of its execution, unless otherwise
provided therein. Every proxy shall be revocable at the pleasure of the
shareholder executing it, except where an irrevocable proxy is permitted by
statute.
Section 7. Consents. Whenever by a provision of statute or of the
Articles of Incorporation or by these Bylaws the vote of shareholders is
required or permitted to
<PAGE>
- 3 -
be taken at a meeting thereof in connection with any corporate action, the
meeting and the vote of shareholders who would have been entitled to vote upon
the action if such meeting were held shall consent in writing to such corporate
action's being taken.
ARTICLE II
DIRECTORS
Section 1. Number and Qualifications. The entire board of directors
(hereinafter, "Board of Directors" or "Board") shall consist of six members,
unless the shares of the Corporation are owned by a lesser number of
shareholders, in which instance the number of directors shall equal at least the
number of shareholders. Directors need not be shareholders of the Corporation.
The number of directors may be changed by an amendment to the Bylaws, adopted by
the shareholders.
Section 2. Manner of Election. The directors shall be elected at the
annual meeting of the shareholders by a plurality vote except as otherwise
prescribed by statute.
Section 3. Term of Office. The term of office of each director shall
be until the next annual meeting of the shareholders and until his successor has
been duly elected and has qualified.
Section 4. Duties and Powers. The Board of Directors shall have
control and management of the affairs and business of the Corporation. The
directors shall in all cases act as a Board, regularly convened, and, in the
transaction of business the act of a majority present at a meeting except as
otherwise provided by law or the Articles of Incorporation shall be the act of
the Board, provided a quorum is present. The directors may adopt such rules and
regulations for the conduct of their meetings and the management of the
Corporation as they may deem proper, not inconsistent with law or these Bylaws.
Section 5. Meetings. The Board of Directors shall meet for the
election or appointment of officers and for the transaction of any other
business as soon as practicable after the adjournment of the annual meeting of
the shareholders, and other regular meetings of the Board shall be held at such
times as the Board may from time to time determine.
<PAGE>
- 4 -
Special meetings of the Board of Directors may be called by the
President at any time; and he must, upon the written request of any two
directors, call a special meeting to be held not more than seven days after the
receipt of such request.
Section 6. Notice of Meetings. No notice need be given of any
regular meeting of the Board. Notice of special meetings shall be served upon
each director in person or by mail addressed to him at his last known post
office address, at least two days prior to the date of such meeting, specifying
the time and place of the meeting and the business to be transacted thereat. At
any meeting at which all of the directors shall be present, although held
without notice, any business may be transacted which might have been transacted
if the meeting had been duly called.
Section 7. Place of Meeting. The Board of Directors may hold its
meeting either within or without the state of Virginia, at such place as may be
designated in the notice of any such meeting.
Section 8. Quorum. At any meeting of the Board of Directors, the
presence of a majority of the Board shall be necessary to constitute a quorum
for the transaction of business. However, should a quorum not be present, a
lesser number may adjourn the meeting to some further time, not more than seven
days later.
Section 9. Voting. At all meetings of the Board of Directors, each
director shall have one vote irrespective of the number of shares that he may
hold.
Section 10. Compensation. Each director shall be entitled to receive
for attendance at each meeting of the Board or of any duly constituted committee
thereof which he attends such fee as is fixed by the Board.
Section 11. Vacancies. Any vacancy occurring in the Board of
Directors by death, resignation, or otherwise, shall be filled promptly by a
majority vote of the remaining directors at a special meeting which shall be
called for that purpose within 30 days after the occurrence of the vacancy. The
director thus chosen shall hold office for the unexpired term of his predecessor
and the election and qualification of his successor.
Section 12. Removal of Directors. Any director
<PAGE>
- 5 -
may be removed either with or without cause, at any time, by a vote of the
shareholders holding a majority of the shares then issued and outstanding and
who were entitled to vote for the election of the director sought to be removed,
at any special meeting called for that purpose, or at the annual meeting. Except
as otherwise prescribed by statute, a director may be removed for cause by vote
of a majority of the entire Board.
Section 13. Resignation. Any director may resign his office at any
time, such resignation to be made in writing and to take effect immediately
without acceptance.
ARTICLE III
OFFICERS
Section 1. Officers and Qualifications. The officers of the
Corporation shall be a President, one or more Vice Presidents, a Secretary, a
Treasurer, and such other officers as the Board of Directors may determine. Any
two offices, except the offices of President and Secretary, may be held by the
same person.
Section 2. Election. All officers of the Corporation shall be
elected annually by the Board of Directors at its meeting held immediately after
the annual meeting of shareholders.
Section 3. Term of Office. All officers shall hold office until
their successors have been duly elected and have qualified, or until removed as
hereinafter provided.
Section 4. Removal of Officers. Any officer may be removed either
with or without cause by the vote of a majority of the Board of Directors.
Section 5. Duties of Officers. The duties and powers of the officers
of the Corporation shall be as follows and as shall hereafter be set by
resolution of the Board of Directors:
PRESIDENT
A. The President shall preside at all
<PAGE>
- 6 -
meetings of the Board of Directors. He shall also preside at all meetings of the
shareholders.
B. He shall present at each annual meeting of the shareholders
and directors a report of the condition of the business of the Corporation.
C. He shall cause to be called regular and special meetings of
the shareholders and directors in accordance with the requirements of the
statute and of these Bylaws.
D. He shall appoint, discharge, and fix the compensation of
all employees and agents of the Corporation other than the duly elected
officers, subject to the approval of the Board of Directors.
E. He shall sign and execute all contracts in the name of the
Corporation, and all notes, drafts, or other orders for the payment of money.
F. He shall sign all certificates representing shares.
G. He shall cause all books, reports, statements, and
certificates to be properly kept and filed as required by law.
H. He shall enforce these Bylaws and perform all duties
incident to his office and which are required by law, and, generally, he shall
supervise and control the business and affairs of the Corporation.
VICE PRESIDENT
During the absence or incapacity of the President, the Vice
President in order of seniority of election shall perform the duties of the
President, and when so acting, he shall have all the powers and be subject to
all the responsibilities of the office of President and shall perform such
duties and functions as the Board may prescribe.
SECRETARY
A. The Secretary shall keep the minutes of
<PAGE>
- 7 -
the meetings of the Board of Directors and of the shareholders in appropriate
books.
B. He shall attend to the giving of notice of special meetings
of the Board of Directors and of all the meetings of the shareholders of the
Corporation.
C. He shall be custodian of the records and seal of the
Corporation and shall affix the seal to the certificates representing shares and
other corporate papers when required.
D. He shall keep a book or record containing the names of all
persons who are shareholders of the Corporation, showing their places of
residence, the number and class of shares held by them respectively, and the
dates when they respectively became the owners of record thereof. He shall keep
such book or record and the minutes of the proceedings of its shareholders open,
daily during the usual business hours, for inspection, within the limits
prescribed by law, by any person duly authorized to inspect such records. At the
request of the person entitled to an inspection thereof, he shall prepare and
make available a current list of the officers and directors of the Corporation
and their resident addresses.
E. He shall sign all certificates representing shares and
affix the corporate seal thereto.
F. He shall attend to all correspondence and present to the
Board of Directors at its meeting all official communications received by him.
G. He shall perform all the duties incident to the office of
Secretary of the Corporation.
TREASURER
A. The Treasurer shall have the care and custody of and be
responsible for all the funds and securities of the Corporation, and shall
deposit such funds and securities in the name of the Corporation in such banks
or safe deposit companies as the Board of Directors may designate.
B. He shall make, sign, and endorse in the
<PAGE>
- 8 -
name of the Corporation all checks, drafts, notes, and other orders for the
payment of money, and pay out and dispose of such under the direction of the
President or the Board of Directors.
C. He shall keep at the principal office of the Corporation
accurate books of account of all its business and transactions and shall at all
reasonable hours exhibit books and accounts to any director upon application at
the office of the Corporation during business hours.
D. He shall render a report of the condition of the finances
of the Corporation at each regular meeting of the Board of Directors and at such
other times as shall be required of him, and he shall make a full financial
report at the annual meeting of the shareholders.
E. He shall further perform all duties incident to the office
of Treasurer of the Corporation.
F. If required by the Board of Directors, he shall give such
bond as it shall determine appropriate for the faithful performance of his
duties.
OTHER OFFICERS
Other officers shall perform such duties and have such powers
as may be assigned to them by the Board of Directors.
Section 6. Vacancies. All vacancies in any office shall be filled
promptly by the Board of Directors, either at regular meetings or at a meeting
specially called for that purpose.
Section 7. Compensation of Officers. The officers shall receive such
salary or compensation as may be fixed by the Board of Directors.
Section 8. Reimbursement of Compensation of Officers. Any payments
made to an officer of the Corporation such as salary, commission, bonus,
interest, or rent, or entertainment expense incurred by him, which shall be
disallowed in whole or in part as a deductible expense by the Internal Revenue
Service, shall be reimbursed by such officer of the Corporation to the full
extent of such disallowance.
<PAGE>
- 9 -
It shall be the duty of the directors, as a Board, to enforce payment of each
amount disallowed. In lieu of payment by the officer, subject to the
determination of the directors, proportionate amounts may be withheld from his
future compensation payments until the amount owed to the Corporation has been
recovered.
ARTICLE IV
SEAL
Section 1. Seal. The seal of the Corporation shall be as follows:
ARTICLE V
SHARES
Section 1. Certificates. The shares of the Corporation shall be
represented by certificates prepared by the Board of Directors and signed by the
President and the Secretary, and sealed with the seal of the Corporation or a
facsimile. The certificates shall be numbered consecutively and in the order in
which they are issued, and a record shall be maintained of the name of the
person to whom the shares represented by each such certificate is issued, and
the number and class or series of such shares, and the date of issue. Each
certificate shall state the registered holder's name, the number and class of
shares represented thereby, the date of issue, the par value of such shares, or
that they are without par value.
<PAGE>
- 10 -
Section 2. Subscriptions. Subscriptions to the shares shall be paid
at such times and in such installments as the Board of Directors may determine.
If default shall be made in the payment of any installment as required by such
resolution, the Board may declare the shares and all previous payments thereon
forfeited for the use of the Corporation, in the manner prescribed by statute.
Section 3. Transfer of Shares. The shares of the Corporation shall
be assignable and transferable only on the books and records of the Corporation
and by the registered owner, or by his duly authorized attorney, upon surrender
of the certificate duly and properly endorsed with proper evidence of authority
to transfer. The Corporation shall issue a new certificate for the shares
surrendered to the person or persons entitled thereto.
Section 4. Return Certificates. All certificates for shares changed
or returned to the Corporation for transfer shall be marked by the Secretary
"Cancelled," with the date of cancellation, and the transaction shall be
immediately recorded in the certificate book opposite the memorandum of their
issue. The returned certificate may be inserted in the certificate book.
ARTICLE VI
DIVIDENDS
Section 1. Declaration of Dividends. The Board of Directors at any
regular or special meeting may declare dividends payable only out of the
unreserved and unrestricted earned surplus of the Corporation or out of capital
surplus of the Corporation, whenever in the exercise of its discretion it may
deem such declaration advisable. Such dividends may be paid in cash, property,
or shares of the Corporation.
ARTICLE VII
BILLS, NOTES, ETC.
Section 1. Execution. All bills payable, notes,
<PAGE>
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checks, drafts, warrants, or other negotiable instruments of the Corporation
shall be made in the name of the Corporation and shall be signed by such officer
or officers as the Board of Directors shall from time to time by resolution
direct.
No officer or agent of the Corporation, either singly or
jointly with others, shall have the power to make any bill payable, note, check,
draft, or warrant, or other negotiable instrument, or endorse the same in the
name of the Corporation, or contract or cause to be contracted any debt of
liability in the name and on behalf of the Corporation except as herein
expressly prescribed and provided.
ARTICLE VIII
OFFICES
The principal office of the Corporation shall be located in
the city of Virginia Beach, state of Virginia. The Board of Directors may change
the location of the principal office of the Corporation and may, from time to
time, designate other offices within or without the state as the business of the
Corporation may require.
ARTICLE IX
AMENDMENTS
Section 1. Manner of Amending. These Bylaws may be altered, amended,
repealed, or added to by the affirmative vote of the holders of a majority of
the shareholders entitled to vote in the election of any director at an annual
meeting or at a special meeting called for that purpose, provided that a written
notice shall have been sent to each shareholder of record entitled to vote at
such meeting at his last known post office address at least 10 days before the
date of such annual or special meeting, which notice shall state the
alterations, amendments, additions, or changes which are proposed to be made in
such Bylaws. Only such changes shall be made as have been specified in the
notice. The Bylaws may also be altered, amended, repealed, or new Bylaws adopted
by a majority of the entire Board of Directors at a regular or special meeting
of the Board. However, any Bylaws adopted by the Board may be altered, amended,
or repealed by the shareholders.
<PAGE>
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ARTICLE X
WAIVER OF NOTICE
Section 1. Authority to Waive Notice. Whenever under the provisions
of these Bylaws or of any statute any shareholder or director is entitled to
notice of any regular or special meeting or of any action to be taken by the
Corporation, such meeting may be held or such action may be taken without the
giving of such notice, provided every shareholder or director entitled to such
notice in writing waives the requirements of these Bylaws in respect thereto.
<PAGE>
Amendment to By Laws dated November 11, 1997
WHEREAS, the Corporation is the owner, directly or indirectly, of
all of the outstanding capital stock of each of Copy Service and Supply, Inc., a
North Carolina corporation, Office Furniture Concepts, Inc., a North Carolina
corporation, Felco Office Systems, Inc., a Texas corporation, American Photocopy
Equipment Company of Pittsburgh, Inc., a Delaware corporation, Berney, Inc., an
Alabama corporation, Southern Copy Systems, Inc., an Alabama corporation, Conway
Office Products, Inc., a New Hampshire corporation, Business Equipment
Unlimited, Inc., a Maine corporation, Cameron Office Products, Inc., a
Massachusetts corporation, Electronic Systems, Inc., a Virginia corporation,
Southern Business Communications, Inc., a Georgia corporation, Quality Business
Systems, Inc., a Washington corporation, and Duplicating Specialties, Inc., an
Oregon corporation; and
WHEREAS, the Board of Directors of the Corporation hereby deem it to
be in the best interests of the Corporation that the Corporation, as the sole
stockholder or the parent of the sole stockholder of each of the Subsidiaries,
hereby amends each of the Subsidiaries' bylaws in order to provide more
efficient and modern means for conducting the business of meetings for such
Subsidiaries' stockholders and boards of directors; NOW, THEREFORE, BE IT
RESOLVED, that the Corporation, as the sole stockholder of each of
the Subsidiaries, hereby elects by written consent of sole stockholder to amend
the Bylaws of each of the Subsidiaries to provide that any authorized person may
call a meeting of the Board of Directors of such company upon 24 hours written
notice (which notice may be given by facsimile transmission);
FURTHER RESOLVED, that the Corporation, as the sole stockholder of
each of the Subsidiaries, hereby elects by written consent of sole stockholder
to amend the Bylaws of each of the Subsidiaries to provide that any meeting of
the Board of Directors of such company may be held in person or by telephone;
FURTHER RESOLVED, that the Corporation, as the sole stockholder of
each of the Subsidiaries, hereby elects by written consent of sole stockholder
to amend the Bylaws of each of the Subsidiaries to provide that any action of
the stockholders of the Corporation may be taken by unanimous written consent
except as otherwise required by law to be held at a meeting of the stockholders
of such company; and
FURTHER RESOLVED, that the Corporation hereby ratifies all actions
previously taken by the officers of the Corporation in connection with the
amendments to its Subsidiaries' Bylaws to comply with all the requirements and
conditions in connection therewith, and all other actions taken incidental
thereto.
-1-
<PAGE>
AMENDMENT TO BYLAWS OF ELECTRONIC SYSTEMS, INC. BY CONSENT OF SOLE
SHAREHOLDER DATED DECEMBER 23, 1997.
RESOLVED, that in accordance with the Corporation's bylaws, effective as of
August 8, 1997, the first sentence of Article II, Section 1 of the Corporation's
Bylaws as amended is hereby amended and restated to read as follows:
Section 1: The entire board of directors (hereinafter, the "Board of
---------
Directors" or "Board") shall consist of not less than one (1) nor more than
seven (7) members.
<PAGE>
Exhibit 3.18a
ARTICLES OF INCORPORATION
OF
ELECTRONIC SYSTEMS OF RICHMOND, INC.
This is to certify that I the undersigned desire to and do hereby
establish a stock corporation under the provisions of Chapter I of Title 13.1 of
the Code of Virginia, and subject to the requirements of law for such cases made
and provided; and I, by these Articles of Incorporation, set forth as follows:
1. The name of the corporation is ELECTRONIC SYSTEMS OF RICHMOND,
INC.
2. The purposes for which the corporation is formed are as follows:
a. To engage in the purchasing, selling, distributing, or
leasing, as principal or agent, of all kinds of office machinery, equipment,
computers, word processing equipment, and electronic equipment of any kind, as
well as accessories and attachments therefor.
b. To carry on any other business not prohibited by law or
required to be stated herein.
c. Generally to do all other acts and engage in all other
activities which a corporation may lawfully do or do in connection with the
foregoing. The purposes specified herein shall be construed both as powers and
purposes. The purposes and powers specified in each of the clauses herein shall
be regarded as independent purposes and powers, and the enumeration of specific
purposes and powers shall not be construed to limit or restrict in any manner
the meaning of the general terms or of the general powers of the corporation,
nor shall the expression of one thing be deemed to exclude another, although it
be of a like nature not expressed.
3. The aggregate number of shares which the corporation shall have
authority to issue is Fifteen Hundred (1500) shares of common stock at a par
value of Ten Dollars ($10.00) each.
4. The post office address of the initial registered office of the
corporation is Suite 500, Pembroke Five Building, Pembroke Office Park, which is
located in the City of Virginia Beach, Virginia 23462. The name of its initial
registered agent is Michael A. Inman, who is a resident of Virginia and a member
of the Virginia State Bar and whose business address is the same as the address
of the initial registered office of the corporation.
5. The period for the duration of the corporation shall be
unlimited.
6. There shall be Two (2) Directors constituting the initial Board
of Directors, and their names and addresses are as follows:
NAMES ADDRESSES
----- ---------
William G. Kamarek 709 Suffolk Circle
Virginia Beach, VA 23452
<PAGE>
Timothy D. McCulloch 1503 Santa Rosa Road
Richmond, VA 23288
7. Stockholders shall have preemptive rights to acquire: (i)
unissued stock of the corporation, (ii) any warrants, rights or options to
purchase any such stock, or (iii) any securities or other obligations
convertible into any such stock or into warrants, rights or options to purchase
any such stock.
8. The corporation shall have the power to restrict the transfer of
shares of stock issued by way of restrictions on stock certificates requiring
that prior to offering stock for sale to any individual, the holder of the
certificate must offer the shares to the corporation or other stockholders.
9. Each person now or hereafter a director or officer of the
corporation (and his heirs, executors and administrators) shall be indemnified
by the corporation against all claims, liabilities, judgments, settlements,
costs and expenses, including all attorneys fees, imposed upon or reasonably
incurred by him in connection with or resulting from any action, suit,
proceeding or claim to which he is or may be made a party by reason of his being
or having been a director or officer of the corporation (whether or not a
director or officer at the time such costs or expenses are incurred by or
imposed upon him), except in relation to matters as to which he shall have been
finally adjudged in such action, suit or proceeding to be liable for gross
negligence or willful misconduct in the performance of his duties as such
director or officer. In the event of any other judgment against such director or
officer or in the event of a settlement, the indemnification shall be made only
if the corporation shall be advised, in case none of the persons involved shall
be or have been a director, by the Board of Directors of the corporation, and
otherwise by independent counsel to be appointed by the Board of Directors, that
in its or his opinion such director or officer was not guilty of gross
negligence or willful misconduct in the performance of his duty, and in the
event of a settlement, that such settlement was or is in the best interest of
the corporation. If the determination is to be made by the Board of Directors,
it may rely as to all questions of law on the advice of independent counsel.
Such right of indemnification shall not be deemed exclusive of any rights to
which he may be entitled under any by-law, agreement, vote of stockholders, or
otherwise.
10. In addition to the foregoing, the powers of the corporation
shall be those allowed under the law of Virginia including but not limited to
the following:
a. To borrow money, and to secure its obligations,
undertakings and commitments; to make and issue bonds, notes, debentures and
other evidences of indebtedness, secured or unsecured, and to buy or retire the
same.
<PAGE>
b. To enter into partnership agreements with other
corporations and individuals, and generally to do all things and engage in any
and all other businesses and activities permitted by law and directly or
indirectly related to the foregoing powers and purposes.
c. The corporation shall have the power to acquire by
purchase, exchange, or otherwise, all or any part of, or any interest in, the
properties, assets, businesses, and goodwill of any one or more persons, firms,
associations heretofore or hereafter engaged in any business for which a
corporation now or hereafter may be organized under the laws of this State; to
pay for the same in cash, property or its own or other securities; to hold,
operate, reorganize, liquidate, sell or in any manner dispose of the whole or
any part thereof.
d. The corporation shall have the power to enter into any
partnership as a limited or general partner, or both.
e. To exercise any and all further powers necessary as
incidental to the pursuit or accomplishment of the general purposes herein set
forth and which are or may hereafter be authorized by law.
Given under my hand this 18th day of January, 1983.
/s/ Michael A. Inman
-------------------------
MICHAEL A. INMAN
<PAGE>
Exhibit 3.18b
BY-LAWS
OF
ELECTRONIC SYSTEMS OF RICHMOND, INC.
Article I
The principal office of the corporation shall be located at Suite 116 #7
Koger Executive Center, Norfolk, Virginia.
Stockholders' Meeting
Section 1. Annual Meeting: The annual meeting of the stockholders of the
corporation shall be held on January 25 in each year. If that day is a legal
holiday, the annual meeting shall be held on the next succeeding day not a legal
holiday.
Section 2. Other Meetings: All meetings of the stockholders shall be held
at the times or places fixed by the Board of Directors. The time and place shall
be stated in the notice or waiver of notice of each meeting. Meetings of the
stockholders shall be held whenever called by the President or Secretary, by a
majority of the directors, or by stockholders holding at least one-fourth of the
number of shares of common stock entitled to vote then outstanding.
Section 3. Quorum and Voting: At any meeting of stockholders, a majority
of the outstanding shares of the corporation entitled to vote, represented in
person or by proxy, shall constitute a quorum at a meeting of stockholders. A
majority of votes cast at any meeting of stockholders, when a quorum is present
or represented thereat, shall be sufficient to elect and pass any measure,
unless the measure is one upon which by express provision of the statutes or of
the Articles of Incorporation or of these By-Laws, a different vote is required,
in which case such express provision shall govern and control the passage of
such measure.
Section 4. Closing Transfer Books and Record Date: The transfer books for
shares of common stock of the corporation may be closed by order of the Board of
Directors for a period not less than ten (10) days nor more than fifty (50) days
next preceding any stockholders' meeting for the purpose of determining
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or entitled to receive payment of any dividend or in
order to make a determination of stockholders for any other proper purposes. In
lieu of closing the stock transfer books, the Board of Directors may fix in
advance a date as the record date for any such determination of stockholders,
such date to be not more than fourteen (14) days preceding the date on which the
particular action requiring such determination of the stockholders is to be
taken. If the stock transfer books are not closed and no record date is set, the
date on which notice of a meeting is mailed or the date on which a resolution
declaring a dividend is adopted by the Board, as the case may be, shall be the
record date for the shareholder determination.
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Section 5. Conduct of Meetings: The President shall preside over all
meetings of the stockholders. If he is not present, then a Chairman shall be
elected by the meeting. The Secretary of the corporation shall act as Secretary
of all the meetings if he is present. If he is not present, the Chairman shall
appoint a Secretary of the meeting.
Section 6. Notice of Meeting: Written or printed notice stating the place,
day and hour of any meeting shall be given not less than ten (10) nor more than
fifty (50) days before the date of the meeting, either personally or by mail, by
or at the direction of the President, the Secretary, the Board of Directors, or
the persons calling the meeting, to each shareholder of record entitled to vote
at such meeting. If mailed, such notice shall be deemed to have been delivered
when deposited in the United States mail addressed to the shareholder at his
address as it appears on the stock transfer books of the corporation, with
postage thereon prepaid. Meetings may be held without notice if all the
stockholders are present or those not present waive notice before or after the
meeting.
Section 7. Voting Rights: At all meetings of shareholders, each
shareholder shall be entitled to one vote for each share of voting stock held by
him, which vote may be given personally or by written proxy, executed by him, or
by his duly authorized attorney-in-fact. Such proxy shall be filed with the
Secretary of the corporation before or at
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the time of the meeting. No proxy shall be valid after eleven months from the
date of its execution, unless otherwise provided in the proxy. No proxy shall be
valid after ten years from the date of its execution. The vote of a majority of
the shares voted on any matter at a meeting at which a quorum is present shall
be the act of the shareholders on that matter, unless the vote of a greater
number is required by law, the Charter, or by these By-Laws. Voting on all
matters shall be by voice vote unless the Chairman states otherwise.
Article II
Board of Directors
Section 1. Number, Election and Terms: The Board of Directors shall be
elected at the annual meeting of the stockholders or at any special meeting held
in lieu thereof. The number of the Directors shall be Two (2). The number may be
increased or decreased at any time by amendment of these By-Laws, but shall
always be a number not less than three, or not less than the number of
stockholders, whichever is the lesser. Directors need not be stockholders.
Directors shall hold office until removed or until the next annual meeting of
the stockholders or until their successors are elected. A majority of the
Directors actually elected and serving at the time of a given meeting shall
constitute a quorum. Less than a quorum may adjourn the meeting to a fixed time
and place, no further notice of any adjourned meeting being required.
Section 2. Removal and Vacancies: The stockholders at any meeting, by a
vote of the holders of a majority of all the shares of common stock at the time
outstanding and having voting power, may remove any Director and fill the
vacancy. Any vacancy arising among the Directors may be filled by the remaining
Directors unless sooner filled by the stockholders in meeting.
Section 3. Meetings and Notices: Meetings of the Board of Directors shall
be held at times fixed by resolution of the Board, or upon the call of the
President or Secretary, or upon the call of a majority of the members of the
Board. Notice of any meeting not held at a time fixed by a resolution of the
Board shall be given to each Director at learnt twenty-four hours before the
meeting at his residence or business address or by delivering such notice to him
or by telephoning or telegraphing it to him at least twenty-four hours before
the meeting. Any such notice shall contain the time and place of the meeting,
but need not contain the purpose of any meeting. Meetings may be held without
notice if all the Directors are present or those not present waive notice before
or after the meeting.
Section 4. Conduct of Meetings: The President shall be Chairman of the
Board and preside over all meetings of the Directors for a period to coincide
with the terms of office of the officers of the corporation. If the Chairman is
not present, then a substitute chairman shall be elected by the meeting. The
Secretary of the corporation shall act
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as secretary of all meetings of the Directors if he is present. If he is not
present, the Chairman shall appoint a secretary of the meeting.
Section 5. Quorum: A majority of the Board of Directors shall constitute a
quorum for the transaction of business.
Section 6. Voting: The act of the majority of the directors present at a
meeting at which a quorum is present shall be the act of the Board of Directors,
except as otherwise provided in the Charter, or by these By-Laws, or by law. No
director may vote by proxy.
Section 7. Presumption of Assent: A director who is present at a meeting
of the Board of Directors at which action on any corporate matter is taken shall
be presumed to have assented to the action taken unless his contrary vote is
recorded or his dissent shall be entered in the minutes of the meeting, or
unless he shall file his written dissent to such action with the person acting
as the Secretary of the meeting before the adjournment thereof, or shall forward
such dissent by registered mail to the Secretary of the corporation immediately
after the adjournment of the meeting. Such right to dissent shall not apply to a
director who voted in favor of such action.
Article III
Officers
Section 1. Election, Removal and Duties: The Board of Directors, promptly
after its election in each
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year, shall elect a President, Secretary and a Treasurer and may elect or
appoint one or more such other officers as it may deem proper. Any officer may
hold more than one office except that the same person shall not be President and
Secretary, unless there is only one stockholder. All officers shall serve for a
term of one year and until their respective successors are elected, but any
officer may be removed summarily without or with cause at any time by the vote
of a majority of all of the Directors. Vacancies among the officers shall be
filled by the Directors. The officers of the corporation shall have such duties
as from time to time may be delegated to them by the Board of Directors.
Section 2. Duties of the President: The President shall be the principal
executive officer of the corporation and, subject to the control of the
Directors, shall in general supervise and control all of the business and
affairs of the corporation. He shall, when present, preside at all meetings of
the stockholders and of the Directors. He may sign, with the Secretary or any
other proper officer of the corporation, any deeds, mortgages, bonds, contracts,
or other instruments which the Directors have authorized to be executed, except
in cases where the signing or the execution thereof shall be expressly delegated
by the Directors or by these By-Laws to some other officer or agent of the
corporation, or shall be required by law to be otherwise signed or executed, and
in general shall perform all duties incident to the office of President and such
other duties as may be prescribed by the Directors from time to time.
Section 3. Duties of the Vice-President: In the absence of the President
in event of his death, inability or refusal to act, the Vice-President shall
perform the duties of the President, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the President. The
Vice-President shall perform such other duties as from time to time may be
assigned to him by the President or by the Directors.
Section 4. Duties of the Secretary: The Secretary shall keep the minutes
of the Stockholders' and Directors' meetings in one or more books provided for
that purpose, see that all notices are duly given in accordance with the
provisions of these by-laws or as required, be custodian of the corporate
records and of the seal of the corporation and keep a register of the post
office address of each stockholder which shall be furnished to the Secretary by
such stockholder, have general charge of the stock transfer books of the
corporation and in general perform all duties incident to the office of
Secretary and such other duties as from time to time may be assigned to him by
the President or by the Directors.
Section 5. Duties of the Treasurer: If required by the Directors, the
Treasurer shall give a bond for the faithful discharge of his duties in such sum
and with such surety or sureties as the Directors shall determine. He
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shall have charge and custody of and be responsible for all funds and securities
of the corporation; receive and give receipts for monies due and payable to the
corporation from any source whatsoever, and deposit all such monies in the name
of the corporation in such banks, trust companies or other depositories as shall
be selected in accordance with these by-laws and in general perform all of the
duties incident to the office of Treasurer and such other duties as from time to
time may be assigned to him by the President or by the Directors.
Article IV
Certificates of Stock
Section 1. Form: Each stockholder may be entitled to a certificate or
certificates of stock in such form as may be approved by the Board of Directors
and which are signed by the President and Secretary and with the corporate seal
impressed thereon. In case any officer or officers who shall have signed any
such certificate or certificates shall cease to be such officer or officers of
the corporation, whether because of death, resignation, or otherwise, before any
certificate or certificates shall have been delivered by the corporation, such
certificate or certificates may nevertheless be issued and delivered as though
the person or persons who signed such certificate or certificates had not ceased
to be such officer or officers of the corporation.
Section 2. Transfers: Transfer of shares of the corporation shall be made
only (a) on the stock transfer books of the corporation by the holder of record
thereof or by his legal representative, who shall furnish proper evidence of
authority to transfer, or by his attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary of the corporation, and (b)
on surrender for cancellation of the certificate for such shares. The person in
whose name shares stand on the books of the corporation shall be deemed by the
corporation to be the owner thereof for all purposes.
Section 3. Replacements: In case of the loss, mutilation, or destruction
of a certificate of stock, a duplicate certificate may be issued upon such terms
not in conflict with laws as the Board of Directors may prescribe.
Section 4. Restriction of Transfer: No transfer of stock of the
corporation shall be made upon its books if such transfer is in violation of the
terms of any agreement restricting the transfer of such stock between any
stockholders of the corporation, or between the corporation and any stockholder
or stockholders of the corporation; provided, however, that a copy of such
agreement is on file with the corporation and such agreement is referred to on
the face or back of the certificate representing the stock so restricted.
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Article V
Seal
Section 1. Seal: The seal of the corporation shall be a flat-faced
circular die (of which there may be any number of counterparts) with the word
"SEAL" and the name of the corporation engraved thereon.
Article VI
Checks, Notes and Drafts
Section 1. Signatures: Checks, notes, drafts and other orders for the
payment of money shall be signed by such persons as the Board of Directors from
time to time may authorize.
Section 2. Borrowing: In furtherance and not in limitation of the powers
conferred by the laws of the State of Virginia, the Board of Directors of the
corporation is expressly authorized and empowered to adopt resolution or
resolutions to provide for the corporation's dealing with banks, financial
institutions and other lenders in the management and conduct of the
corporation's business affairs.
Article VII
Fiscal Year
Section 1. Fiscal Year: The fiscal year of the corporation shall end on
December 31 in each year.
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Article VIII
Amendments
Section 1. These By-Laws may be amended, repealed or altered in whole or
in part, by the directors at any regular meeting, or at any special meeting, or
by any other manner authorized by law.
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ELECTRONIC SYSTEMS OF RICHMOND, INC.
RESOLVED, that the bylaws of Electronic Systems of Richmond, Inc. are
hereby amended as follows:
Section 1 of Article II shall be amended by deleting the second and third
sentences of that paragraph and replacing them with the following: "The number
of directors shall be from one to ten in number, as determined by resolution of
either the stockholders or the board of directors."
-14-
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[NOTARIZED STAMP]
FILED
In the Office of the
Secretary of State of Texas
MAR 08 1995
Clerk D
Corporations Section
==================================
ARTICLES OF INCORPORATION OF
FELCO OFFICE SYSTEMS, INC. Exhibit 3.19A
==================================
ARTICLE ONE
The name of the Corporation is FELCO OFFICE SYSTEMS, INC.
ARTICLE TWO
The period of its duration is perpetual.
ARTICLE THREE
The purpose for which the Corporation is organized is the transaction of
any and all lawful business for which a corporation may be incorporated under
the Texas Business Corporation Act.
ARTICLE FOUR
The aggregate number of shares which the Corporation shall have authority
to issue is One Hundred Thousand (100,000). The shares shall have no par value.
ARTICLES OF INCORPORATION
FELCO OFFICE SYSTEMS, INC., PAGE 1
<PAGE>
ARTICLE FIVE
The Corporation will not commence business until it has received
consideration equal to or exceeding the value of $1,000.00, consisting of money,
labor done, or property actually received, for the issuance of its shares.
ARTICLE SIX
The street address of its initial Registered Office, and the name of its
initial Registered Agent at this address is as follows:
James R. Bass
9002 Wurzbach
San Antonio, Texas 78240
ARTICLE SEVEN
The number of initial Directors is one (1). The name and address of the
initial Director is:
Arthur C. Felcoff
18115 Ravenfield
Houston, Texas 77084
ARTICLE EIGHT
The name and address of the Incorporator is:
Inga Brown
712-A, East 26th Street
Austin, Texas 78705
ARTICLES OF INCORPORATION
FELCO OFFICE SYSTEMS, INC., PAGE 2
<PAGE>
IN WITNESS WHEREOF: I have hereunto set my hand this 8th day of
March, 1985.
/s/ Inga Brown
-------------------------------
Inga Brown, Incorporator
SUBSCRIBED, SWORN TO, AND ACKNOWLEDGED before me this the 8th day of
March, 1985, to which witness my hand and seal of office.
/s/ Marilyn C. Hershman
-------------------------------
Notary Public In and For
The State of Texas
My commission expires:
[NOTARY PUBLIC SEAL]
STATE OF TEXAS
ARTICLES OF INCORPORATION
FELCO OFFICE SYSTEMS, INC., PAGE 3
<PAGE>
[NOTARIZED STAMP]
FILED
In the Office of the
Secretary of State of Texas
NOV 13 1989
Corporations Section
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
Pursuant to the provisions of Article 4.04 of the [ILLEGIBLE] Business
Corporation Act, the undersigned Corporation adopts the following Articles of
Amendment to its Articles of Incorporation:
ARTICLE ONE
The name of the Corporation is FELCO OFFICE SYSTEMS, INC.
ARTICLE TWO
The following amendments to the Articles of Incorporation were adopted by
the shareholders of the Corporation on October 2, 1989.
1. This amendment alters or changes Article Four of the original Articles
of Incorporation and the full text of Article Four as it is amended is as
follows:
"The Corporation is authorized to issue two classes of shares to be
designated respectively "Preferred" and "Common". The total number of
shares which the Corporation is authorized to issue is TWO HUNDRED
THOUSAND (200,000) shares. The number of Preferred shares authorized is
ONE HUNDRED THOUSAND (100,000) shares, and the par value of each such
share is ONE HUNDRED FIFTY AND NO/l00 DOLLARS ($150.00). The number of
Common shares authorized is ONE HUNDRED THOUSAND (100,000) shares, and all
such shares are without par value."
2. This amendment is in addition to the original Articles of Incorporation
and the full text of Article Nine as it is added is as follows:
"The preferences, privileges, restrictions, and rights granted to or
imposed on the Preferred shares are as follows:
Dividends on Preferred Shares
9.01(1) The holders of the Preferred shares shall be entitled to receive
dividends, out of any funds legally available therefore, at the rate of
one percent (1%) per annum of the par value thereof payable in preference
and priority to any payment of any dividend on Common shares and payable
in cash annually on December 31, or otherwise, as the Board of Directors
may from time to time determine. The right to such dividends on Preferred
shares shall not be cumulative, and no right shall accrue to the holders
of such shares by reason of the Boards failure to pay or declare and set
apart dividends thereon for any given year as herein provided.
(2) After all dividends which have been declared have been paid, as
provided in Subparagraph 1 of this Paragraph, holders of the Common shares
shall be entitled to receive out of any funds of the Corporation legally
available for dividends, when and as declared by the Board of Directors,
at the rate of $15.00 per share per annum, or at such lesser rate as the
Board of Directors may determine, payable in cash annually on December
<PAGE>
31, or at such other intervals as the Board of Directors may from time to
time determine. The right of the holders of Common shares to receive such
dividends shall not be cumulative, and no rights shall accrue to such
holders should dividends on Common shares not be paid or declared and set
apart for payment in or for any year or years.
(3) After all dividends on the Preferred shares which have been declared
have been paid and the noncumulative dividends on the Common shares at the
rate of $15.00 per share, or at such lesser rate as the Board of Directors
may determine, shall have been paid or declared and set apart for payment
in any year, as herein provided, any further dividends declared by the
Board of Directors shall be made equally to all shares, Preferred and
Common. The dividends authorized by this Subparagraph 3 shall not be
cumulative and no rights shall accrue to the holders of either Preferred
or Common shares should such dividends not be paid or declared and set
apart for payment in any year or years.
Liquidation Preferences
9.02 On any voluntary or involuntary liquidation of the Corporation, the
holders of the Preferred shares shall receive an amount equal to the par
value of such shares plus any dividends declared and unpaid thereon, and
no more, before any amount shall be paid to the holders of the Common
shares. If the assets of the Corporation should be insufficient to permit
payment to the Preferred shareholders of their full preferential amounts
as herein provided, then such assets shall be distributed ratably among
the outstanding Preferred shares. Subject to such preferential rights, the
holders of the Common shares shall receive, ratably, all remaining assets
of the Corporation. A consolidation or merger of the Corporation with or
into any other Corporation, or a sale of all or substantially all of the
assets of the Corporation shall not be deemed a liquidation, dissolution,
or winding up of the Corporation within the meaning of this paragraph.
Redemption Clause
9.03(1) The Corporation, at the option of the Board of Directors, may at
any time redeem the whole, or from time to time redeem any part, of the
Preferred shares outstanding by paying in cash therefor the sum of $150.00
per share, plus all dividends declared but unpaid thereon as provided in
this Article to and including the date of redemption, hereinafter referred
to as the "redemptive price", and by giving to each Preferred shareholder
of record at his last known address, as shown on the records of the
Corporation, at least twenty, but not more than sixty days' prior written
notice either personally or by mail, postage prepaid, stating the class or
part of any class of shares to be redeemed and the date and plan of
redemption, the redemptive price, and the place where the shareholders may
obtain payment of the redemptive price on surrender of their respective
share certificates, hereinafter called the "redemption notice." Should
only a part of the outstanding Preferred shares be redeemed, such
redemption shall be effected by
<PAGE>
lot, or pro rata, as prescribed by the Board of Directors; provided,
however, that no Preferred shares shall be redeemed unless all dividends
declared on all outstanding Preferred shares shall have been paid. On or
after the date fixed for redemption, each holder of shares called for
redemption shall surrender his certificate for such shares of the
Corporation at the place designated in the redemption notice and shall
thereupon be entitled to receive payment of the redemptive price. Should
less than all the shares represented by any surrendered certificate be
redeemed, a new certificate for the unredeemed shares shall be issued. If
the redemption notice is duly given and if sufficient funds are available
therefor on the date fixed for redemption, then, whether or not the
certificates evidencing the shares to be redeemed are surrendered, all
rights with respect to such shares shall terminate on the date fixed for
redemption, except for the right of the shareholders to receive the
redemption price, without interest, on surrender of their certificate
therefor.
(2) If, on or prior to any date fixed for redemption of Preferred shares
as herein provided, the Corporation deposits with any bank or trust
company in Texas, or any bank or trust company in the United States duly
appointed and acting as transfer agent for the Corporation, as a trust
fund, a sum sufficient to redeem, on the date fixed for redemption
thereof, the shares called for redemption, with irrevocable instructions
and authority to the bank or trust company to give or complete the notice
of redemption thereof, and to pay, on or after the date fixed for
redemption, the redemptive price of the shares to their respective holders
on surrender of their share certificates, then from and after the date
fixed for redemption, the shares so called shall be deemed to be redeemed
and no dividends on those shares shall thereafter be declared. The deposit
shall be deemed to constitute full payment of the shares to their holders
and from and after the date of the deposit the shares shall be deemed to
be no longer outstanding, and the holders thereof shall cease to be
shareholders with respect to such shares and shall have no rights with
respect thereto, except the right to receive from the bank or trust
company payment of the redemptive price of the shares, without interest,
on surrender of their certificates therefor.
(3) Shares redeemed by the Corporation shall be restored to the status of
authorized but unissued shares of the Corporation.
Voting Rights
9.04 Except where otherwise provided by law, the holders of the Common
shares shall have the exclusive voting rights and powers, including the
exclusive right to notice of shareholders' meetings."
<PAGE>
ARTICLE THREE
The number of shares of the Corporation outstanding at the time of such
adoption was 1,000; and the number of shares entitled to vote thereon was 1,000.
ARTICLE FOUR
The holders of all of the shares outstanding and entitled to vote on said
amendments voted for the amendments.
Dated: October 2, 1989.
/s/ Arthur C. Felcoff
-------------------------------
Arthur C. Felcoff, President
<PAGE>
EXHIBIT B
Exhibit 3.19B
BY-LAWS
OF
FELCO OFFICE SYSTEMS, INC.
ARTICLE. I - OFFICES
1. REGISTERED OFFICE AND AGENT
The registered office of the corporation shall be maintained at 9002
Wurzbach, San Antonio, Texas 78240 in the State of Texas. The registered office
or the registered agent, or both, may be changed by resolution of the board of
directors, upon filing the statement required by law.
2. PRINCIPAL OFFICE
The principal office of the corporation shall be at 4778 Research Drive,
San Antonio, Texas provided that the board of directors shall have power to
change the location of the principal office in its discretion.
3. OTHER OFFICES
The corporation may also maintain other offices at such places within or
without the State of Texas as the board of directors may from time to time
appoint or as the business of the corporation may require.
ARTICLE II - SHAREHOLDERS
1. PLACE OF MEETING
All meetings of shareholders, both regular and special, shall be held
either at the registered office of the corporation in Texas or at such other
places, either within or without the state, as shall be designated in the notice
of the meeting.
2. ANNUAL MEETING
The annual meeting of shareholders for the election of directors and for
the transaction of all other business which may come before the meeting shall be
held on the 15th day
by-laws 1
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of March _______ in each year (if not a legal holiday and, if a legal holiday,
then on the next business day following) at the hour specified in the notice of
meeting.
If the election of directors shall not be held on the day above designated
for the annual meeting, the board of directors shall cause the election to be
held as soon thereafter as conveniently may be at a special meeting of the
shareholders called for the purpose of holding such election.
The annual meeting of shareholders may be held for any other purpose in
addition to the election of directors which may be specified in a notice of such
meeting. The meeting may be called by resolution of the board of directors or by
a writing filed with the secretary signed either by a majority of the directors
or by shareholders owning a majority in amount of the entire capital stock of
the corporation issued and outstanding and entitled to vote at any such
meeting.
3. NOTICE OF SHAREHOLDERS' MEETING
A written or printed notice stating the place, day and hour of the
meeting, and in case of a special meeting, the purpose or purposes for which the
meeting is called, shall be delivered not less than ten (10) nor more than fifty
(50) days before the date of the meeting, either personally or by mail, by or at
the direction of the president, secretary or the officer or person calling the
meeting, to each shareholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail addressed to the shareholder at his address as it appears on the
share transfer books of the corporation, with postage thereon prepaid.
4. VOTING OF SHARES
Each outstanding share, regardless of class, shall be entitled to one vote
on each matter submitted to a vote at a meeting of shareholders, except to the
extent that the voting rights of the shares of any class or classes are limited
or denied by the Articles of Incorporation or by law.
Treasury shares, shares of its own stock owned by another corporation the
majority of the voting stock of which is owned or controlled by this
corporation, and shares of its own stock held by this corporation in a fiduciary
capacity shall not be voted, directly or indirectly, at any meeting, and shall
not be counted in determining the total number of outstanding shares at any
given time.
A shareholder may vote either in person or by proxy executed in writing by
the shareholder or by his duly authorized attorney in-fact. No proxy shall be
valid after eleven (11) months from the date of its execution unless otherwise
provided in the proxy. Each proxy shall be revocable unless expressly provided
therein to be irrevocable, and in no event shall it remain irrevocable for a
period of more than eleven (11) months.
by-laws 2
<PAGE>
At each election for directors every shareholder entitled to vote at such
election shall have the right to vote, in person or by proxy, the number of
shares owned by him for as many persons as there are directors to be elected and
for whose election he has a right to vote, or unless prohibited by the articles
of incorporation, to cumulate his votes by giving one candidate as many votes as
the number of such directors multiplied by the number of his shares shall equal,
or by distributing such votes on the same principal among any number of such
candidates. Any shareholder who intends to cumulate his votes as herein
authorized shall give written notice of such intention to the secretary of the
corporation on or before the day preceding the election at which such
shareholder intends to cumulate his votes.
5. CLOSING TRANSFER BOOKS AND FIXING RECORD DATE
For the purpose of determining shareholders entitled to notice of or to
vote at any meeting of shareholders or any adjournment thereof, or entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the board of directors may provide
that the share transfer books shall be closed for a stated period not exceeding
fifty (50) days. If the stock transfer books shall be closed for the purpose of
determining shareholders entitled to notice of or to vote at a meeting of
shareholders, such books shall be closed for at least ten (10) days immediately
preceding such meeting. In lieu of closing the stock transfer books, the by-laws
or in the absence of an applicable by-law the board of directors, may fix in
advance a date as the record date for any such determination of shareholders,
not later than fifty (50) days and, in case of a meeting of shareholders, not
earlier than ten (10) days prior to the date on which the particular action,
requiring such determination of shareholders is to be taken. If the share
transfer books are not closed and no record date is fixed for the determination
of shareholders entitled to notice of or to vote at a meeting of shareholders,
or shareholders entitled to receive payment of a dividend, the date on which
notice of the meeting is mailed or the date on which the resolution of the board
of directors declaring such dividend is adopted, as the case may be, shall be
the record date for such determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof, except where the determination has been made through the closing of
share transfer books and the stated period of closing has expired.
6. QUORUM OF SHAREHOLDERS
Unless otherwise provided in the articles of incorporation, the holders of
a majority of the shares entitled to vote, represented in person or by proxy,
shall constitute a quorum at a meeting of shareholders, but in no event shall a
quorum consist of the holders of less than one-third (1/3) of the shares
entitled to vote and thus represented at such meeting. The vote of the holders
of a majority of the shares entitled to vote and thus represented at a meeting
at
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which a quorum is present shall be the act of the shareholders' meeting, unless
the vote of a greater number is required by law, the articles of incorporation
or the by-laws.
7. VOTING LISTS
The officer or agent having charge of the share transfer books for the
shares of the corporation shall make, at least ten (10) days before each meeting
of shareholders, a complete list of the shareholders entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical order, with the
address of and the number of shares held by each, which list, for a period of
ten (10) days prior to such meeting, shall be kept on file at the registered
office of the corporation and shall be subject to inspection by any shareholder
at any time during usual business hours. Such list shall also be produced and
kept open at the time and place of the meeting and shall be subject to the
inspection of any shareholder during the whole time of the meeting. The original
share transfer books shall be prima-facie evidence as to who are the
shareholders entitled to examine such list or transfer books or to vote at any
meeting of shareholders.
ARTICLE III - DIRECTORS
1. BOARD OF DIRECTORS
The business and affairs of the corporation shall be managed by a board of
directors. Directors need not be residents of the State of Texas or shareholders
in the corporation.
2. NUMBER AND ELECTION OF DIRECTORS
The number of directors shall be one provided that the number may be
increased or decreased from time to time by an amendment to these by-laws, but
no decrease shall have the effect of shortening the term of any incumbent
director. At each annual election the shareholders shall elect directors to hold
office until the next succeeding annual meeting.
3. VACANCIES
Any vacancy occurring in the board of directors may be filled by the
affirmative vote of the remaining directors, though less than a quorum of the
board. A director elected to fill a vacancy shall be elected for the unexpired
term of his predecessor in office. Any directorship to be filled by reason of an
increase in the number of directors shall be filled by election at an annual
meeting or at a special meeting of shareholders called for that purpose.
4. QUORUM OF DIRECTORS
A majority of the board of directors shall constitute a
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quorum for the transaction of business. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the board
of directors.
5. ANNUAL MEETING OF DIRECTORS
Within thirty days after each annual meeting of shareholders the board of
directors elected at such meeting shall hold an annual meeting at which they
shall elect officers and transact such other business as shall come before the
meeting.
6. REGULAR MEETING OF DIRECTORS
A regular meeting of the board of directors may be held at such time as
shall be determined from time to time by resolution of the board of directors.
7. SPECIAL MEETINGS OF DIRECTORS
The secretary shall call a special meeting of the board of directors
whenever requested to do so by the president or by two directors. Such special
meeting shall be held at the time specified in the notice of meeting.
8. PLACE OF DIRECTORS' MEETINGS
All meetings of the board of directors (annual, regular or special) shall
be held either at the principal office of the corporation or at such other
place, either within or without the State of Texas, as shall be specified in the
notice of meeting.
9. NOTICE OF DIRECTORS' MEETINGS
All meetings of the board of directors (annual, regular or special) shall
be held upon five (5) days' written notice stating the date, place and hour of
meeting delivered to each director either personally or by mail or at the
direction of the president or the secretary or the officer or person calling the
meeting.
In any case where all of the directors execute a waiver of notice of the
time and place of meeting, no notice thereof shall be required, and any such
meeting (whether annual, regular or special) shall be held at the time and at
the place (either within or without the State of Texas) specified in the waiver
of notice. Attendance of a director at any meeting shall constitute a waiver of
notice of such meeting, except where the directors attends a meeting for the
express purpose of objecting to the transaction of any business on the ground
that the meeting is not lawfully called or convened.
Neither the business to be transacted at, nor the purpose of, any annual,
regular or special meeting of the board of directors need be specified in the
notice or waiver of notice of such meeting.
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10. COMPENSATION
Directors, as such, shall not receive any stated salary for their
services, but by resolution of the board of directors a fixed sum and expenses
of attendance, if any, may be allowed for attendance at each annual, regular or
special meeting of the board, provided, that nothing herein contained shall be
construed to preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
ARTICLE IV - OFFICERS
1. OFFICERS ELECTION
The officers of the corporation shall consist of a president, one or more
vice-presidents, a secretary, and a treasurer. All such officers shall be
elected at the annual meeting of the board of directors provided for in Article
III, Section 5. If any office is not filled at such annual meeting, it may be
filled at any subsequent regular or special meeting of the board. The board of
directors at such annual meeting, or at any subsequent regular or special
meeting may also elect or appoint such other officers and assistant officers and
agents as may be deemed necessary. Any two or more offices may be held by the
same person, except the offices of president and secretary.
All officers and assistant officers shall be elected to serve until the
next annual meeting of directors (following the next annual meeting of
shareholders) or until their successors are elected; provided, that any officer
or assistant officer elected or appointed by the board of directors may be
removed with or without cause at any regular or special meeting of the board
whenever in the judgment of the board of directors the best interests of the
corporation will be served thereby, but such removal shall be without prejudice
to the contract rights, if any, of the person so removed. Any agent appointed
shall serve for such term, not longer than the next annual meeting of the board
of directors, as shall be specified, subject to like right of removal by the
board of directors.
2. VACANCIES
If any office becomes vacant for any reason, the vacancy may be filled by
the board of directors.
3. POWER OF OFFICERS
Each officer shall have, subject to these by-laws, in addition to the
duties and powers specifically set forth herein, such powers and duties as are
commonly incident to his office and such duties and powers as the board of
directors shall from time to time designate. All officers shall perform their
duties
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subject to the directions and under the supervision of the board of directors.
The president may secure the fidelity of any and all officers by bond or
otherwise.
4. PRESIDENT
The president shall be the chief executive officer of the corporation. He
shall preside at all meetings of the directors and shareholders. He shall see
that all orders and resolutions of the board are carried out, subject however,
to the right of the directors to delegate specific powers, except such as may be
by statute exclusively conferred on the president, to any other officers of the
corporation.
He or any vice-president shall execute bonds, mortgages and other
instruments requiring a seal, in the name of the corporation, and, when
authorized by the board, he or any vice-president may affix the seal to any
instrument requiring the same, and the seal when so affixed shall be attested by
the signature of either the secretary or an assistant secretary. He or any
vice-president shall sign certificates of stock.
The President shall be ex-officio a member of all standing committees.
He shall submit a report of the operations of the corporation for the year
to the directors at their meeting next preceding the annual meeting of the
shareholders and to the shareholders at their annual meeting.
5. VICE-PRESIDENTS
The vice-president shall, in the absence or disability of the president,
perform the duties and exercise the powers of the president, and they shall
perform such other duties as the board of directors shall prescribe.
6. THE SECRETARY AND ASSISTANT SECRETARIES
The secretary shall attend all meeting of the board and all meetings of
the shareholders and shall record all votes and the minutes of all proceedings
and shall perform like duties for the standing committees when required. He
shall give or cause to be given notice of all meetings of the shareholders and
all meetings of the board of directors and shall perform such other duties as
may be prescribed by the board. He shall keep in safe custody the seal of the
corporation, and when authorized by the board, affix the same to any instrument
requiring it, and when so affixed, it shall be attested by his signature or by
the signature of an assistant secretary.
The assistant secretary shall, in the absence or disability of the
secretary, perform the duties and exercise the powers of the secretary, and they
shall perform such other duties as the board of directors shall prescribe.
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In the absence of the secretary or an assistant Secretary, the minutes of
all meetings of the board and shareholders shall be recorded by such person as
shall be designated by the president or by the board of directors.
7. THE TREASURER AND ASSISTANT TREASURERS
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. He shall keep and maintain the corporation's books of account and
shall render to the president and directors an account of all of his
transactions as treasurer and of the financial condition of the corporation and
exhibit his books, records and accounts to the president or directors at any
time. He shall disburse funds for capital expenditures as authorized by the
board of directors and in accordance with the orders of the president, and
present to the president for his attention any requests for disbursing funds if
in the judgment of the treasurer any such request is not properly authorized. He
shall perform such other duties as may be directed by the board of directors or
by the president.
If required by the board of directors, he shall give the corporation a
bond in such sum and with such surety or sureties as shall be satisfactory to
the board for the faithful performance of the duties of his office and for the
restoration to the corporation, in case of his death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other property of
whatever kind in his possession or under his control belonging to the
corporation.
The assistant treasurers in the order of their seniority shall, in the
absence or disability of the treasurer, perform the duties and exercise the
powers of the treasurer, and they shall perform such other duties as the board
of directors shall prescribe.
ARTICLE V - CERTIFICATES OF STOCK: TRANSFER, ETC.
1. CERTIFICATES OF STOCK
The certificates for shares of stock of the corporation shall be numbered
and shall be entered in the corporation as they are issued. They shall exhibit
the holder's name and number of shares and shall be signed by the president or a
vice-president and the secretary or an assistant secretary and shall be sealed
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with the seal of the corporation or a facsimile thereof. If the corporation has
a transfer agent or a registrar, other than the corporation itself or an
employee of the corporation, the signatures of any such officer may be
facsimile. In case any officer or officers who shall have signed or whose
facsimile signature or signatures shall have been used on any such certificate
or certificates shall cease to be such officer or officers of the corporation,
whether because of death, resignation or otherwise, before said certificate or
certificates shall have been issued, such certificate may nevertheless be issued
by the corporation with the same effect as though the person or persons who
signed such certificates or whose facsimile signature or signatures shall have
been used thereon had been such officer or officers at the date of its issuance.
Certificates shall be in such form as shall in conformity to law be prescribed
from time to time by the board of directors.
The corporation may appoint from time to time transfer agents and
registrars, who shall perform their duties under the supervision of the
secretary.
2. TRANSFERS OF SHARES
Upon surrender to the corporation or the transfer agent of the corporation
of a certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate, and record the transaction upon its books.
3. REGISTERED SHAREHOLDERS
The corporation shall be entitled to treat the holder of record of any
share or shares of stock as the holder in fact thereof and, accordingly shall
not be bound to recognize any equitable or other claim to or interest in such
share on the part of any other person, whether or not it shall have express or
other notice thereof, except as otherwise provided by law.
4. LOST CERTIFICATE
The board of directors may direct a new certificate or certificates to be
issued in place of any certificate or certificates theretofore issued by the
corporation alleged to have been lost or destroyed, upon the making of an
affidavit of that fact by the person claiming the certificate to be lost. When
authorizing such issue of a new certificate or certificates, the board of
directors in its discretion and as a condition precedent to the issuance
thereof, may require the owner of such lost or destroyed certificate or
certificates or his legal representative to advertise the same in such manner as
it shall require or to give the corporation a bond with surety and in form
satisfactory to the corporation (which bond shall also name the corporation's
transfer agents and registrars, if any, as obligees) in such sum as it may
direct as indemnity against any claim that may be made against the corporation
or other obligees with respect to the certificate alleged to have been
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lost or destroyed, or to advertise and also give such bond.
ARTICLE VI - DIVIDEND
1. DECLARATION
The board of directors may declare at any annual, regular or special
meeting of the board and the corporation may pay, dividends on the outstanding
shares in cash, property or in the shares of the corporation to the extent
permitted by, and subject to the provisions of, the laws of the State of Texas.
2. RESERVES
Before payment of any dividend there may be set aside out of any funds of
the corporation available for dividends such sum or sums as the directors from
time to time in their absolute discretion think proper as a reserve fund to meet
contingencies or for equalizing dividends or for repairing or maintaining any
property of the corporation or for such other purpose as the directors shall
think conducive to the interest of the corporation, and the directors may
abolish any such reserve in the manner in which it was created.
ARTICLE VII - MISCELLANEOUS
1. INFORMAL ACTION
Any action required to be taken or which may be taken at a meeting of the
shareholders, directors or members of the executive committee, may be taken
without a meeting if a consent in writing setting forth the action so taken
shall be signed by all of the shareholders, directors, or members of the
executive committee, as the case may be, entitled to vote with respect to the
subject matter thereof, and such consent shall have the same force and effect as
a unanimous vote of the shareholders, directors, or members of the executive
committee, as the case may be, at a meeting of said body.
2. SEAL
The corporate seal shall be circular in form and shall contain the name of
the corporation, the year of its incorporation and the words "TEXAS," and
"CORPORATE SEAL" or an image of the Lone Star. The seal may be used by causing
it or a facsimile to be impressed or affixed or in any other manner reproduced.
The corporate seal may be altered by order of the board of directors at any
time.
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3. CHECKS
All checks or demands for money and notes of the corporation shall be
signed by such officer or officers or such other person or persons as the board
of directors may from time to time designate.
4. FISCAL YEAR
The fiscal year of the corporation shall begin on the ________ day of
________. in each and every year.
5. DIRECTORS' ANNUAL STATEMENT
The board of directors shall present at each annual meeting of
shareholders a full and clear statement of the business and condition of the
corporation.
6. CLOSE CORPORATIONS: MANAGEMENT BY SHAREHOLDERS
If the articles of incorporation of the corporation and each certificate
representing its issued and outstanding shares states that the business and
affairs of the corporation shall be managed by the shareholders of the
corporation rather than by a board of directors, then, whenever the context so
requires the shareholders of the corporation shall be deemed the directors of
the corporation for purposes of applying any provision of these by-laws.
7. AMENDMENTS
These by-laws may be altered, amended or repealed in whole or in part by
the affirmative vote of the holders of a majority of the shares outstanding and
entitled to vote, but such power may be delegated by the shareholders to the
board of directors.
by-laws 11
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Amendment to By Laws dated November 11, 1997
WHEREAS, the Corporation is the owner, directly or indirectly, of
all of the outstanding capital stock of each of Copy Service and Supply, Inc., a
North Carolina corporation, Office Furniture Concepts, Inc., a North Carolina
corporation, Felco Office Systems, Inc., a Texas corporation, American Photocopy
Equipment Company of Pittsburgh, Inc., a Delaware corporation, Berney, Inc., an
Alabama corporation, Southern Copy Systems, Inc., an Alabama corporation, Conway
Office Products, Inc., a New Hampshire corporation, Business Equipment
Unlimited, Inc., a Maine corporation, Cameron Office Products, Inc., a
Massachusetts corporation, Electronic Systems, Inc., a Virginia corporation,
Southern Business Communications, Inc., a Georgia corporation, Quality Business
Systems, Inc., a Washington corporation, and Duplicating Specialties, Inc., an
Oregon corporation; and
WHEREAS, the Board of Directors of the Corporation hereby deem it to
be in the best interests of the Corporation that the Corporation, as the sole
stockholder or the parent of the sole stockholder of each of the Subsidiaries,
hereby amends each of the Subsidiaries' bylaws in order to provide more
efficient and modern means for conducting the business of meetings for such
Subsidiaries' stockholders and boards of directors; NOW, THEREFORE, BE IT
RESOLVED, that the Corporation, as the sole stockholder of each of
the Subsidiaries, hereby elects by written consent of sole stockholder to amend
the Bylaws of each of the Subsidiaries to provide that any authorized person may
call a meeting of the Board of Directors of such company upon 24 hours written
notice (which notice may be given by facsimile transmission);
FURTHER RESOLVED, that the Corporation, as the sole stockholder of
each of the Subsidiaries, hereby elects by written consent of sole stockholder
to amend the Bylaws of each of the Subsidiaries to provide that any meeting of
the Board of Directors of such company may be held in person or by telephone;
FURTHER RESOLVED, that the Corporation, as the sole stockholder of
each of the Subsidiaries, hereby elects by written consent of sole stockholder
to amend the Bylaws of each of the Subsidiaries to provide that any action of
the stockholders of the Corporation may be taken by unanimous written consent
except as otherwise required by law to be held at a meeting of the stockholders
of such company; and
FURTHER RESOLVED, that the Corporation hereby ratifies all actions
previously taken by the officers of the Corporation in connection with the
amendments to its Subsidiaries' Bylaws to comply with all the requirements and
conditions in connection therewith, and all other actions taken incidental
thereto.
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<PAGE>
AMENDMENT TO THE BYLAWS OF CERTAIN SUBSIDIARIES
The Corporation, by and through the Board, acting by written consent as the
sole stockholder of Felco Office Systems, Inc. hereby amends the Bylaws of the
subsidiary as follows:
Felco Office Systems, Inc.
--------------------------
Paragraph 2 of Article III shall be amended by deleting the first sentence and
replacing it with the following: "The number of directors shall be from one to
ten in number, as determined by resolution of either the shareholders or the
board of directors."
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<PAGE>
Exhibit 3.20a
CERTIFICATE OF INCORPORATION
OF
GLOBAL IMAGING FINANCE COMPANY
ARTICLE I.
This corporation is being organized and will exist under Delaware law.
ARTICLE II.
The name of the corporation is Global Imaging Finance Company.
ARTICLE III.
The address of the corporation's registered office in the State of
Delaware is The Corporation Trust Center, 1209 Orange Street, City of
Wilmington, County of New Castle, Delaware 19801. The name of its registered
agent at such address is The Corporation Trust Company.
ARTICLE IV.
The nature of the business of the corporation and the purposes for which
it is organized are:
To engage in the pursuit of the financing of investments in the
copier/officer equipment dealer and/or service industry and any business
and in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware and to possess and employ
all powers and privileges now or hereafter granted or available under the
laws of the Stare of Delaware to such corporations.
ARTICLE V.
The total number of shares that the corporation shall have authority to
issue is 1,000 shares, all of which shall be common stock, each with a par value
of $.01.
<PAGE>
ARTICLE VI.
The name and mailing address of the incorporator is:
Christopher J. Hagan
1225 New York Avenue, Suite 1200
Washington, D.C. 20005-3919
ARTICLE VII.
The powers of the incorporator shall terminate upon the filing of this
certificate of incorporation in the office of the Secretary of State of the
State of Delaware. The names and mailing addresses of the persons who are to
serve as directors of the corporation until their successors are elected and
qualified or until their earlier resignations or removals are:
Name Mailing Address
---- ---------------
Thomas S. Johnson 14499 Marbury Road, Suite 280
Tampa, Florida 33618
Carl D. Thoma 6100 Sears Tower
Chicago, Illinois 60606
William Kessinger 6100 Sears Tower
Chicago, Illinois 60606
ARTICLE VIII.
A. The number of director. of the corporation shall be fixed from time to
time in the manner provided in the bylaws and may be increased or decreased from
time to time in the manner provided in the bylaws.
B. Election of directors need not be by written ballot except and to the
extent provided in the bylaws of the corporation.
ARTICLE IX.
The board of directors of the corporation is expressly authorized to make,
alter, or repeal the bylaws of the corporation, but such authorization shall not
divest the stockholders of the power, nor limit their power, to adopt, amend, or
repeal bylaws.
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<PAGE>
ARTICLE X.
The corporation shall, to the fullest extent permitted by Delaware law as
in effect from time to time, indemnify any person against all liability and
expense (including attorneys' fees) incurred by reason of the fact that he is or
was a director or officer of the corporation or, while serving at the request of
the corporation as a director, officer, partner or trustee of, or in any similar
managerial or fiduciary position of, or as an employee or agent of, another
corporation, partnership, joint venture, trust, association, or other entity.
Expenses (including attorneys' fees) incurred in defending an action, suit, or
proceeding may be paid by the corporation in advance of the final disposition of
such action, suit, or proceeding to the full extent and under the circumstances
permitted by Delaware law. The corporation may purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee, fiduciary,
or agent of the corporation against any liability asserted against and incurred
by such person in any such capacity or arising out of such person's position,
whether or not the corporation would have the power to indemnify against such
liability under the provisions of this Article X. The indemnification provided
by this Article X shall not be deemed exclusive of any other rights to which
those indemnified may be entitled under this certificate of incorporation, any
bylaw, agreement, vote of stockholders or disinterested directors, statute, or
otherwise, and shall inure to the benefit of their heirs, executors, and
administrators. The provisions of this Article X shall not be deemed to preclude
the corporation from indemnifying other persons from similar or other expenses
and liabilities as the board of directors or the stockholders way determine in a
specific instance or by resolution of general application. Any repeal or
modification of this Article X by the stockholders of the corporation shall not
adversely affect any right or protection of a director or officer of the
corporation existing at the time of such repeal or modification.
ARTICLE XI.
A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except as to liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) for violations of Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived any
improper personal benefit. If the Delaware General Corporation Law hereafter is
amended to further eliminate or limit the liability of a director, then a
director of the corporation, in addition to the circumstances in which a
director is not personally liable as set forth in the preceding sentence, shall
nor be liable to the fullest extent permitted by the amended Delaware General
Corporation Law. Any repeal or modification of this Article XI by the
stockholders of the corporation shall not adversely affect any right or
protection of a director of the corporation existing at the time of such repeal
or modification.
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<PAGE>
ARTICLE XII.
The corporation shall have authority, to the fullest extent now or
hereafter permitted by the General Corporation Law of the State of Delaware, or
by any other applicable law, to enter into any contract or transaction with one
or more of its directors or officers, or with any corporation, partnership,
joint venture, trust, association, or other entity in which one or more of its
directors or officers are directors or officers, or have a financial interest,
notwithstanding such relationships and notwithstanding the fact that 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.
ARTICLE XIII.
Whenever a compromise or arrangement is proposed between this corporation
and its creditors or any class of them and/or between this corporation and its
stockholders or any class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of this
corporation or of any creditor or stockholder thereof or on the application of
any receiver or receivers appointed for this corporation under the provisions of
Section 291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for this corporation under
the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of
the creditors or class of creditors, and/or of the stockholders or class of
stockholders of this corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and of the
stockholders or class of stockholders of this corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this corporation, as the case may be, and also on this
corporation.
ARTICLE XIV.
The corporation shall not be subject to the provisions of Section 203 of
the Delaware General Corporation Law.
Executed this 13th day of March, 1996.
/s/ Christopher J. Hagan
------------------------
Christopher J. Hagan
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<PAGE>
Exhibit 3.20b
BYLAWS
OF
GLOBAL IMAGING FINANCE COMPANY
ARTICLE I
OFFICES
Section 1. Delaware Office. The office of Global Imaging Finance Company
(hereinafter called the Corporation) within the State of Delaware shall be 1209
Orange Street in the City of Wilmington, County of New Castle.
Section 2. Other Offices. The Corporation may also have an office or
offices and keep the books and records of the Corporation, except as may
otherwise be required by law, in such other place or places, either within or
without the State of Delaware, as the Board of Directors of the Corporation
(hereinafter called the Board) may from time to time determine or the business
of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meeting. All meetings of stockholders of the
Corporation shall be held at the office of the Corporation in the State of
Delaware or at such other place, within or without the State of Delaware, as may
from time to time be fixed by the Board or specified or fixed in the respective
notices or waivers of notice thereof.
Section 2. Annual Meetings. The annual meeting of stockholders of the
Corporation for the election of directors and for the transaction of such other
business as may properly come before the meeting shall be held annually on such
date and at such time as may be fixed by the Board.
Section 3. Special Meetings. Special meetings of stockholders, unless
otherwise provided by law, may be called at any time only by the Board pursuant
to a resolution adopted by a majority of the then authorized number of directors
(as determined in accordance with Section 2 of Article III of these Bylaws), or
by the Chairman or the Chief Executive Officer. Any such call must specify the
matter or matters to be acted upon at such meeting and only such matter or
matters shall be acted upon thereat. Any action required or permitted to be
taken by the stockholders may be taken without a meeting if a majority in
interest of all shares of stock entitled to vote on any action consent in
writing to the adoption of a resolution authorizing the action. If less than
unanimous consent of all stockholders is received, the Secretary shall give
prompt written notice of such action to all other stockholders.
Section 4. Notice of Meetings. Except as may otherwise be required by law,
notice of each meeting of stockholders, annual or special, shall be in writing,
shall state the place, date
<PAGE>
and hour of the meeting and, unless it is the annual meeting, shall state the
purpose or purposes of the meeting, indicate that the notice is being issued by
or at the direction of the person or persons calling the meeting, and a copy
thereof shall be delivered or sent by mail, not less than 10 or more than 60
days before the date of said meeting, to each stockholder entitled to vote at
such meeting. If mailed, such notice shall be directed to the stockholder at his
address as it appears on the stock records of the Corporation, unless he shall
have filed with the Secretary a written request that notices to him be mailed to
some other address, in which case it shall be directed to him at such other
address. Unless (i) the adjournment is for more than thirty days, or (ii) the
Board shall fix a new record date for any adjourned meeting after the
adjournment, notice of such adjourned meeting need not be given if the time and
place to which the meeting shall be adjourned were announced at the meeting at
which the adjournment was taken.
Section 5. Quorum. At each meeting of stockholders of the Corporation, the
holders of a majority of the shares of capital stock of the Corporation issued
and outstanding and entitled to vote shall be present or represented by proxy to
constitute a quorum for the transaction of business, except as otherwise
provided by law.
Section 6. Adjournments. In the absence of a quorum at any meeting of
stockholders or any adjournment or adjournments thereof, the chairman of the
meeting or a majority in interest of those present or represented by proxy and
entitled to vote may adjourn the meeting from time to time until a quorum shall
be present or represented by proxy. At any such adjourned meeting at which a
quorum shall be present or represented by proxy, any business may be transacted
which might have been transacted at the meeting as originally called if a quorum
had been present or represented by proxy thereat.
Section 7. Order of Business. The order of business at all meetings of
stockholders shall be as determined by the chairman of the meeting.
Section 8. Voting. Except as otherwise provided in the Certificate of
Incorporation, at each meeting of stockholders, every stockholder of the
Corporation shall be entitled to one vote for every share of capital stock
standing in his name on the stock records of the Corporation (i) at the time
fixed pursuant to Section 6 of Article VII of these Bylaws as the record date
for the determination of stockholders entitled to vote at such meeting, or (ii)
if no such record date shall have been fixed, then at the close of business on
the date next preceding the day on which notice thereof shall be given. At each
meeting of stockholders, all matters (except as otherwise provided in Section 3
of Article III of these Bylaws and except in cases where a larger vote is
required by law or by the Certificate of Incorporation of the Corporation or
these Bylaws) shall be decided by a majority of the votes cast at such meeting
by the holders of shares present or represented by proxy and entitled to vote
thereon, a quorum being present.
Section 9. Inspectors. For each election of directors by the stockholders
and in any case in which it shall be advisable, in the opinion of the Board,
that the voting upon any other matter shall be conducted by inspectors of
election, the Board shall appoint two inspectors of election. If, for any such
election of directors or the voting upon any such other matter, any inspector
appointed by the Board shall be unwilling or unable to serve, or if the Board
shall fail to appoint inspectors, the chairman of the meeting shall appoint the
necessary inspector or
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inspectors. The inspectors so appointed, before entering upon the discharge of
their duties, shall be sworn faithfully to execute the duties of inspectors with
strict impartiality, and according to the best of their ability, and the oath so
taken shall be subscribed by them. Such inspectors shall determine the number of
shares outstanding and the voting power of each, the number of shares
represented at the meeting, the existence of a quorum, the validity and effect
of proxies, and shall receive votes or ballots, hear and determine all
challenges and questions arising in connection with the right to vote, count and
tabulate all votes or ballots, determine the result, and do such acts as are
proper to conduct the election or vote with fairness to all stockholders. On
request of the chairman of the meeting or any stockholder entitled to vote
thereat, the inspectors shall make a report in writing of any challenge,
question or matter determined by them and shall execute a certificate of any
fact found by them. No director or candidate for the office of director shall
act as an inspector of election of directors. Inspectors need not be
stockholders.
Section 10. New Business. Any new business to be taken up at any annual
meeting of stockholders shall be stated in writing and filed with the Secretary
at least ten (10) days before the date of the annual meeting, and all business
so stated, proposed and filed shall be considered at the annual meeting, but no
other proposal shall be acted upon at the annual meeting of stockholders. Any
stockholder may make any other proposal at the annual meeting, and the proposal
may be discussed and considered, but unless stated in writing and filed with the
Secretary at least ten (10) days before the meeting, such proposal shall be
postponed for action at an adjourned, special or annual meeting of stockholders
taking place thirty (30) days or more thereafter. This provision shall not
prevent the consideration and approval or disapproval at the annual meeting of
stockholders of reports of officers, directors and committees, but in connection
with such reports no new business shall be acted upon at such annual meeting
unless stated as herein provided.
Section 11. Certain Rules of Procedure Relating to Stockholder Meetings.
All stockholder meetings, annual or special, shall be governed in accordance
with the following rules:
(i) Only stockholders of record will be permitted to present motions
from the floor at any meeting of stockholders.
(ii) The chairman of the meeting shall preside over and conduct the
meeting in a fair and reasonable manner, and all questions of
procedure or conduct of the meeting shall be decided solely by the
chairman of the meeting. The chairman of the meeting shall have all
power and authority vested in a presiding officer by law or practice
to conduct an orderly meeting. Among other things, the chairman of
the meeting shall have the power to adjourn or recess the meeting,
to silence or expel persons to insure the orderly conduct of the
meeting, to declare motions or persons out of order, to prescribe
rules of conduct and an agenda for the meeting, to impose reasonable
time limits on questions and remarks by any stockholder, to limit
the number of questions a stockholder may ask, to limit the nature
of questions and comments to one subject matter at a time
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as dictated by any agenda for the meeting, to limit the number of
speakers or persons addressing the chairman of the meeting or the
meeting, to determine when the polls shall be closed, to limit the
attendance at the meeting to stockholders of record, beneficial
owners of stock who present letters from the record holders
confirming their status as beneficial owners, and the proxies of
such record and beneficial holders, and to limit the number of
proxies a stockholder may name.
Section 12. Requests for Stockholder List and Corporation Records.
Stockholders shall have those rights afforded under the General Corporation Law
of the State of Delaware to inspect a list of stockholders and other related
records and make copies or extracts therefrom. Such request shall be in writing
in compliance with Section 220 of the General Corporation Law of the State of
Delaware. In addition, any stockholder making such a request must agree that any
information so inspected, copied or extracted by the stockholder shall be kept
confidential, that any copies or extracts of such information shall be returned
to the Corporation and that such information shall only be used for the purpose
stated in the request. Information so requested shall be made available for
inspecting, copying or extracting at the principal executive offices of the
Corporation. Each stockholder desiring a photostatic or other duplicate copies
of any of such information requested shall make arrangements to provide such
duplicating or other equipment necessary in the city where the Corporation's
principal executive offices are located. Alternative arrangements with respect
to this Section 12 may be permitted in the discretion of the Chief Executive
Officer of the Corporation or by vote of the Board of Directors.
ARTICLE III
DIRECTORS
Section 1. Powers. The business of the Corporation shall be managed under
the direction of the Board. The Board may exercise all such authority and powers
of the Corporation and do all such lawful acts and things as are not by law or
otherwise directed or required to be exercised or done by the stockholders.
Section 2. Number, Election and Terms. The authorized number of directors
may be determined from time to time by vote of a majority of the then authorized
number of directors; provided however, that such number shall not be less than
one nor more than nine. No decrease in the number of directors constituting the
Board shall shorten the term of any incumbent director.
Section 3. Election. At each meeting of stockholders for the election of
directors at which a quorum is present, the persons receiving a plurality of the
votes cast shall be elected directors.
Section 4. Place of Meetings. Meetings of the Board shall be held at the
Corporation's office in the State of Delaware or at such other place, within or
without such state, as the Board may from time to time determine or as shall be
specified or fixed in the notice or waiver of notice of any such meeting.
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Section 5. Regular Meetings. Regular meetings of the Board shall be held
in accordance with a yearly meeting schedule as determined by the Board; or such
meetings may be held on such other days and at such other times as the Board may
from time to time determine. Notice of regular meetings of the Board need not be
given except as otherwise required by these Bylaws.
Section 6. Special Meetings. Special meetings of the Board may be called
by the Chief Executive Officer and shall be called by the Secretary at the
request of any two of the other directors.
Section 7. Notice of Meetings. Notice of each special meeting of the Board
(and of each regular meeting for which notice shall be required), stating the
time, place and purposes thereof, shall be mailed to each director, addressed to
him at his residence or usual place of business, or shall be sent to him by
telex, cable or telegram so addressed, or shall be given personally or by
telephone, on twenty-four hours notice, or such shorter notice as the person or
persons calling such meeting may deem necessary or appropriate in the
circumstances.
Section 8. Ouorum and Manner of Acting. The presence of at least a
majority of the authorized number of directors shall be necessary and sufficient
to constitute a quorum for the transaction of business at any meeting of the
Board or a committee thereof. If a quorum shall not be present at any meeting of
the Board or a committee thereof, a majority of the directors present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present. Except where a
different vote is required by law, the act of a majority of the directors
present at any meeting at which a quorum shall be present shall be the act of
the Board. Any action required or permitted to be taken by the Board may be
taken without a meeting if all the directors consent in writing to the adoption
of a resolution authorizing the action. The resolution and the written consents
thereto by the directors shall be filed with the minutes of the proceedings of
the Board. Any one or more directors may participate in any meeting of the Board
by means of a conference telephone or similar communications equipment allowing
all persons participating in the meeting to hear each other at the same time.
Participation by such means shall constitute presence in person at a meeting of
the Board.
Section 9. Resignation. Any directors may resign at any time by giving
written notice to the Corporation; provided, however, that written notice to the
Board, the Chairman of the Board, the Chief Executive Officer or the Secretary
shall be deemed to constitute notice to the Corporation. Such resignation shall
take effect upon receipt of such notice or at any later time specified therein,
and, unless otherwise specified therein, acceptance of such resignation shall
not be necessary to make it effective.
Section 10. Compensation of Directors. The Board may provide for the
payment to any of the directors, other than officers or employees of the
Corporation, of a specified amount for services as a director or member of a
committee of the Board, or of a specified amount for attendance at each regular
or special Board meeting or committee meeting, or of both, and all directors
shall be reimbursed for expenses of attendance at any such meeting; provided,
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however, that nothing herein contained shall be construed to preclude any
director from serving the Corporation in any other capacity and receiving
compensation therefor.
Section 11. Vacancies. Additional Directors and Removal From Office. If
any vacancy occurs in the Board caused by the death, resignation, retirement,
disqualification or removal from office of any director, or otherwise, or if any
new directorship is created by an increase in the authorized number of
directors, a majority of the directors then in office, though less than a
quorum, or a sole remaining director, may choose a successor to fill such
vacancy or the newly created directorship; and a director so chosen shall hold
office until the term of the director whose vacancy is filled expires and until
his successor shall be duly elected and shall qualify, or until his earlier
death, resignation, retirement, disqualification or removal, or until the next
annual meeting of stockholders, whichever shall first occur. Any director may be
removed, with or without cause, by the holders of a majority of the shares then
entitled to vote at an election of directors at any special meeting of
stockholders duly called and held for such purpose.
Section 12. Action Without Meeting. Unless otherwise restricted by the
Certificate of Incorporation or these Bylaws, any action required or permitted
to be taken at any meeting of the Board, or of any committee thereof as provided
in Article IV of these Bylaws, may be taken without a meeting, if a written
consent thereto is signed by all members of the Board or of such committee, as
the case may be, and such written consent is filed with the minutes of
proceedings of the Board or committee.
ARTICLE IV
COMMITTEES OF THE BOARD
Section 1. Designation, Powers and Name. The Board may, by resolution
passed by a majority of the whole Board, designate one or more committees,
including, if they shall so determine, an Executive Committee, each such
committee to consist of one or more of the directors of the Corporation. If an
Audit Committee or a Compensation Committee is designated, each such committee
shall consist of one or more directors of the Corporation who are not employees
of the Corporation. The committee shall have and may exercise such of the powers
of the Board in the management of the business and affairs of the Corporation as
may be provided in such resolution; provided, however, that no such committee
shall have the power or authority in 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, fix the designations 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 a dissolution, or amending the
Bylaws of the Corporation; and,
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provided further, that, unless the resolution establishing the committee
expressly so provides, no such committee shall have the power or authority to
declare a dividend or to authorize the issuance of stock. The committee may
authorize the seal of the Corporation to be affixed to all papers which may
require it. The Board may designate one or more directors as alternate member(s)
of any committee, who may replace any absent or disqualified member at any
meeting.
Section 2. Minutes. Each committee of directors shall keep regular minutes
of its proceedings and report the same to the Board when required.
Section 3. Compensation. Members of special or standing committees may be
allowed compensation for attending committee meetings, if the Board shall so
determine.
Section 4. Action by Consent: Participation by Telephone or Similar
Equipment. Unless the Board shall otherwise provide, any action required or
permitted to be taken by any committee may be taken without a meeting if all
members of the committee consent in writing to the adoption of a resolution
authorizing the action. The resolution and the written consents thereto by the
members of the committee shall be filed with the minutes of the proceedings of
the committee. Unless the Board shall otherwise provide, any one or more members
of any such committee may participate in any meeting of the committee by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other. Participation by
such means shall constitute presence in person at a meeting of the committee.
Section 5. Changes in Committees; Resignations; Removals. The Board shall
have power, by the affirmative vote of a majority of the authorized number of
directors, at any time to change the members of, to fill vacancies in, and to
discharge any committee of the Board. Any member of any such committee may
resign at any time by living notice to the Corporation, provided, however, that
notice to the Board, the Chairman of the Board, the Chief Executive Officer, the
Chairman of such committee or the Secretary shall be deemed to constitute notice
to the Corporation. Such resignation shall take effect upon receipt of such
notice or at any later time specified therein; and, unless otherwise specified
therein, acceptance of such resignation shall not be necessary to make it
effective. Any member of any such committee may be removed at any time, either
with or without cause by the affirmative vote of a majority of the authorized
number of directors at any meeting of the Board called for that purpose.
ARTICLE V
OFFICERS
Section 1. Officers. The officers of the Corporation shall be a Chairman
of the Board (if such office is created by resolution adopted by the Board and
who may also be designated the Chief Executive Officer), a President (who may
also be designated the Chief Executive Officer), one or more Vice Presidents
(any one or more of whom may be designated Executive Vice President or Senior
Vice President), a Secretary and a Treasurer. The Board may appoint such other
officers and agents, including Assistant Vice Presidents, Assistant
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Secretaries and Assistant Treasurers, as it shall deem necessary, who shall hold
their offices for such terms and shall exercise such powers and perform such
duties as shall be determined by the Board. Any two or more offices, other than
the offices of President and Secretary, may be held by the same person. No
officer shall execute, acknowledge, verify or countersign any instrument on
behalf of the Corporation in more than one capacity, if such instrument is
required by law, by these Bylaws or by any act of the Corporation to be
executed, acknowledged, verified or countersigned by two or more officers. The
Chairman of the Board shall be elected from among the directors. With the
foregoing exception, none of the other officers need be a director, and none of
the officers need be a stockholder of the Corporation unless otherwise required
by the Certificate of Incorporation.
Section 2. Election and Term of Office. The officers of the Corporation
shall be elected annually by the Board at its first regular meeting held after
the annual meeting of stockholders or as soon thereafter as conveniently
practicable. Each officer shall hold office until his successor shall have been
elected or appointed and shall have qualified or until his death or the
effective date of his resignation or removal, or until he shall cease to be a
director in the case of the Chairman of the Board.
Section 3. Removal and Resignation. Any officer or agent elected or
appointed by the Board may be removed without cause by the affirmative vote of a
majority of the Board whenever, in its judgment, the best interests of the
Corporation shall be served thereby, but such removal shall be without prejudice
to the contractual rights, if any, of the person so removed. Any officer may
resign at any time by giving written notice to the Corporation. Any such
resignation shall take effect at the date of the receipt of such notice or at
any later time specified therein, and unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
Section 4. Vacancies. Any vacancy occurring in any office of the
Corporation by death, resignation, removal or otherwise, may be filled by the
Board for the unexpired portion of the term.
Section 5. Salaries. The salaries of all officers and agents of the
Corporation shall be fixed by the Board or pursuant to its direction; and no
officer shall be prevented from receiving such salary by reason of his also
being a director.
Section 6. Chairman of the Board. The Chairman of the Board (if such
office is created by resolution adopted by that Board and who may also hold the
office of President or other offices) shall have such duties as the Board may
prescribe. In the Chairman's absence, such duties shall be attended to by the
President.
Section 7. President. The President shall preside at all meetings of the
Board and at all meetings of the stockholders. The President shall be the Chief
Executive Officer of the Corporation and shall perform such duties and exercise
such powers as usually appertain to such title and such other duties as may be
prescribed by the stockholders, the Board or the Executive Committee (if any)
from time to time. The President shall have the power to appoint and remove
subordinate officers, agents and employees, including Assistant Secretaries and
Assistant
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Treasurers, except that the President may not remove those elected or appointed
by the Board. The President shall keep the Board and the Executive Committee (if
any) fully informed and shall consult them concerning the business of the
Corporation. The President may sign, with the Secretary or another officer of
the Corporation thereunto authorized by the Board, certificates for shares of
the Corporation and any deeds, bonds, mortgages, contracts, checks, notes,
drafts or other instruments, the issue or execution of which shall have been
authorized by resolution of the Board, except in cases where the signing and
execution thereof has been expressly delegated by these Bylaws or by the Board
to some other officer or agent of the Corporation, or shall be required by law
to be otherwise executed. The President shall vote, or give a proxy to any other
officer of the Corporation to vote, all shares of stock of any other corporation
standing in the name of the Corporation. In general, the President shall perform
all other duties normally incident to or as usually appertain to the office of
President and such other duties as may be prescribed by the stockholders, the
Board or the Executive Committee (if any) from time to time.
Section 8. Vice Presidents. In the absence of the President, or in the
event of his inability or refusal to act, the Executive Vice President (or in
the event there shall be no Vice President designated Executive Vice President,
any Vice President designated by the Board) shall perform the duties and
exercise the powers of the President. Any Vice President may sign, with the
Secretary or Assistant Secretary, certificates for shares of the Corporation and
any deeds, bonds, mortgages, contracts, checks, notes, drafts or other
instruments, the issue or execution of which shall have been authorized by
resolution of the Board, except in cases where the signing and execution thereof
has been expressly delegated by these Bylaws or by the Board to some other
officer or agent of the Corporation, or shall be required by law to be otherwise
executed. The Vice Presidents shall perform such other duties as from time to
time may be assigned to them by the Chairman of the Board (if any), the
President, the Board or the Executive Committee (if any).
Section 9. Secretary. The Secretary shall (a) record the proceedings of
the meetings of the stockholders, the Board and committees of directors in the
permanent minute books of the Corporation kept for that purpose; (b) see that
all notices are duly given in accordance with the provisions of these Bylaws and
as required by law; (c) be custodian of the corporate records and of the seal of
the Corporation, and see that the seal of the Corporation or a facsimile thereof
is affixed to all certificates for shares of the Corporation prior to the issue
thereof and to all documents, the execution of which on behalf of the
Corporation under its seal is duly authorized in accordance with the provisions
of these Bylaws; (d) keep or cause to be kept a register of the post office
address of each stockholder which shall be furnished by such stockholder; (e)
sign with the Chairman of the Board (if any), the President, or an Executive
Vice President or Vice President, certificates for shares of the Corporation and
any deeds, bonds, mortgages, contracts, checks, notes, drafts or other
instruments, the issue or execution of which shall have been authorized by
resolution of the Board, except in cases where the signing and execution thereof
has been expressly delegated by these Bylaws or by the Board to some other
officer or agent of the Corporation, or shall be required by law to be otherwise
executed; (f) have general charge of the stock transfer books of the
Corporation; and (g) in general, perform all duties normally incident to the
office of Secretary and such other duties as from time to time may be assigned
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by the Chairman of the Board (if any), the President, the Board of Directors or
the Executive Committee (if any).
Section 10. Treasurer. If required by the Board. the Treasurer shall give
a bond for the faithful discharge of his or her duties in such sum and with such
surety or sureties as the Board shall determine. The Treasurer shall (a) gave
charge and custody of and be responsible for all funds and securities of the
Corporation; receive and give receipts for monies due and payable to the
Corporation from any source whatsoever and deposit all such monies in the name
of the Corporation in such banks, trust companies or other depositories as shall
be selected in accordance with the provisions of Section 4 of Article VI of
these Bylaws; (b) prepare, or cause to be prepared, for submission at each
regular meeting of the Board, at each annual meeting of the stockholders, and at
such other times as may be required by the Board, the Chairman of the Board (if
any), the President or the Executive Committee (if any), a statement of
financial condition of the Corporation in such detail as may be required; (c)
sign with the Chairman of the Board (if any), the President, or an Executive
Vice President or Vice President, certificates for shares of the Corporation and
any deeds, bonds, mortgages, contracts, checks, notes, drafts or other
instruments, the issue or execution of which shall have been authorized by
resolution of the Board, except in cases where the signing and execution thereof
has been expressly delegated by these Bylaws or by the Board to some other
officer or agent of the Corporation, or shall be required by law to be otherwise
executed; and (d) in general, perform all the duties incident to the office of
Treasurer and such other duties as from time to time may be assigned by the
Chairman of the Board (if any), the President, the Board or the Executive
Committee (if any).
Section 11. Assistant Secretary or Treasurer. The Assistant Secretaries
and Assistant Treasurers shall, in general, perform such duties as shall be
assigned to them by the Secretary or the Treasurer, respectively, or by the
Chairman of the Board (if any), the President, the Board or the Executive
Committee (if any). The Assistant Secretaries and Assistant Treasurers shall, in
the absence of the Secretary or Treasurer, respectively, or in their respective
inability or refusal to act, perform all functions and duties which such absent
officers may delegate, but such delegation shall not relieve the absent officer
from the responsibilities and liabilities of their office. The Assistant
Secretaries may sign, with the Chairman of the Board (if any), the President or
Executive Vice President or Vice President. certificates for shares of the
Corporation and any deeds, bonds, mortgages, contracts, checks, notes, drafts or
other instruments, the issue or execution of which shall have been authorized by
a resolution of the Board, except in cases where the signing and execution
thereof has been expressly delegated by these Bylaws or by the Board to some
other officer or agent of the Corporation, or shall be required by law to be
otherwise executed. The Assistant Treasurers shall respectively, if required by
the Board, give bonds for the faithful discharge of their duties in such sums
and with such sureties as the Board shall determine.
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ARTICLE VI
CONTRACTS, CHECKS, LOANS, DEPOSITS, ETC.
Section 1. Contracts. The Board may authorize any officer or officers,
agent or agents, in the name and on behalf of the Corporation, to enter into any
contract or to execute and deliver any instrument, which authorization may be
general or confined to specific instances; and, unless so authorized by the
Board, no officer, agent or employee shall have any power or authority to bind
the Corporation by any contract or engagement or to pledge its credit or to
render it liable pecuniarily for any purpose or for any amount.
Section 2. Checks, etc. All checks, drafts, bills of exchange or other
orders for the payment of money out of the funds of the Corporation, and all
notes or other evidences of indebtedness of the Corporation, shall be signed in
the name and on behalf of the Corporation in such manner as shall from time to
time be authorized by the Board, which authorization may be general or confined
to specific instances.
Section 3. Loans. No loan shall be contracted on behalf of the
Corporation, and no negotiable paper shall be issued in its name, unless
authorized by the Board, which authorization may be general or confined to
specific instances. All bonds, debentures, notes and other obligations or
evidences of indebtedness of the Corporation issued for such loans shall be
made, executed and delivered as the Board shall authorize.
Section 4. Deposits. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation in such
banks, trust companies or other depositaries as may be selected by or in the
manner designated by the Board. The Board or its designees may make such special
rules and regulations with respect to such bank accounts, not inconsistent with
the provisions of these Bylaws, as may be deemed expedient.
ARTICLE VII
CAPITAL STOCK
Section 1. Stock Certificates. Each stockholder shall be entitled to have,
in such form as shall be approved by the Board, a certificate or certificates
signed by the Chief Executive Officer or the President and by either the
Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary
(except that, when any such certificate is countersigned by a transfer agent or
registered by a registrar other than the Corporation itself or any employee, the
signatures of any such officers may be facsimiles, engraved or printed), which
may be sealed with the seal of the Corporation (which seal may be a facsimile,
engraved or printed), certifying the number of shares of capital stock of the
Corporation owned by such stockholder. In case any officer who has signed or
whose facsimile signature has been placed upon any such certificate shall have
ceased to be such officer before such certificate is issued, such certificate
may be issued by the Corporation with the same effect as if he were such officer
at the date of its issue.
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Section 2. List of Stockholders Entitled to Vote. The officer of the
Corporation who has charge of the stock ledger of the Corporation shall prepare
and make or cause to have prepared or made, 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 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 of the
Corporation who is present.
Section 3. Stock Ledger. The stock ledger of the Corporation shall be the
only evidence as to who are the stockholders entitled to examine the stock
ledger, the list required by Section 2 of this Article VII or the books of the
Corporation, or to vote in person or by proxy at any meeting of stockholders.
Section 4. Transfers of Capital Stock. Transfers of shares of capital
stock of the Corporation shall be made only on the stock records of the
Corporation by the holder of record thereof or by his attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary of
the Corporation or the transfer agent thereof, and only on surrender of the
certificate or certificates representing such shares, properly endorsed or
accompanied by a duly executed stock transfer power. The Board may make such
additional rules and regulations as it may deem expedient concerning the issue
and transfer of certificates representing shares of the capital stock of the
Corporation.
Section 5. Lost Certificates. The Board may direct a new certificate to be
issued in place of any certificate theretofore issued by the Corporation alleged
to have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming the certificate of stock to be lost, stolen or
destroyed. When authorizing such issue of a new certificate, the Board may, in
its discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate, or his legal
representative, to give the Corporation a bond in such sum as it may direct as
indemnity against any claim that may be made against the Corporation with
respect to the certificate alleged to have been lost, stolen or destroyed.
Section 6. Fixing of Record Date. 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 entitled to receive payment of any
dividends 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 may fix, in advance, a
record date, which shall not be more than sixty days nor less than ten days
before the date of such meeting, nor more than sixty days prior to any other
action. 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 may fix a new record date for the adjourned
meeting.
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Section 7. Beneficial Owners. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold such
person liable for calls and assessments, and shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof,
except as otherwise provided by law.
ARTICLE VIII
DIVIDENDS
Section 1. Declaration. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board at any regular or special meeting, pursuant to
law. Dividends may be paid in cash, in property or in shares of capital stock,
subject to the provisions of the Certificate of Incorporation.
Section 2. Reserve. Before payment of any dividend, there may be set aside
out of any funds of the Corporation available for dividends such sum or sums as
the Board from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for such other
purpose as the Board shall think conducive to the interests of the Corporation,
and the directors may modify or abolish any such reserve in the manner in which
it was created.
ARTICLE IX
LIMITATION OF DIRECTORS' LIABILITY
Section 1. Limitation of Liability of Directors to the Corporation and its
Stockholders. No director of the Corporation shall be liable to the Corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv)
for any transaction from which the director derived an improper personal
benefit.
ARTICLE X
INDEMNIFICATION
Section 1. Indemnification. The Corporation shall indemnify to the full
extent authorized or permitted by law any person made, or threatened to be made,
a party to any action or proceeding (whether civil or criminal or otherwise) by
reason of the fact that he, his testator or intestate, is or was a director or
officer of the Corporation or by reason of the fact that such director or
officer, at the request of the Corporation, is or was serving any other
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, in any capacity.
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Nothing contained herein shall affect any rights to indemnification to which
employees other than directors and officers may be entitled by law.
Section 2. Advancement of Expenses. Expenses, incurred by an officer or
director in defending a civil or criminal action, suit or proceeding may be paid
by the Corporation in advance of the final disposition of such action, suit or
proceeding as authorized by the Board upon receipt of an undertaking by or on
behalf of such director or officer to repay such amount if it shall ultimately
be determined that he is not entitled to be indemnified by the Corporation as
authorized in this Section.
Section 3. Non-Exclusivity. The indemnification and advancement of
expenses provided for hereby shall not be deemed exclusive of any other rights
to which a person seeking indemnification or advancement of expenses may be
entitled under any Bylaw, agreement, vote of stockholders or disinterested
directors, or otherwise, both as to action in their official capacity and as to
action in another capacity while holding such office.
Section 4. Continuity. The indemnification and advancement of expenses
provided for hereby shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
ARTICLE XI
SEAL
The Corporation's seal shall be circular in form and shall include the
name of the Corporation, the state and year of its incorporation, and the word
"Seal."
ARTICLE XII
WAIVER OF NOTICE
Whenever any notice is required by law, the Certificate of Incorporation
or these Bylaws, to be given to any director, member of a committee or
stockholder, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto. 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. 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.
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ARTICLE XII
WAIVER OF NOTICE
Whenever any notice is required by law, the Certificate of Incorporation
or these Bylaws, to be given to any director, member of a committee or
stockholder, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto. 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. 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.
ARTICLE XIII
AMENDMENTS
These Bylaws may be amended or supplemented in any respect at any time,
either (a) at any meeting of stockholders, provided that any amendment or
supplement proposed to be acted upon at any such meeting shall have been
described or referred to in the notice of such meeting, or (b) at any meeting of
the Board; provided that any amendment or supplement proposed to be acted upon
at any such meeting shall have been described or referred to in the notice of
such meeting or an announcement with respect thereto shall have been made at the
last previous Board meeting, and further provided that no amendment or
supplement adopted by the Board shall vary or conflict with any amendment or
supplement adopted by the stockholders.
I, the undersigned, being the Assistant Secretary of the Corporation DO
HEREBY CERTIFY THAT the foregoing are the Bylaws of said Corporation, as adopted
by the Board of said Corporation on the 13th day of March, 1996.
/s/ Christopher J. Hagan
---------------------------
Assistant Secretary
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<PAGE>
Amendment to By Laws dated November 11, 1997
WHEREAS, the Corporation is the owner, directly or indirectly, of all of
the outstanding capital stock of each of Copy Service and Supply, Inc., a North
Carolina corporation, Office Furniture Concepts, Inc., a North Carolina
corporation, Felco Office Systems, Inc., a Texas corporation, American Photocopy
Equipment Company of Pittsburgh, Inc., a Delaware corporation, Berney, Inc., an
Alabama corporation, Southern Copy Systems, Inc., an Alabama corporation, Conway
Office Products, Inc., a New Hampshire corporation, Business Equipment
Unlimited, Inc., a Maine corporation, Cameron Office Products, Inc., a
Massachusetts corporation, Electronic Systems, Inc., a Virginia corporation,
Southern Business Communications, Inc., a Georgia corporation, Quality Business
Systems, Inc., a Washington corporation, and Duplicating Specialties, Inc., an
Oregon corporation; and
WHEREAS, the Board of Directors of the Corporation hereby deem it to be in
the best interests of the Corporation that the Corporation, as the sole
stockholder or the parent of the sole stockholder of each of the Subsidiaries,
hereby amends each of the Subsidiaries' bylaws in order to provide more
efficient and modern means for conducting the business of meetings for such
Subsidiaries stockholders and boards of directors; NOW, THEREFORE, BE IT
RESOLVED, that the Corporation, as the sole stockholder of each of the
Subsidiaries, hereby elects by written consent of sole stockholder to amend the
Bylaws of each of the Subsidiaries to provide that any authorized person may
call a meeting of the Board of Directors of such company upon 24 hours written
notice (which notice may be given by facsimile transmission);
FURTHER RESOLVED, that the Corporation, as the sole stockholder of each of
the Subsidiaries, hereby elects by written consent of sole stockholder to amend
the Bylaws of each of the Subsidiaries to provide that any meeting of the Board
of Directors of such company may be held in person or by telephone;
FURTHER RESOLVED, that the Corporation, as the sole stockholder of each of
the Subsidiaries, hereby elects by written consent of sole stockholder to amend
the Bylaws of each of the Subsidiaries to provide that any action of the
stockholders of the Corporation may be taken by unanimous written consent except
as otherwise required by law to be held at a meeting of the stockholders of such
company; and
FURTHER RESOLVED, that the Corporation hereby ratifies all actions
previously taken by the officers of the Corporation in connection with the
amendments to its Subsidiaries' Bylaws to comply with all the requirements and
conditions in connection therewith, and all other actions taken incidental
thereto.
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EXHIBIT 3.21a
CERTIFICATE OF INCORPORATION
OF
GLOBAL IMAGING OPERATIONS, INC.
ARTICLE I
This Corporation is being organized and will exist under Delaware law.
ARTICLE II
The name of the Corporation is Global Imaging Operations, Inc.
ARTICLE III
The address of the Corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, City of Wilmington,
County of New Castle 19801. The name of its registered agent at such address is
The Corporation Trust Company.
ARTICLE IV
The nature of the business of the Corporation and the purposes for which
it is organized are:
To engage in any business and in any lawful act or activity for which
corporations may be organized under the General Corporation Law of Delaware and
to possess and employ all powers and privileges now or hereafter granted or
available under the laws of the State of Delaware to such corporations.
ARTICLE V
5.1 The total number of shares that the Corporation shall have authority
to issue is 1,000 shares, which shares shall be common stock, each with a par
value of $.001.
5.2 Each holder of common stock shall be entitled to one vote for each
share of common stock held on all matters as to which holders of common stock
shall be entitled to vote. Except as may be provided by the laws of the State of
Delaware, the holders of common stock shall have exclusively all rights of
stockholders of the Corporation, including, but not by way of limitation, (i)
the right to receive dividends, when and as declared by the board of directors
out of assets lawfully available therefor, and (ii), in the event of any
distribution of
<PAGE>
assets upon the dissolution and liquidation of the Corporation, the right to
receive ratably and equally all of the assets of the Corporation.
ARTICLE VI
The name and mailing address of the incorporator are:
James L. Smith
Suite 4700
370 Seventeenth Street
P.O.Box 185
Denver, Colorado 80201-0185
ARTICLE VII
The powers of the incorporator shall terminate upon the filing of this
certificate of incorporation in the office of the Secretary of State of the
State of Delaware. The names and mailing addresses of the persons who are to
serve as directors of the Corporation until their successors are elected and
qualified or until their earlier resignations or removals are:
Name Mailing Address
---- ---------------
Thomas S. Johnson 14499 North Dale Mabry, Suite 280
Tampa, Florida 33618
Carl D. Thoma 6100 Sears Tower
Chicago, IL 60606
ARTICLE VIII
8.1 The number of directors of the Corporation shall be from time to time
in the manner provided in the bylaws and may be increased or decreased from time
to time in the manner provided in the bylaws.
8.2 Election of directors need not be by written ballot except and to the
extent provided in the bylaws of the Corporation.
8.3 A quorum of the board of directors for the transaction of business
shall not consist of less than a majority of the total number of directors,
except as may be provided in the bylaws which respect to filling vacancies.
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<PAGE>
ARTICLE IX
The board of directors of the Corporation is expressly authorized to make,
alter, or repeal the bylaws of the Corporation, but such authorization shall not
divest the stockholders of the power, nor limit their power, to adopt, amend, or
repeal bylaws.
ARTICLE X
No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except as to liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) for violations of Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived any
improper personal benefit.
ARTICLE XI
The Corporation shall, to the fullest extent permitted by applicable law
as in effect from time to time, indemnify any person against all liability and
expense (including attorneys' fees) incurred by reason of the fact that he is or
was a director or officer of the Corporation or, while serving as a director or
officer of the Corporation, he is or was serving at the request of the
Corporation as a director, officer, partner or trustee of, or in any similar
managerial or fiduciary position of, or as an employee or agent of, another
corporation, partnership, joint venture, trust, association, or other entity.
Expenses (including attorneys' fees) incurred in defending an action, suit, or
proceeding may be paid by the Corporation in advance of the final disposition of
such action, suit, or proceeding to the full extent and under the circumstances
permitted by Delaware law. The Corporation may purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee, fiduciary,
or agent of the Corporation against any liability asserted against and incurred
by such person in any such capacity or arising out of such person's position,
whether or not the Corporation would have the power to indemnify against such
liability under the provision of this Article XI. The indemnification provided
by this Article XI shall not be deemed exclusive of any other rights to which
those indemnified may be entitled under this certificate of incorporation, any
bylaw, agreement, vote of stockholders or disinterested directors, statute, or
otherwise, and shall inure to the benefit of their heirs, executors, and
administrators. The provisions of this Article XI shall not be deemed to
preclude the Corporation from indemnifying other persons from similar or other
expenses and liabilities as the board of directors or the stockholders may
determine in a specific instance or by resolution of general application.
ARTICLE XII
The Corporation shall have authority, to the fullest extent now or
hereafter permitted by the General Corporation Law of the State of Delaware, or
by any other applicable
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<PAGE>
law, to enter into any contract or transaction with one or more of its directors
or officers, or with any corporation, partnership, joint venture, trust,
association, or other entity in which one or more of its directors or officers
are directors or officers, or have a financial interest, notwithstanding such
relationships and notwithstanding the fact that 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.
Executed this 20th day of March 1996.
/s/ James L. Smith
Incorporator
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<PAGE>
EXHIBIT 3.21b
BYLAWS OF
GLOBAL IMAGING OPERATIONS, INC.
ARTICLE 1 - OFFICES
Section 1.1. Registered Office. The registered office of the
Corporation shall be in Wilmington, Delaware.
Section 1.2. Corporate Office. The Corporation may have its office
or offices at such place or places as the board of directors, in its discretion,
may from time to time determine.
ARTICLE 2 - MEETINGS OF STOCKHOLDERS
Section 2.1. Time and Place. Any meeting of the stockholders may be
held at such time and such place, either within or without the State of
Delaware, as shall be designated from time to time by resolution of the board of
directors or as shall be stated in a duly authorized notice of the meeting.
Section 2.2. Annual Meeting. The annual meeting of the stockholders
shall be held on the date and at the time fixed, from time to time, by the board
of directors; provided, however, that the first annual meeting shall be held
within thirteen months after the organization of the Corporation, and each
succeeding annual meeting shall be held within thirteen months after the last
preceding annual meeting. The annual meeting shall be for the purpose of
electing a board of directors and transacting such other business as may
properly be brought before the meeting.
Section 2.3. Special Meetings. Special meetings of the stockholders,
for any purpose or purposes, unless otherwise prescribed by statute or by the
certificate of incorporation, may be called by the president or the board of
directors and shall be called by the president or secretary at the written
request of stockholders owning a majority in amount of the entire capital stock
of the Corporation issued and outstanding and entitled to vote. Such request
shall state the purpose or purposes of the proposed meeting.
Section 2.4. Notices. Written notice stating the place, date, and
hour of the meeting and, in case of a special meeting, the purpose or purposes
for which the meeting is called, shall be given not less than ten nor more than
sixty days before the date of the meeting, except as otherwise required by
statute or the certificate of incorporation, either personally or by mail,
telecopy, prepaid telegram, telex, cablegram, or radiogram, to each stockholder
of record entitled to vote at such meeting. If mailed, such notice shall be
deemed to be given when deposited in the United States mail, postage prepaid,
addressed to the stockholder at his address as it appears on the stock records
of the Corporation. If given personally or otherwise than by
<PAGE>
mail, such notice shall be deemed to be given when either handed to the
stockholder or delivered to the stockholder's address as it appears on the stock
records of the Corporation.
Section 2.5. Record Date. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting, or
at any adjournment of a meeting, of stockholders; or entitled 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 record date shall not precede the date upon
which the resolution fixing the record date is adopted by the board of
directors. The record date for determining the stockholders entitled to notice
of or to vote at any meeting of the stockholders or any adjournment thereof
shall not be more than sixty nor less than ten days before the date of such
meeting. The record date for determining the stockholders entitled to consent to
corporate action in writing without a meeting shall not be more than ten days
after the date upon which the resolution fixing the record date is adopted by
the board of directors. The record date for any other action shall not be more
than sixty days prior to such action. If no record date is fixed, (i) the record
date for determining stockholders entitled to notice of or to vote at any
meeting shall be at the close of business on the day next preceding the day on
which notice is given or, if notice is waived by all stockholders, at the close
of business on the day next preceding the day on which the meeting is held; (ii)
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, shall be the first date on which a signed written
consent setting forth the action taken or to be taken is delivered to the
Corporation and, 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 (iii) 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 to
such other purpose. 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 2.6. Voting List. The secretary shall prepare and 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 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 be produced and kept at the place of the meeting during the
whole time thereof and may be inspected by any stockholder who is present.
Section 2.7. Quorum. The holders of a majority of the stock issued
and outstanding and entitled to vote at the meeting, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business, except
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as otherwise provided by statute or by the certificate of incorporation. If,
however, such a quorum shall not be present at any meeting of stockholders, the
stockholders entitled to vote, present in person or represented by proxy, shall
have the power to adjourn the meeting from time to time, without notice if the
time and place are announced at the meeting, until a quorum shall be present. At
such adjourned meeting at which a quorum shall be present, any business may be
transacted 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 2.8. Voting and Proxies. At every meeting of the
stockholders, each stockholder shall be entitled to one vote, in person or by
proxy, for each share of the capital stock having voting power held by such
stockholder, but no proxy shall be voted on after three years from its date
unless the proxy provides for a longer period. When a quorum is present at any
meeting, the vote of the holders of a majority of the stock having voting power
present in person or represented by proxy shall decide any question brought
before such meeting, unless the question is one upon which, by express provision
of the statutes or of the certificate of incorporation, a different vote is
required, in which case such express provision shall govern.
Section 2.9. Waiver. Attendance of a stockholder of the Corporation,
either in person or by proxy, at any meeting, whether annual or special, shall
constitute a waiver of notice of such meeting, except where a stockholder
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. A written waiver of notice of any such meeting signed by a
stockholder or stockholders entitled to such notice, whether before, at, or
after the time for notice or the time of the meeting, shall be equivalent to
notice. Neither the business to be transacted at, nor the purpose of, any
meeting need be specified in any written waiver of notice.
Section 2.10. Consent of Stockholders in Lieu of Meeting. Any action
required or permitted to be taken at any annual or special meeting of
stockholders of the Corporation 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 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. Any such consent may be in counterparts and shall bear the
date of signature of each stockholder who signs the consent. No such consent
shall be effective to take any action unless, within sixty days following the
date of the earliest signature thereon, the consent or counterparts thereof,
bearing the signatures of holders of 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 were present, are delivered to the
Corporation by delivery to its principal place of business or to the secretary
of the Corporation. Any action taken pursuant to such consent shall be effective
as of the date of the last signature thereon needed to make it effective unless
otherwise provided in the consent. All counterparts of such consent necessary to
make it effective shall be filed with the minutes
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of proceedings of the stockholders. If the action that is consented to is such
as would have required the filing of a certificate under any provisions of the
Delaware General Corporation Law if such action had been voted upon by
stockholders at a meeting, the certificate filed shall state, in lieu of any
statement concerning a vote of stockholders, that written consent has been given
in accordance with the provisions of Section 228 of the Delaware General
Corporation Law, and that written notice has been given as provided in that
section.
ARTICLE 3 - DIRECTORS
Section 3.1. Number. The number of directors shall be one or more,
as fixed from time to time by resolution of the board of directors; provided,
however, that the number of directors shall not be reduced so as to shorten the
tenure of any director at the time in office. The initial number of directors
shall be two.
Section 3.2. Elections. Except as provided in Section 3.3 of this
Article 3, the board of directors shall be elected at the annual meeting of the
stockholders or at a special meeting called for that purpose. Each director
shall hold such office until his successor is elected and qualified or until his
earlier resignation or removal.
Section 3.3. Vacancies. Any vacancy occurring on the board of
directors and any directorship to be filled by reason of an increase in the
board of directors may be filled by the affirmative vote of a majority of the
remaining directors, although less than a quorum, or by a sole remaining
director. Such newly elected director shall hold such office until his successor
is elected and qualified or until his earlier resignation or removal.
Section 3.4. Meetings. The first meeting of each newly elected board
of directors elected at the annual meeting of stockholders shall be held
immediately after, and at the same place as, the annual meeting of the
stockholders, provided a quorum is present, and no notice of such meeting shall
be necessary in order to legally constitute the meeting. The board of directors
may, by resolution, establish a place and time for regular meetings which may
thereafter be held without call or notice.
Section 3.5. Notice of Special Meetings. Special meetings may be
called by the president or any two members of the board of directors. Such
notice may be given to each member of the board of directors by mail by the
secretary, the president, or the members of the board calling the meeting by
depositing the same in the United States mail, postage prepaid, at least seven
days before the meeting, addressed to the director at the last address he has
furnished to the Corporation for this purpose, and any notice so mailed shall be
deemed to have been given at the time when mailed. Notice may also be given at
least twenty-four hours before the meeting in person, by telephone, or by a
writing (including telecopy, prepaid telegram, telex, cablegram, radiogram, or
similar writing), and such notice shall be deemed to have been given when the
personal or telephone conversation occurs or when the writing is either
personally delivered to the director or is delivered to such address as is
stated above, as the case may be.
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Section 3.6. Quorum. At all meetings of the board, a majority of the
total number of directors shall constitute a quorum for the transaction of
business, and the act of a majority of the directors present at any meeting at
which a quorum is present shall be the act of the board of directors, except as
otherwise specifically required by statute, the certificate of incorporation, or
these bylaws. If less than a quorum is present, the director or directors
present may adjourn the meeting from time to time without further notice. Voting
by proxy is not permitted at meetings of the board of directors.
Section 3.7. Waiver. Attendance of a director at a meeting of the
board of directors shall constitute a waiver of notice of such meeting, except
where a director 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. A written waiver of notice signed by a
director or directors entitled to such notice, whether before, at, or after the
time for notice or the time of the meeting, shall be equivalent to the giving of
such notice.
Section 3.8. Action Without Meeting. Any action required or
permitted to be taken at a meeting of the board of directors may be taken
without a meeting if a consent in writing setting forth the action so taken
shall be signed by all of the directors and filed with the minutes of
proceedings of the board of directors. Any such consent may be in counterparts
and shall be effective on the date of the last signature thereon unless
otherwise provided therein.
Section 3.9. Attendance by Telephone. Members of the board of
directors may participate in a meeting of such board by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation in a
meeting shall constitute presence in person at such meeting.
ARTICLE 4 - OFFICERS
Section 4.1. Election. The Corporation shall have such officers,
with such titles and duties, as the board of directors may determine by
resolution, which may include a president, one or more vice presidents, a
secretary, and a treasurer and one or more assistants to such officers. The
officers shall in any event have such titles and duties as shall enable the
Corporation to sign instruments and stock certificates complying with Sections
103(a)(2) and 158 of the Delaware General Corporation Law, and one of the
officers shall have the duty to record the proceedings of the stockholders and
the directors in a book to be kept for that purpose. The officers shall be
elected by the board of directors; provided, however, that the president may
appoint one or more assistant secretaries and assistant treasurers and such
other subordinate officers as he deems necessary, who shall hold their offices
for such terms and shall exercise such powers and perform such duties as are
prescribed in the bylaws or as may be determined from time to time by the board
of directors or the president]. Any two or more offices may be held by the same
person, except the offices of president and secretary.
Section 4.2. Removal and Resignation. Any officer may be removed at
any time by the affirmative vote of a majority of the board of directors. Any
officer appointed by
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the president may be removed at any time by the board of directors or the
president. Any officer may resign at any time by giving written notice of his
resignation to the president or to the secretary, and acceptance of such
resignation shall not be necessary to make it effective unless the notice so
provides. Any vacancy occurring in any office of president, vice president,
secretary, or treasurer shall be filled by the board of directors. Any vacancy
occurring in any other office may be filled by the president.
Section 4.3. President. The president shall be chief executive
officer of the Corporation and shall preside at all meetings of the stockholders
and of the board of directors. Subject to the direction and control of the board
of directors, he shall have general and active management of the business of the
Corporation and shall see that all orders and resolutions of the board of
directors are carried into effect. He may execute contracts, deeds, and other
instruments on behalf of the Corporation as are authorized by the board of
directors. He shall perform such additional functions and duties as the board of
directors may from time to time prescribe.
Section 4.4. Vice President. The vice president or, if there is more
than one, the vice presidents in the order determined by the board of directors,
shall be the officer or officers next in seniority after the president. Each
vice president shall also perform such duties and exercise such powers as are
appropriate and such as are prescribed by the board of directors or, in lieu of
or in addition to such prescription, such as are prescribed by the president
from time to time. Upon the death, absence, or disability of the president, the
vice president or, if there is more than one, the vice presidents in the order
determined by the board of directors or, in lieu of such determination, in the
order determined by the president shall perform the duties and exercise the
powers of the president.
Section 4.5. Assistant Vice President. The assistant vice president
or, if there is more than one, the assistant vice presidents shall, under the
supervision of the president or a vice president, perform such duties and have
such powers as are prescribed by the board of directors, the president, or a
vice president from time to time.
Section 4.6. Secretary. The secretary shall give, or cause to be
given, notice of all meetings of the stockholders and special meetings of the
board of directors, keep the minutes of such meetings, have charge of the
corporate seal and stock records, be responsible for the maintenance of all
corporate files and records and the preparation and filing of reports to
governmental agencies (other than tax returns), have authority to affix the
corporate seal to any instrument requiring it (and, when so affixed, attest it
by his signature), and perform such other duties and have such other powers as
are appropriate and such as are prescribed by the board of directors or the
president from time to time.
Section 4.7. Assistant Secretary. The assistant secretary or, if
there is more than one, the assistant secretaries in the order determined by the
board of directors or, in lieu of such determination, by the president or the
secretary shall, in the absence or disability of the secretary or in case such
duties are specifically delegated to him by the board of directors, the
president, or the secretary, perform the duties and exercise the powers of the
secretary and shall,
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under the supervision of the secretary, perform such other duties and have such
other powers as are prescribed by the board of directors, the president, or the
secretary from time to time.
Section 4.8. Treasurer. The treasurer shall have control of the
funds and the care and custody of all the stocks, bonds, and other securities of
the Corporation and shall be responsible for the preparation and filing of tax
returns. He shall receive all moneys paid to the Corporation and shall have
authority to give receipts and vouchers, to sign and endorse checks and warrants
in its name and on its behalf, and give full discharge for the same. He shall
also have charge of the disbursement of the funds of the Corporation and shall
keep full and accurate records of the receipts and disbursements. He shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as shall be designated by the board of
directors and shall perform such other duties and have such other powers as are
appropriate and such as are prescribed by the board of directors or the
president from time to time.
Section 4.9. Assistant Treasurer. The assistant treasurer or, if
there is more than one, the assistant treasurers in the order determined by the
board of directors or, in lieu of such determination, by the president or the
treasurer shall, in the absence or disability of the treasurer or in case such
duties are specifically delegated to him by the board of directors, the
president, or the treasurer, perform the duties and exercise the powers of the
treasurer and shall, under the supervision of the treasurer, perform such other
duties and have such other powers as are prescribed by the board of directors,
the president, or the treasurer from time to time.
Section 4.10. Compensation. Officers shall receive such
compensation, if any, for their services as may be authorized or ratified by the
board of directors. Election or appointment as an officer shall not of itself
create a right to compensation for services performed as such officer.
ARTICLE 5 - COMMITTEES
Section 5.1. Designation of Committees. The board of directors may
establish committees for the performance of delegated or designated functions to
the extent permitted by law, each committee to consist of one or more directors
of the Corporation. 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 the place of such absent or disqualified member.
Section 5.2. Committee Powers and Authority. The board of directors
may provide, by resolution or by amendment to these bylaws, that a committee may
exercise all the power 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; provided,
however, that a committee may not exercise the power or authority of the board
of directors in reference to amending the certificate of incorporation, adopting
an agreement of merger or consolidation, recommending to the stockholders the
sale, lease, or
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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 a dissolution, or amending these bylaws.
Section 5.3. Committee Procedures. To the extent the board of
directors does not establish other procedures for the committee, each committee
shall be governed by the procedures established in Section 3.4 (except as they
relate to an annual meeting of the board of directors) and Sections 3.5, 3.6,
3.7, 3.8, and 3.9 of these bylaws, as if the committee were the board of
directors.
ARTICLE 6 - INDEMNIFICATION
Section 6.1. Expenses for Actions Other Than by or in the Right of
the Corporation. The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
or investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he is or was a director or officer of the Corporation,
or, while a director or officer of the Corporation, is or was serving at the
request of the Corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, association, or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit, or proceeding, if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit, or proceeding by judgment, order, settlement, conviction, or upon
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, that he had
reasonable cause .to believe that his conduct was unlawful.
Section 6.2. Expenses for Actions by or in the Right of the
Corporation. The Corporation shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending, or completed action
or suit by or in the right of the Corporation to procure a judgment in its favor
by reason of the fact that he is or was a director or officer of the
Corporation, or, while a director or officer of the Corporation, is or was
serving at the request of the Corporation as a director, officer, employee, or
agent of another corporation, partnership, joint venture, trust, association, or
other enterprise, against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit, if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Corporation, except that no
indemnification shall be made in respect of any claim, issue, or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery of the State of
Delaware or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view
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of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery of the State
of Delaware or such other court shall deem proper.
Section 6.3. Successful Defense. To the extent that any person
referred to in the preceding two sections of this Article 6 has been successful
on the merits or otherwise in defense of any action, suit, or proceeding
referred to in such sections, or in defense of any claim, issue, or matter
therein, he shall be indemnified against expenses (including attorneys fees)
actually and reasonably incurred by him in connection therewith.
Section 6.4. Determination to Indemnify. Any indemnification under
the first two sections of this Article 6 (unless ordered by a court) shall be
made by the Corporation only as authorized in the specific case upon a
determination that indemnification of the director or officer is proper in the
circumstances because he has met the applicable standard of conduct set forth
therein. Such determination shall be made (i) by a majority vote of those
members of the board of directors who were not parties to such action, suit, or
proceeding, even though they constitute less than a quorum, or (ii) if a
majority of such disinterested directors so directs, by independent legal
counsel in a written opinion, or (iii) by the stockholders.
Section 6.5. Expense Advances. Expenses (including attorneys' fees)
incurred by an officer or director in defending any civil, criminal,
administrative or investigative action, suit, or proceeding may be paid by the
Corporation in advance of the final disposition of such action, suit, or
proceeding upon receipt of an undertaking by or on behalf of the director or
officer to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the Corporation as authorized in this Article 6.
Section 6.6. Provisions Nonexclusive. The indemnification and
advancement of expenses provided by, or granted pursuant to, the other sections
of this Article 6 shall not be deemed exclusive of any other rights to which any
person seeking indemnification or advancement of expenses may be entitled, under
the certificate of incorporation or under any other bylaw, agreement, insurance
policy, vote of stockholders or disinterested directors, statute, or otherwise,
both as to action in his official capacity and as to action in another capacity
while holding such office.
Section 6.7. Insurance. By action of the board of directors,
notwithstanding any interest of the directors in the action, the Corporation
shall have power to purchase and maintain insurance, in such amounts as the
board of directors deems appropriate, on behalf of any person who 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, partnership, joint venture, trust, association, or other
enterprise, against any liability asserted against him and incurred by him in
any such capacity, or arising out of his status as such, whether or not he is
indemnified against such liability or expense under the provisions of this
Article 6 and whether or not the Corporation would have the power or would be
required to indemnify him against such liability under the provisions of this
Article 6 or of the Delaware General Corporation Law or by any other applicable
law.
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Section 6.8. Surviving Corporation. The board of directors may
provide by resolution that references to "the Corporation" in this Article 6
shall include, in addition to this Corporation, all constituent corporations
absorbed in a merger with this Corporation so that any person who was a director
or officer of such a constituent corporation or is or was serving at the request
of such constituent corporation as a director, employee, or agent of another
corporation, partnership, joint venture, trust, association, or other entity
shall stand in the same position under the provisions of this Article 6 with
respect to this Corporation as he would if he had served this Corporation in the
same capacity or is or was so serving such other entity at the request of this
Corporation, as the case may be.
Section 6.9. Inurement. The indemnification and advancement of
expenses provided by, or granted pursuant to, this Article 6 shall continue as
to a person who has ceased to be a director or officer and shall inure to the
benefit of the heirs, executors, and administrators of such person.
Section 6.10. Employees and Agents. To the same extent as it may do
for a director or officer, the Corporation may indemnify and advance expenses to
a person who is not and was not a director or officer of the Corporation but who
is or was an employee or agent of the Corporation or who is or was serving at
the request of the Corporation as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust, association, or
other-enterprise.
ARTICLE 7 - STOCK
Section 7.1. Certificates. Every holder of stock in the Corporation
represented by certificates and, upon request, every holder of uncertificated
shares shall be entitled to have a certificate, signed by or in the name of the
Corporation by the president or a vice president, and by the secretary or an
assistant secretary of the Corporation, certifying the number of shares owned by
him in the Corporation.
Section 7.2. Facsimile Signatures. Where a certificate of stock is
countersigned (i) by a transfer agent other than the Corporation or its employee
or (ii) by a registrar other than the Corporation or its employee, any other
signature on the certificate may be facsimile. In case any officer, transfer
agent, or registrar who has signed, or whose facsimile signature or signatures
have been placed upon, any such certificate shall cease to be such officer,
transfer agent, or registrar, whether because of death, resignation, or
otherwise, before such certificate is issued, the certificate may nevertheless
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 7.3. Transfer of Stock. Transfers of shares of stock of the
Corporation shall be made on the books of the Corporation only upon presentation
of the certificate or certificates representing such shares properly endorsed or
accompanied by a proper instrument of assignment, except as may otherwise be
expressly provided by the laws of the State of Delaware or by order by a court
of competent jurisdiction. The officers or transfer agents of
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the Corporation may, in their discretion, require a signature guaranty before
making any transfer.
Section 7.4. Lost Certificates. The board of directors may direct
that a new certificate of stock be issued in place of any certificate issued by
the Corporation that is alleged to have been lost, stolen, or destroyed, upon
the making of an affidavit of that fact by the person claiming the certificate
to be lost, stolen, or destroyed. When authorizing such issue of a new
certificate, the board of directors may, in its discretion and as a condition
precedent to the issuance of a new certificate, require the owner of such lost,
stolen, or destroyed certificate, or his legal representative, to give the
Corporation a bond in such sum as it may reasonably direct as indemnity against
any claim that may be made against the Corporation on account of the alleged
loss, theft, or destruction of any such certificate or the issuance of such new
certificate.
Section 7.5. Registered Stockholders. The Corporation shall be
entitled to treat the person in whose name any shares of stock are registered on
its books as the owner of such shares for all purposes and shall not be bound to
recognize any equitable or other claim or interest in such shares on the part of
any other person, whether or not the Corporation shall have notice of such claim
or interest, except as expressly provided by the laws of Delaware.
ARTICLE 8 - SEAL
The board of directors may adopt and provide a seal which shall be
circular in form and shall bear the name of the Corporation and the words "SEAL"
and "DELAWARE," and which, when adopted, shall constitute the corporate seal of
the Corporation. The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or manually reproduced.
ARTICLE 9 - FISCAL YEAR
The board of directors, by resolution, may adopt a fiscal year for
the Corporation.
ARTICLE 10 - AMENDMENT
These bylaws may at any time and from time to time be amended,
altered, or repealed by the board of directors, but the stockholders may make
additional bylaws and may alter and repeal any bylaws whether adopted by them or
otherwise.
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Amendment to By Laws dated November 11, 1997
WHEREAS, the Corporation is the owner, directly or indirectly, of
all of the outstanding capital stock of each of Copy Service and Supply, Inc., a
North Carolina corporation, Office Furniture Concepts, Inc., a North Carolina
corporation, Felco Office Systems, Inc., a Texas corporation, American Photocopy
Equipment Company of Pittsburgh, Inc., a Delaware corporation, Berney, Inc., an
Alabama corporation, Southern Copy Systems, Inc., an Alabama corporation, Conway
Office Products, Inc., a New Hampshire corporation, Business Equipment
Unlimited, Inc., a Maine corporation, Cameron Office Products, Inc., a
Massachusetts corporation, Electronic Systems, Inc., a Virginia corporation,
Southern Business Communications, Inc., a Georgia corporation, Quality Business
Systems, Inc., a Washington corporation, and Duplicating Specialties, Inc., an
Oregon corporation; and
WHEREAS, the Board of Directors of the Corporation hereby deem it to
be in the best interests of the Corporation that the Corporation, as the sole
stockholder or the parent of the sole stockholder of each of the Subsidiaries,
hereby amends each of the Subsidiaries' bylaws in order to provide more
efficient and modern means for conducting the business of meetings for such
Subsidiaries stockholders and boards of directors; NOW, THEREFORE, BE IT
RESOLVED, that the Corporation, as the sole stockholder of each of
the Subsidiaries, hereby elects by written consent of sole stockholder to amend
the Bylaws of each of the Subsidiaries to provide that any authorized person may
call a meeting of the Board of Directors of such company upon 24 hours written
notice (which notice may be given by facsimile transmission);
FURTHER RESOLVED, that the Corporation, as the sole stockholder of
each of the Subsidiaries, hereby elects by written consent of sole stockholder
to amend the Bylaws of each of the Subsidiaries to provide that any meeting of
the Board of Directors of such company may be held in person or by telephone;
FURTHER RESOLVED, that the Corporation, as the sole stockholder of
each of the Subsidiaries, hereby elects by written consent of sole stockholder
to amend the Bylaws of each of the Subsidiaries to provide that any action of
the stockholders of the Corporation may be taken by unanimous written consent
except as otherwise required by law to be held at a meeting of the stockholders
of such company; and
FURTHER RESOLVED, that the Corporation hereby ratifies all actions
previously taken by the officers of the Corporation in connection with the
amendments to its Subsidiaries' Bylaws to comply with all the requirements and
conditions in connection therewith, and all other actions taken incidental
thereto.
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GLOBAL IMAGING OPERATIONS, INC.
RESOLVED, that the bylaws of Global Imaging Operations, Inc. are hereby
amended as follows:
Section 1 of Article II shall be replaced in its entirety with the
following: "The number of directors shall be from one to ten in number, as
determined by resolution of either the stockholders or the board of directors."
<PAGE>
Exhibit 3.22a
0-0347643
------------------------------
FILED
9:00 AM
JUN 23 1994
EFFECTIVE 7-1-94 12:00:01 A.M.
RUFUS L. EDMISTEN
SECRETARY OF STATE
NORTH CAROLINA
STATE OF NORTH CAROLINA
DEPARTMENT OF THE SECRETARY OF STATE
ARTICLES OF INCORPORATION
OF
ProView, Inc.
Pursuant to Section 55-2-02 of the General Statutes of North Carolina, the
undersigned does hereby submit these Articles of Incorporation for the purpose
of forming a business corporation.
ARTICLE I.
The name of the corporation is ProView, Inc.
ARTICLE II.
The number of shares the corporation is authorized to issue is one hundred
thousand, all of one class, designated as common stock.
ARTICLE III.
The street address and county of the initial registered office of the
corporation is 500 D North Poplar Street, Charlotte, North Carolina 28202,
County of Mecklenburg.
ARTICLE IV.
The name of the initial registered agent is SUSAN L. MCELWAIN.
ARTICLE V.
Any person who at any time serves or has served as a director, officer,
employee or agent of the corporation, or in such capacity at the request of the
corporation for any other foreign or domestic corporation, partnership, joint
venture, trust, employee benefit plan, or other enterprise, shall have a right
to be indemnified by the corporation to the fullest extent from time to time
permitted by law in the event he is made, or is threatened to be made, a party
to any threatened, pending or completed civil, criminal, administrative,
investigative or arbitrative action, suit or proceeding and any appeal therein
(and any inquiry or investigation that could lead to such action, suit or
proceeding), whether or not brought by or on behalf of the corporation, seeking
to hold him liable by reason of the fact that he is or was acting in such
capacity, except for:
<PAGE>
i. acts or omissions the director at the time knew or believed were
clearly in conflict with the best interests of the corporation;
ii. any liability for unlawful distributions under G.S. 55-8-33;
iii. any transaction from which the director derived an improper personal
benefit, which does not include a director's reasonable compensation
or other reasonable incidental benefit from his or her service as a
director, officer, employee, independent contractor, attorney, or
consultant of the corporation; or
iv. acts or omissions occurring prior to the effectiveness of the
provisions.
The director's, officer's, employee's or agent's rights hereunder shall,
to the fullest extent from time to time permitted by law, cover (a) reasonable
expenses, including without limitation, all attorney's fees actually and
necessarily incurred by him in connection with any such action, suit or
proceeding, (b) all reasonable payments made by him in satisfaction of any
judgment, money decree, fine (including an excise tax assessed with respect to
an employee benefit plan), penalty or settlement for which he may have become
liable in such action, suit or proceeding and (c) all reasonable expenses
incurred in enforcing the indemnification rights provided herein.
The Board of Directors of the corporation shall take all such action as
may be necessary and appropriate to authorize the corporation to pay the
indemnification required by this provision, including, without limitation, to
the extent needed, making a good faith evaluation of the manner in which the
claimant for indemnity acted and of the reasonable amount of indemnity due him.
Any person who at any time serves or has served in any of the aforesaid
capacities for or on behalf of the corporation shall be deemed to be doing or to
have done so in reliance upon, and as consideration for, the rights provided for
herein. Any repeal or modification of these indemnification provisions shall not
affect any rights or obligations existing at the time of such repeal or
modification. The rights provided for herein shall inure to the benefit of the
legal representatives of any such person and shall not be exclusive of any other
rights to which such person may be entitled apart from this provision.
The rights granted herein shall not be limited by the provisions contained
in Section 55-8-51 of the North Carolina General Statutes or any successor to
such statute.
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<PAGE>
ARTICLE VI.
The name and address of the incorporator is James E. Martin, Jr., 1115 E.
Morehead Street, Charlotte, North Carolina 28204.
ARTICLE VII.
The articles will be effective as of July 1, 1994 at 12:00:01 o'clock A.M.
This 22nd day of June, 1994.
/s/ James E. Martin, Jr.
----------------------------------------
James E. Martin, Jr., Attorney at Law,
Incorporator
3
<PAGE>
Exhibit 3.22b
BYLAWS
OF
PROVIEW, INC.
ARTICLE I.
OFFICES
Section 1. Principal Office. The principal office of the corporation shall
be located at such place as the Board of Directors may fix from time to time.
Section 2. Registered Office. The registered office of the corporation
required by law to be maintained in the State of North Carolina may be, but need
not be, identical with the principal office.
Section 3. Other Offices. The corporation may have offices at such other
places, either within or without the State of North Carolina, as the Board of
Directors may designate or as the affairs of the corporation may require from
time to time.
ARTICLE II.
MEETINGS AND SHAREHOLDERS
Section 1. Place of Meetings. All meetings of shareholders shall be held
at the principal office of the corporation, or at such other place, either
within or without the State of North Carolina, as shall in each case be (i)
fixed by the President, the Secretary, or the Board of Directors and designated
in the notice of the meeting or (ii) agreed upon by a majority of the
shareholders entitled to vote at the meeting.
Section 2. Annual Meetings. The annual meeting of shareholders shall be
held in July of each year on any day (except Saturday, Sunday or a legal
holiday) in that month as determined by the Board of Directors.
Section 3. Substitute Annual Meeting. If the annual meeting shall not be
held on the day designated by these bylaws, a substitute annual meeting may be
called in accordance with the provisions of Section 4 of this Article II. A
meeting so called shall be designated and treated for all purposes as the annual
meeting.
Section 4. Special Meetings. Special meetings of the shareholders may be
called at any time by the President, the Secretary or the Board of Directors,
and shall be called pursuant to the written request of the holders of not less
than one-tenth of all the votes entitled to be cast on any issue proposed to be
considered at the meeting.
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Section 5. Notice of Meetings. Written notice stating the date, time and
place of the meeting shall be given not less than ten nor more than sixty days
before the date of any shareholders' meeting, either by personal delivery or by
telegraph, teletype, or other form of wire or wireless communication, or by
facsimile transmission or by mail or private carrier, by or at the direction of
the Board of Directors, the President, the Secretary or other person calling the
meeting, to each shareholder entitled to vote at such meeting; provided that
such notice must be given to all shareholders with respect to any meeting at
which a merger or share exchange is to be considered and in such other instances
as required by law. If mailed, such notice shall be deemed to be effective when
deposited in the United States mail, correctly addressed to the shareholder at
the shareholder's address as it appears on the current record of shareholders of
the corporation, with postage thereon prepaid.
In the case of a special meeting, the notice of meeting shall include a
description of the purpose or purposes for which the meeting is called; but, in
the case of an annual or substitute annual meeting, the notice of meeting need
not include a description of the purpose or purposes for which the meeting is
called unless such a description is required by the provisions of the North
Carolina Business Corporation Act.
When a meeting is adjourned to a different date, time or place, notice
need not be given of the new day, time or place if the new date, time or place
is announced at the meeting before adjournment and if a new record date is not
fixed for the adjourned meeting; but if a new record date is fixed for the
adjourned meeting (which must be done if the new date is more than 120 days
after the date of the original meeting), notice of the adjourned meeting must be
given as provided in this section to persons who are shareholders as of the new
record date.
Section 6. Waiver of Notice. Any shareholder may waive notice of any
meeting before or after the meeting. The waiver must be in writing, signed by
the shareholder, and delivered to the corporation for inclusion in the minutes
for filing with the corporate records. A shareholder's attendance, in person or
by proxy, at a meeting (a) waives objection to lack of notice or defective
notice of the meeting, unless the shareholder or his proxy at the beginning of
the meeting objects to holding the meeting or transacting business at the
meeting, and (b) waives objection to consideration of a particular matter at the
meeting that is not within the purpose or purposes described in the meeting
notice, unless the shareholder or his proxy objects to considering the matter
before it is voted upon.
Section 7. Shareholders' List. Before each meeting of shareholders, the
Secretary of the corporation shall prepare an alphabetical list of the
shareholders entitled to notice of such meeting. The list shall be arranged by
voting group (and within each voting group by class or series of shares) and
show the address of and number of shares held by each shareholder. The list
shall be kept on file at the principal office of the corporation, or at a place
identified in the meeting notice in the city where the meeting will be held, for
the period beginning two business days after notice of the meeting is given and
continuing through the meeting and shall be available for inspection by any
shareholder, his agent or attorney, at any time during regular business hours.
The list shall also be available at the meeting and shall be subject to
inspection by any shareholder, his agent or attorney, at any time during the
meeting or any adjournment thereof
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Section 8. Voting. Group. All shares of one or more classes or series that
under the articles of incorporation or the North Carolina Business Corporation
Act are entitled to vote and be counted together collectively on a matter at a
meeting of shareholders constitute a voting group. All shares entitled by the
articles of incorporation or the North Carolina Business Corporation Act to vote
generally on a matter are for that purpose a single voting group. Classes or
series of shares shall not be entitled to vote separately by voting group unless
expressly authorized by the articles of incorporation or specifically required
by law.
Section 9. Quorum. Shares entitled to vote as a separate voting group may
take action on a matter at the meeting only if a quorum of those shares exists.
A majority of the votes entitled to be cast on the matter by the voting group
constitutes a quorum of that voting group for action on that matter.
Once a share is represented for any purpose at a meeting, it is deemed
present for quorum purposes for the remainder of the meeting and for any
adjournment of that meeting unless a new record date is or must be set for that
adjourned meeting.
In the absence of a quorum at the opening of any meeting of shareholders,
such meeting may be adjourned from time to time by the vote of a majority of the
votes cast on the motion to adjourn; and, subject to the provisions of Section 5
of this Article II, at any adjourned meeting any business may be transacted that
might have been transacted at the original meeting if a quorum exists with
respect to the matter proposed.
Section 10. Proxies. Shares may be voted either in person or by one or
more proxies authorized by a written appointment of proxy signed by the
shareholder or by his duly authorized attorney in fact. An appointment of proxy
is valid for eleven months from the date of its execution, unless a different
period is expressly provided in the appointment form.
Section 11. Voting of Shares. Subject to the provisions of the articles of
incorporation, each outstanding share shall be entitled to one vote on each
matter voted on at a meeting of shareholders.
Except in the election of directors as governed by the provisions of
Section 3 of Article III, if a quorum exists, action on a matter by voting group
is approved if the votes cast within the voting group favoring the action exceed
the votes cast opposing the action, unless a greater vote is required by law or
the articles of incorporation or these bylaws.
Absent special circumstances, shares of the corporation are not entitled
to vote if they are owned, directly or indirectly, by another corporation in
which the corporation owns, directly or indirectly, a majority of the shares
entitled to vote for directors of the second corporation; provided that this
provision does not limit the power of the corporation to vote its own shares
held by it in a fiduciary capacity.
Section 12. Informal Action by Shareholders. Any action that is required
or permitted to be taken at a meeting of the shareholders may be taken without a
meeting if one or more written consents, describing the action so taken, shall
be signed by all of the
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shareholders who would be entitled to vote upon such action at a meeting, and
delivered to the corporation for inclusion in the minutes or filing with the
corporate records.
If the corporation is required by law to give notice to nonvoting
shareholders of action to be taken by unanimous written consent of the voting
shareholders, then the corporation shall give the nonvoting shareholders, if
any, written notice of the proposed action at least ten days before the action
is taken.
ARTICLE III.
BOARD OF DIRECTORS
Section 1. General Powers. All corporate powers shall be exercised by or
under the authority of, and the business and affairs of the corporation shall be
managed under the direction of, the Board of Directors.
Section 2. Number and Qualifications. The number of directors constituting
the Board of Directors shall be not less than one nor more than three as may be
fixed or changed from time to time, within the minimum and maximum, by the
shareholders or by the Board of Directors. Directors need not be residents of
the State of North Carolina or shareholders of the corporation.
Section 3. Election. Except as provided in Section 6 of this Article III,
the directors shall be elected at the annual meeting of shareholders. Those
persons who receive the highest number of votes at a meeting at which a quorum
is present shall be deemed to have been elected.
Section 4. Term of Directors. Each initial director shall hold office
until the first shareholders' meeting at which directors are elected, or until
such director's death, resignation or removal. The term of every other director
shall expire at the next annual shareholders' meeting following the director's
election or upon such director's death, resignation or removal. The term of a
director elected to fill a vacancy expires at the next shareholders' meeting at
which directors are elected. A decrease in the number of directors does not
shorten an incumbent director's term. Despite the expiration of a director's
term, such director shall continue to serve until a successor shall be elected
and qualifies or until there is a decrease in the number of directors.
Section 5. Removal. Any director may be removed at any time with or
without cause by a vote of the shareholders if the number of votes cast to
remove such director exceeds the number of votes cast not to remove him. If a
director is elected by a voting group of shareholders, only the shareholders of
that voting group may participate in the vote to remove him. A director may not
be removed by the shareholders at a meeting unless the notice of the meeting
states that the purpose, or one of the purposes, of the meeting is removal of
the director. If any directors are so removed, new directors may be elected at
the same meeting.
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Section 6. Vacancies. Any vacancy occurring in the Board of Directors,
including without limitation a vacancy resulting from an increase in the number
of directors or from the failure by the shareholders to elect the full
authorized number of directors, may be filled by the shareholders or by the
Board of Directors, whichever group shall act first. If the directors remaining
in office do not constitute a quorum, the directors may fill the vacancy by the
affirmative vote of a majority of the remaining directors. If the vacant office
was held by a director elected by a voting group, only the remaining director or
directors elected by that voting group or the holders of shares of that voting
group are entitled to fill the vacancy.
Section 7. Chairman of Board. There may be a Chairman of the Board of
Directors elected by directors from their number at any meeting of the Board.
The Chairman shall preside at all meetings of the Board of Directors and perform
such other duties as may be directed by the Board.
Section 8. Compensation. The Board of Directors may provide for the
compensation of directors for their services as such and for the payment or
reimbursement of any or all expenses incurred by them in connection with such
services.
ARTICLE IV.
MEETINGS OF DIRECTORS
Section 1. Regular Meetings. A regular meeting of the Board of Directors
shall be held immediately after, and at the same place as, the annual meeting of
shareholders. In addition, the Board of Directors may provide, by resolution,
the time and place, either within or without the State of North Carolina, for
the holding of additional regular meetings.
Section 2. Special Meetings. Special meetings of the Board of Directors
may be called by or at the request of the Chairman of the Board, if any, by the
President or by any one of the directors. Such a meeting may be held either
within or without the State of North Carolina, as fixed by the person or persons
calling the meeting.
Section 3. Notice of Meetings. Regular meetings of the Board of Directors
may be held without notice. The person or persons calling a special meeting of
the Board of Directors shall, at least two days before the meeting, give or
cause to be given notice thereof by any usual means of communication. Such
notice need not specify the purpose for which the meeting is called. Any duly
convened regular or special meeting may be adjourned by the directors to a later
time without further notice.
Section 4. Waiver of Notice. Any director may waive notice of any meeting
before or after the meeting. The waiver must be in writing, signed by the
director entitled to the notice, and delivered to the corporation for inclusion
in the minutes or filing with the corporate records. A director's attendance at
or participation in a meeting waives any required notice of such meeting unless
the director at the beginning of the meeting, or
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promptly upon arrival, objects to holding the meeting or to transacting business
at the meeting and does not thereafter vote for or assent to action taken at the
meeting.
Section 5. Quorum. Unless the articles of incorporation or these bylaws
provide otherwise, a majority of the number of directors fixed by or pursuant to
these bylaws shall constitute a quorum for the transaction of business at any
meeting of the Board of Directors, or if no number is so fixed, the number of
directors in office immediately before the meeting begins shall constitute a
quorum.
Section 6. Manner of Acting. Except as otherwise provided in the articles
of incorporation or these bylaws, including Section 9 of this Article IV, the
affirmative 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.
Section 7. Presumption of Assent. A director who is present at a meeting
of the Board of Directors or a committee of the Board of Directors when
corporate actions taken is deemed to have assented to the action taken unless
(a) he objects at the beginning of the meeting, or promptly upon his arrival, to
holding it or to transacting business at the meeting, or (b) his dissent or
abstention from the action taken is entered in the minutes of the meeting, or
(c) he files written notice of his dissent or abstention with the presiding
officer of the meeting before its adjournment or with the corporation
immediately after the adjournment of the meeting. Such right of dissent or
abstention is not available to a director who votes in favor of the action
taken.
Section 8. Action Without Meeting. Action required or permitted to be
taken at a meeting of the Board of Directors may be taken without a meeting if
the action is taken by all members of the Board. The action must be evidenced by
one or more written consents signed by each director before or after such
action, describing the action taken, and included in the minutes or filed with
the corporate records.
Section 9. Committees of the Board. The Board of Directors may create an
Executive Committee and other committees of the board and appoint members of the
Board of Directors to serve on them. The creation of a committee of the Board
and appointment of members to it must be approved by the greater of (a) a
majority of the number of directors in office when the action is taken or (b)
the number of directors required to take action pursuant to Section 6 of this
Article IV. Each committee of the board must have two or more members and, to
the extent authorized by law and specified by the Board of Directors, shall have
and may exercise all of the authority of the Board of Directors in the
management of the corporation. Each committee member serves at the pleasure of
the Board of Directors. The provisions in these bylaws governing meetings,
action without meetings, notice and waiver of notice and quorum and voting
requirements of the Board of Directors apply to committees of the Board
established under this section.
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ARTICLE V.
OFFICERS
Section 1. Officers of the Corporation. The officers of the corporation
shall consist of a President, a Secretary, a Treasurer and such Vice-Presidents,
Assistant Secretaries, Assistant Treasurers and other officers as may from time
to time be appointed by or under the authority of the Board of Directors. Any
two or more offices may be held by the same person, but no officer may act in
more than one capacity where action of two or more officers is required.
Section 2. Appointment and Term. The officers of the corporation shall be
appointed by the Board of Directors or by a duly appointed officer authorized by
the Board of Directors to appoint one or more officers or assistant officers.
Each officer shall hold office until his death, resignation, retirement,
removal, disqualification or his successor shall have been appointed.
Section 3. Compensation of Officers. The compensation of all officers of
the corporation shall be fixed by or under the authority of the Board of
Directors, and no officer shall serve the corporation in any other capacity and
receive compensation therefor unless such additional compensation shall be duly
authorized. The appointment of an officer does not itself create contract
rights.
Section 4. Removal. Any officer may be removed by the Board at any time
with or without cause; but such removal shall not itself affect the officer's
contract rights, if any, with the corporation.
Section 5. Resignation. An officer may resign at any time by communicating
his resignation to the corporation, orally or in writing. A resignation is
effective when communicated unless it specifies in writing a later effective
date. If a resignation is made effective at a later date that is accepted by the
corporation, the Board of Directors may fill the pending vacancy before the
effective date if the Board provides that the successor does not take office
until the effective date. An officer's resignation does not affect the
corporation's contract rights, if any, with the officer.
Section 6. Bonds. The Board of Directors may by resolution require any
officer, agent or employee of the corporation to give bond to the corporation,
with sufficient sureties, conditioned on the faithful performance of the duties
of his respective office or position, and to comply with such other conditions
as may from time to time be required by the Board of Directors.
Section 7. President. The president shall be the principal executive
officer of the corporation and, subject to the control of the Board of
Directors, shall in general supervise and control all of the business and
affairs of the corporation. He shall, when present, preside at all meetings of
the shareholders. He shall sign, with the Secretary, an Assistant Secretary, or
any other proper officer of the corporation thereunto authorized by the Board of
Directors, certificates for shares of the corporation, any deeds, mortgages,
bonds,
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contracts or other instruments which the Board of Directors has authorized to be
executed, except in cases where the signing and execution thereof shall be
expressly delegated by the Board of Directors or by these bylaws to some other
officer or agent of the corporation, or shall be required by law to be otherwise
signed or executed; and in general he shall perform all duties incident to the
office of President and such other duties as may be prescribed by the Board of
Directors from time to time.
Section 8. Vice Presidents. In the absence of the President or in the
event of his death, inability or refusal to act, the Vice-Presidents in the
order of their length of services as such, unless otherwise determined by the
Board of Directors, shall perform the duties of the President, and when so
acting shall have all the powers of and be subject to all the restrictions upon
the President. Any Vice-President may sign, with the Secretary or an Assistant
Secretary, certificates for shares of the corporation; and shall perform such
other duties as from time to time may be prescribed by the President or Board of
Directors.
Section 9. Secretary. The Secretary shall: (a) keep the minutes of the
meetings of shareholders, the Board of Directors, and all of the committees in
one or more books provided for that purpose; (b) see that all notices are duly
given in accordance with the provisions of these bylaws or as required by law;
(c) maintain and authenticate the records of the corporation and be custodian of
the seal of the corporation and see that the seal of the corporation is affixed
to all documents the execution of which on behalf of the corporation under its
seal is duly authorized (d) sign with the President, or a Vice-President,
certificates for shares of the corporation, the issuance of which shall have
been authorized by resolution of the Board of Directors; (e) maintain and have
general charge of the stock transfer books of the corporation; (f) prepare or
cause to be prepared shareholder lists prior to each meeting of shareholders as
required by law; (g) attest the signature or certify the incumbency or signature
of any officer of the corporation; and (h) in general perform all duties
incident to the office of secretary and such other duties as from time to time
may be prescribed by the President or by the Board of Directors.
Section 10. Assistant Secretaries. In the absence of the Secretary or in
the event of his death, inability or refusal to act, the Assistant Secretaries
in the order of their length of service as Assistant Secretary, unless otherwise
determined by the Board of Directors, shall perform the duties of the Secretary,
and when so acting shall have all the powers of and be subject to all the
restrictions upon the Secretary. They shall perform such other duties as may be
prescribed by the Secretary, by the President or by the Board of Directors. Any
Assistant Secretary may sign, with the President or a Vice-President,
certificates for shares of the Corporation.
Section 11. Treasurer. The Treasurer shall: (a) have charge and custody of
and be responsible for all funds and securities of the corporation; receive and
give receipts for moneys due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the corporation in such
depositories as shall be selected in accordance with the provisions of Section 4
of Article VI of these bylaws; (b) maintain appropriate accounting records as
required by law; (c) prepare, or cause to be prepared, annual financial
statements of the corporation that include a balance sheet as of the end of the
fiscal year and an income and cash flow statement for that year, which
statements, or a written notice of
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their availability, shall be mailed to each shareholder within 120 days after
the end of such fiscal year; and (d) in general, perform all of the duties
incident to the office of treasurer and such other duties as from time to time
may be prescribed by the President or by the Board of Directors.
Section 12. Assistant Treasurers. In the absence of the Treasurer or in
the event of his death, inability or refusal to act, the Assistant Treasurers in
the order of their length of service as such, unless otherwise determined by the
Board of Directors, shall perform the duties of the Treasurer, and when so
acting shall have all the powers of and be subject to all the restrictions upon
the Treasurer. They shall perform such other duties as may be prescribed by the
Treasurer, by the President, or by the Board of Directors.
ARTICLE VI.
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. Contracts. The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the corporation, and such authority
may be general or confined to specific instances.
Section 2. Loan. No loans shall be contracted on behalf of the corporation
and no evidence of indebtedness shall be issued in its name unless authorized by
the Board of Directors. Such authority may be general or confined to specific
instances.
Section 3. Checks and Drafts. All checks, drafts, or other orders for the
payment of money, issued in the name of the corporation, shall be signed by such
officer or officers, agent or agents of the corporation and in such manner as
shall from time to time be determined by the Board of Directors.
Section 4. Deposits. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
depositories as may be selected by or under the authority of the Board of
Directors.
ARTICLE VII
SHARES AND THEIR TRANSFER
Section 1. Certificates for Shares. The Board of Directors may authorize
the issuance of some or all of the shares of the corporation's classes or series
without issuing certificates to represent such shares. If shares are represented
by certificates, the certificates shall be in such form as required by law and
as determined by the Board of Directors. Certificates shall be signed, either
manually or in facsimile, by the President or a Vice President and by the
Secretary or Treasurer or an Assistant Secretary or an Assistant Treasurer. All
certificates for shares shall be consecutively numbered or otherwise identified
and entered into the stock transfer books of the corporation. When shares are
represented by certificates, the corporation shall issue and deliver, to each
shareholder to whom such shares
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have been issued or transferred, certificates representing the shares owned by
him. When shares are not represented by certificates, then within a reasonable
time after the issuance or transfer of such shares, the corporation shall send
the shareholder to whom such shares have been issued or transferred a written
statement of the information required by law to be on certificates.
Section 2. Stock Transfer Books. The corporation shall keep a book or set
of books, to be known as the stock transfer books of the corporation, containing
the name of each shareholder of record, together with such shareholder's address
and the number and class or series of shares held by him. Transfers of shares of
the corporation shall be made only on the stock transfer books of the
corporation by the holder of record thereof or by his legal representative, who
shall furnish proper evidence of authority to transfer, or by his attorney
authorized to effect such transfer by power of attorney duly executed and filed
with the Secretary, and on surrender for cancellation of the certificate for
such shares (if the shares are represented by certificates).
Section 3. Lost Certificate. The Board of Directors may direct a new
certificate to be issued in place of any certificate theretofore issued by the
corporation claimed to have been lost or destroyed, upon receipt of an affidavit
of such fact from the person claiming the certificate to have been lost or
destroyed. When authorizing such issue of a new certificate, the Board of
Directors shall require that the owner of such lost or destroyed certificate, or
his legal representative, give the corporation a bond in such sum and with such
surety or other security as the board may direct as indemnity against any claim
that may be made against the corporation with respect to the certificate claimed
to have been lost or destroyed, except where the Board of Directors by
resolution finds that in the judgment of the directors the circumstances justify
omission of a bond.
Section 4. Fixing Record Date. The Board of Directors may fix a future
date as the record date for one or more voting groups in order to determine the
shareholders entitled to notice of a shareholder's meeting, to demand a special
meeting to vote or to take any other action. Such record date may not be more
than seventy days before the meeting or action requiring a determination of
shareholders. A determination of shareholders entitled to notice of or to vote
at a shareholders' meeting is effective for any adjournment of the meeting
unless the Board of Directors fixes a new record date for the adjourned meeting,
which it must do if the meeting is adjourned to a date more than 120 days after
the date fixed for the original meeting.
If no record date is fixed by the Board of Directors for the determination
of shareholders entitled to notice of or to vote at a meeting of shareholders,
the close of business on the day before the first notice of the meeting is
delivered to shareholders shall be the record date for such determination of
shareholders.
The Board of Directors may fix a date as the record date for determining
shareholders entitled to a distribution or share dividend. If no record date is
fixed by the Board of Directors for such determination, it is the date the Board
of Directors authorizes the distribution or share dividend.
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Section 5. Holder of Record. Except as otherwise required by law, the
corporation may treat the person in whose name the shares stand of record on its
books as the absolute owner of the shares and the person exclusively entitled to
receive notification and distributions, to vote, and to otherwise exercise the
rights, powers and privileges of ownership of such shares.
Section 6. Shares Held by Nominees. The corporation shall recognize the
beneficial owner of shares registered in the name of a nominee as the owner and
shareholder of such shares for certain purposes if the nominee in whose name
such shares are registered files with the Secretary a written certificate in a
form prescribed by the corporation, signed by the nominee, indicating the
following: (i) the name, address and taxpayer identification number of the
nominee; (ii) the name, address and taxpayer identification number of the
beneficial owner, (iii) the number and class or series of shares registered in
the name of the nominee as to which the beneficial owner shall be recognized as
the shareholder; and (iv) the purposes for which the beneficial owner shall be
recognized as the shareholder.
The purposes for which the corporation shall recognize the beneficial
owner as the shareholder may include the following: (i) receiving notice of,
voting at, and otherwise participating in shareholders' meetings; (ii) executing
consents with respect to the shares; (iii) exercising dissenters' rights under
Article 13 of the Business Corporation Act; (iv) receiving distributions and
share dividends with respect to the shares; (v) exercising inspection rights;
(vi) receiving reports, financial statements, proxy statements and other
communications from the corporation; (vii) making any demand upon the
corporation required or permitted by law; and (viii) exercising any other rights
or receiving any other benefits of a shareholder with respect to the shares.
The certificate shall be effective ten (10) business days after its
receipt by the corporation and until it is changed by the nominee, unless the
certificate specifies a later effective time or an earlier termination date.
If the certificate affects less than all of the shares registered in the
name of the nominee, the corporation may require the shares affected by the
certificate to be registered separately on the books of the corporation and be
represented by a share certificate that bears a conspicuous legend stating that
there is a nominee certificate in effect with respect to the shares represented
by that share certificate.
ARTICLE VIII
INDEMNIFICATION
Any person who at any time serves or has served as a director of the
corporation, or who, while serving as a director of the corporation, serves or
has served, at the request of the corporation, as a director, officer, partner,
trustee, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, or as a trustee or administrator under an employee
benefit plan, shall have a right to be indemnified by the corporation to the
fullest extent permitted by law against (a) reasonable expenses, including
attorneys' fees, incurred by him in connection with any threatened, pending or
completed
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civil, criminal, administrative, investigative or arbitrative action, suit or
proceeding (and any appeal therein), whether or not brought by or on behalf of
the corporation, seeking to hold him liable by reason of the fact that he is or
was acting in such capacity and (b) reasonable payments made by him in
satisfaction of any judgment, money decree, fine (including an excise tax
assessed with respect to an employee benefit plan), penalty or settlement for
which he may have become liable in any such action, suit or proceeding.
The Board of Directors of the corporation shall take all such action as
may be necessary and appropriate to authorize the corporation to pay the
indemnification required by this bylaw, including, without limitation, making a
determination that indemnification is permissible in the circumstances and a
good faith evaluation of the manner in which the claimant for indemnity acted
and of the reasonable amount of indemnity due him. The Board of Directors may
appoint a committee or special counsel to make such determination and
evaluation. To the extent needed, the Board shall give notice to, and obtain
approval by, the shareholders of the corporation for any decision to indemnify.
Any person who at any time after the adoption of this bylaw serves or has
served in the aforesaid capacity for or on behalf of the corporation shall be
deemed to be doing or to have done so in reliance upon, and as consideration
for, the right of indemnification provided herein. Such right shall inure to the
benefit of the legal representatives of any such persons and shall not be
exclusive of any other rights to which such person may be entitled apart from
the provision of this bylaw.
ARTICLE IX.
GENERAL PROVISIONS
Section 1. Distributions. The Board of Directors may from time to time
authorize, and the corporation may grant, distributions and share dividends to
its shareholders pursuant to law and subject to the provisions of its articles
of incorporation.
Section 2. Seal. The corporate seal of the corporation shall consist of
two concentric circles between which is the name of the corporation and in the
center of which is inscribed SEAL; and such seal, as impressed or affixed on the
margin hereof, is hereby adopted as the corporate seal of the corporation.
Section 3. Fiscal Year. The fiscal year of the corporation shall be fixed
by the Board of Directors.
Section 4. Amendments. Except as otherwise provided in the articles of
incorporation or by law, these bylaws may be amended or repealed and new bylaws
may be adopted by the Board of Directors.
No bylaw adopted, amended or repealed by the shareholders shall be
readopted, amended or repealed by the Board of Directors, unless the articles of
incorporation or a bylaw adopted by the shareholders authorizes the Board of
Directors to adopt, amend or repeal that particular bylaw or the bylaws
generally.
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Section 5. Definitions. Unless the context otherwise requires, terms used
in these bylaws shall have the meanings assigned to them in the North Carolina
Business Corporation Act to the extent defined therein.
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AMENDMENT TO BYLAWS OF PROVIEW BY JOINT WRITTEN CONSENT OF THE DIRECTORS OF
GLOBAL IMAGING SYSTEMS, INC., SOUTHERN BUSINESS COMMUNICATIONS, INC.
AND GLOBAL IMAGING FINANCE COMPANY DATED SEPTEMBER 28, 1998.
(4) SBC, AS SHAREHOLDER OF PROVIEW, AMENDMENTS TO BYLAWS OF PROVIEW AND
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ELECTION OF DIRECTORS OF PROVIEW
--------------------------------
RESOLVED, that immediately subsequent to the consummation of the
ProView Transaction the bylaws of ProView (the "PROVIEW BYLAWS") shall be
amended as follows:
Section 2 of Article III of the ProView Bylaws shall be amended to
replace the first sentence with the following: "The business of this
corporation shall be managed by its Board of Directors, which shall be
from one to ten in number, as determined by the shareholders of the
Corporation."
Section 7 of Article III of the ProView Bylaws shall be amended to
replace the second sentence with the following: "The Chairman shall
preside at all meetings of the Board of Directors and perform such
other duties as may be directed by the Board and the shareholders."
Section 2 of Article IV of the ProView Bylaws shall be amended to
replace the first sentence with the following: "Special meetings of
the Board may be called by the Chairman of the Board on 24 hours
notice to each director, either personally or by mail, overnight
courier or by facsimile."
Section 1 of Article V of the ProView Bylaws shall be amended to
replace the first sentence with the following: "The executive officers
of the corporation shall be the Chairman of the Board of Directors,
the President, any number of Vice Presidents chosen by the Board of
Directors, the Treasurer, the Secretary, and any number of Assistant
Secretaries chosen by the Board of Directors."
-5-
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FILED
FEB 27 1986
SECRETARY OF STATE
STATE OF WASHINGTON
Exhibit 3.23a
ARTICLES OF INCORPORATION
OF
QUALITY BUSINESS SYSTEMS, INC.
KNOW ALL MEN BY THESE PRESENTS: That the undersigned, being over the age
of eighteen (18) years, and for the purpose of forming a corporation under the
Washington Business Corporation Act hereby certifies and adopts in duplicate the
following Articles of Incorporation:
ARTICLE I
The name of the corporation shall be QUALITY BUSINESS SYSTEMS, INC.
ARTICLE II
This corporation shall have perpetual existence.
ARTICLE III
The purposes for which the corporation is organized are as follows:
1. To sell, lease, repair and service office and business machinery and
equipment of any type and nature;
2. To engage in generally and carry on any lawful business or trade which
may, in the judgment of the Board of Directors, at any time be necessary, useful
or advantageous to this corporation; and
3. In furtherance of and not in limitation of the general powers conferred
by the laws of the State of Washington, it is expressly provided that this
corporation shall also have the following powers:
ARTICLES OF INCORPORATION Page 1
<PAGE>
(a) To acquire by purchase or otherwise and to own, hold, cancel, reissue,
sell, pledge and otherwise deal in the stock of this corporation; provided that
the money or property of the corporation shall not be used for purchase of
shares of its own stock when such use would cause any impairment of the capital
of the corporation. The corporation shall not be entitled to vote, either
directly or indirectly, on any shares of its own stock which it may hold.
(b) To acquire by purchase or otherwise and to own, hold, cancel, reissue,
sell, pledge and otherwise deal in the bonds, debentures, notes and other
securities and obligations of this corporation.
(c) To borrow money and give security therefor.
(d) To enter into, make, perform and carry out contracts of every kind for
any lawful purposes pertaining to its business, with any individual, entity,
firm, association, or corporation, or with any governmental, municipal, or
public authority, domestic or foreign.
(e) To do everything necessary, proper, convenient, or incidental to the
accomplishment of the purpose and objects of this corporation, of which is
calculated directly or indirectly to promote the welfare of interests of the
corporation or enhance the value or render profitable any of its property or
rights.
ARTICLES OF INCORPORATION Page 2
<PAGE>
(f) To do any and all of the things in this Article set forth to the same
extent a natural person might or could do, and in any part of the world, as
principals, agents, contractors, trustees, or otherwise, either alone or in
company with others;
PROVIDED, HOWEVER, that nothing. herein contained shall be deemed to
authorize or permit the corporation to carry on any business, to exercise any
power or to do any act which a corporation formed under the Uniform Business
Corporation Act of the State of Washington, or any amendment thereto or
substitute therefor, may not at the time lawfully carry on or do.
ARTICLE IV
Shareholders of this corporation shall have preemptive rights to acquire
additional shares offered for sale by the corporation and shall have cumulative
voting.
ARTICLE V
The location and post office address of the registered office of the
corporation in this state shall be:
14574 N. E. 95th Street
Redmond, Washington 98052
and the registered agent of the corporation at that address shall be:
Ronald R. Baker
ARTICLE VI
The authorized capital of this corporation shall consist of FIFTY THOUSAND
(50,000) shares having no par value or
ARTICLES OF INCORPORATION Page 3
<PAGE>
stated value. Subscriptions for shares thereof shall be made payable with
consideration of the character and value determined by the Board of Directors.
Consideration to be received for the issuance of shares shall not exceed FIFTY
THOUSAND DOLLARS ($50,000.00).
ARTICLE VII
1. The number of directors of the corporation shall be fixed as provided
in the By-Laws, and may be changed from time to time by amending the By-Laws, as
therein provided.
2. In furtherance of and not in limitation of the powers conferred by the
laws of the State of Washington, the Board of Directors is expressly authorized
to make, alter and repeal the By-Laws of the corporation, subject to the power
of the stockholders of the corporation to change or repeal such By-Laws.
3. The corporation may enter into contracts and otherwise transact
business as vendor, purchaser, or otherwise, with its directors, officers, and
stockholders and with corporations, associations, firms and entities in which
they are or may be necessary to obligate the corporation upon such contracts or
transactions; and
In the absence of fraud no such contract or transaction shall be voided
and no such director, officer or stockholder shall be held liable to account to
the corporation, by reason of such adverse interests or by reason of any
fiduciary relationship to the corporation arising out of such office or
ARTICLES OF INCORPORATION Page 4
<PAGE>
stock ownership, for any profit or benefit realized by him through any such
contract or transaction; provided that in the case of directors and officers of
the corporation (but not in the case of stockholders who are not directors or
officers), the nature of the interest of such director or officer, though not
necessarily the details or extent thereof, be disclosed or known to the Board of
Directors of the corporation, at the meeting thereof at which such contract or
transaction is authorized or confirmed.
A general notice that a director or officer of this corporation is
interested in any corporation, association, firm, or entity shall be sufficient
disclosure as to such director or officer with respect to all contracts and
transactions with that corporation, association, firm or entity.
4. Any contract, transaction or act of the corporation or of the directors
or of any officers of the corporation which shall be ratified by a majority of a
quorum of the stockholders of the corporation at any annual meeting or any
special meeting called for such purpose, shall insofar as permitted by law, be
as binding as though ratified by every stockholder of the corporation.
ARTICLE VIII
1. The number of directors constituting the initial Board of Directors of
the corporation is four.
ARTICLES OF INCORPORATION Page 5
<PAGE>
2. The names and addresses of the persons who are to serve as directors
until the first annual meeting of the shareholders or their successors are
elected and qualified are as follows:
RONALD R. BAKER 1119 East Lake Sammamish Pky N. E.
LINDA L. BAKER Redmond, Washington 98053-6640
JOYCE M. WOROBEC 10725 N. E. 114th Place Kirkland, WA
98033
RODGER D. SWANSON 209 Poppy Road
Bothell, Washington 98012
ARTICLE IX
The name and address of the incorporator is as follows:
RONALD R. BAKER 1119 East Lake Sammamish Pky N. E.
Redmond, Washington 98053-6640
IN WITNESS WHEREOF, the incorporator hereunto set his hand this 5th day of
February, 1986.
/s/ Ronald R. Baker
---------------------------------
RONALD R. BAKER, Incorporator
ARTICLES OF INCORPORATION Page 6
<PAGE>
CONSENT TO SERVE AS REGISTERED AGENT
I, RONALD R. BAKER, hereby consent to serve as Registered Agent, in the
state of Washington, for the following corporation, QUALITY BUSINESS SYSTEMS,
INC. I understand that as agent for the corporation, it will be my
responsibility to receive service of process in the name of the corporation; to
forward all mail to the corporation; and to immediately notify the office of the
Secretary of State in the event of my resignation, or of any changes in the
registered office address of the corporation for which I am agent.
2-5-86 /s/ Ronald R. Baker
- ----------- --------------------------------
(date) (signature of agent)
14574 N. E. 95th Street
--------------------------------
(registered office address)
Redmond, WA 98052
--------------------------------
<PAGE>
Exhibit 3.23b
BYLAWS
OF
QUALITY BUSINESS SYSTEMS, INC.
Adopted effective September 1, 1997
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
ARTICLE I
OFFICES
<S> <C> <C> <C>
Section 1 Principal Office.............................................1
2 Registered Office/Agent......................................1
ARTICLE II
SHAREHOLDERS
Section 1 Annual Meeting.............................................. 1
2 Special Meetings.............................................1
3 Place of Meeting.............................................1
4 Notice of Meetings ..........................................2
5 Waiver of Notice ............................................2
6 Record Date .................................................2
7 Quorum ......................................................2
8 Proxies .....................................................3
9 Voting Record ...............................................3
10 Voting of Shares ............................................3
11 Attendance by Conference Telephone ..........................3
12 Voting of Shares by Certain Holders .........................3
13 Informal Action by Shareholders .............................4
14 Facsimiles ..................................................4
ARTICLE III
BOARD OF DIRECTORS
Section 1 General Powers ..............................................4
2 Number, Tenure and Qualifications ...........................4
3 Attendance by Conference Telephone ..........................4
4 Regular Meetings ............................................4
5 Special Meetings ............................................5
6 Notice ......................................................5
7 Quorum ......................................................5
8 Manner of Acting ............................................5
9 Action without Meeting ......................................5
10 Vacancies ...................................................5
11 Compensation ................................................6
12 Presumption of Assent .......................................6
13 Committees ..................................................6
14 Facsimiles ..................................................6
ARTICLE IV
OFFICERS
Section 1 Number ......................................................6
2 Election and Term of Office .................................7
3 Removal .....................................................7
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
4 Vacancies ..................................................7
5 Chairman of the Board ......................................7
6 President ..................................................7
7 Vice President .............................................7
8 Secretary ..................................................7
9 Treasurer ..................................................7
10 Other Officers and Agents ..................................8
11 Salaries ...................................................8
12 Facsimiles .................................................8
ARTICLE V
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1 Contracts ...................................................8
2 Loans .......................................................8
3 Checks, Drafts or other
Evidences of Indebtedness ...................................8
4 Deposits ....................................................8
ARTICLE VI
CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 1 Issuance of Shares ..........................................8
2 Certificates for Shares .....................................9
3 Transfer of Shares ..........................................9
4 Restrictions on Transfer ....................................9
ARTICLE VII
BOOKS AND RECORDS
Section 1 Books of Accounts, Minutes and
Share Register .............................................10
2 Copies of Resolutions ......................................10
ARTICLE VIII
CORPORATE YEAR ...............................................................10
ARTICLE IX
AMENDMENTS
Section 1 By the Shareholders ........................................10
2 By the Board of Directors ..................................10
3 Conformity to State Law ....................................11
</TABLE>
<PAGE>
BYLAWS
OF
QUALITY BUSINESS SYSTEMS, INC.
ARTICLE I
OFFICES
Section 1. Principal Office. The principal office of the Corporation is
the office within or outside of the state of Washington where the principal
executive offices of the Corporation are located, or such other place as the
Board of Directors may designate. The Corporation may have such other offices,
either within or without the state of Washington, as the Board of Directors may
designate or as the business of the Corporation may require from time to time.
Section 2. Registered Office/Agent. The Corporation shall continuously
maintain within the state of Washington a Registered Agent and a Registered
Office as required by the Business Corporation Act of the state of Washington.
The Registered Agent for the Corporation may be changed from time to time by the
Board of Directors. To be effective, notice of any change in the registered
agent or registered office must be filed with the office of the Secretary of
State of the state of Washington.
ARTICLE II
SHAREHOLDERS
Section 1. Annual Meeting. The annual meeting of the Shareholders shall be
held during the month of December at such date and time as shall be specified by
the Board of Directors, for the purpose of electing Directors and for the
transaction of such other business as may come before the meeting. If the
election of Directors shall not be held at the annual meeting of the
Shareholders, or at any adjournment thereof, the Board of Directors shall cause
the election to be held at a special meeting of the Shareholders as soon
thereafter as is convenient.
Section 2. Special Meetings. Special meetings of the Shareholders, for any
purpose or purposes, unless otherwise prescribed by statute, may be called by
the president or by a majority of the Board of Directors, and shall be called by
the president at the written request of the holders of not less than one-tenth
(1/10) of all outstanding shares of the Corporation entitled to vote at the
meeting. No business shall be transacted at any special meeting of shareholders
except as is specified in the notice calling for the meeting.
Section 3. Place of Meeting. The Board of Directors may designate any
place, either within or without the state of Washington, as the place for any
annual meeting, or for any special meeting called by the Board of Directors.
Special meetings called at the request of shareholders shall be held at such
place as may be determined by the Board of Directors and designated in the
notice of such meetings. If no designation is made, the place of meeting shall
be the principal office of the Corporation in the state of Washington.
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Section 4. Notice of Meetings. Written notice stating the place, day, and
hour of the meeting, and in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall, unless otherwise prescribed by
statute, be given no fewer than ten (10) days nor more than sixty (60) days
before the date of the meeting by or at the direction of the president or the
secretary, or the persons calling the meeting, to each shareholder of record
entitled to vote at such meeting. Notice of a meeting to act on an amendment to
the Articles of Incorporation, a plan of merger or share exchange, a proposed
sale, lease, exchange or other disposition of all or substantially all of the
assets of the Corporation other than in the usual or regular course of business,
or the dissolution of Corporation shall be given to all shareholders, whether or
not entitled to vote, no fewer than twenty (20) days nor more than sixty (60)
days before the meeting date. Notice may be transmitted by mail, private carrier
or personal delivery; telegraph or teletype; or telephone, equipment which
transmits a facsimile of the notice. If mailed, such notice shall be deemed to
be effective when mailed with postage thereon prepaid, addressed to the
shareholder at his or her address as it appears in the Corporation's current
record of shareholders. If a proposed corporate action creating dissenters'
rights under RCW 23B.13.020 (as such statute now exists or may hereafter be
amended) is to be submitted to a vote at a shareholders' meeting, the meeting
notice must state that shareholders are or may be entitled to assert dissenters'
rights and be accompanied by a copy of RCW 23B.13 (as such statute now exists or
may hereafter be amended).
Section 5. Waiver of Notice. Notice of the time, place and purpose of any
meeting may be waived in writing (either before or after such meeting) and will
be waived by any shareholder by his or her attendance at the meeting in person
or by proxy, unless the shareholder at the beginning of the meeting objects to
holding the meeting or transacting business at the meeting. Any shareholder so
waiving shall be bound by the proceedings of any such meeting in all respects as
if due notice thereof had been given.
Section 6. Record Date. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders, or any
adjournment thereof, or entitled to receive payment of any dividend, the Board
of Directors may fix in advance a record date for any such determination of
shareholders, such date to be not more than seventy (70) days prior to the date
on which the particular action requiring such determination of shareholders is
to be taken. If no record date is fixed for the determination of shareholders
entitled to notice of or to vote at a meeting of shareholders, or shareholders
entitled to receive payment of a dividend, the day before the date on which
notice of the meeting is mailed or the date on which the resolution of the Board
of Directors declaring such dividend is adopted, as the case may be, shall be
the record date for such determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof, unless the Board of Directors fixes a new record date, which it must do
if the meeting is adjourned to a date more than one hundred twenty (120) days
after the date fixed for the original meeting.
Section 7. Quorum. A majority of the outstanding shares of the Corporation
entitled to vote, represented in person or by proxy, shall constitute a quorum
at a meeting of Shareholders. If less than a quorum is represented at a meeting,
a majority of the shares so represented may adjourn the meeting without further
notice to a different date, time, and/or place. At such adjourned meeting if a
quorum is present or represented, any business may be transacted which might
have been transacted at the meeting as originally notified. The Shareholders
present at a duly organized meeting may continue to transact business until
adjournment, notwithstanding the withdrawal of enough Shareholders to leave less
than a quorum, unless a new record date is or must be set for the adjourned
meeting.
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Section 8. Proxies. At all meetings of Shareholders, a shareholder may
vote in person, or by proxy executed in writing by the shareholder or by his or
her duly authorized attorney-in-fact. Such proxy shall be filed with the
secretary of the Corporation before or at the time of the meeting. No proxy
shall be valid after eleven (11) months from the date of its execution, unless
otherwise provided in the proxy. A proxy with respect to a specified meeting
shall entitle the holder thereof to vote at any reconvened meeting following
adjournment of such meeting but shall not be valid after the final adjournment
thereof.
Section 9. Voting Record. After fixing a record date for a shareholders'
meeting, the Corporation shall prepare an alphabetical list of the names of all
shareholders on the record date who are entitled to notice of the shareholders'
meeting. The list shall be arranged by voting group, and within each voting
group by class or series of shares, and show the address of and number of shares
held by each shareholder. A shareholder, shareholder's agent, or a shareholder's
attorney may inspect the shareholder's list, beginning ten days prior to the
shareholders' meeting and continuing through the meeting, at the Corporation's
principal office or at a place identified in the meeting notice in the city
where the meeting will be held during regular business hours and at the
shareholder's expense. The shareholders' list shall be kept open for inspection
during such meeting or any adjournment.
Section 10. Voting of Shares. Except as otherwise provided in the Articles
of Incorporation or in these Bylaws, each outstanding share entitled to vote
shall be entitled to one (1) vote upon each matter submitted to vote at a
meeting of Shareholders. If a quorum exists, action on a matter, other than
election of directors, is approved by a voting group of shareholders if the
votes cast within the voting group favoring the action exceed the votes cast
within the voting group opposing the action, unless the Articles of
Incorporation or the Washington Business Corporation Act requires a greater
number of affirmative votes.
Section 11. Attendance by Conference Telephone. A meeting may be held by
means of a conference telephone or similar communications equipment whereby all
persons participating in the meeting can hear each other at the same time, and
participation by such means shall constitute presence in person at such a
meeting.
Section 12. Voting of Shares by Certain Holders. Subject to the
limitations contained in RCW 23B.07.210(2), shares standing in the name of
another Corporation may be voted by such officer, agent, or proxy as the Bylaws
of such Corporation may prescribe, or, in the absence of such provision, as the
Board of Directors of such Corporation may determine.
Shares held by an administrator, executor, guardian, or conservator may be
voted by him or her, either in person or by proxy, without transfer of such
shares into his or her name. Shares standing in the name of a trustee may be
voted by him or her, either in person or by proxy, but no trustee shall be
entitled to vote shares held by him or her without a transfer of such shares
into his or her name.
Shares standing in the name of a receiver may be voted by such receiver,
and shares held by or under the control of a receiver may be voted by such
receiver without the transfer thereof into his or her name if authority so to do
be contained in an appropriate order of the court by which such receiver was
appointed.
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A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Section 13. Informal Action by Shareholders. Any action required to be
taken at a meeting of the Shareholders, or any action which may be taken at a
meeting of the Shareholders, may be taken without a meeting, without prior
notice, and without a vote, if a consent in writing setting forth the action to
be taken, shall be signed by all of the Shareholders entitled to vote with
respect to the subject matter thereof. If action by unanimous consent of voting
shareholders is proposed for amendment to the Articles of Incorporation, a plan
of merger or share exchange, a proposed sale, lease, exchange or other
disposition of all or substantially all of the assets of the Corporation other
than in the usual or regular course of business, or the dissolution of
Corporation, the corporation must give nonvoting shareholders written notice, as
provided in these Bylaws, at least ten (10) days before the action is taken: If
corporate action creating dissenters' rights under RCW 23B.13.020 (as such
statute now exists or may hereafter be amended) is taken without a vote of the
shareholders, the Corporation, within ten days after the effective date of such
corporate action, shall notify, in writing, all shareholders entitled to assert
dissenters' rights that the action was taken and send them the dissenters'
notice described in RCW 23B.13.220 (as such statute now exists or may hereafter
be amended).
Section 14. Facsimiles. When the signature of a shareholder on a corporate
document is delivered by equipment which transmits a facsimile of the document,
that signature shall be deemed to be an original signature. In addition, an
original signature on a facsimile copy of a corporate document shall be deemed
an original.
ARTICLE III
BOARD OF DIRECTORS
Section 1. General Powers. The business and affairs of the Corporation
shall be managed by its Board of Directors, subject to any limitation set forth
in the Corporation's Articles of Incorporation.
Section 2. Number, Tenure and Qualifications. The number of Directors of
the Corporation shall be three (3) until that number is changed in accordance
with these Bylaws. If the minutes of any shareholder meeting should indicate
that a larger or lesser number has been elected, then this Bylaw shall be
considered to have been automatically amended to conform to the number set
forth in the minutes, provided that no decrease shall shorten the term of any
incumbent director. Unless a director dies, resigns, or is removed, he or she
shall hold office until the next annual meeting of the Shareholders and until
his or her successor shall have been elected and qualified. Directors need not
be residents of the state of Washington or Shareholders of the Corporation.
Section 3. Attendance by Conference Telephone. A meeting of the Board of
Directors may be held by means of a conference telephone or similar
communications equipment whereby all persons participating in the meeting can
hear each other at the same time, and participation by such means shall
constitute presence in person at such a meeting.
Section 4. Regular Meetings. A regular annual meeting of the Board of
Directors shall be held, without other notice than this Bylaw, immediately after
or combined with, and at the same place as, the annual meeting of Shareholders.
The Board of Directors
4
<PAGE>
may provide, by resolution, the time and place, either within or without the
state of Washington, for the holding of additional regular meetings, without
other notice than such resolution.
Section 5. Special Meetings. Special meetings of the Board of Directors
may be called at the request of the president or any director. The person or
persons authorized to call special meetings of the Board of Directors may fix
any place, either within or without the state of Washington, as the place for
holding any special meeting of the Board of Directors called by them.
Section 6. Notice. Notice of the time and place of each special meeting of
directors shall be given by the secretary, or the persons calling the meeting,
either in writing or orally. Oral notice may be communicated in person or by
telephone, and shall be deemed effective if personally given to the director at
least forty-eight (48) hours in advance of the time of the meeting:
Written notice delivered by private carrier, personal delivery, telegraph,
teletype, or telephone, equipment which transmits a facsimile of the notice,
must be delivered at least forty-eight (48) hours in advance of the time of the
meeting.
If mailed, written notice shall be deemed effective when mailed, if mailed
with first-class postage prepaid addressed to a director at his or her address
shown on the records of the Corporation at least five (5) days before the
meeting.
Any director may waive notice of any meeting in writing. The attendance of
a director at a meeting shall constitute a waiver of notice of such meeting, and
no writing shall be required, except where a director attends a meeting for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened.
Neither the business to be transacted at, nor the purpose of, any regular
or special meeting of the Board of Directors need be specified in the notice or
waiver of notice of such meeting.
Section 7. Quorum. A majority of the number of Directors fixed by Section
2 of this Article III shall constitute a quorum for the transaction of business
at any meeting of the Board of Directors; but, if less than such a majority is
present at a meeting, a majority of the Directors present may adjourn the
meeting to a different date, time, or place without further notice.
Section 8. Manner of Acting. Unless the vote of a greater number is
required by these Bylaws, the Articles of Incorporation, the Washington Business
Corporation Act, or any Shareholders Agreement, the act of the majority of the
Directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors.
Section 9. Action without Meeting. Any action that may be taken by the
Board of Directors at a meeting may be taken without a meeting if a consent, in
writing, setting forth the action to be taken, shall be signed by all of the
Directors.
Section 10. Vacancies. Any vacancy occurring in the Board of Directors may
be filled by the affirmative vote of a majority of the remaining Directors,
though less than a quorum of the Board of Directors. A director elected to fill
a vacancy shall be elected for the unexpired term of his or her predecessor in
office. Any directorship to be filled by reason of an increase in the number of
Directors may be filled by election by the Board of
5
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Directors for a term of office continuing only until the next election of
Directors by the Shareholders.
Section 11. Compensation. By resolution of the Board of Directors, each
director may be paid his or her expenses, if any, of attendance at each meeting
of the Board of Directors, and may be paid a stated salary as a director or a
fixed sum for attendance at each meeting of the Board of Directors, or a
combination of the foregoing. No such payment shall preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor.
Section 12. Presumption of Assent. A director of the Corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken, unless
the director objects at the beginning of the meeting, or promptly upon the
director's arrival, to holding it or transacting business at the meeting and'
his or her dissent shall be entered in the minutes of the meeting, or unless he
or she shall deliver his or her written dissent to such action with the person
acting as the secretary of the meeting before the adjournment thereof or to the
Corporation within a reasonable time after adjournment of the meeting. Such
right to dissent shall not apply to any director who votes in favor of the
action taken.
Section 13. Committees. The Board of Directors, by resolution adopted by a
majority of the full Board of Directors, may designate from among its members
one or more committees, each of which must have two or more members and, to the
extent provided in such resolution, shall have and may exercise all the
authority of the Board of Directors, except that no such committee shall have
the authority to: authorize and approve a distribution except according to a
general formula or method prescribed by the Board of Directors; approve or
propose to shareholders action that the Washington Business Corporation Act
requires to be approved by shareholders; fill vacancies on the Board of
Directors or on any of its committees; amend any Articles of Incorporation not
requiring shareholder approval; adopt, amend or repeal Bylaws; approve a plan of
merger not requiring shareholder approval; 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 14. Facsimiles. When the original signature of a director on a
corporate document is delivered by equipment which transmits a facsimile of the
document, that signature shall be deemed to be an original signature. In
addition, an original signature on a facsimile copy of a corporate document
shall be deemed an original.
ARTICLE IV
OFFICERS
Section 1. Number. The officers of the Corporation shall be a president, a
secretary, and a treasurer, each of whom shall be elected by the Board of
Directors. Such other officers and assistant officers, including one or more
vice presidents (the number thereof to be determined by the Board of Directors),
as may be deemed necessary may be elected or appointed by the Board of
Directors, and shall have such authority and perform such duties as are provided
in these Bylaws or as may be provided by resolution of the Board. Any two or
more offices may be held by the same person.
6
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Section 2. Election and Term of Office. The officers of the Corporation
shall be elected annually by the Board of Directors at the meeting of the Board
of Directors held after each annual meeting of the Shareholders. If the election
of officers shall not be held at such meeting, such election shall be held as
soon thereafter as is convenient. Unless an officer dies, resigns or is removed
from office, he or she shall hold office until his or her successor shall have
been duly elected and qualified.
Section 3. Removal. Any officer or agent may be removed by the Board of
Directors whenever, in its judgment, the best interest of the Corporation will
be served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Election or appointment of an officer
or agent shall not of itself create contract rights.
Section 4. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification, or any other cause, may be filled by the
Board of Directors for the unexpired portion of the term.
Section 5. Chairman of the Board. If elected, the Chairman of the Board of
Directors shall perform such duties as he or she shall accept from the Board of
Directors from time to time and shall preside over meetings of the Board of
Directors and shareholders unless another officer is appointed or designated by
the Board of Directors as Chairman of such meeting.
Section 6. President. The president shall be the chief executive officer
of the Corporation and, unless some other officer is so designated by the Board
of Directors, shall preside over meetings of the Board of Directors and, subject
to the control of the Board of Directors, shall supervise and control all of the
assets, business and affairs of the Corporation.
Section 7. Vice President. The vice president shall perform all duties
incumbent upon the president during the absence or disability of the president,
with all the powers of and subject to all the restrictions upon the president,
and shall perform such other duties as the Bylaws may provide or the Board of
Directors may prescribe. Any vice president may sign with the secretary or any
assistant secretary certificates for shares of the Corporation.
Section 8. Secretary. The secretary shall: (1) keep the minutes of the
shareholders' meetings and of the Board of Directors' meetings in one or more
books provided for that purpose; (2) see that all notices are duly given in
accordance with the provisions of these Bylaws or as required by law; (3) be
custodian of the corporate records and of the seal of the Corporation and affix
the seal of the Corporation to all documents as may be required; (4) keep a
register of the post office address of each shareholder as furnished to the
secretary by such shareholder; (5) sign certificates for shares of the
Corporation, the issuance of which shall have been authorized by resolution of
the Board of Directors; (6) have general charge of the stock transfer books of
the Corporation; and (7) in general perform all duties incident to the office of
secretary and such other duties as from time to time may be assigned to him or
her by these Bylaws or by the Board of Directors.
Section 9. Treasurer. The treasurer shall keep correct and complete
records of account, showing accurately at all times the financial condition of
the Corporation. He or she shall be the legal custodian of all moneys, notes,
securities, and other valuables that may from time to time come into the
possession of the Corporation. He or she shall immediately deposit all funds of
the Corporation coming into the treasurer's hands in a bank or other depository
to be designated by the Board of Directors, and shall furnish at
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<PAGE>
meetings of the Board of Directors, or whenever requested, a statement of the
financial condition of the Corporation, and shall perform such other duties as
these Bylaws may provide or the Board of Directors may prescribe.
Section 10. Other Officers and Agents. The Board of Directors may from
time to time appoint such other officers and agents as it shall deem necessary
or expedient, who shall hold their offices for such terms, and shall exercise
such powers and perform such duties as shall be determined by the Board of
Directors.
Section 11. Salaries. The salaries of all officers and agents of the
Corporation and all other forms of compensation and benefits to such officers
and agents shall be fixed and determined by the Board of Directors.
Section 12. Facsimiles. When the original signature of an officer on a
corporate document is delivered by equipment which transmits a facsimile of the
document, that signature shall be deemed to be an original signature. In
addition, an original signature on a facsimile copy of a corporate document
shall be deemed an original.
ARTICLE V
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. Contracts. The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract, or execute and deliver
any instrument, in the name of and on behalf of the Corporation, and such
authority may be general or confined to specific instances.
Section 2. Loans. No loans shall be contracted on behalf of the
Corporation, and no evidences of indebtedness shall be issued in its name,
unless authorized by a resolution of the Board of Directors. Such authority may
be general or confined to specific instances.
Section 3. Checks, Drafts or other Evidences of Indebtedness. All checks,
drafts, or other orders for the payment of money, notes, or other evidences of
indebtedness issued in the name of the Corporation, shall be signed by such
officer or officers, agent or agents, of the Corporation, and in such manner, as
shall from time to time be determined by resolution of the Board of Directors.
Section 4. Deposits. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation in such
banks, trust companies, or other depositories as the Board of Directors may
select.
ARTICLE VI
CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 1. Issuance of Shares. No shares of the Corporation shall be
issued unless authorized by the Board of Directors, which authorization shall
include the maximum number of shares to be issued and the consideration to be
received for each share. Such authorization shall also include the value of
non-cash consideration, and a statement that the Board of Directors has
determined that such consideration is adequate.
8
<PAGE>
Section 2. Certificates for Shares. Certificates representing shares of
the Corporation shall be in such form as is consistent with the provisions of
the Washington Business Corporation Act. Such certificates shall be signed by
any two officers of the Corporation, and may be sealed with the corporate seal
or a facsimile thereof. The signatures of such officers upon a certificate may
be a facsimile if the certificate is countersigned by a transfer agent or by
registered employees. All certificates for shares shall be consecutively
numbered or otherwise identified. The name and address of the person to whom the
shares represented thereby are issued, with the number of shares and the date of
issue, shall be entered on the stock transfer books of the Corporation. All
certificates surrendered to the Corporation for transfer shall be cancelled, and
no new Certificate shall be issued until the former certificate for a like
number of shares shall have been surrendered and cancelled, except that, in the
case of a lost, destroyed, or mutilated certificate, a new certificate may be
issued therefor upon such terms and indemnity to the Corporation as the Board of
Directors may prescribe.
The share certificates issued by the Corporation may contain such
restrictive legend(s) as shall be deemed by the Shareholders and Board of
Directors pertinent to the sale, issuance, transfer, or other disposition of the
shares of the Corporation.
Section 3. Transfer of Shares. Transfer of shares of the Corporation shall
be made only on the stock transfer books of the Corporation by the holder of
record thereof, or by his or her legal representative, who shall furnish proper
evidence of authority to transfer, or by his or her attorney authorized by power
of attorney, duly executed and filed with the secretary of the Corporation, and
on surrender for cancellation of the certificate for such shares. Until the
Corporation is notified of a change in ownership of shares and the provisions
hereof regarding transfer are complied with, the person in whose name shares
stand on the books of the Corporation shall be deemed by the Corporation to be
the owner thereof for all purposes.
Any transfer of shares is also subject to restrictions of record of the
Corporation.
Section 4. Restrictions on Transfer. All certificates representing shares
of the Corporation which have not been registered with federal and appropriate
state securities agencies shall bear a legend on the face of the certificate, or
on the reverse of the certificate if a reference to the legend is contained on
the face, substantially as follows:
THESE SECURITIES ARE NOT REGISTERED UNDER STATE OR FEDERAL
SECURITIES LAWS AND MAY NOT BE OFFERED, OR SOLD, PLEDGED (EXCEPT A
PLEDGE PURSUANT TO THE TERMS OF WHICH ANY OFFER OR SALE UPON
FORECLOSURE WOULD BE MADE IN A MANNER THAT WOULD NOT VIOLATE THE
REGISTRATION PROVISIONS OF FEDERAL OR STATE SECURITIES LAWS) OR
OTHERWISE DISTRIBUTED FOR VALUE, NOR MAY THESE SECURITIES BE
TRANSFERRED ON THE BOOKS OF THE COMPANY, UNLESS NO VIOLATION OF
THESE REGISTRATION PROVISIONS WOULD RESULT FROM ANY SUCH ACTIONS.
Shares shall also bear the following legend if they are subject to a
Shareholders Agreement:
9
<PAGE>
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS AS TO SALE, TRANSFER OR ENCUMBRANCE.
ARTICLE VII
BOOKS AND RECORDS
Section 1. Books of Accounts. Minutes and Share Register. The Corporation
shall keep, as permanent records, minutes of all meetings of its shareholders
and Board of Directors, a record of all actions taken by the shareholders or
Board of Directors without a meeting, and a record of all actions taken by a
committee of the Board of Directors exercising the authority of the Board of
Directors on behalf of the Corporation. The Corporation shall maintain
appropriate accounting records. The Corporation or its agent shall maintain a
record of its shareholders, in a form that permits preparation of a list of the
names and addresses of all shareholders, in alphabetical order by class of
shares showing the number and class of shares held by each. The Corporation
shall keep a copy of the following records at its principal office: the Articles
or Restated Articles of Incorporation and all amendments to them currently in
effect; the Bylaws or restated Bylaws and all amendments to them currently in
effect; the minutes of all shareholders' meetings, and records of all actions
taken by shareholders without a meeting, for the past three years; its financial
statements for the past three years, including balance sheets showing in
reasonable detail the financial condition of the Corporation as of the close of
each fiscal year, and an income statement showing the results of its operations
during each fiscal year prepared on the basis of generally accepted accounting
principles or, if not, prepared on a basis explained therein; all written
communications to shareholders generally within the past three years; a list of
the names and business addresses of its current Directors and officers; and its
most recent annual report delivered to the Secretary of the state of Washington.
Section 2. Copies of Resolutions. Any person dealing with the Corporation
may rely upon a copy of any of the records of the proceedings, resolutions, or
votes of the Board of Directors or shareholders, when certified by the president
or secretary.
ARTICLE VIII
CORPORATE YEAR
The fiscal year of the Corporation shall be determined by the Board of
Directors.
ARTICLE IX
AMENDMENTS
Section 1. By the Shareholders. These Bylaws may be amended, altered, or
repealed at any regular or special meeting of the shareholders if notice of the
proposed alteration or amendment is contained in the notice of the meeting.
Section 2. By the Board of Directors. These Bylaws may be altered,
amended, or repealed, and new Bylaws may be adopted by the Board of Directors,
at any regular or special meeting of the Board of Directors.
10
<PAGE>
Section 3. Conformity to State Law. No amendments or changes may be made
to these Bylaws which would conflict with the provisions of the Washington
Business Corporation Act. In the event of any conflict between these Bylaws (or
any amendments to these Bylaws) and the Washington Business Corporation Act then
in existence, the Washington Business Corporation Act shall control.
Dated effective September 1, 1997.
Quality Business Systems, Inc.
By /s/ Gary Stevens
------------------------------
Gary Stevens
Its President
11
<PAGE>
Amendment to By Laws dated November 11, 1997
WHEREAS, the Corporation is the owner, directly or indirectly, of
all of the outstanding capital stock of each of Copy Service and Supply, Inc., a
North Carolina corporation, Office Furniture Concepts, Inc., a North Carolina
corporation, Felco Office Systems, Inc., a Texas corporation, American Photocopy
Equipment Company of Pittsburgh, Inc., a Delaware corporation, Berney, Inc., an
Alabama corporation, Southern Copy Systems, Inc., an Alabama corporation, Conway
Office Products, Inc., a New Hampshire corporation, Business Equipment
Unlimited, Inc., a Maine corporation, Cameron Office Products, Inc., a
Massachusetts corporation, Electronic Systems, Inc., a Virginia corporation,
Southern Business Communications, Inc., a Georgia corporation, Quality Business
Systems, Inc., a Washington corporation, and Duplicating Specialties, Inc., an
Oregon corporation; and
WHEREAS, the Board of Directors of the Corporation hereby deem it to
be in the best interests of the Corporation that the Corporation, as the sole
stockholder or the parent of the sole stockholder of each of the Subsidiaries,
hereby amends each of the Subsidiaries' bylaws in order to provide more
efficient and modern means for conducting the business of meetings for such
Subsidiaries' stockholders and boards of directors; NOW, THEREFORE, BE IT
RESOLVED, that the Corporation, as the sole stockholder of each of
the Subsidiaries, hereby elects by written consent of sole stockholder to amend
the Bylaws of each of the Subsidiaries to provide that any authorized person may
call a meeting of the Board of Directors of such company upon 24 hours written
notice (which notice may be given by facsimile transmission);
FURTHER RESOLVED, that the Corporation, as the sole stockholder of
each of the Subsidiaries, hereby elects by written consent of sole stockholder
to amend the Bylaws of each of the Subsidiaries to provide that any meeting of
the Board of Directors of such company may be held in person or by telephone;
FURTHER RESOLVED, that the Corporation, as the sole stockholder of
each of the Subsidiaries, hereby elects by written consent of sole stockholder
to amend the Bylaws of each of the Subsidiaries to provide that any action of
the stockholders of the Corporation may be taken by unanimous written consent
except as otherwise required by law to be held at a meeting of the stockholders
of such company; and
FURTHER RESOLVED, that the Corporation hereby ratifies all actions
previously taken by the officers of the Corporation in connection with the
amendments to its Subsidiaries' Bylaws to comply with all the requirements and
conditions in connection therewith, and all other actions taken incidental
thereto.
-1-
<PAGE>
EXHIBIT 3.24a
RESTATED ARTICLES OF INCORPORATION
OF
SOUTHERN BUSINESS COMMUNICATIONS, INC.
FIRST: The name of the corporation is Southern Business Communications, Inc.
SECOND: The corporation is organized pursuant to the provisions of the Georgia
Business Corporation Code.
THIRD: The period of its duration is perpetual.
FOURTH: The corporation is formed for the purpose of engaging in any lawful
business activity including, but not limited to, selling and servicing
office products, equipment and supplies.
FIFTH: The aggregate number of shares which the corporation shall have
authority to issue is One Million (1,000,000) of the par value of One
Dollar ($1.00) each.
SIXTH: The corporation will not commence business until it has received the
sum of five hundred dollars ($500.00) as consideration for the
issuance of shares.
SEVENTH: The address of the intitial registered office of the corporation is:
First National Bank Tower
c/o CT Corporation System
Atlanta, Georgia 30383
<PAGE>
and the name of its initial registered agent at such address is:
CT Corporation System
EIGHTH: The shareholders of the corporation shall not have a preemptive right
to acquire the corporation's unissued or treasury shares.
NINTH: The number of directors constituting the initial board of directors
shall be two (2); and the names and addresses of each person who is to
serve as a member thereof are:
Name Address
Mark Lloyd 13125 Hallmark Court
Apple Valley, Minnesota 55124
Arthur E. Kreps 2715 Lake Elmo Ave. North
Lake Elmo, Minnesota 35042
TENTH: The names and addresses of the incorporators are:
Name Address
L.A. Cancro 1820 First National Bank Tower
Atlanta, Georgia 30383
K.L. Slayman 1820 First National Bank Tower
Atlanta, Georgia 30383
G.F.Robinson 1820 First National Bank Tower
Atlanta, Georgia 30383
ELEVENTH: The directors of the corporation shall be indemnified by the
corporation to the full extent provided or permitted by Part 5 of
Article 8 of the Georgia Business Corporation Code.
TWELFTH: The directors of the corporation shall have no personal liability to
the corporation or its shareholders for monetary damages for breach of
duty of care or other duty as a director resulting from any act or
omission, other than personal liability of a director for:
(a) any appropriation, in violation of his duties, of any business
opportunity of the corporation;
(b) acts or omissions which involve intentional misconduct or a
knowing violation of law:
(c) the types of liability set forth in O.C.G.A. Section 14-2-832; or
<PAGE>
(d) any transaction from which the director received an improper
personal benefit.
IN WITNESS WHEREOF, Southern Business Communications, Inc. has caused
these Restated Articles of Incorporation to be executed by its duly authorized
officer, this 29th day of April, 1996.
SOUTHERN BUSINESS COMMUNICATIONS, INC.
By: /s/ Mark M. Lloyd
------------------------------------
Its: President
<PAGE>
CERTIFICATE OF RESTATEMENT
OF
SOUTHERN BUSINESS COMMUNICATIONS, INC.
Pursuant to Section 14-2-1007 of the Georgia Business Corporation Code
(the "Code"), Southern Business Communications, Inc., a Georgia corporation (the
"Corporation"), hereby certifies that:
1. The name of the Corporation is SOUTHERN BUSINESS COMMUNICATIONS, INC.
2. On April 8, 1996, Restated Articles of Incorporation of the Corporation
(the "Restatement") were duly adopted by the Board of Directors of the
Corporation.
3. The Restatement contains amendments to the Articles of Incorporation
requiring shareholder approval.
4. The amendments to the Articles of Incorporation contained in the
Restatement are as follows:
<PAGE>
a) Article FOURTH of the Articles of Incorporation was deleted in its
entirety and the following Article FOURTH was inserted in lieu
thereof:
"FOURTH: The corporation is formed for the purpose of engaging in
any lawful business activity including, but not limited to, selling
and servicing office products, equipment and supplies";
b) Article EIGHTH of the Articles of Incorporation was deleted in its
entirety and the following Article EIGHTH was inserted in lieu
thereof:
"EIGHTH: The shareholders of the corporation shall not have a
preemptive right to acquire the corporation's unissued or treasury
shares."
c) Article NINTH of the Articles of Incorporation was amended to delete
therefrom the second sentence which read:
"All of the shares of the Corporation are to be owned by two (2)
shareholders";
<PAGE>
d) Article ELEVENTH of the Articles of Incorporation was deleted in its
entirety;
e) A new Article ELEVENTH was added to the Articles of Incorporation
as follows:
"ELEVENTH: The directors of the corporation shall be indemnified by
the corporation to the full extent provided or permitted by Part 5
of Article 8 of the Georgia Business Corporation Code."
f) A new Article TWELFTH was added to the Articles of Incorporation as
follows:
"TWELFTH: The directors of the corporation shall have no personal
liability to the corporation or its shareholders for monetary
damages for breach of duty of care or other duty as a director
resulting from any act or omission, other than personal liability of
a director for:
(a) any appropriation, in violation of his duties, of any business
opportunity of the corporation;
(b) acts or omissions which involve intentional misconduct or a
knowing violation of law;
(c) the types of liability set forth in O.C.G.A. Section 14-2-832;
or
(d) any transaction from which the director received an improper
personal benefit."
5. The foregoing amendments were duly approved on April 9, 1996 by the
shareholders of the Corporation in accordance with the provisions of
Section 14-2-1003 of the Georgia Business Corporation Code.
IN WITNESS WHEREOF, Southern Business Communications, Inc. has caused this
Certificate of Restatement to be executed by its duly authorized officer on this
29th day of April, 1996.
SOUTHERN BUSINESS COMMUNICATIONS, INC.
By: /s/ Mark M. Lloyd
------------------------------------
Its: President
<PAGE>
EXHIBIT 3.24b
SOUTHERN BUSINESS COMMUNICATIONS, INC.
* * * * *
BY - LAWS
* * * * *
ARTICLE I
OFFICES
Section 1. The registered office shall be located in Atlanta,
Georgia.
Section 2. The corporation may also have offices at such other
places both within and without the State of Georgia as the board of directors
may from time to time determine or the business of the corporation may require.
ARTICLE II
ANNUAL MEETINGS OF SHAREHOLDERS
Section 1. All meetings of shareholders for the election of
directors shall be held in the City of Atlanta, State of Georgia, at such place
as may be fixed from time to time by the board of directors.
Section 2. Annual meetings of shareholders, commencing with the year
1982, shall be held on the first Tuesday in April if not a legal holiday, and if
a legal holiday, then on the next secular day following, at 10:00 A.M., at which
they shall elect by a plurality vote a board of directors, and transact such
other business as may properly be brought before the meeting.
<PAGE>
Section 3. Written or printed notice of the annual meeting stating
the place, day and hour of the meeting shall be delivered not less than ten nor
more than fifty days before the date of the meeting, either personally or by
mail, by or at the direction of the president, the secretary, or the officer or
persons calling the meeting, to each shareholder of record entitled to vote at
such meeting.
ARTICLE III
SPECIAL MEETINGS OF SHAREHOLDERS
Section 1. Special meetings of shareholders for any purpose other
than the election of directors may be held at such time and place within or
without the State of Georgia as shall be stated in the notice of the meeting or
in a duly executed waiver of notice thereof.
Section 2. Special meetings of the shareholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the articles of
incorporation, may be called by the president, chairman of the board of
directors, the board of directors, or such other officers or persons as provided
in the Articles of Incorporation, or in the event there are no officers or
directors, then by any shareholder.
Section 3. Written or printed notice of a special meeting stating
the place, day and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be delivered not less than ten nor more than fifty days
before the date of the meeting, either personally or by mail,
<PAGE>
by or at the direction of the president, the secretary, or the officer or
persons calling the meeting, to each shareholder of record entitled to vote at
such meeting.
Section 4. The business transacted at any special meeting of
shareholders shall be limited to the purposes stated in the notice.
ARTICLE IV
QUORUM AND VOTING OF STOCK
Section 1. The holders of a majority of the shares of stock issued
and outstanding and entitled to vote, represented in person or by proxy, shall
constitute a quorum at all meetings of the shareholders for the transaction of
business except as otherwise provided by statute or by the articles of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the shareholders, the shareholders present in person or
represented by proxy shall have power to adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum shall be
present or represented. At such adjourned meeting at which a quorum shall be
present or represented any business may be transacted which might have been
transacted at the meeting as originally notified.
Section 2. If a quorum is present, the affirmative vote of a
majority of the shares of stock represented at the meeting shall be the act of
the shareholders unless the vote of a greater number of shares of stock is
required by law or the articles of incorporation.
Section 3. Each outstanding share of stock, having voting power,
shall be entitled to one vote on each matter submitted to a vote at a meeting of
shareholders. A shareholder may vote either in person or by proxy executed in
writing by the shareholder or by his duly authorized attorney-in-fact.
Section 4. Any action required to be taken at a meeting of the
shareholders may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the shareholders entitled
to vote with respect to the subject matter thereof. ARTICLE V
ARTICLE V
DIRECTORS
Section 1. The number of directors shall not be in excess. Directors
need not be residents of the State of Georgia nor shareholders of the
corporation. The directors, other than the first board of directors, shall be
elected at the annual meeting of the shareholders, and each director elected
shall serve until the next succeeding annual meeting and until his successor
shall have been elected and qualified. The first board of directors shall hold
office until the first annual meeting of shareholders.
Section 2. Any vacancy occurring in the board of directors may be
filled by the affirmative vote of a majority of the remaining directors though
less than a quorum of the board of directors. A director elected to fill a
vacancy
<PAGE>
shall be elected for the unexpired portion of the term of his predecessor in
office.
Any directorship to be filled by reason of an increase in the number
of directors may be filled by the affirmative vote of a majority of the
remaining directors present at a meeting though less than a quorum of the board
of directors is present. A director elected to fill a newly created directorship
shall serve until the next election of directors by the shareholders and the
election and qualification of his successor.
Section 3. The business affairs of the corporation shall be managed
by its board of directors which may exercise all such powers of the corporation
and do all such lawful acts and things as are not by statute or by the articles
of incorporation or by these by-laws directed or required to be exercised or
done by the shareholders.
Section 4. The directors may keep the books of the corporation,
except such as are required by law to be kept within the state, outside of the
State of Georgia, at such place or places as they may from time to time
determine.
Section 5. The board of directors, by the affirmative vote of a
majority of the directors then in office, and irrespective of any personal
interest of any of its members, shall have authority to establish reasonable
compensation of all directors for services to the corporation as directors,
officers or otherwise.
<PAGE>
ARTICLE VI
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Meetings of the board of directors, regular or special,
may be held either within or without the State of Georgia.
Section 2. The first meeting of each newly elected board of
directors shall be held at such time and place as shall be fixed by the vote of
the shareholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present, or it may convene at such place and
time as shall be fixed by the consent in writing of all the directors.
Section 3. Regular meetings of the board of directors may be held
upon such notice, or without notice, and at such time and at such place as shall
from time to time be determined by the board.
Section 4. Special meetings of the board of directors may be called
by the chairman of the board, by the president, or by any two directors on two
days' notice to each director, either personally or by mail, telegram or
cablegram.
Section 5. Notice of a meeting need not be given to any director who
submits a signed waiver of notice whether before or after the meeting, or who
attends the meeting without protesting, prior thereto or at its commencement,
the lack of notice. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the board of directors need be specified
in the notice or waiver of notice of such meeting.
Section 6. A majority of the directors shall constitute a quorum for
the transaction of business unless a greater number is required by law or by the
articles of incorporation. The act of a majority of the directors present at any
meeting at which a quorum is present shall be the act of the board of directors,
unless the act of a greater number is required by statute or by the articles of
incorporation. If a quorum shall not be present at any meeting of directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 7. Any action required to permitted to be taken at a meeting
of the directors may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the directors entitled to
vote with respect to the subject matter thereof.
ARTICLE VII
EXECUTIVE COMMITTEE
Section 1. The board of directors, by resolution adopted by a
majority of the number of directors fixed by the by-laws or otherwise, may
designate two or more directors to constitute an executive committee, which
committee, to the extent provided in such resolution, shall have and exercise
<PAGE>
all of the authority of the board of directors in the management of the
corporation, except as otherwise required by law. Vacancies in the membership of
the committee shall be filled by the board of directors at a regular or special
meeting of the board of directors. The executive committee shall keep regular
minutes of its proceedings and report the same to the board when required.
ARTICLE VIII
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
articles of incorporation or of these by-laws, notice is required to be given to
any director or shareholder, it shall not be construed to mean personal notice,
but such notice may be given in writing, by mail, addressed to such director or
shareholder, at his address as it appears on the records of the corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Notice to
directors may also be given by telegram.
Section 2. Whenever any notice whatever is required to be given
under the provisions of the statutes or under the provisions of the articles of
incorporation or these by-laws, a waiver thereof in writing signed by the person
or persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
<PAGE>
ARTICLE IX
OFFICERS
Section 1. The officers of the corporation shall be chosen by the
board of directors and shall be a president, a vice-president, a secretary and a
treasurer. The board of directors may also choose additional vice-presidents,
and one or more assistant secretaries and assistant treasurers.
Section 2. The board of directors at its first meeting after each
annual meeting of shareholders shall choose a president, one or more
vice-presidents, a secretary and a treasurer, none of whom need be a member of
the board.
Section 3. The board of directors may appoint such other officers
and agents as it shall deem necessary who shall hold their offices for such
terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the board of directors.
Section 4. The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officer elected or appointed by the
board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
<PAGE>
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the shareholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, 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 VICE-PRESIDENTS
Section 8. The vice-president, or if there shall be more than one,
the vice-presidents in the order determined by the board of directors, shall, 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.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the shareholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the shareholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He shall have custody of the
corporate seal of the corporation and he, or an assistant secretary, shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by his signature or by the signature of such assistant
secretary. The board of directors may give general authority to any other
officer to affix the seal of the corporation and to attest the affixing by his
signature.
Section 10. The assistant secretary, or if there be more than one,
the assistant secretaries in the order determined by the board of directors,
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 may from time to time
prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. 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
<PAGE>
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.
Section 12. He 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 his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he 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 his office and for the restoration to the corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the corporation.
Section 14. The assistant treasurer, or, if there shall be more than
one, the assistant treasurers in the order determined by the board of directors,
shall, in the absence or disability of the treasurer, perform the duties and
exercise the powers of the treasurer 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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ARTICLE X
CERTIFICATES FOR SHARES
Section 1. The shares of the corporation shall be represented by
certificates signed by the president, or other chief executive officer, or a
vice-president and the secretary or an assistant secretary of the corporation,
and may be sealed with the seal of the corporation or a facsimile thereof.
When the corporation has issued shares which are subordinate to
authorized shares of any other class or series with respect to dividends or
amounts payable on liquidation each certificate shall contain upon its face or
back a clear and concise statement to that effect.
When the corporation is authorized to issue shares of more than one
class there shall be set forth or fairly summarized upon the face or back of the
certificate, or the certificate shall have a statement that the corporation will
furnish to any shareholder upon request and without charge, a full statement of
the designations, preferences, limitations, and relative rights of the shares of
each class authorized to be issued and, if the corporation is authorized to
issue any preferred or special class in series, the variations in the relative
rights and preferences between the shares of each such series so far as the same
have been fixed and determined and the authority of the board of directors or
shareholders to fix and determine the relative rights and preferences of
subsequent series.
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Section 2. The signatures of the officers of the corporation upon a
certificate may be facsimiles if the certificate is countersigned by a transfer
agent, or registered by a registrar, other than the corporation itself or an
employee of the corporation. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer at the date of its
issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate to be
issued in place of any certificate theretofore issued by the corporation alleged
to have been lost or destroyed. When authorizing such issue of a new
certificate, the board of directors, in its discretion and as a condition
precedent to the issuance thereof, may prescribe such terms and conditions as it
deems expedient, and may require such indemnities as it deems adequate, to
protect the corporation from any claim that may be made against it with respect
to any such certificate alleged to have been lost or destroyed.
TRANSFERS OF SHARES
Section 4. Upon surrender to the corporation or the transfer agent
of the corporation of a certificate representing shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, a new cer-
<PAGE>
tificate shall be issued to the person entitled thereto, and the old certificate
cancelled and the transaction recorded upon the books of the corporation.
CLOSING OF TRANSFER BOOKS
Section 5. For the purpose of determining shareholders entitled to
notice of or to vote at any meeting of shareholders, or any adjournment thereof
or entitled to receive payment of any dividend, or in order to make a
determination of shareholders for any other proper purpose, the board of
directors may provide that the stock transfer books shall be closed for a stated
period but not to exceed, in any case, fifty days. If the stock transfer books
shall be closed for the purpose of determining shareholders entitled to notice
of or to vote at a meeting of shareholders, such books shall be closed for at
least ten days immediately preceding such meeting. In lieu of closing the stock
transfer books, the board of directors may fix in advance a date as the record
date for any such determination of shareholders, such date in any case to be not
more than fifty days and, in case of a meeting of shareholders, not less than
ten days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If the stock transfer books are
not closed and no record date is fixed for the determination of shareholders
entitled to notice of or to vote at a meeting of shareholders, or shareholders
entitled to receive payment of a dividend, the date on which notice of
<PAGE>
the meeting is mailed or the date on which the resolution of the board of
directors declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof, unless the board of directors fixes a new record date for the adjourned
meeting.
REGISTERED SHAREHOLDERS
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Georgia.
LIST OF SHAREHOLDERS
Section 7. The officer or agent having charge of the stock transfer
books for shares of a corporation shall make a complete list of the shareholders
entitled to vote at a meeting of shareholders or any adjournment thereof,
arranged in alphabetical order, with the address of and the number and class and
series, if any, of shares held by each. Such list shall be produced and kept
open at the time and place of the meeting and shall be subject to inspection of
any shareholder during the whole time of the meeting for the purposes thereof.
Such list shall be prima facie evidence of who is a shareholder of record.
ARTICLE XI
GENERAL PROVISIONS
DIVIDENDS
Section 1. Subject to the provisions of the articles of
incorporation relating thereto, if any, dividends may be declared by the board
of directors at any regular or special meeting, pursuant to law. Dividends may
be paid in cash, in property or in shares of the capital stock, subject to any
provisions of the articles of incorporation.
Section 2. Before payment of any dividend, there may be set aside
out of any funds of the corporation available for dividends such sum or sums as
the directors from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
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CHECKS
Section 3. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
SEAL
Section 5. The corporate seal shall have inscribed thereon the name
of the corporation, the year of its organization and the words "Corporate Seal,
Georgia". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any manner reproduced.
ARTICLE XII
AMENDMENTS
Section 1. These by-laws may be altered, amended, or repealed or new
by-laws may be adopted by the affirmative vote of a majority of the board of
directors at any regular or special meeting of the board, but any by-laws
adopted by the board of directors may be altered, amended, or repealed, and new
by-laws adopted by the shareholders.
<PAGE>
Amendment to By Laws dated November 11, 1997
WHEREAS, the Corporation is the owner, directly or indirectly, of
all of the outstanding capital stock of each of Copy Service and Supply, Inc., a
North Carolina corporation, Office Furniture Concepts, Inc., a North Carolina
corporation, Felco Office Systems, Inc., a Texas corporation, American Photocopy
Equipment Company of Pittsburgh, Inc., a Delaware corporation, Berney, Inc., an
Alabama corporation, Southern Copy Systems, Inc., an Alabama corporation, Conway
Office Products, Inc., a New Hampshire corporation, Business Equipment
Unlimited, Inc., a Maine corporation, Cameron Office Products, Inc., a
Massachusetts corporation, Electronic Systems, Inc., a Virginia corporation,
Southern Business Communications, Inc., a Georgia corporation, Quality Business
Systems, Inc., a Washington corporation, and Duplicating Specialties, Inc., an
Oregon corporation; and
WHEREAS, the Board of Directors of the Corporation hereby deem it to
be in the best interests of the Corporation that the Corporation, as the sole
stockholder or the parent of the sole stockholder of each of the Subsidiaries,
hereby amends each of the Subsidiaries' bylaws in order to provide more
efficient and modern means for conducting the business of meetings for such
Subsidiaries' stockholders and boards of directors; NOW, THEREFORE, BE IT
RESOLVED, that the Corporation, as the sole stockholder of each of
the Subsidiaries, hereby elects by written consent of sole stockholder to amend
the Bylaws of each of the Subsidiaries to provide that any authorized person may
call a meeting of the Board of Directors of such company upon 24 hours written
notice (which notice may be given by facsimile transmission);
FURTHER RESOLVED, that the Corporation, as the sole stockholder of
each of the Subsidiaries, hereby elects by written consent of sole stockholder
to amend the Bylaws of each of the Subsidiaries to provide that any meeting of
the Board of Directors of such company may be held in person or by telephone;
FURTHER RESOLVED, that the Corporation, as the sole stockholder of
each of the Subsidiaries, hereby elects by written consent of sole stockholder
to amend the Bylaws of each of the Subsidiaries to provide that any action of
the stockholders of the Corporation may be taken by unanimous written consent
except as otherwise required by law to be held at a meeting of the stockholders
of such company; and
FURTHER RESOLVED, that the Corporation hereby ratifies all actions
previously taken by the officers of the Corporation in connection with the
amendments to its Subsidiaries' Bylaws to comply with all the requirements and
conditions in connection therewith, and all other actions taken incidental
thereto.
-1-
<PAGE>
EXHIBIT 3.25B
BY-LAWS
OF
SOUTHERN COPY SYSTEMS, INC.
ARTICLE I
Meeting of Stockholders
SECTION 1. Place of Meeting. All meetings of stockholders of SOUTHERN COPY
SYSTEMS, INC., (referred to as the Corporation), shall be held at the principal
office of the Corporation in Auburn, Alabama, or at such other place, either
within or, if the consent of the majority of the stockholders shall have been
obtained, without the State of Alabama, as may from time to time be fixed by the
Board of Directors of the Corporation (herein referred to as the Board).
SECTION 2. Annual Meetings. Each annual meeting of stockholders of the
Corporation for the election of Directors and for the transaction of such other
business as may properly come before the meeting shall be held at 10:00 a.m. in
the forenoon on the second Wednesday in January in each year (or, if that day
shall be a legal holiday, then on the next succeeding business day), commencing
in the year 1986.
SECTION 3. Special Meetings. Except as otherwise provided by law, special
meetings of the stockholders, for any purpose or purposes, may be called by the
President or by the Board, and shall be called whenever one or more stockholders
who are entitled to vote and who hold at least 10% of the capital stock issued
and outstanding shall make written application therefore to the Secretary
stating the time, place and purpose of the meeting called for.
SECTION 4. Notice of Meeting. Except as otherwise provided by law and
these By-Laws, written notice of the time, place and purpose of each meeting of
stockholders shall be delivered not less than ten nor more than fifty days
before such meetings, to each stockholder entitled to vote thereat personally,
or by mailing such notice in a postage prepaid envelope addressed to him at his
post office address as it appears on the records of the Corporation. Notice need
not be given to any stockholder who shall attend such meeting in person or by
proxy or who shall waive notice thereof as provided in Article X of these
By-Laws. Notice of any adjourned meeting need not be given except when expressly
required by law.
SECTION 5. Quorum. At any meeting of stockholders, a majority in interest
of the issued and outstanding stock of the Corporation, present in person or
represented by proxy at
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such meeting, shall constitute a quorum, except as otherwise provided by law or
by the Articles of Incorporation as from time to time amended. In the absence of
a quorum at any such meeting or any adjournment or adjournments thereof, a
majority in voting interest of those present in person or represented by proxy
may adjourn such meeting from time to time without further notice, provided that
no one adjournment shall be for a period in excess of sixty days. At any such
adjourned meeting at which a quorum shall be present any business may be
transacted which might have been transacted at the meeting as originally called.
The stockholders present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.
SECTION 6. Voting. Unless otherwise provided by the Articles of
Incorporation, each stockholder shall, at each meeting of the stockholders, be
entilted to one vote in person or by proxy appointed by instrument in writing
subscribed by such stockholder, or by his duly authorized attorney, for each
share of the capital stock of the Corporation held by him and registered in his
name on the books of the Corporation at the date of such meeting if no record
date for the determination of stockholders entitled to notice of and to vote at
such meeting shall have been fixed. Any person holding stock in a fiduciary
capacity shall be entitled to vote the shares so held, or to give a proxy to
vote the same, at all meetings of stockholders. Any persons whose stock is
pledged shall be entitled to vote thereon so long as said stock remains in his
name on the books of the corporation, except that, if the pledgor shall have
expressly empowered the pledgee to vote thereon and written notice, signed by
the pledgor and the pledgee, setting forth such delegation, shall have been
served upon the Corporation at least three days prior to the date on which such
stock is to be voted, only the pledgee or his proxy shall be entitled to vote
thereon. Shares of stock of the Corporation belonging to it shall not be voted,
directly or indirectly.
SECTION 7. Conduct of Meetings. Each meeting of stockholders shall be
presided over the the President, or if the President shall not be present, by
one of the Vice-Presidents. In the absence of all of the officers aforesaid, a
chairman shall be chosen by the vote of a majority in voting interest of those
stockholders present in person or represented by proxy. The Secretary of the
Corporation, or if he shall not be present, an Assistant Secretary shall so act.
If neither the Secretary nor an Assistant Secretary shall be present, a
Secretary shall be appointed by the chairman of the meeting.
2
<PAGE>
ARTICLE II
Board of Directors
SECTION 1. Number, Term, and Election. The property, business, and affairs
of the Corporation shall be managed by the Board as from time to time
constituted. The Board shall consist of not less than one (1) director. In case
the number of directors shall be increased at any time within the provisions of
the Articles of Incorporation, the additional directors to fill the vacancies
caused by such increase may be elected in accordance with the provisions of
Section 4 of Article IV of these By-Laws. Each stockholder entitled to vote at
any election of directors shall have the right to nominate persons to be voted
upon. At all meetings of stockholders of the election of directors at which a
quourm shall be present, the persons receiving a plurality of the votes cast
shall be elected directors. The term of office of each director shall be from
the time of his election and qualification until the annual meeting of
stockholders next succeeding his election and until his successors shall have
been duly elected and shall have qualified, or until his death, or until he
shall resign, or until he shall have been removed in the manner hereinafter
provided.
SECTION 2. Compensation. By resolution of the Board, the Directors may be
paid their expenses, if any, of attendance at each meeting of the Board of a
stated salary as director. No such payment shall preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefore.
SECTION 3. Place of Meeting. The Board may hold its meeting at such place
or places, either within or without the State of Alabama, as it may from time to
time by resolution determine or as shall be specified or fixed in the respective
notices or waivers of notice thereof.
SECTION 4. First Meeting. After each annual election of directors, on the
same day and at the conclusion of the meeting of the stockholders at which such
election shall be held, and at the place where such election shall be held, the
newly elected Board of Directors shall meet for the purposes of organization,
the election of officers of the Corporation, and the transaction of other
business. Notice of such meeting need not be given. Such meeting may be held at
any other time or place which shall be specified in a notice given as
hereinafter provided for special meetings of the Board, or in a waiver of notice
thereof signed by all the directors.
SECTION 5. Regular Meetings. Regular meetings of the Board may be held at
such time and place as may from time to time be specified in a resolution
adopted by the Board and at
3
<PAGE>
the time in effect. Notice of any such regular meeting need not be given.
SECTION 6. Special Meetings. Special meetings shall be held whenever
called by the President, or by the Secretary at the request of any director.
Notice of the time and place of each such special meeting shall be mailed to
each director, addressed to him at his address or usual place of business, not
later than the second day before the day on which such meeting is to be held, or
shall be sent addressed to him at such place by telegraph or cable, or delivered
personally or by telephone, not later than the day before the day on which such
meeting is to be held. Except as otherwise specifically provided by law or by
these By-Laws, notices or waivers of notice of any meeting of the Board need not
contain any statement of the purposes of the meeting.
SECTION 7. Quorum. At each meeting of the Board the presence of a majority
of the full number of directors shall be necessary to constitute a quorum and
sufficient for the transaction of business. Any act of a majority of the
directors present at which a quorum shall be present shall be the act of the
Board, except as may be otherwise specifically provided by law or these By-Laws.
In the absence of a quorum at any meeting of the Board, a majority of the
directors present thereat may adjourn such meeting from time to time until a
quorum shall be present thereat. Notice of any adjourned meeting need not be
given. The directors shall act only as a Board, and the individual directors
shall have no power as such.
SECTION 8. Indemnification of Directors and Officers. Each director and
officer, whether or not then in office, shall be indemnified by the Corporation
against all costs and expenses reasonably incurred by or imposed upon him in
connection with or arising out of any action, suit, or proceeding in which he
may be involved by reason of his being or having been a director or officer of
the Corporation, such expenses to include the cost of reasonable settlements
(other than the amounts paid to the Corporation itself) made with a view to
curtailment of costs of litigation. The Corporation shall not, however,
indemnify any director or officer with respect to matters as to which he shall
be finally adjudged in any such action, suit, or proceeding to have been
derelict in the performances of his duty as such director or officer, nor in
respect of any matter on which any settlement or compromise is effected, if the
total expense, including the cost of such settlement, shall substantially exceed
the expense which might reasonably be incurred by such director or officer in
conducting such litigation to a final conclusion. The foregoing right of
indemnification shall not be exclusive
4
<PAGE>
of other rights to which any director or officer may be entitled as a matter of
law.
ARTICLE III
-----------
Officers
--------
SECTION 1. Principal Officers. The principal officers of the Corporation
----------
shall be a President, one or more Vice-Presidents, a Secretary, and a Treasurer;
and there may be in additions such subordinate officers, agents, and employees,
as shall be appointed in accordance with the provisions of Section 3 of this
Article III. One person may hold any two officers, the duties of which do not
conflict. The Board may require any such officers, agents or employee to give
security for the faithful performance of his duties.
SECTION 2. Election, Term of Officer, and Qualification. The principal
----------
officers of the Corporation shall be elected annually by the Board at the first
meeting thereof in each year after the annual election of directors, each such
principal officer to hold office until his successor shall have been duly
elected and shall have qualified, or until his death, or until he shall resign,
or until he shall have been removed in the manner hereinafter provided.
SECTION 3. Subordinate Officers, etc. The Board may appoint such other
----------
officers, agent, and employees as the Board may deem necessary or advisable,
including one or more Assistant Treasurers and one or more Assistant
Secretaries, each of whom shall hold office for such period, have such
authority, and perform such duties as are provided in three By-Laws or as the
Board may from time to time determine. The Board may delegate to any principal
officer the power to appoint any such additional officers, agents, or employees.
SECTION 4. The President. The President shall be the Chief executive
----------
officer of the Corporation and shall have general supervision over its business,
subject to the control of the Board. He shall preside at each meeting of the
stockholders and the Board. He shall see that all orders and resolutions of the
Board are carried into effect. He may sign, with the Secretary or an Assistant
Secretary or the Treasurer or an Assistant Treasurer, certificates of stock of
the Corporation; and he may sign, execute, and deliver in the name of the
Corporation all deeds, mortgages, bonds, contracts, or other instruments,
authorized by the Board, except in cases where the signing, execution or
delivery shall be expressly delegated by the Board or these By-Laws to some
other officer or agent of the Corporation or where any thereof shall be required
by law otherwise to be signed, executed or delivered. In general, he shall
perform
5
<PAGE>
all duties incident to the office of the President and such other duties as may
from time to time be assigned to him by the Board.
SECTION 5. Vice-Presidents. Each Vice-President shall have such powers and
perform such duties as the Board may from time to time prescribe. Any
Vice-President may sign, with the Secretary or an Assistant Secretary or the
Treasurer or an Assistant Treasurer, cerificates of stock of the Corporation.
The Board may elect, or designate one of the Vice-Presidents as an Executive
Vice-Prsident, who shall be the senior Vice-President. At the request of the
President, or in case of his absence or inability to act, the Vice-President, if
there shall be more than one Vice-President then in office, the Executive
Vice-President, that one of the Vice-Presidents who shall be designated for the
purpose by the Board or the President, shall perform the duties of the
President, and when so acting shall have all the powers of and be subject to all
the restrictions upon the President.
SECTION 6. The Treasurer. The Treasurer shall be chief financial
accounting officer of the Corporation. He shall have charge and custody of, and
be responsible for, all the funds and securities of the Corporation and shall
keep or cause to be kept, and shall be responsible for the keeping of, correct
and adequate records of the assets, liabilities, business and transactions of
the Corporation, and at all reasonable times shall exhibit such records to any
of the Directors upon application at the office of the Corporation where such
records are kept. He shall deposit all moneys and other valuable effects in the
name of and to the credit of the Corporation in such banks, trust companies, or
other depositaries as may be designated by the Board; he shall disburse the
funds of the Corporation as may be ordered by the Board, based upon proper
vouchers for such disbursements, shall be responsible for the preparation and
filing of all reports relating to or based upon the books and records of the
Corporation kept by him or under his direction, and shall render to the Board of
the President, whenever the Board or the President may require him to do so, a
statement of all his transactions as Treasurer and an account of the financial
condition of the Corporation; he may sign, with the President or any
Vice-President, certificates of stock of the Corporation; and, in general, he
shall perform all the duties incident to the office of the Treasurer and such
other duties as may from time to time be assigned to him by the Board or the
President.
SECTION 7. Assistant Treasurer. At the request of the Treasurer, or in
case of his absence or inability to act, the Assistant Treasurer, or, if there
shall be more than one, that one of the Assistant Treasurers who shall be
designated by the Treasurer or the Board, shall perform the duties of the
Treasurer,
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and when so acting, shall have all the powers of, and be subject to all
restrictions upon the Treasurer. The Assistant Treasurer shall assist the
Treasurer in the performance of his duties as directed by him, and shall perform
such other duties as may from time to time be assigned to him by the Board, the
President or the Treasurer.
SECTION 8. The Secretary. The Secretary shall act as Secretary of, and
keep the minutes of, all meetings of the Board and the stockholders, he shall
see that all notices are duly given in accordance with these By-Laws and as
required by law; he shall be custodian of the seal of the Corporation and shall
affix and attest the seal to all certificates for shares of stock of the
Corporation and shall affix and attest the seal to all documents, the execution
of which on behalf of the Corporation under its shall shall have been
specifically or generally authorized by the Board; he shall have charge of the
stock book and also of the other books, records, and papers of the Corporation
relating to its organization as a Corporation, and shall see that all reports,
statements, and other documents required by law are properly kept or filed by
the Treasurer; he may sign, with the President or any Vice-President,
certificates of stock of the Corporation; and, in general, he shall perform all
the duties incident to the office of Secretary and such other duties as may from
time to time be assigned to him by the Board or the President.
SECTION 9. Assistant Secretaries. At the request of the Secretary, or in
case of his absence or inability to act, the Assistant Secretary, or, if there
shall be more than one, that one of the Assistant Secretaries who shall be
designated by the Secretary or the Board, shall perform the duties of the
Secretary, and when so acting, shall have all the powers of, and be subject to
all the restrictions upon the Secretary. The Assistant Secretaries shall assist
the Secretary in the performance of his duties as directed by him, and shall
perform such other duties as may from time to time be assigned to them by the
Board, the President, or the Secretary.
SECTION 10. Salaries. The salaries of the officers of the Corporation, if
any, shall be fixed from time to time by the Board, and none of such officers
shall be prevented from receiving a salary by reason of the fact that he is also
a member of the Board; but none thereof who shall also be a member of the Board
shall have any vote in the determination of the amount of the salary or
compensation that shall be paid to him.
Any payment made to an officer of the Corporation such as salary,
commission, bonus, interest, or rent, or entertainment expenses incurred by him,
which shall be disallowed in whole
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<PAGE>
or in part as a deductible expense by the Internal Revenue Service, shall be
reimbursed by such officer to the Corporation to the full extent of such
disallowance. It shall be the duty of the directors, as a Board, to enforce
payment of each such amount disallowed. In lieu of payment by the officer,
subject to the determination of the directors, proportionate amounts may be
withheld from his future compensation payments until the amount owed to the
Corporation has been recovered.
ARTICLE IV
Removal, Resignations and Vacancies
SECTION 1. Removal of Directors. Any director of the Corporation may be
removed at any time, either with or without cause, by the affirmative vote of
the holders of record of two-thirds of the shares of stock of the Corporation
entitled to vote for the election of directors, given at a special meeting of
the stockholders called for the purpose, and the vacancy in the Board caused by
any such removal may be filled by the stockholders at such meeting.
SECTION 2. Removal of Officers. Any officer of the Corporation may be
removed at any time, either with or without cause, by resolution adopted by a
majority of the whole Board at a special meeting thereof called for the purpose,
or, except in the case of an officer elected or appointed by the Board, by any
principal officer upon whom such power of removal may be conferred by the Board.
SECTION 3. Resignation. Any director or officer of the Corporation may at
any time resign as such director or officer by giving written notice of his
resignation and shall take effect at the time specified therein, or if no time
be specified therein, at the time of the receipt thereof, and unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
SECTION 4. Vacancies. Vacancies in the Board, whether caused by death,
resignation, removal, disqualification, an increase in the number of directors,
or any other cause, may be filled by a majority vote of the remaining members of
the Board if such remaining members constitute a quorum or by the stockholders
of the Corporation at a special meeting called for the purpose, of which meeting
notice shall be given as provided in Section 4 of Article I of these By-Laws.
Each director so elected shall hold office until the next annual election of
directors and until his successor shall have been duly elected and qualified, or
until his death, or until he shall resign, or until he shall have been removed
in the manner hereinbefore
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provided. Any vacancy in the office of any officer, whether caused by death,
resignation, removal, disqualification, or any other cause, may be filled for
the unexpired portion of the term by the Board at any regular or special meeting
thereof or, in the case of a subordinate officer, by the principal officer
possessing the power to appoint such officer under an outstanding delegation
from the Board.
ARTICLE V
Contracts, Loans, Checks, Drafts, Deposits, Etc.
SECTION 1. Execution of Contracts. Except as otherwise provided by law or
these By-Laws, the Board may authorize any officer or agent of the Corporation,
in the name and on behalf of the Corporation, to enter into any contract or to
sign, execute, or deliver any contract or other instrument, and such authority
may be general or confined to specific instances; and unless authorized by the
Board or these By-Laws, no officer, agent, or employee shall have any power or
authority to bind the Corporation by any contract or engagement, to pledge its
credit, or to render it pecunicarily liable for any purpose or to any amount.
SECTION 2. Loans. No loans shall be contracted on behalf of the
Corporation and no negotiable paper shall be issued in its name; unless
authorized by resolution of the Board. To the extent permitted by law, when
authorized by the Board to do so, advances at any time for the Corporation from
any bank, trust company, or other institution, or from any firm, Corporation, or
individual, and for such loans or advances may make, execute, and deliver
promissory notes, bonds, debentures, or other obligations of the Corporation,
and may pledge, hypothecate, or transfer any security for any such loans or
advances. Such authority may be general or confined to specific instances.
SECTION 3. Checks, Drafts, Etc. All checks, drafts, and other orders for
the payment of monies out of the funds of the Corporation and all notes and
other obligations, of the Corporation shall be signed on behalf of the
Corporation in such manner as shall from time to time be determined by
resolution of the Board.
SECTION 4. Deposits. All funds not otherwise employed shall be deposited
from time to time to the credit of the Corporation in such banks, trust
companies, or other depositaries as the Board may select or as may be selected
by any officer or agent of the Corporation to whom such power may from time to
time be delegated by the Board; and, for the purpose of such deposit, the
President, any Vice-President, the Treasurer, the Secretary, or any other
officer, agent or employee of the
9
<PAGE>
Corporation to whom such power may be delegated by the Board, may endorse,
assign, and deliver checks, drafts, and other orders for the payment of monies
which are payable to the order of the Corporation.
SECTION 5. Proxies. Unless otherwise provided by resolution of the Board,
the President may from time to time appoint any attorney or agent, in the name
and on behalf of the Corporation, to cast as the holder of stock or other
securities in any other corporation any of whose stock or other securites may be
held by the Corporation, at meetings of the holders of stock or other securities
of such other Corporation, or to consent in writing, in the name and on behalf
of the Corporation as such holder, to any action by such other Corporation, and
may instruct the person or persons so appointed as to the manner of casting such
votes or giving such consent, and may execute or cause to be executed, in the
name and on behalf of the Corporation and under its corporate seal or otherwise,
all such written proxies or other instruments as he may deem necessary or proper
in the premies.
ARTICLE VI
Shares and Dividends
SECTION 1. Certificates for Shares. Certificates representing shares of
the Corporation shall be in such form as shall be determined by the Board. Such
certificates shall be signed by the President or a Vice-President and by the
Secretary or an Assistant Secretary. All certificates for shares shall be
consecutively numbered or otherwise identified. The name and address of the
person to whom the shares are represented thereby are issued, with the number of
shares and the date of issue, shall be entered on the stock transfer books of
the Corporation. All certificates surrendered to the Corporation for transfer
shall be cancelled and no new certificate shall be issued until the former
certificates for a like number of shares shall have been surrendered and
cancelled, except that in case of a lost, destroyed, or mutilated certificate
and a new one may be issued therefore upon such terms and idemnity to the
Corporation as the Board may prescribe.
SECTION 2. Transfer of Shares. Transfer of shares of the Corporation shall
be made only on the stock transfer books of the Corporation by the holder of
record thereof or by his legal representative, who shall furnish proper evidence
of authority to transfer, or by his attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary of the Corporation and on
surrender for cancellation of the certificate for such shares. The person in
whose name shares stand on the
10
<PAGE>
books of the Corporation shall be deemed by the Corporation to be the owner
thereof for all purposes.
SECTION 3. Dividends, Surplus. Subject to the provisions of the Articles
of Incorporation and to the extent permitted by law, the Board may declare
dividends on the shares of capital stock of the Corporation at such time and in
such amounts as, in his opinion, the condition of the affairs of the Corporation
shall render advisable; provided, however, that no dividend shall be declared
when the Corporation is insolvent or when the payment of such dividend would
render it insolvent or would diminish the amount of its capital stock. Subject
to the provisions of the Articles of Incorporation, the Board may use and apply,
in its discretion, any of the surplus of the Corporation in purchasing or
acquiring any of the shares of its capital stock or any of its promissory notes,
bonds, debentures, or other obligations.
ARTICLE VII
Offices and Books
SECTION 1. Offices. The principal office of the Corporation in the State
of Alabama shall be as specified in the Articles of Incorporation. The Board may
from time to time establish other offices for the Corporation or branches of its
business at such place or places, within or without the State of Alabama, as
shall seem to it expedient.
SECTION 2. Books. There shall be kept at the principal office of the
Corporation correct books of account of all the business and transactions of the
Corporation and a copy of all these By-Laws. There shall be kept at said office
the original stock ledger, or a duplicate thereof, which shall contain the names
of all persons who are stockholders of the Corporation, their addresses, and the
number of shares held by each of them. The Board from time to time shall fix
reasonable times and places for the inspection of the books, records, and papers
of the corporation, or any of them, by the stockholders; and no stockholder
shall have any right to inspect any book, record, or paper of the Corporation
except at such times and places.
ARTICLE VIII
Seal
The corporate seal of the Corporation shall be in the form of a circle and
shall bear the name of the Corporation and the inscription "Corporate Seal,
Alabama."
11
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ARTICLE IX
Fiscal Year
The fiscal year of the Corporation shall be determined by resolution of
the Board of Directors.
ARTICLE X
Waiver of Notice
Whenever any notice whatever is required to be given by law, the Articles
of Incorporation, or these By-Laws, the person entitled thereto may, in person
or by attorney thereunto authorized, waive such notice in writing or by
telegraph or cable, at, or after such meeting; nor need such notice be given if
the person entitled thereto shall be present in person, or, in the case of a
meeting of stockholders, be present in person or represented by proxy, at such
meeting.
ARTICLE XI
Amendments
Except as expressly otherwise provided by law, the Articles of
Incorporation or herein, these By-Laws, or any of them, may be altered, amended,
or repealed, or new By-Laws may be made, at any annual or special meeting of
stockholders, or at any regular or special meeting of the Board, by vote of a
majority of the whole board, provided that the proposed action in respect
thereof shall be stated in notice of such meeting or in a waiver of notice
thereof. By-Laws made, altered, or amended by the Board shall be subject to
alteration, amendment, or repeal by the stockholders.
I, the undersigned Director of SOUTHERN COPY SYSTEMS, INC., hereby certify
that the foregoing By-Laws were adopted by the stockholders and the Directors of
the Corporation on this the 31st day of January, 1985.
/s/ Edward Segrest Patridge
----------------------------------
EDWARD SEGREST PATRIDGE
President
/s/ Daniel Schorsten
- ----------------------------------
DAN SCHORSTEN, Secretary/Treasurer
12
<PAGE>
Amendment to By Laws dated November 11, 1997
WHEREAS, the Corporation is the owner, directly or indirectly, of
all of the outstanding capital stock of each of Copy Service and Supply, Inc., a
North Carolina corporation, Office Furniture Concepts, Inc., a North Carolina
corporation, Felco Office Systems, Inc., a Texas corporation, American Photocopy
Equipment Company of Pittsburgh, Inc., a Delaware corporation, Berney, Inc., an
Alabama corporation, Southern Copy Systems, Inc., an Alabama corporation, Conway
Office Products, Inc., a New Hampshire corporation, Business Equipment
Unlimited, Inc., a Maine corporation, Cameron Office Products, Inc., a
Massachusetts corporation, Electronic Systems, Inc., a Virginia corporation,
Southern Business Communications, Inc., a Georgia corporation, Quality Business
Systems, Inc., a Washington corporation, and Duplicating Specialties, Inc., an
Oregon corporation; and
WHEREAS, the Board of Directors of the Corporation hereby deem it to
be in the best interests of the Corporation that the Corporation, as the sole
stockholder or the parent of the sole stockholder of each of the Subsidiaries,
hereby amends each of the Subsidiaries' bylaws in order to provide more
efficient and modern means for conducting the business of meetings for such
Subsidiaries' stockholders and boards of directors; NOW, THEREFORE, BE IT
RESOLVED, that the Corporation, as the sole stockholder of each of
the Subsidiaries, hereby elects by written consent of sole stockholder to amend
the Bylaws of each of the Subsidiaries to provide that any authorized person may
call a meeting of the Board of Directors of such company upon 24 hours written
notice (which notice may be given by facsimile transmission);
FURTHER RESOLVED, that the Corporation, as the sole stockholder of
each of the Subsidiaries, hereby elects by written consent of sole stockholder
to amend the Bylaws of each of the Subsidiaries to provide that any meeting of
the Board of Directors of such company may be held in person or by telephone;
FURTHER RESOLVED, that the Corporation, as the sole stockholder of
each of the Subsidiaries, hereby elects by written consent of sole stockholder
to amend the Bylaws of each of the Subsidiaries to provide that any action of
the stockholders of the Corporation may be taken by unanimous written consent
except as otherwise required by law to be held at a meeting of the stockholders
of such company; and
FURTHER RESOLVED, that the Corporation hereby ratifies all actions
previously taken by the officers of the Corporation in connection with the
amendments to its Subsidiaries' Bylaws to comply with all the requirements and
conditions in connection therewith, and all other actions taken incidental
thereto.
-1-
<PAGE>
EXECUTION COPY
EXHIBIT 4.1
===================================================
GLOBAL IMAGING SYSTEMS, INC.,
AS ISSUER,
THE NOTE GUARANTORS PARTY HERETO
AND
UNITED STATES TRUST COMPANY OF NEW YORK,
AS TRUSTEE
10 3/4% SENIOR SUBORDINATED NOTES DUE 2007
==============
INDENTURE
Dated as of March 8, 1999
==============
===================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
<S> <C>
Section 1.1. Definitions................................................ 1
Section 1.2. Other Definitions.......................................... 27
Section 1.3. Incorporation by Reference of Trust Indenture Act.......... 28
Section 1.4. Rules of Construction...................................... 28
ARTICLE II
THE NOTES
Section 2.1. Form and Dating............................................ 29
Section 2.2. Execution and Authentication............................... 30
Section 2.3. Registrar and Paying Agent................................. 31
Section 2.4. Deposit of Monies; Paying Agent to Hold Money in Trust..... 32
Section 2.5. Noteholder Lists........................................... 32
Section 2.6. Book-Entry Provisions...................................... 32
Section 2.7. Legends 33
Section 2.8. Transfer and Exchange...................................... 34
Section 2.9. Mutilated, Destroyed, Lost or Stolen Notes................. 40
Section 2.10. Temporary Notes............................................ 40
Section 2.11. Cancellation............................................... 41
Section 2.12. Payment of Interest; Defaulted Interest.................... 41
Section 2.13. Computation of Interest.................................... 42
Section 2.14. Add-On Notes............................................... 42
Section 2.15. CUSIP Numbers.............................................. 42
ARTICLE III
COVENANTS
Section 3.1. Payment of Notes........................................... 43
Section 3.2. Maintenance of Office or Agency............................ 43
Section 3.3. Corporate Existence........................................ 44
Section 3.4. Payment of Taxes and Other Claims.......................... 44
Section 3.5. Compliance Certificate..................................... 44
Section 3.6. Maintenance of Properties.................................. 45
Section 3.7. Further Instruments and Acts............................... 45
Section 3.8. Waiver of Stay, Extension or Usury Laws.................... 45
Section 3.9. Limitation on Incurrence of Additional Indebtedness........ 45
Section 3.10. Limitation on Restricted Payments.......................... 46
Section 3.11. Limitation on Asset Sales.................................. 49
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Section 3.12. Limitation on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries...... 52
Section 3.13. Limitation on the Ownership of Capital Stock of Restricted Subsidiaries...................... 54
Section 3.14. Limitation on Designation of Unrestricted Subsidiaries....................................... 54
Section 3.15. Limitation on Layered Indebtedness........................................................... 55
Section 3.16. Limitation on Liens.......................................................................... 56
Section 3.17. Limitation on Transactions with Affiliates................................................... 56
Section 3.18. Change of Control............................................................................ 57
Section 3.19. Reports to Holders........................................................................... 59
Section 3.20. Payments for Consent......................................................................... 60
ARTICLE IV
SUCCESSOR COMPANY
Section 4.1. Merger, Consolidation and Sale of Assets..................................................... 60
ARTICLE V
REDEMPTION OF NOTES
Section 5.1. Optional Redemption.......................................................................... 62
Section 5.2. Applicability of Article..................................................................... 62
Section 5.3. Election to Redeem; Notice to Trustee........................................................ 62
Section 5.4. Notice of Redemption......................................................................... 63
Section 5.5. Deposit of Redemption Price.................................................................. 64
Section 5.6. Notes Payable on Redemption Date............................................................. 64
Section 5.7. Notes Redeemed in Part....................................................................... 64
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.1. Events of Default............................................................................ 64
Section 6.2. Acceleration................................................................................. 66
Section 6.3. Other Remedies............................................................................... 67
Section 6.4. Waiver of Past Defaults...................................................................... 67
Section 6.5. Control by Majority.......................................................................... 67
Section 6.6. Limitation on Suits.......................................................................... 68
Section 6.7. Rights of Holders to Receive Payment......................................................... 68
Section 6.8. Collection Suit by Trustee................................................................... 68
Section 6.9. Trustee May File Proofs of Claim............................................................. 68
Section 6.10. Priorities................................................................................... 69
Section 6.11. Undertaking for Costs........................................................................ 69
ARTICLE VII
TRUSTEE
Section 7.1. Duties of Trustee............................................................................ 69
Section 7.2. Rights of Trustee............................................................................ 71
Section 7.3. Individual Rights of Trustee................................................................. 71
</TABLE>
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<TABLE>
<S> <C>
Section 7.4. Trustee's Disclaimer.............................................................. 71
Section 7.5. Notice of Defaults................................................................ 72
Section 7.6. Reports by Trustee to Holders..................................................... 72
Section 7.7. Compensation and Indemnity........................................................ 72
Section 7.8. Replacement of Trustee............................................................ 73
Section 7.9. Successor Trustee by Merger....................................................... 74
Section 7.10. Eligibility; Disqualification..................................................... 74
Section 7.11. Preferential Collection of Claims Against Company................................. 75
ARTICLE VIII
DISCHARGE OF INDENTURE; DEFEASANCE
Section 8.1. Termination of the Company's Obligations.......................................... 75
Section 8.2. Legal Defeasance and Covenant Defeasance.......................................... 76
Section 8.3. Conditions to Defeasance.......................................................... 77
Section 8.4. Application of Trust Money........................................................ 78
Section 8.5. Repayment to Company.............................................................. 78
Section 8.6. Indemnity for U.S. Government Obligations......................................... 79
Section 8.7. Reinstatement..................................................................... 79
ARTICLE IX
AMENDMENTS
Section 9.1. Without Consent of Holders........................................................ 79
Section 9.2. With Consent of Holders........................................................... 80
Section 9.3. Compliance with Trust Indenture Act............................................... 81
Section 9.4. Revocation and Effect of Consents and Waivers..................................... 81
Section 9.5. Notation on or Exchange of Notes.................................................. 82
Section 9.6. Trustee to Sign Amendments, etc................................................... 82
ARTICLE X
SUBORDINATION OF THE NOTES
Section 10.1. Agreement to Subordinate.......................................................... 82
Section 10.2. Liquidation, Dissolution, Bankruptcy.............................................. 82
Section 10.3. Default on Senior Indebtedness of the Company..................................... 83
Section 10.4. Acceleration of Payment of Notes.................................................. 84
Section 10.5. When Distribution Must Be Paid Over............................................... 84
Section 10.6. Subrogation....................................................................... 84
Section 10.7. Relative Rights................................................................... 84
Section 10.8. Subordination May Not Be Impaired by Company...................................... 84
Section 10.9. Rights of Trustee and Paying Agent................................................ 84
Section 10.10. Distribution or Notice to Representative.......................................... 85
Section 10.11. Article X Not to Prevent Events of Default or Limit Right to Accelerate........... 85
Section 10.12. Trust Moneys Not Subordinated..................................................... 85
Section 10.13. Trustee Entitled to Rely.......................................................... 85
Section 10.14. Trustee to Effectuate Subordination............................................... 86
Section 10.15. Trustee Not Fiduciary for Holders of Senior Indebtedness.......................... 86
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<S> <C>
Section 10.16. Reliance by Holders of Senior Indebtedness on Subordination Provisions....................... 86
Section 10.17. No Waiver of Subordination Provisions........................................................ 86
Section 10.18. Other Rights of Holders of Senior Indebtedness............................................... 87
ARTICLE XI
GUARANTEE
Section 11.1. Guarantee.................................................................................... 88
Section 11.2. Limitation on Liability; Termination, Release and Discharge.................................. 89
Section 11.3. Right of Contribution........................................................................ 90
Section 11.4. No Subrogation............................................................................... 90
Section 11.5. Additional Note Guarantees................................................................... 91
ARTICLE XII
SUBORDINATION OF THE NOTE GUARANTEES
Section 12.1. Agreement to Subordinate..................................................................... 91
Section 12.2. Liquidation, Dissolution, Bankruptcy......................................................... 91
Section 12.3. Default on Senior Indebtedness of Note Guarantors............................................ 92
Section 12.4. Demand for Payment........................................................................... 93
Section 12.5. When Distribution Must Be Paid Over.......................................................... 93
Section 12.6. Subrogation.................................................................................. 93
Section 12.7. Relative Rights.............................................................................. 93
Section 12.8. Subordination May Not Be Impaired by Note Guarantors......................................... 93
Section 12.9. Rights of Trustee and Paying Agent........................................................... 94
Section 12.10. Distribution or Notice to Representative..................................................... 94
Section 12.11. Article XII Not to Prevent Defaults Under the Note Guarantees or Limit Right to Demand
Payment............................................................................... 94
Section 12.12. Trustee Entitled to Rely..................................................................... 94
Section 12.13. Trustee to Effectuate Subordination.......................................................... 95
Section 12.14. Trustee Not Fiduciary for Holders of Senior Indebtedness of Note Guarantors.................. 95
Section 12.15. Reliance by Holders of Senior Indebtedness on Subordination Provisions....................... 95
Section 12.16. No Waiver of Subordination Provisions........................................................ 95
Section 12.17. Other Rights of Holders of Senior Indebtedness............................................... 96
ARTICLE XIII
MISCELLANEOUS
Section 13.1. Trust Indenture Act Controls................................................................. 97
Section 13.2. Notices...................................................................................... 97
Section 13.3. Communication by Holders with Other Holders.................................................. 98
Section 13.4. Certificate and Opinion as to Conditions Precedent........................................... 98
Section 13.5. Statements Required in Certificate or Opinion................................................ 98
Section 13.6. Rules by Trustee, Paying Agent and Registrar................................................. 98
Section 13.7. GOVERNING LAW, ETC........................................................................... 99
Section 13.8. No Recourse Against Others................................................................... 99
Section 13.9. Successors................................................................................... 99
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<TABLE>
<S> <C>
Section 13.10. Multiple Originals....................................... 99
Section 13.11. Severability............................................. 99
Section 13.12. Qualification of Indenture............................... 99
Section 13.13. Table of Contents; Headings.............................. 100
</TABLE>
ANNEX A NOTE GUARANTORS
EXHIBIT A FORM OF INITIAL NOTE
EXHIBIT B FORM OF EXCHANGE NOTE
EXHIBIT C FORM OF TRANSFER CERTIFICATE FOR TRANSFER TO QIBS
EXHIBIT D FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION
WITH TRANSFERS TO INSTITUTIONAL ACCREDITED INVESTORS
EXHIBIT E FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH
TRANSFERS PURSUANT TO REGULATION S
EXHIBIT F FORM OF NOTE GUARANTEE
v
<PAGE>
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
<S> <C>
- -------------- --------------
310(a)(1) .................................................................... 7.10
(a)(2) .................................................................... 7.10
(a)(3) .................................................................... N.A.
(a)(4) .................................................................... N.A.
(b) .................................................................... 7.8; 7.10
(c) .................................................................... N.A.
311(a) .................................................................... 7.11
(b) .................................................................... 7.11
(c) .................................................................... N.A.
312(a) .................................................................... 2.5
(b) .................................................................... 13.3
(c) .................................................................... 13.3
313(a) .................................................................... 7.6
(b)(1) .................................................................... N.A.
(b)(2) .................................................................... 7.6
(c) .................................................................... 7.6
(d) .................................................................... 7.6
314(a) .................................................................... 3.20
(b) .................................................................... N.A.
(c)(1) .................................................................... 13.4
(c)(2) .................................................................... 13.4
(c)(3) .................................................................... N.A.
(d) .................................................................... N.A.
(e) .................................................................... 13.5
315(a) .................................................................... 7.2
(b) .................................................................... 13.2
(c) .................................................................... 7.1
(d) .................................................................... 7.1
(e) .................................................................... 6.11
316(a)(last sentence) .................................................................... 11.1
(a)(1)(A) .................................................................... 6.5
(a)(1)(B) .................................................................... 6.4
(a)(2) .................................................................... N.A.
(b) .................................................................... 6.7
317(a)(1) .................................................................... 6.8
(a)(2) .................................................................... 6.9
(b) .................................................................... 2.4
318(a) .................................................................... 13.1
</TABLE>
N.A. means Not Applicable.
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of the Indenture.
vi
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This INDENTURE is dated as of March 8, 1999, among Global Imaging
Systems, Inc., a Delaware corporation (the "Company"), American Photocopy
-------
Equipment Company of Pittsburgh, a Delaware corporation, Berney, Inc., an
Alabama corporation, Business Equipment Unlimited, a Maine corporation, Cameron
Office Products, Inc., a Massachusetts corporation, Capitol Copy Products, Inc.,
a Delaware corporation, Capitol Office Solutions, Inc., a Delaware corporation,
Carr Business Machines of Great Neck Inc., a New York corporation, Centre
Business Products, Inc., a Pennsylvania corporation, Connecticut Business
Systems, Inc., a Connecticut corporation, Conway Office Products, Inc., a New
Hampshire corporation, Copy Service and Supply, Inc., a North Carolina
corporation, COS Financial, Inc., a Maryland corporation, Dahill Industries,
Inc., a Texas corporation, Distinctive Business Products, Inc., an Illinois
corporation, Duplicating Specialties, Inc. dba Copytronix, an Oregon
corporation, Eastern Copy Products, Inc., a New York corporation, Electronic
Systems of Richmond, Inc., a Virginia corporation, Electronic Systems, Inc., a
Virginia corporation, Felco Office Systems, Inc., a Texas corporation, Global
Imaging Finance Company, a Delaware corporation, Global Imaging Operations,
Inc., a Delaware corporation, ProView, Inc., a North Carolina corporation,
Quality Business Systems, Inc., a Washington corporation, Southern Business
Communications, Inc., a Georgia corporation, and Southern Copy Systems, Inc., an
Alabama corporation, as Note Guarantors (as defined), and United States Trust
Company of New York, a bank and trust company organized under the New York
Banking Law, as trustee (the "Trustee").
-------
Each party agrees as follows for the benefit of the other parties and
for the equal and ratable benefit of the holders (the "Holders" or
-------
"Noteholders") of: (i) the Company's 10 3/4% Senior Subordinated Notes Due 2007
-----------
issued on the date hereof, (ii) any Add-On Notes that may be issued after the
Issue Date (all such securities in clauses (i) and (ii) being referred to
collectively as "Initial Notes") and (iii) if and when issued in exchange for
-------------
Initial Notes as provided in the Registration Rights Agreement or a similar
agreement relating to Initial Notes (as hereinafter defined), the Company's 10
3/4% Senior Subordinated Notes Due 2007 (the "Exchange Notes", and together with
--------------
the Initial Notes, the "Notes").
-----
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1. Definitions.
-----------
"Acquired Indebtedness" means Indebtedness of a Person or any of its
---------------------
Subsidiaries existing at the time such Person becomes a Restricted Subsidiary or
at the time it merges or consolidates with the Company or any of its Restricted
Subsidiaries or is assumed in connection with the acquisition of assets from
such Person.
"Affiliate" means, with respect to any specified Person, any other
---------
Person who directly or indirectly through one or more intermediaries controls,
or is controlled by, or is under common control with, such specified Person. The
term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise;
provided, that beneficial ownership of 10% or more of the Voting Stock of a
Person shall be deemed to be
<PAGE>
control. For purposes of this definition, the terms "controlling", "controlled
by" and "under common control with" have correlative meanings.
"Asset Acquisition" means:
-----------------
(1) an Investment by the Company or any Restricted Subsidiary in any
other Person pursuant to which such Person shall become a Restricted
Subsidiary, or shall be merged with or into the Company or any Restricted
Subsidiary; or
(2) the acquisition by the Company or any Restricted Subsidiary of the
assets of any Person (other than a Subsidiary of the Company) which
constitute all or substantially all of the assets of such Person or
comprise any division or line of business of such Person or any other
properties or assets of such Person other than in the ordinary course of
business.
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
----------
transfer, lease, assignment or other transfer for value by the Company or any of
its Restricted Subsidiaries (including any Sale and Leaseback Transaction) to
any Person other than the Company or a Restricted Subsidiary (including a Person
that is or will become a Restricted Subsidiary immediately after such sale,
issuance, conveyance, transfer, lease, assignment or other transfer for value)
of:
(a) any Capital Stock of any Restricted Subsidiary; or
(b) any property or assets (other than cash, Cash Equivalents or
Capital Stock) of the Company or any Restricted Subsidiary;
Notwithstanding the preceding, the following items shall not be deemed
to be Asset Sales:
(1) the sale, lease, conveyance, disposition or other transfer of all
or substantially all of the assets of the Company and its Restricted
Subsidiaries as permitted under Section 4.1;
-----------
(2) a disposition of inventory, receivables or other current assets in
the ordinary course of business;
(3) dispositions of assets in any fiscal year with a Fair Market Value
not to exceed $5 million in the aggregate;
(4) for purposes of Section 3.11 only, the making of a Permitted
------------
Investment or Restricted Payment;
(5) a disposition in the ordinary course of business of obsolete or
worn-out equipment;
(6) rental equipment sales made in the ordinary course of business;
and
2
<PAGE>
(7) any sale of Capital Stock or other securities or Indebtedness of
an Unrestricted Subsidiary.
"Asset Sale Transaction" means Asset Sales and, whether or not
----------------------
constituting an Asset Sale, (1) any sale or other disposition of Capital Stock
and (2) any sale or other disposition of property or assets excluded from the
definition of Asset Sale by clause (1) or (4) of such definition.
"Bankruptcy Law" means Title 11, United States Code, or any other
--------------
applicable federal, state, or foreign bankruptcy, insolvency or similar law as
now or hereafter constituted.
"Board of Directors" means, (i) in the case of a Person that is a
------------------
corporation, the board of directors of such Person or any committee authorized
to act therefor and (ii) in the case of any other Person, the board of
directors, management committee or similar governing body or any authorized
committee thereof responsible for the management of the business and affairs of
such Person.
"Board Resolution" means, with respect to any Person, a copy of a
----------------
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"Business Day" means a day other than a Saturday, Sunday or other day
------------
on which commercial banking institutions are authorized or required by law to
close in New York City.
"Capitalized Lease Obligations" means, as to any Person, the
-----------------------------
obligations of such Person under a lease that are required to be classified and
accounted for as capital lease obligations under GAAP. For purposes of this
definition, the amount of such obligations at any date shall be the capitalized
amount of such obligations at such date, determined in accordance with GAAP.
"Capital Stock" means:
-------------
(1) with respect to any Person that is a corporation, any and all
shares, interests, participations or other equivalents (however designated
and whether or not voting) of corporate stock, including each class of
Common Stock and Preferred Stock of such Person; and
(2) with respect to any Person that is not a corporation, any and all
partnership, membership or other equity or ownership interests of such
Person.
"Cash Equivalents" means:
----------------
(1) marketable direct obligations issued by, or unconditionally
guaranteed by, the United States government or issued by any agency thereof
and backed by the full faith
3
<PAGE>
and credit of the United States, in each case maturing within one year from
the date of acquisition thereof;
(2) marketable direct obligations issued by any state of the United
States of America or any political subdivision of any such state or any
public instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either S&P or Moody's;
(3) commercial paper maturing no more than one year from the date of
creation thereof and, at the time of acquisition, having a rating of at
least A-1 from S&P or at least P-1 from Moody's;
(4) certificates of deposit or bankers' acceptances maturing within
one year from the date of acquisition thereof issued by any bank organized
under the laws of the United States of America or any state thereof or the
District of Columbia or any U.S. branch of a foreign bank having at the
date of acquisition thereof combined capital and surplus of not less than
$500 million;
(5) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clause (1) above entered
into with any bank meeting the qualifications specified in clause (4)
above; and
(6) investments in money market funds which invest substantially all
their assets in securities of the types described in clauses (1) through
(5) above.
"Certificated Notes" means Notes held in certificated form, other than
------------------
Global Notes, but including IAI Notes.
"Change of Control" means the occurrence of one or more of the
-----------------
following events:
(1) (A) any "person" (as such term is used in Sections 13(d) and 14(d)
of the Exchange Act), other than one or more Permitted Holders, is or
becomes the beneficial owner (as defined in Rule 13d-3 and 13d-5 under the
Exchange Act, except that for purposes of this clause (1) such person shall
be deemed to have "beneficial ownership" of all shares that any such person
has the right to acquire, whether such right is exercisable immediately or
only after the passage of time), directly or indirectly, of more than 35%
of the total voting power of the Voting Stock of the Company and (B) the
Permitted Holders "beneficially own" (as so defined), directly or
indirectly, in the aggregate a lesser percentage of the total voting power
of the Voting Stock of the Company than such other person (for the purposes
of this clause (1), such other person shall be deemed to beneficially own
any Voting Stock of a specified corporation held by a parent corporation,
if such other person is the beneficial owner (as defined in this clause
4
<PAGE>
(1) ), directly or indirectly, of more than 35% of the voting power of the
Voting Stock of such parent corporation and the Permitted Holders
"beneficially own" (as defined in this clause (1) ), directly or
indirectly, in the aggregate a lesser percentage of the voting power of the
Voting Stock of such parent corporation);
(2) during any period of two consecutive years (or, in the case this
event occurs within the first two years after the Issue Date, such shorter
period as shall have begun on the Issue Date), individuals who at the
beginning of such period constituted the Board of Directors of the Company
(together with any new directors whose election by such Board of Directors
or whose nomination for election by the shareholders of the Company was
approved by a vote of a majority of the directors of the Company then still
in office who were either directors at the beginning of such period or
whose election or nomination for election was previously so approved) cease
for any reason to constitute a majority of the Board of Directors of the
Company then in office; or
(3) the Company consolidates with, or merges with or into, another
Person (other than the Company or a Wholly Owned Restricted Subsidiary) or
the Company or any of its Restricted Subsidiaries sells, conveys, assigns,
transfers, leases or otherwise disposes of all or substantially all of the
assets of the Company and its Restricted Subsidiaries (determined on a
consolidated basis for the Company and its Restricted Subsidiaries) to any
Person (other than the Company or any Wholly Owned Restricted Subsidiary),
other than any such transaction where immediately after such transaction
the Person or Persons that "beneficially owned" (as defined in Rules 13d-3
and 13d-5 under the Exchange Act, except that a Person shall be deemed to
have "beneficial ownership" of all securities that such Person has the
right to acquire, whether such right is exercisable immediately or only
after the passage of time) immediately prior to such transaction, directly
or indirectly, all of the total voting power of the then outstanding Voting
Stock of the Company "beneficially own" (as so determined), directly or
indirectly, a majority of the total voting power of the then outstanding
Voting Stock of the surviving or transferee Person.
"Closing Date" means, with respect to any Initial Notes, the date on
------------
which such Initial Notes are originally issued.
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Commission" means the Securities and Exchange Commission, or any
----------
successor agency thereto with respect to the regulation or registration of
securities.
"Common Stock" of any Person means any and all shares, interests or
------------
other participations in, and other equivalents (however designated and whether
voting or non-voting) of such Person's common stock, whether outstanding on the
Issue Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common stock.
"Company" has the meaning set forth in the introductory paragraph
-------
hereto.
5
<PAGE>
"Consolidated EBITDA" means, for any period, Consolidated Net Income
-------------------
for such period, plus the following to the extent deducted in calculating such
Consolidated Net Income:
(1) Consolidated Income Tax Expense for such period; plus
(2) Consolidated Interest Expense for such period; plus
(3) Consolidated Non-cash Charges for such period; plus
(4) net after-tax losses from Asset Sale Transactions or abandonments
or reserves relating thereto, less
(5) to the extent that the aggregate of all such items exceeds $1.0
million (a) all non-cash credits and gains increasing Consolidated Net
Income for such period and (b) all cash payments during such period
relating to non-cash charges that were added back in determining
Consolidated EBITDA in any prior period.
"Consolidated Fixed Charge Coverage Ratio" means, as of any date of
----------------------------------------
determination, the ratio of the aggregate amount of Consolidated EBITDA for the
four most recent full fiscal quarters for which financial statements are
available ending prior to the date of such determination (the "Four Quarter
------------
Period") to Consolidated Fixed Charges for such Four Quarter Period. For
- ------
purposes of this definition, "Consolidated EBITDA" and "Consolidated Fixed
Charges" shall be calculated after giving effect on a pro forma basis for the
period of such calculation to:
(1) the Incurrence or repayment (excluding revolving credit borrowings
Incurred or repaid in the ordinary course of business for working capital
purposes) of any Indebtedness or Preferred Stock of the Company or any of
its Restricted Subsidiaries (and the application of the proceeds thereof),
including the Incurrence of any Indebtedness or Preferred Stock (and the
application of the proceeds thereof) giving rise to the need to make such
determination, occurring during such Four Quarter Period or at any time
subsequent to the last day of such Four Quarter Period and on or prior to
such date of determination, as if such Incurrence or repayment, as the case
may be (and the application of the proceeds thereof), occurred on the first
day of such Four Quarter Period; and
(2) any Asset Sale Transactions or Asset Acquisitions (including,
without limitation, any Asset Acquisition giving rise to the need to make
such determination as a result of the Company or one of its Restricted
Subsidiaries (including any Person who becomes a Restricted Subsidiary as a
result of the Asset Acquisition) Incurring Acquired Indebtedness and
including, without limitation, by giving pro forma effect to any
Consolidated EBITDA (provided that such pro forma Consolidated EBITDA shall
be calculated in a manner consistent with the exclusions in the definition
of "Consolidated Net Income") attributable to the assets which are the
subject of the Asset Sale Transaction or Asset Acquisition during the Four
Quarter Period) occurring during the Four Quarter Period or at any time
subsequent to the last day of the Four Quarter Period and on or prior
6
<PAGE>
to such date of determination, as if such Asset Sale Transaction or Asset
Acquisition (including the Incurrence of any such Acquired Indebtedness)
occurred on the first day of the Four Quarter Period.
Furthermore, in calculating "Consolidated Fixed Charges" for purposes
of determining the denominator (but not the numerator) of this "Consolidated
Fixed Charge Coverage Ratio,"
(a) interest on outstanding Indebtedness determined on a fluctuating
basis as of the date of determination and which will continue to be so
determined thereafter shall be deemed to have accrued at a fixed rate per
annum equal to the rate of interest on such Indebtedness in effect on such
date of determination;
(b) if interest on any Indebtedness actually Incurred on such date of
determination may optionally be determined at an interest rate based upon a
factor of a prime or similar rate, a eurocurrency interbank offered rate,
or other rates, then the interest rate in effect on such date of
determination will be deemed to have been in effect during the Four Quarter
Period; and
(c) notwithstanding clause (a) above, interest on Indebtedness
determined on a fluctuating basis, to the extent such interest is covered
by Hedging Obligations, shall be deemed to accrue at the rate per annum
resulting after giving effect to the operation of such agreements.
"Consolidated Fixed Charges" means, for any period, the sum, without
--------------------------
duplication, of:
(1) Consolidated Interest Expense, plus
(2) the product of:
(a) the amount of all cash and non-cash dividend payments on any
series of Preferred Stock or Disqualified Capital Stock of the Company
(other than dividends paid in Qualified Capital Stock) paid, accrued
or scheduled to be paid or accrued during such period times
(b) a fraction, the numerator of which is one and the denominator
of which is one minus the then current effective consolidated federal,
state and local tax rate of the Company, expressed as a decimal.
"Consolidated Income Tax Expense" means, with respect to the Company
-------------------------------
for any period, the provision for Federal, state, local and foreign income taxes
payable by the Company and its Restricted Subsidiaries for such period as
determined on a consolidated basis in accordance with GAAP.
7
<PAGE>
"Consolidated Interest Expense" means, for any period, the sum of,
-----------------------------
without duplication determined on a consolidated basis in accordance with GAAP:
(1) the aggregate of cash and non-cash interest expense of the Company
and its Restricted Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP, including, without limitation
(whether or not interest expense in accordance with GAAP):
(a) any amortization or accretion of debt discount or any
interest paid on Indebtedness of the Company in the form of additional
Indebtedness,
(b) any amortization of deferred financing costs,
(c) the net costs under Currency Agreements related to
Indebtedness and Interest Rate Agreements (including amortization of
fees),
(d) all capitalized interest,
(e) the interest portion of any deferred payment obligation,
(f) commissions, discounts and other fees and charges Incurred in
respect of letters of credit or bankers' acceptances, and
(g) any interest expense on Indebtedness of another Person that
is guaranteed by the Company or one of its Restricted Subsidiaries or
secured by a Lien on the assets of the Company or one of its
Restricted Subsidiaries (whether or not such guarantee or Lien is
called upon); and
(2) the interest component of Capitalized Lease Obligations paid,
accrued and/or scheduled to be paid or accrued by the Company and its
Restricted Subsidiaries during such period.
"Consolidated Net Income" means, with respect to any Person for any
-----------------------
period, the aggregate net income (or loss) of the Company and its Restricted
Subsidiaries for such period on a consolidated basis, determined in accordance
with GAAP; provided, that there shall be excluded therefrom:
(1) net after-tax gains from Asset Sale Transactions or abandonments
or reserves relating thereto;
(2) net after-tax items classified as extraordinary gains or losses;
(3) for purposes of calculating Consolidated Net Income pursuant to
clause (3)(A) Section 3.10 only, the net income of any Person acquired in a
------------
"pooling of interests" transaction accrued prior to the date it becomes a
Restricted Subsidiary or is merged or consolidated with the Company or any
Restricted Subsidiary;
8
<PAGE>
(4) the net income (but not loss) of any Restricted Subsidiary to the
extent that the declaration of dividends or similar distributions by that
Restricted Subsidiary of that income is restricted by contract, operation
of law or otherwise;
(5) the net income of any Person, other than a Restricted Subsidiary,
except to the extent of cash dividends or distributions paid to the Company
or to a Restricted Subsidiary by such Person;
(6) any increase (but not decrease) in net income attributable to
minority interests in any Restricted Subsidiary;
(7) any restoration to income of any contingency reserve in excess of
$1.0 million, except to the extent that provision for such reserve was made
out of Consolidated Net Income accrued at any time following the Issue
Date; and
(8) the cumulative effect of changes in accounting principles.
"Consolidated Net Worth" of any Person means the consolidated
----------------------
stockholders' equity of such Person, determined on a consolidated basis in
accordance with GAAP, less (without duplication) amounts attributable to
Disqualified Capital Stock of such Person.
"Consolidated Non-cash Charges" means, for any period, the aggregate
-----------------------------
depreciation, amortization and other non-cash expenses or losses of the Company
and its Restricted Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP (excluding any such charge which requires an
accrual of or a reserve for cash charges for any future period).
"Currency Agreement" means, in respect of any Person, any foreign
------------------
exchange contract, currency swap agreement or other similar agreement as to
which such Person is a party.
"Custodian" means any receiver, trustee, assignee, liquidator,
---------
custodian or similar official under any Bankruptcy Law.
"Default" means an event or condition the occurrence of which is, or
-------
with the lapse of time or the giving of notice or both would be, an Event of
Default.
"Designated Senior Indebtedness" means:
------------------------------
(1) in respect of the Company, the Senior Credit Facility and any
other Senior Indebtedness of the Company which, at the date of
determination, has an aggregate principal amount outstanding of, or under
which, at the date of determination, the holders thereof are committed to
lend up to, at least $15 million and is specifically designated by the
Company in the instrument evidencing or governing such Senior Indebtedness
as "Designated Senior Indebtedness;" and
(2) in respect of any Note Guarantor, the Senior Credit Facility and
any other Senior Indebtedness of any Note Guarantor which, at the date of
determination, has an
9
<PAGE>
aggregate principal amount outstanding of, or under which, at the date of
determination, the holders thereof are committed to lend up to, at least
$15 million and is specifically designated by such Note Guarantor in the
instrument evidencing or governing such Senior Indebtedness as "Designated
Senior Indebtedness."
"Disqualified Capital Stock" means that portion of any Capital Stock
--------------------------
which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable at the option of the holder
thereof), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the sole option of the holder thereof, in any case, on or prior to the 91st
day after the final maturity date of the Notes; provided, however, that any
Capital Stock that would not constitute Disqualified Capital Stock but for
provisions thereof giving holders thereof the right to require such Person to
repurchase or redeem such Capital Stock upon the occurrence of an "asset sale"
or "change of control" occurring prior to the 91st day following the Stated
Maturity of the Notes shall not constitute Disqualified Capital Stock if (x) the
"asset sale" or "change of control" provisions applicable to such Capital Stock
are not more favorable to the holders of such Capital Stock than the provisions
described under Section 3.18 and Section 3.11 and (y) any such requirement only
------------ ------------
becomes operative after compliance with such terms applicable to the Notes,
including the purchase of any Notes tendered pursuant thereto.
"Domestic Restricted Subsidiary" means any direct or indirect
------------------------------
Restricted Subsidiary that is organized under the laws of the United States, any
state thereof or the District of Columbia.
"DTC" means The Depository Trust Company, its nominees and their
---
respective successors and assigns, or such other depository institution
hereinafter appointed by the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
or any successor statute or statutes thereto.
"Exchange Offer Registration Statement" has the meaning assigned to it
-------------------------------------
in the Registration Rights Agreement.
"Fair Market Value" means, with respect to any asset, the price (after
-----------------
taking into account any liabilities relating to such assets) which could be
negotiated in an arm's-length free market transaction, for cash, between a
willing seller and a willing and able buyer, neither of which is under any
compulsion to complete the transaction; provided, that the Fair Market Value of
any such asset or assets shall be determined conclusively by the Board of
Directors of the Company acting in good faith, and shall be evidenced by a Board
Resolution.
"Four Quarter Period" has the meaning set forth in the definition of
-------------------
"Consolidated Fixed Charge Coverage Ratio" above.
"GAAP" means generally accepted accounting principles set forth in the
----
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified
10
<PAGE>
Public Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as may be
approved by a significant segment of the accounting profession of the United
States, which are in effect as of the date of determination; provided, however,
that all calculations made for purposes of determining compliance with the
financial covenants contained herein shall utilize GAAP as in effect on the
Issue Date.
"Hedging Obligations" means the obligations of any Person pursuant to
-------------------
any Interest Rate Agreement or Currency Agreement.
"IAI" means an institutional "accredited investor," as defined in Rule
---
501(a)(1), (2), (3) or (7) under the Securities Act, other than a QIB.
"Incur" means, with respect to any Indebtedness or other obligation of
-----
any Person, to create, issue, incur (including by conversion, exchange or
otherwise), assume, guarantee or otherwise become liable in respect of such
Indebtedness or other obligation on the balance sheet of such Person (and
"Incurrence," "Incurred" and "Incurring" shall have meanings correlative to the
preceding). Indebtedness of any Person or any of its Subsidiaries existing at
the time such Person becomes a Restricted Subsidiary or at the time it merges or
consolidates with the Company or any of its Restricted Subsidiaries or at the
time its assets are acquired and Indebtedness assumed in connection therewith by
the Company or any of its Restricted Subsidiaries, whether or not such
Indebtedness was Incurred in connection with, as a result of, or in
contemplation of, such Person becoming a Restricted Subsidiary or being merged
or consolidated with the Company or any of its Restricted Subsidiaries or the
acquisition of such Person's assets, shall be deemed Incurred at that time.
"Indebtedness" means with respect to any Person, without duplication:
------------
(1) the principal amount (or, if less, the accreted value) of all
obligations of such Person for borrowed money;
(2) the principal amount (or, if less, the accreted value) of all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments;
(3) all Capitalized Lease Obligations of such Person;
(4) all obligations of such Person issued or assumed as the deferred
purchase price of property, all conditional sale obligations and all
obligations under any title retention agreement (but excluding trade
accounts payable and other accrued liabilities arising in the ordinary
course of business that are not overdue by 90 days or more or are being
contested in good faith by appropriate proceedings promptly instituted and
diligently conducted);
(5) all obligations of such Person for the reimbursement of any
obligor on any letter of credit, banker's acceptance or similar credit
transaction;
11
<PAGE>
(6) guarantees and other contingent obligations of such Person in
respect of Indebtedness referred to in clauses (1) through (5) above and
clause (8) below;
(7) all Indebtedness of any other Person of the type referred to in
clauses (1) through (6) which are secured by any lien on any property or
asset of such Person, the amount of such Indebtedness being deemed to be
the lesser of the Fair Market Value of such property or asset or the amount
of the Indebtedness so secured;
(8) all obligations under Hedging Obligations of such Person; and
(9) all Disqualified Capital Stock issued by such Person with the
amount of Indebtedness represented by such Disqualified Capital Stock being
equal to the greater of its voluntary or involuntary liquidation preference
and its maximum fixed repurchase price, but excluding accrued dividends, if
any; provided that if the "maximum fixed repurchase price" of any
Disqualified Capital Stock:
(a) does not have a fixed repurchase price, such price shall be
calculated in accordance with the terms of such Disqualified Capital
Stock as if such Disqualified Capital Stock were purchased on any date
on which Indebtedness shall be required to be determined pursuant to
this Indenture, and
(b) is based upon, or measured by, the fair market value of such
Disqualified Capital Stock, such fair market value shall be the Fair
Market Value thereof.
"Indenture" means this Indenture, as amended or supplemented from time
---------
to time.
"Independent Financial Advisor" means an accounting firm, appraisal
-----------------------------
firm, investment banking firm or consultant to Persons engaged in a Permitted
Business, in each case, of nationally recognized standing that is, in the
judgment of the Company's Board of Directors, qualified to perform the task for
which it has been engaged and which is independent in connection with the
relevant transaction.
"Interest Rate Agreement" of any Person means any interest rate
-----------------------
protection agreement (including, without limitation, interest rate swaps, caps,
floors, collars, derivative instruments and similar agreements) and/or other
types of interest hedging agreements.
"Investment" means, with respect to any Person, any:
----------
(1) direct or indirect loan or other extension of credit (including,
without limitation, a guarantee),
(2) capital contribution to (by means of any transfer of cash or other
property to others or any payment for property or services for the account
or use of others), or
(3) any purchase or acquisition by such Person of any Capital Stock,
bonds, notes, debentures or other securities or evidences of Indebtedness
issued by, any other Person.
12
<PAGE>
"Investment" shall exclude accounts receivable or deposits arising in the
ordinary course of business. For purposes of Section 3.10, the Company shall be
------------
deemed to have made an "Investment" in an Unrestricted Subsidiary at the time of
its Designation, which shall be valued at the Fair Market Value of the sum of
the net assets of any such Unrestricted Subsidiary at the time of its
Designation and the amount of any Indebtedness of such Unrestricted Subsidiary
guaranteed by the Company or any Restricted Subsidiary or owed to the Company or
any Restricted Subsidiary immediately following such Designation.
Any property transferred to or from an Unrestricted Subsidiary will be
valued at its Fair Market Value at the time of such transfer. If the Company or
any Restricted Subsidiary sells or otherwise disposes of any Capital Stock of a
Restricted Subsidiary (including any issuance and sale of Capital Stock by a
Restricted Subsidiary) such that, after giving effect to any such sale or
disposition, such Restricted Subsidiary would cease to be a Subsidiary of the
Company, the Company shall be deemed to have made an Investment on the date of
any such sale or disposition equal to the sum of the Fair Market Value of the
Capital Stock of such former Restricted Subsidiary held by the Company or any
Restricted Subsidiary immediately following such sale or other disposition and
the amount of any Indebtedness of such former Restricted Subsidiary guaranteed
by the Company or any Restricted Subsidiary or owed to the Company or any
Restricted Subsidiary immediately following such sale or other disposition.
"Issue Date" means March 8, 1999.
----------
"Lien" means any lien, mortgage, deed of trust, pledge, security
----
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof and any
agreement to give any security interest).
"Liquidated Damages" has the meaning assigned to it in the
------------------
Registration Rights Agreement.
"Moody's" means Moody's Investors Service, Inc. or any successor to
-------
the business of such corporation.
"Net Cash Proceeds" means, with respect to any Asset Sale, the
-----------------
proceeds in the form of cash or Cash Equivalents, including payments in respect
of deferred payment obligations when received in the form of cash or Cash
Equivalents received by the Company or any of its Restricted Subsidiaries from
such Asset Sale, net of the direct costs relating to such Asset Sale, including:
(1) out-of-pocket expenses and fees relating to such Asset Sale
(including, without limitation, legal, accounting and investment banking
fees and sales commissions);
(2) taxes paid or payable after taking into account any reduction in
consolidated tax liability due to available tax credits or deductions and
any tax sharing arrangements;
(3) repayment or Indebtedness secured by a Lien permitted under this
Indenture that is required to be repaid in connection with such Asset Sale;
and
13
<PAGE>
(4) appropriate amounts to be provided by the Company or any
Restricted Subsidiary, as the case may be, as a reserve, in accordance with
GAAP, against any liabilities associated with such Asset Sale and retained
by the Company or any Restricted Subsidiary, as the case may be, after such
Asset Sale, including, without limitation, pension and other post-
employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated
with such Asset Sale.
"Non-U.S. Person" means a Person who is not a U.S. Person, as defined
---------------
in Regulation S.
"Note Custodian" means, with respect to each Global Note, the
--------------
custodian therefor on behalf of DTC or its nominee (as appointed by DTC), or any
successor Person thereto and shall initially be the Trustee.
"Note Guarantee" means the guarantee of the Notes by each Note
--------------
Guarantor under Article XI hereof.
----------
"Note Guarantor" means American Photocopy Equipment Company of
--------------
Pittsburgh, Berney, Inc., Business Equipment Unlimited, Cameron Office Products,
Inc., Capitol Copy Products, Inc., Capitol Office Solutions, Inc., Carr Business
Machines of Great Neck Inc., Centre Business Products, Inc., Connecticut
Business Systems, Inc., Conway Office Products, Inc., Copy Service and Supply,
Inc., COS Financial, Inc., Dahill Industries, Inc., Distinctive Business
Products, Inc., Duplicating Specialties, Inc. dba Copytronix, Eastern Copy
Products, Inc., Electronic Systems of Richmond, Inc., Electronic Systems, Inc.,
Felco Office Systems, Inc., Global Imaging Finance Company, Global Imaging
Operations, Inc., ProView, Inc., Quality Business Systems, Inc., Southern
Business Communications, Inc., Southern Copy Systems, Inc. and each Additional
Guarantor.
"Obligations" means, with respect to any Indebtedness, any principal,
-----------
interest (including, without limitation, Post-Petition Interest), penalties,
fees, indemnifications, reimbursements, including, in the case of the Notes and
the Note Guarantees in respect thereof, damages, and other liabilities payable
under the documentation governing such Indebtedness.
"Officer" means the Chairman of the Board, the Chief Executive
-------
Officer, the President, the Chief Financial Officer, any Vice President, the
Treasurer, the Controller or the Secretary of the Company.
"Officers' Certificate" means a certificate signed by two Officers or
---------------------
by an Officer and either an Assistant Treasurer or an Assistant Secretary of the
Company.
"Opinion of Counsel" means a written opinion from legal counsel who is
------------------
reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.
14
<PAGE>
"Outstanding" means, as of the date of determination, all Notes
-----------
theretofore authenticated and delivered under this Indenture, except:
(i) Notes theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(ii) Notes, or portions thereof, for whose payment or redemption
money in the necessary amount has been theretofore deposited with the
Trustee or any Paying Agent (other than the Company) in trust or set aside
and segregated in trust by the Company (if the Company shall act as its own
Paying Agent) for the Holders of such Notes; provided that, if the Notes
are to be redeemed, notice of such redemption has been duly given pursuant
to this Indenture or provision therefor satisfactory to the Trustee has
been made;
(iii) Notes which have been paid pursuant to Section 2.9 or in
-----------
exchange for or in lieu of which other Notes have been authenticated and
delivered pursuant to this Indenture, other than any such Notes in respect
of which there shall have been presented to the Trustee proof satisfactory
to it that such Notes are held by a bona fide purchaser in whose hands such
Notes are valid obligations of the Company; and
(iv) Notes which have been defeased pursuant to Article VIII;
------------
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Notes owned by
the Company or any other obligor upon the Notes or any Affiliate of the Company
or of such other obligor shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Notes which a Trust Officer of the Trustee actually knows to be so
owned shall be so disregarded. Notes so owned which have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Notes and that the pledgee is not the Company or any other obligor upon the
Notes or any Affiliate of the Company or of such other obligor.
"Permitted Business" means the business or businesses conducted by the
------------------
Company and its Restricted Subsidiaries as of the Issue Date and any business
ancillary, complementary or related thereto.
"Permitted Holders" means
-----------------
(1) Thoma Cressey Equity Partners LLC and its Affiliates and
(2) (a) Thomas S. Johnson; (b) the spouse, parents, siblings or
descendants of Thomas S. Johnson or of such spouse or siblings; (c) in the
event of incompetence or death of Thomas S. Johnson or any of the Persons
described in (b) above, such Person's estate, executor, administrator,
committee or other personal representative in each case who at any
particular date shall beneficially own or have the right to acquire,
directly or
15
<PAGE>
indirectly, Voting Stock of the Company; (d) any trusts created for the
sole benefit of Thomas S. Johnson or any of the Persons described in
clauses (b) or (c) above; (e) any Person of which Thomas S. Johnson or any
of the Persons described in clauses (b) or (c) above (x) "beneficially
owns" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) on a
fully diluted basis at least 51% of the voting power of the Voting Stock of
such Person or (y) is the sole trustee or general partner, or otherwise has
the sole power to manage the business and affairs of such Person.
"Permitted Indebtedness" means, without duplication, each of the
----------------------
following:
(1) Indebtedness in respect of the Notes issued on the Issue Date and
replacement Notes issued therefor pursuant to this Indenture;
(2) guarantees by the Company of Indebtedness of any Note Guarantor
permitted under this Indenture and guarantees by any Note Guarantor of
Indebtedness of the Company or any other Note Guarantor permitted under
this Indenture provided, that if any such guarantee is of Subordinated
Indebtedness, then the Notes, in the case of guarantee by the Company, or
the Note Guarantee, in the case of a guarantee by a Note Guarantor, shall
be senior to the Company's or such Note Guarantor's guarantee of such
Subordinated Indebtedness;
(3) Indebtedness Incurred pursuant to the Senior Credit Facility in an
aggregate principal amount at any time outstanding not to exceed
$250,000,000, less the amount of any permanent prepayments or reductions of
commitments in respect of such Indebtedness made with the Net Cash Proceeds
of an Asset Sale in order to comply with Section 3.11;
------------
(4) other Indebtedness of the Company and its Restricted Subsidiaries
outstanding on the Issue Date other than Indebtedness specified under any
of the other clauses of this definition of Permitted Indebtedness;
(5) Hedging Obligations Incurred for the purpose of fixing or hedging
interest rate risk and not for speculative purposes;
(6) intercompany Indebtedness among the Company and any of its
Restricted Subsidiaries; provided that:
(a) if the Company or any Note Guarantor is the obligor on such
Indebtedness, such Indebtedness must be expressly subordinated to the
prior payment in full of all obligations under the Notes and this
Indenture, in the case of the Company, or such Subsidiary's Note
Guarantee, in the case of any such Subsidiary Guarantor, and
(b) in the event that at any time any such Indebtedness ceases to
be held by the Company or a Restricted Subsidiary, such Indebtedness
shall be deemed to be Incurred and not permitted by this clause (6) at
the time such event occurs;
16
<PAGE>
(7) Indebtedness of the Company or any of its Restricted Subsidiaries
arising from the honoring by a bank or other financial institution of a
check, draft or similar instrument inadvertently (except in the case of
daylight overdrafts) drawn against insufficient funds in the ordinary
course of business; provided, that such Indebtedness is extinguished within
five business days of Incurrence;
(8) Indebtedness of the Company or any of its Restricted Subsidiaries
represented by letters of credit for the account of the Company or any
Restricted Subsidiary, as the case may be, in order to provide security for
workers' compensation claims, payment obligations in connection with self-
insurance or similar requirements in the ordinary course of business;
(9) Refinancing Indebtedness in respect of:
(a) Indebtedness (other than Permitted Indebtedness and
Indebtedness owed to the Company or any Subsidiary) Incurred pursuant
to paragraph (1) of Section 3.9 or
-----------
(b) Indebtedness Incurred pursuant to clause (1) or (4) of this
definition of Permitted Indebtedness;
(10) Capitalized Lease Obligations and Purchase Money Indebtedness
that do not exceed $10 million in the aggregate at any one time
outstanding; and
(11) Additional Indebtedness of the Company or any Note Guarantor in
an aggregate principal amount not to exceed $25 million at any one time
outstanding (which amount may, but need not, be Incurred in whole or in
part under the Senior Credit Facility).
For purposes of determining compliance with Section 3.9, in the event that an
-----------
item of Indebtedness meets the criteria of more than one of the categories
described above in this definition or is entitled to be Incurred pursuant to
Section 3.9, the Company shall, in its sole discretion, classify such item of
- -----------
Indebtedness in any manner that complies with Section 3.9.
-----------
"Permitted Investments" means:
---------------------
(1) Investments by the Company or any Restricted Subsidiary in any
Person that is, or that result in any Person becoming, immediately after
such Investment, a Restricted Subsidiary or constituting a merger or
consolidation of such Person into the Company or with or into a Restricted
Subsidiary;
(2) Investments by any Restricted Subsidiary in the Company;
(3) Investments in cash and Cash Equivalents;
(4) any extension, modification or renewal of any Investments existing
as of the Issue Date (but not Investments involving additional advances,
contributions or other
17
<PAGE>
investments of cash or property or other increases thereof, other than as a
result of the accrual or accretion of interest or original issue discount
or payment-in-kind pursuant to the terms of such Investment as of the Issue
Date);
(5) Investments permitted pursuant to clause (b)(2) or (5) of Section
-------
3.17;
----
(6) Investments received as a result of the bankruptcy or
reorganization of any Person or taken in settlement of or other resolution
of claims or disputes, and, in each case, extensions, modifications and
renewals thereof;
(7) Investments made by the Company or its Restricted Subsidiaries as
a result of non-cash consideration permitted to be received in connection
with an Asset Sale made in compliance with Section 3.11;
------------
(8) Investments made solely in the form of common shares of the
Company constituting Qualified Capital Stock;
(9) Investments received by the Company in the form of promissory
notes received from employees of the Company as consideration for the
issuance of Capital Stock, other than Disqualified Capital Stock;
(10) Investments, including guarantees, by the Company in any Special
Purpose Financing Vehicle; and
(11) other Investments not to exceed $20 million at any one time
outstanding.
"Permitted Junior Securities" means any securities of the Company or
---------------------------
any other Person that are:
(1) equity securities without special covenants; or
(2) debt securities expressly subordinated in right of payment to all
Senior Indebtedness that may at the time be outstanding, to substantially
the same extent as, or to a greater extent than, the Notes are subordinated
as provided in this Indenture, in any event pursuant to a court order so
providing and as to which
(a) the rate of interest on such securities shall not exceed the
effective rate of interest on the Notes on the Issue Date,
(b) such securities shall not be entitled to the benefits of
covenants or defaults materially more beneficial to the holders of
such securities than those in effect with respect to the Notes on the
Issue Date and
(c) such securities shall not provide for amortization (including
sinking fund and mandatory prepayment provisions) commencing prior to
the date six months following the final scheduled maturity date of the
Senior Indebtedness (as
18
<PAGE>
modified by the plan of reorganization pursuant to which such
securities are issued).
"Permitted Liens" means any of the following:
---------------
(1) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen and other Liens imposed by law
incurred in the ordinary course of business for sums not yet delinquent or
being contested in good faith, if such reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made in
respect thereof;
(2) Liens Incurred or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other
types of social security, including any Lien securing letters of credit
issued in the ordinary course of business consistent with past practice in
connection therewith, or to secure the performance of tenders, statutory
obligations, regulatory obligations, surety and appeal bonds, bids, leases,
warranties, government performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the payment of borrowed
money);
(3) any interest or title of a lessor under any Capitalized Lease
Obligation; provided, that such Liens do not extend to any property which
is not leased property subject to such Capitalized Lease Obligation;
(4) purchase money Liens to finance property of the Company or a
Restricted Subsidiary acquired in the ordinary course of business;
provided, that:
(a) the related purchase money Indebtedness shall not exceed the
cost of such property and shall not be secured by any property of the
Company or any Restricted Subsidiary other than the property so
acquired and
(b) the Lien securing such Indebtedness shall be created within
90 days of such acquisition;
(5) Liens upon specific items of inventory or other goods and proceeds
of any Person securing such Person's obligations in respect of bankers'
acceptances issued or created for the account of such Person to facilitate
the purchase, shipment or storage of such inventory or other goods;
(6) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other property
relating to such letters of credit and products and proceeds thereof;
(7) Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual, or warranty requirements of the Company
or a Restricted Subsidiary, including rights of offset and set-off;
19
<PAGE>
(8) Liens securing Hedging Obligations that relate to Indebtedness
that is Incurred in accordance with Section 3.9 and that are secured by the
-----------
same assets as secure such Hedging Obligations;
(9) Liens existing on the Issue Date and Liens to secure any
Refinancing Indebtedness which is Incurred to Refinance any Indebtedness
which has been secured by a Lien permitted under Section 3.16 and which
------------
Indebtedness has been Incurred in accordance with Section 3.9; provided,
-----------
that such new Liens:
(a) are no less favorable to the Holders of Notes and are not
more favorable to the lienholders with respect to such Liens than the
Liens in respect of the Indebtedness being Refinanced and
(b) do not extend to any property or assets other than the
property or assets securing the Indebtedness Refinanced by such
Refinancing Indebtedness;
(10) Liens securing Acquired Indebtedness Incurred in accordance with
Section 3.9, provided, that
-----------
(a) such Liens secured such Acquired Indebtedness at the time of
and prior to the Incurrence of such Acquired Indebtedness by the
Company or a Restricted Subsidiary and were not granted in connection
with, or in anticipation or contemplation of the Incurrence of such
Acquired Indebtedness by the Company or a Restricted Subsidiary and
(b) such Liens do not extend to or cover any property of the
Company or any Restricted Subsidiary other than the property that
secured the Acquired Indebtedness prior to the time such Indebtedness
became Acquired Indebtedness of the Company or a Restricted Subsidiary
and are no more favorable to the lienholders than the Liens securing
the Acquired Indebtedness prior to the Incurrence of such Acquired
Indebtedness by the Company or a Restricted Subsidiary;
(11) Liens in favor of the Company or the Note Guarantors; and
(12) Liens not otherwise permitted by clauses (1) through (11) with
respect to obligations that do not, in the aggregate, exceed $5 million at
any one time outstanding.
"Person" means an individual, partnership, corporation, limited
------
liability company, unincorporated organization, trust or joint venture, or a
governmental agency or political subdivision thereof.
"Post-Petition Interest" means all interest accrued or accruing after
----------------------
the commencement of any insolvency or liquidation proceeding (and interest that
would accrue but for the commencement of any insolvency or liquidation
proceeding) in accordance with and at the contract rate (including without
limitation, any rate applicable upon default) specified in the
20
<PAGE>
agreement or instrument creating, evidencing or governing any Indebtedness,
whether or not, pursuant to applicable law or otherwise, the claim for such
interest is allowed as a claim in such insolvency or liquidation proceeding.
"Preferred Stock" of any Person means any Capital Stock of such Person
---------------
that has preferential rights over any other Capital Stock of such Person with
respect to dividends or redemptions or upon liquidation.
"Private Exchange Notes" means any Initial Notes exchanged for
----------------------
Exchange Notes with a Private Placement Legend pursuant to the Registration
Rights Agreement.
"Purchase Money Indebtedness" means Indebtedness of the Company or any
---------------------------
Restricted Subsidiary Incurred for the purpose of financing all or any part of
the purchase price, or other cost of construction or improvement of any
property; provided, that the aggregate principal amount of such Indebtedness
does not exceed the lesser of the Fair Market Value of such property or such
purchase price or cost, including any Refinancing of such Indebtedness that does
not increase the aggregate principal amount (or accreted amount, if less)
thereof as of the date of Refinancing.
"QIB" means any "qualified institutional buyer" (as defined in Rule
---
144A under the Securities Act).
"Qualified Capital Stock" means any Capital Stock that is not
-----------------------
Disqualified Capital Stock and any warrants, rights or options to purchase or
acquire Capital Stock that is not Disqualified Capital Stock that are not
convertible into or exchangeable into Disqualified Capital Stock.
"Redemption Date" means, with respect to any redemption of Notes, the
---------------
date of redemption with respect thereto.
"Refinance" means, in respect of any security or Indebtedness, to
---------
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "Refinanced" and "Refinancing"
shall have correlative meanings.
"Refinancing Indebtedness" means any Refinancing by the Company or any
------------------------
Restricted Subsidiary, to the extent that such Refinancing does not:
(1) result in an increase in the aggregate principal amount of the
Indebtedness of such Person as of the date of such proposed Refinancing
(plus the amount of any premium required to be paid under the terms of the
instrument governing such Indebtedness and plus the amount of reasonable
expenses incurred by the Company in connection with such Refinancing); or
(2) create Indebtedness with:
21
<PAGE>
(a) a Weighted Average Life to Maturity that is less than the
Weighted Average Life to Maturity of the indebtedness being Refinanced
or
(b) a final maturity earlier than the final maturity of the
Indebtedness being Refinanced;
provided, that: (i) if such Indebtedness being Refinanced is Indebtedness
of the Company, then such Refinancing Indebtedness shall be Indebtedness of
the Company; (ii) if such Indebtedness being Refinanced is Indebtedness of
a Note Guarantor, then such Indebtedness shall be Indebtedness of the
Company and/or such Note Guarantor; (iii) if such Indebtedness being
Refinanced is subordinate or junior to the Notes or any Note Guarantee,
then such Refinancing Indebtedness shall be subordinate to the Notes or
such Note Guarantee at least to the same extent and in the same manner as
the Indebtedness being Refinanced; and (iv) if such Indebtedness being
Refinanced has an original maturity date after the Stated Maturity of the
Notes, then such Refinancing Indebtedness need only have a maturity date
that is after the Stated Maturity of the Notes.
"Registered Exchange Offer" means the registration by the Company
-------------------------
under the Securities Act pursuant to a registration statement of the offer by
the Company to each Holder of the Initial Notes to exchange all the Initial
Notes held by such Holder for the Exchange Notes in an aggregate principal
amount equal to the aggregate principal amount of the Initial Notes held by such
Holder, all in accordance with the terms and conditions of the Registration
Rights Agreement.
"Registration Rights Agreement" means the Registration Rights
-----------------------------
Agreement dated March 8, 1999 among the Company, American Photocopy Equipment
Company of Pittsburgh, Berney, Inc., Business Equipment Unlimited, Cameron
Office Products, Inc., Capitol Copy Products, Inc., Capitol Office Solutions,
Inc., Carr Business Machines of Great Neck Inc., Centre Business Products, Inc.,
Connecticut Business Systems, Inc., Conway Office Products, Inc., Copy Service
and Supply, Inc., COS Financial, Inc., Dahill Industries, Inc., Distinctive
Business Products, Inc., Duplicating Specialties, Inc. dba Copytronix, Eastern
Copy Products, Inc., Electronic Systems of Richmond, Inc., Electronic Systems,
Inc., Felco Office Systems, Inc., Global Imaging Finance Company, Global Imaging
Operations, Inc., ProView, Inc., Quality Business Systems, Inc., Southern
Business Communications, Inc. and Southern Copy Systems, Inc. and First Union
Capital Markets Corp., Prudential Securities Incorporated, Raymond James &
Associates, Inc. and Scotia Capital Markets (USA) Inc.
"Regulation S" means Regulation S adopted under the Securities Act or
------------
any successor regulation.
"Representative" means any trustee, agent or representative (if any)
--------------
for an issue of Senior Indebtedness of the Company.
"Restricted Add-On Notes" means Add-On Notes initially issued other
-----------------------
than in a public offering registered under the Securities Act.
22
<PAGE>
"Restricted Period" means, with respect to any Initial Notes offered
-----------------
and sold outside the United States in reliance on Regulation S, the 40
consecutive days beginning on and including the later of (A) the day on which
such Initial Notes are first offered to persons other than distributors (as
defined in Regulation S) and (B) the Closing Date for such Initial Notes.
"Restricted Subsidiary" of the Company means any Subsidiary of the
---------------------
Company which at the time of determination is not an Unrestricted Subsidiary.
"Revocation" has the meaning set forth under Section 3.14.
---------- ------------
"Royalty Agreement" means the Royalty Agreement dated March 29, 1996,
-----------------
as amended, among Global Imaging Operations, Inc. and each of the Subsidiaries
of the Company.
"Rule 144A" means Rule 144A under the Securities Act or any successor
---------
rule.
"Sale and Leaseback Transaction" means any direct or indirect
------------------------------
arrangement with any Person or to which any such Person is a party providing for
the leasing to the Company or a Restricted Subsidiary of any property, whether
owned by the Company or any Restricted Subsidiary at the Issue Date or later
acquired, which has been or is to be sold or transferred by the Company or such
Restricted Subsidiary to such Person or to any other Person by whom funds have
been or are to be advanced on the security of such Property.
"S&P" means Standard & Poor's Corporation or any successor to the
---
business of such corporation.
"Securities Act" means the Securities Act of 1933, as amended, or any
--------------
successor statute or statutes thereto.
"Senior Credit Facility" means the credit agreement dated as of July
----------------------
31, 1998 among the Company and the Subsidiaries thereof party thereto as
Borrowers, First Union National Bank, as Administrative Agent and as Lender, and
the other agents and lenders from time to time named therein and all amendments
thereto, together with the related documents thereto (including, without
limitation, any guarantee agreements and security documents), in each case as
such agreements may be amended (including any amendment and restatement
thereof), supplemented or otherwise modified from time to time by one or more
credit agreements, including any agreement adding or deleting Subsidiaries of
the Company as additional borrowers or guarantors thereunder or extending the
maturity of, refinancing, replacing, increasing or otherwise restructuring all
or any portion of the Indebtedness under such agreement(s) or any successor or
replacement agreement(s) and whether by the same or any other agent, lender or
group of lenders.
"Senior Indebtedness" means, at any date, with respect to any Company
-------------------
or any Note Guarantor, as the case may be:
(1) all Obligations of the Company or such Note Guarantor, as the case
may be, under the Senior Credit Facility, including all Hedging Obligations
with respect thereto;
23
<PAGE>
(2) all Obligations in respect of Indebtedness of the Company or such
Note Guarantor, as the case may be, for borrowed money.
Notwithstanding the preceding, Senior Indebtedness shall not include:
(1) any liability for Federal, state, local or other taxes owing by
the Company or such Note Guarantor, as the case may be;
(2) any Indebtedness among or between the Company and any Subsidiary
or Affiliate of the Company;
(3) that portion of any Indebtedness that is Incurred in violation of
this Indenture;
(4) any Indebtedness represented by Disqualified Capital Stock;
(5) any Indebtedness that, when Incurred and without respect to any
election under Section 1111(b) of Title 11, United States Code, is without
recourse to the Company or such Note Guarantor, as the case may be;
(6) any Indebtedness that is, by its express terms, not senior in
right of payment to the Notes, in the case of the Company, or the relevant
Note Guarantee, in the case of such Note Guarantor; or
(7) any Indebtedness that is, by its express terms, subordinated in
right of payment to any other Indebtedness of the Company or such Note
Guarantor, as the case may be.
"Senior Subordinated Indebtedness" means, with respect to the Company,
--------------------------------
the Notes and, with respect to any Note Guarantor, such Note Guarantor's Note
Guarantee and any other Indebtedness of the Company or such Note Guarantor that
specifically provides that such Indebtedness is to rank equal in right of
payment with the Notes or such Note Guarantee, as the case may be, and is not
subordinated by its terms in right of payment to any Indebtedness or other
obligation of the Company or such Note Guarantor which is not Senior
Indebtedness.
"Significant Subsidiary" shall mean a Subsidiary of the Company
----------------------
constituting a "Significant Subsidiary" in accordance with Rule 1-02(w) of
Regulation S-X under the Securities Act.
"Special Purpose Financing Vehicle" means, any corporation, limited
---------------------------------
liability company or partnership:
(1) all of whose securities other than debt securities or non-voting
preferred stock or directors' qualifying shares are owned by the Company or
one of its Wholly Owned Restricted Subsidiaries; and
(2) the primary purpose of which is to provide financing to the
Company or one of its Wholly Owned Restricted Subsidiaries.
24
<PAGE>
"Stated Maturity" means, with respect to any security, the date
---------------
specified in such security as the fixed date on which the final payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency unless such contingency has occurred).
"Subordinated Indebtedness" means, with respect to the Company or any
-------------------------
Note Guarantor, any Indebtedness of the Company or such Note Guarantor, as the
case may be, which is expressly subordinated in right of payment to the Notes or
such Note Guarantor's Note Guarantee, as the case may be.
"Subsidiary," with respect to any Person, means:
----------
(1) any corporation of which the outstanding Capital Stock having at
least a majority of the votes entitled to be cast in the election of
directors under ordinary circumstances shall at the time be owned, directly
or indirectly, by such Person; or
(2) any other Person of which at least a majority of the voting
interest under ordinary circumstances is at the time, directly or
indirectly, owned by such Person.
"TIA" or "Trust Indenture Act" means the Trust Indenture Act of 1939
---
(15 U.S.C. (S)(S) 77aaa-77bbbb), as in effect on the date of this Indenture
------
(except as otherwise provided in this Indenture).
"Trustee" means the party named as such in this Indenture until a
-------
successor replaces it in accordance with the provisions of this Indenture and,
thereafter, means the successor.
"Trust Officer" means, when used with respect to the Trustee, any
-------------
officer within the corporate trust department (or successor group) of the
Trustee, including any vice president, assistant vice president, assistant
secretary, assistant treasurer, trust officer or any other officer of the
Trustee who customarily performs functions similar to those performed by the
Persons who at the time shall be such officers, respectively, or to whom any
corporate trust matter is referred because of such person's knowledge of and
familiarity with the particular subject and who shall have direct responsibility
for the administration of this Indenture.
"Unrestricted Subsidiary" means any Subsidiary of the Company
-----------------------
designated as such pursuant to Section 3.14. Any such designation may be
------------
revoked by a Board Resolution of the Company, subject to the provisions of
Section 3.14.
- ------------
"U.S. Government Obligations" means direct obligations (or
---------------------------
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the issuer's option.
25
<PAGE>
"Voting Stock" with respect to any Person, means securities of any
------------
class of Capital Stock of such Person entitling the holders thereof (whether at
all times or only so long as no senior class of stock has voting power by reason
of any contingency) to vote in the election of members of the Board of Directors
of such Person.
"Weighted Average Life to Maturity" means, when applied to any
---------------------------------
Indebtedness at any date, the number of years obtained by dividing
(1) the then outstanding aggregate principal amount of such
Indebtedness into
(2) the sum of the total of the products obtained by multiplying:
(a) the amount of each then remaining installment, sinking fund,
serial maturity or other required payment of principal, including
payment at final maturity, in respect thereof, by
(b) the number of years (calculated to the nearest one-twelfth)
that will elapse between such date and the making of such payment.
"Wholly Owned Restricted Subsidiary" of the Company means any
----------------------------------
Restricted Subsidiary of which all the outstanding Capital Stock (other than in
the case of a foreign Restricted Subsidiary, directors' qualifying shares or an
immaterial amount of shares required to be owned by other Persons pursuant to
applicable law) are owned by the Company or any Wholly Owned Restricted
Subsidiary.
26
<PAGE>
Section 1.2. Other Definitions.
-----------------
<TABLE>
<CAPTION>
Defined in
Term Section
---- -----------
<S> <C>
"Additional Guarantee"........................................................ 11.5
"Additional Guarantor"........................................................ 11.5
"Acceleration Notice"......................................................... 6.2(a)
"Add-On Notes"................................................................ 2.14
"Affiliate Transaction"....................................................... 3.17(a)
"Agent Member"................................................................ 2.6(b)
"Authenticating Agent"........................................................ 2.2(d)
"Blockage Notice"............................................................. 10.3
"Change of Control Offer"..................................................... 3.18(a)
"Change of Control Payment Date".............................................. 3.18(a)
"Change of Control Purchase Price"............................................ 3.18(a)
"Company"..................................................................... Introduction
"Company Order"............................................................... 2.2(c)
"Corporate Trust Office"...................................................... 3.2(a)
"Covenant Defeasance"......................................................... 8.2(c)
"Defaulted Interest".......................................................... 2.12(b)
"Designation"................................................................. 3.14
"Designation Amount".......................................................... 3.14
"Event of Default"............................................................ 6.1
"Exchange Global Note"........................................................ 2.1(g)
"Exchange Notes".............................................................. Introduction
"Global Note"................................................................. 2.6(a)
"Guaranteed Obligations"...................................................... 11.1(a)
"Holders"..................................................................... Introduction
"Initial Notes"............................................................... Introduction
"IAI Note".................................................................... 2.1(f)
"Legal Defeasance"............................................................ 8.2(b)
"Net Proceeds Offer".......................................................... 3.11(d)
"Net Proceeds Offer Amount"................................................... 3.11(d)
"Net Proceeds Offer Payment Date"............................................. 3.11(d)
"Note Register"............................................................... 2.3(a)
"Noteholders"................................................................. Introduction
"Notes"....................................................................... Introduction
"Paying Agent"................................................................ 2.3(a)
"Payment Blockage Period"..................................................... 10.3
"Private Placement Legend".................................................... 2.7(b)
"Public Equity Offering"...................................................... Exhibit A
"Registrar"................................................................... 2.3(a)
"Regulation S Global Note".................................................... 2.1(e)
"Replacement Assets".......................................................... 3.11(b)
"Resale Restriction Termination Date"......................................... 2.7(b)
</TABLE>
27
<PAGE>
<TABLE>
<S> <C>
"Restricted Payment".......................................................... 3.10
"Rule 144A Global Note"....................................................... 2.1(d)
"Special Interest Payment Date"............................................... 2.12
"Special Record Date"......................................................... 2.12
"Surviving Entity"............................................................ 4.1(a)
</TABLE>
Section 1.3. Incorporation by Reference of Trust Indenture Act. This
-------------------------------------------------
Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined in the TIA by reference to another statute or defined by Commission
rule have the meanings assigned to them by such definitions.
Section 1.4. Rules of Construction. Unless the context otherwise
---------------------
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the plural
include the singular; and
(6) the principal amount of any noninterest bearing or other discount
security at any date shall be the principal amount thereof that would be
shown on a balance sheet of the issuer dated such date prepared in
accordance with GAAP.
28
<PAGE>
ARTICLE II
THE NOTES
Section 2.1. Form and Dating. (a) The Initial Notes are being
---------------
offered and sold by the Company pursuant to a Note Purchase Agreement, dated
March 3, 1999, among the Company, the Note Guarantors and First Union Capital
Markets Corp., Prudential Securities Incorporated, Raymond James & Associates,
Inc. and Scotia Capital Markets (USA) Inc. The Initial Notes and the Trustee's
certificate of authentication shall be substantially in the form of Exhibit A
---------
hereto. The Exchange Notes and the Trustee's certificate of authentication shall
be substantially in the form of Exhibit B hereto.
---------
(b) The terms and provisions contained in the Notes, annexed hereto
as Exhibits A and B, shall constitute, and are hereby expressly made, a part of
---------- -
this Indenture and, to the extent applicable, the Company, the Note Guarantors
and the Trustee, by their execution and delivery of this Indenture, expressly
agree to such terms and provisions and to be bound thereby. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or DTC
rule or usage. The Company and the Trustee shall approve the form of the Notes
and any notation, legend or endorsement on them. Each Note shall be dated the
date of its authentication.
(c) The Notes shall be issuable only in fully registered form,
without coupons, and only in denominations of $1,000 and any integral multiple
thereof, provided that, except as provided in Section 5.7, each IAI Note shall
-----------
be in a minimum denomination of $250,000.
(d) Initial Notes offered and sold to QIBs in the United States of
America in reliance on Rule 144A will be issued on a Closing Date in the form of
a permanent global Note, in fully registered form without interest coupons,
substantially in the form of Exhibit A, (the "Rule 144A Global Note"), deposited
--------- ---------------------
with the Note Custodian, duly executed by the Company and authenticated by the
Trustee as hereinafter provided. The Rule 144A Global Note may be represented
by more than one certificate, if so required by DTC's rules. The aggregate
principal amount of the Rule 144A Global Note may from time to time be increased
or decreased by adjustments made on the records of the Note Custodian, as
hereinafter provided.
(e) Initial Notes offered and sold outside the United States of
America in reliance on Regulation S will be issued on a Closing Date in the form
of a permanent global Note, in fully registered form without interest coupons,
substantially in the form of Exhibit A (the "Regulation S Global Note"),
--------- ------------------------
deposited with the Note Custodian, duly executed by the Company and
authenticated by the Trustee as hereinafter provided. The Regulation S Global
Note may be represented by more than one certificate, if so required by DTC's
rules. The aggregate principal amount of the Regulation S Global Note may from
time to time be increased or decreased by adjustments made on the records of the
Note Custodian, as hereinafter provided.
(f) Initial Notes offered and sold to IAIs in the United States of
America will be issued on a Closing Date in non-global, fully registered form,
without interest coupons, substantially in the form set forth in Exhibit A, duly
---------
executed by the Company and authenticated by the Trustee as hereinafter provided
(each, an "IAI Note"). Upon such issuance, the Trustee
--------
29
<PAGE>
shall register such IAI Note in the name of the beneficial owner or owners of
such note (or the nominee of such beneficial owner or owners) and deliver the
certificates for such IAI Notes to the respective beneficial owner or owners.
Upon transfer of such IAI Notes to a QIB or to a Non-U.S. Person, such IAI Notes
will, unless the Rule 144A Global Note, in the case of a transfer to a QIB, or
the Regulation S Global Note, in the case of a transfer to a Non-U.S. Person,
has previously been exchanged for Certificated Notes pursuant to Section 2.6(c),
--------------
be exchanged for an interest in a Global Note pursuant to Section 2.8.
-----------
(g) All or part of any Rule 144A Global Note, Regulation S Global
Note and any IAI Note exchanged in the Registered Exchange Offer will be
exchanged for a permanent global Note in fully registered form, without interest
coupons (or beneficial interest therein) substantially in the form of Exhibit B,
---------
deposited with the Note Custodian, duly executed by the Company and
authenticated by the Trustee, as hereinafter provided (the "Exchange Global
---------------
Note"). The Exchange Global Note may be represented by more than one
certificate, if so required by DTC's rules. The aggregate principal amount of
the Exchange Global Note may from time to time be increased or decreased by
adjustments made on the records of the Note Custodian, as hereinafter provided.
Section 2.2. Execution and Authentication. (a) Two Officers, one of
----------------------------
whom shall be the Chairman of the Board, the President, the Chief Executive
Officer or the Chief Financial Officer of the Company, shall sign the Notes for
the Company by manual or facsimile signature. If an Officer whose signature is
on a Note no longer holds that office at the time the Trustee authenticates the
Note, the Note shall be valid nevertheless.
(b) A Note shall not be valid until an authorized signatory of the
Trustee manually authenticates the Note. The signature of the Trustee on a Note
shall be conclusive evidence that such Note has been duly and validly
authenticated and issued under this Indenture.
(c) At any time and from time to time after the execution and
delivery of this Indenture, the Trustee shall authenticate and make available
for delivery: (1) Initial Notes for original issue on the Issue Date in an
aggregate principal amount of $100,000,000, (2) Exchange Notes for issue only in
a Registered Exchange Offer pursuant to the Registration Rights Agreement, and
only in exchange for Initial Notes of an equal principal amount and (3) Add-On
Notes for original issue after the Issue Date in unlimited aggregate principal
amount, and, if applicable, the related exchange of Initial Notes for Exchange
Notes, in each case upon a written order of the Company signed by two Officers
or by an Officer and either an Assistant Treasurer or an Assistant Secretary of
the Company (a "Company Order"). Such Company Order shall specify the amount of
-------------
the Notes to be authenticated and the date on which the original issue of Notes
is to be authenticated and whether the Notes are to be Initial Notes or Exchange
Notes. The aggregate principal amount of Notes which may be authenticated and
delivered under this Indenture is unlimited. Except as permitted in Section
-------
2.14 or Section 2.15(b), all Notes issued on the Issue Date and all Add-On Notes
- ---- ---------------
shall be identical in all respects other than issue dates, the date from which
interest accrues and any changes relating thereto. Notwithstanding anything to
the contrary contained in this Indenture, all Notes issued under this Indenture
shall vote and
30
<PAGE>
consent together on all matters as one class and no series of Notes will have
the right to vote or consent as a separate class on any matter.
(d) The Trustee may appoint an agent (the "Authenticating Agent")
--------------------
reasonably acceptable to the Company to authenticate the Notes. Unless limited
by the terms of such appointment, any such Authenticating Agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by the Authenticating
Agent.
(e) In case the Company, pursuant to Article IV, shall be
----------
consolidated or merged with or into any other Person or shall convey, transfer,
lease or otherwise dispose of its properties and assets substantially as an
entirety to any Person, and the successor Person resulting from such
consolidation, or surviving such merger, or into which the Company shall have
been merged, or the Person which shall have received a conveyance, transfer,
lease or other disposition as aforesaid, shall have executed an indenture
supplemental hereto with the Trustee pursuant to Article IV, any of the Notes
----------
authenticated or delivered prior to such consolidation, merger, conveyance,
transfer, lease or other disposition may, from time to time, at the request of
the successor Person, be exchanged for other Notes executed in the name of the
successor Person with such changes in phraseology and form as may be
appropriate, but otherwise in substance of like tenor as the Notes surrendered
for such exchange and of like principal amount; and the Trustee, upon Company
Order of the successor Person, shall authenticate and deliver Notes as specified
in such order for the purpose of such exchange. If Notes shall at any time be
authenticated and delivered in any new name of a successor Person pursuant to
this Section 2.2 in exchange or substitution for or upon registration of
-----------
transfer of any Notes, such successor Person, at the option of the Holders but
without expense to them, shall provide for the exchange of all Notes at the time
Outstanding for Notes authenticated and delivered in such new name.
Section 2.3. Registrar and Paying Agent. (a) The Company shall
--------------------------
maintain an office or agency in the Borough of Manhattan, City of New York,
where Notes may be presented for registration of transfer or for exchange (the
"Registrar"), where Notes may be presented for payment (the "Paying Agent") and
--------- ------------
for the service of notices and demands to or upon the Company in respect of the
Notes and this Indenture. The Registrar shall keep a register of the Notes and
of their transfer and exchange (the "Note Register"). The Company may have one
-------------
or more co-registrars and one or more additional paying agents. The term
"Paying Agent" includes any additional paying agent.
(b) The Company shall enter into an appropriate agency agreement with
any Registrar, Paying Agent or co-registrar not a party to this Indenture, which
shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall
notify the Trustee of the name and address of each such agent. If the Company
fails to maintain a Registrar or Paying Agent, the Trustee shall act as such and
shall be entitled to appropriate compensation therefor pursuant to Section 7.7.
-----------
The Company may act as Paying Agent, Registrar or co-registrar.
31
<PAGE>
(c) The Company initially appoints the Trustee at its principal
corporate trust office in the Borough of Manhattan, City of New York (the
"Corporate Trust Office") as Registrar, Paying Agent and agent for service of
----------------------
demands and notices in connection with the Notes and this Indenture, until such
time as the Trustee has resigned or a successor Trustee has been appointed or
until a successor Registrar, Paying Agent or agent for service of demands and
notices in connection with the Notes and this Indenture has been appointed.
Section 2.4. Deposit of Monies; Paying Agent to Hold Money in Trust.
------------------------------------------------------
By at least 10:00 a.m. (New York City time) on the date on which any principal
of, or interest or Liquidated Damages, if any, on, any Note is due and payable,
the Company shall deposit with the Paying Agent in immediately available funds
money sufficient to pay such principal, interest or Liquidated Damages, if any,
when due. The Company shall require each Paying Agent (other than the Trustee)
to agree in writing that such Paying Agent shall hold in trust for the benefit
of Noteholders or the Trustee all money held by such Paying Agent for the
payment of principal of, or interest or Liquidated Damages, if any, on, the
Notes and shall notify the Trustee in writing of any default by the Company in
making any such payment. If the Company acts as Paying Agent, it shall (by at
least 10:00 a.m. (New York City time) on the date on which any principal of, or
interest or Liquidated Damages, if any, on, any Note is due and payable)
segregate the money held by it as Paying Agent and hold it as a separate trust
fund. The Company at any time may require a Paying Agent (other than the
Trustee) to pay all money held by it to the Trustee and to account for any funds
disbursed by such Paying Agent. Upon complying with this Section, the Paying
Agent (if other than the Company) shall have no further liability for the money
delivered to the Trustee. At any time that the Company is serving as Paying
Agent for the Notes, upon any bankruptcy, reorganization or similar proceeding
with respect to the Company, the Trustee shall serve as Paying Agent for the
Notes.
Section 2.5. Noteholder Lists. The Trustee shall preserve in as
----------------
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Noteholders. If the Trustee is not the Registrar,
or to the extent otherwise required under the TIA, the Company shall furnish to
the Trustee, in writing at least seven Business Days before each interest
payment date and at such other times as the Trustee may request in writing, a
list in such form and as of such date as the Trustee may reasonably require of
the names and addresses of Noteholders.
Section 2.6. Book-Entry Provisions. (a) Each Rule 144A Global Note
---------------------
and Regulation S Global Note (each, a "Global Note" and collectively, the
-----------
"Global Notes") initially shall (i) be registered in the name of DTC or the
------------
nominee of DTC, (ii) be deposited with the Note Custodian and (iii) bear the
appropriate legends, as set forth in Exhibit A or Exhibit B, as the case may be.
--------- ---------
(b) Members of, or participants in, DTC ("Agent Members") shall have
-------------
no rights under this Indenture with respect to any Global Note held on their
behalf by DTC or by the Note Custodian or under such Global Note, and DTC may be
treated by the Company, the Trustee and any agent of the Company or the Trustee
as the absolute owner of such Global Note for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company,
32
<PAGE>
the Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by DTC or impair,
as between DTC and its Agent Members, the operation of customary practices of
DTC governing the exercise of the rights of a Holder of a beneficial interest in
any Global Note. The registered Holder of a Global Note may grant proxies and
otherwise authorize any person, including Agent Members and persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Notes.
(c) Except as provided below, owners of beneficial interests in
Global Notes will not be entitled to receive Certificated Notes. If required to
do so pursuant to any applicable law or regulation, beneficial owners may obtain
Certificated Notes in exchange for their beneficial interests in a Global Note
upon written request in accordance with DTC's and the Registrar's procedures.
In addition, Certificated Notes (in the form of Exhibit A or Exhibit B, as
--------- ---------
applicable) shall be transferred to all beneficial owners in exchange for their
beneficial interests in a Global Note if:
(i) DTC notifies the Company that it is unwilling or unable to
continue as depositary for such Global Note or DTC ceases to be a clearing
agency registered under the Exchange Act at a time when DTC is required to
be so registered in order to act as depositary, and in each case a
successor depositary is not appointed by the Company within 90 days of such
notice,
(ii) the Company executes and delivers to the Trustee and Registrar
an Officers' Certificate stating that such Global Note shall be so
exchangeable, or
(iii) an Event of Default has occurred and is continuing and the
Registrar has received a request from DTC.
In connection with the transfer of an entire Global Note to the beneficial
owners thereof pursuant to this subsection (c), such Global Note shall be deemed
to be surrendered to the Trustee for cancellation, and the Company shall
execute, and the Trustee shall authenticate and deliver, to each beneficial
owner identified by DTC in exchange for its beneficial interest in such Global
Note, an equal aggregate principal amount of Certificated Notes of authorized
denominations.
(d) In connection with the exchange of a portion of a Certificated
Note for a beneficial interest in a Global Note, the Trustee shall cancel such
Certificated Note, and the Company shall execute, and the Trustee shall
authenticate and deliver, to the transferring Holder a new Certificated Note
representing the principal amount not so transferred.
Section 2.7 Legends.
-------
(a) Each Global Note shall bear the legend specified therefor in
Exhibit A or Exhibit B, as the case may be, on the face thereof.
- --------- ---------
(b) Initial Notes other than Initial Notes issued pursuant to Section
-------
2.1(e) shall, prior to the date which is two years after the Closing Date (or,
- ------
in the case of Restricted Add-On
33
<PAGE>
Notes (other than Restricted Add-On Notes issued pursuant to Section 2.1(e)),
--------------
the Closing Date therefor) (the "Resale Restriction Termination Date") and the
-----------------------------------
Regulation S Global Note shall, prior to the expiration of the applicable
Restricted Period, bear the Private Placement Legend specified in Exhibit A on
---------
the face thereof (the "Private Placement Legend.").
-------------------------
(c) Prior to the Resale Restriction Termination Date therefor, each
Certificated Note, including IAI Notes, shall bear the legend specified
therefor:
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH REGISTRAR
MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIED WITH THE
FOREGOING RESTRICTIONS AS PROVIDED FOR IN THE INDENTURE.
Section 2.8. Transfer and Exchange.
---------------------
(a) The following provisions shall apply with respect to any proposed
transfer of a beneficial interest in a Rule 144A Global Note or an IAI Note
prior to the Resale Restriction Termination Date therefor:
(i) if the Holder of one or more IAI Note(s) wishes to transfer such
IAI Note(s) (or a portion or portions thereof) to a QIB pursuant to Rule
144A, (x) upon receipt by the Registrar of:
(A) such IAI Note(s), duly endorsed as provided herein,
(B) instructions from such Holder directing the Registrar to credit
or cause to be credited a beneficial interest in the Rule 144A
Global Note equal to the principal amount (or portion thereof) of
such IAI Note(s) to be transferred, specifying the Agent Member
account with DTC to be credited with such increase, and, if the
entire principal amount of such IAI Note(s) is not being
transferred, to issue one or more IAI Notes to the transferor IAI in
an amount equal to the principal amount not transferred, and
(C) a certificate in the form of Exhibit C hereto duly executed by
the transferor, and
(y) subject to the rules and procedures of DTC, the Registrar shall:
(1) cancel the IAI Note(s) delivered to it;
(2) increase the Rule 144A Global Note and credit or cause to be
credited the Agent Member account at DTC in accordance with the
foregoing; and
(3) if applicable, issue to the IAI transferor one or more IAI
Note(s) in accordance with the foregoing;
34
<PAGE>
(ii) if the Holder of one or more IAI Note(s) wishes to transfer such
IAI Note(s) (or any portion or portions thereof) to an IAI, the Registrar
shall authenticate and deliver IAI Note(s) to the appropriate IAI(s) upon
receipt by the Registrar of:
(A) such IAI Note(s), duly endorsed as provided herein;
(B) instructions from such Holder directing the Registrar to issue
one or more IAI Notes (i) in the amounts specified to the transferee
IAI, and (ii) if the entire principal amount of such IAI Note(s) is
not being transferred, to the transferor IAI in an amount equal to
the principal amount not transferred; and
(C) a certificate in the form of Exhibit D duly executed by the
---------
transferee;
(iii) if the holder of a beneficial interest in a Rule 144A Global
Note wishes to transfer such interest (or a portion thereof) to an IAI, (x)
upon receipt by the Registrar of:
(A) instructions from the Holder of the Rule 144A Global Note
directing the Registrar to issue one or more Certificated Notes in
the amounts specified to the transferee IAI, debit or cause to be
debited an equivalent amount of beneficial interest in the Rule 144A
Global Note and specifying the Agent Member account with DTC to be
debited with such decrease; and
(B) a certificate in the form of Exhibit D from the IAI transferee,
---------
and (y) subject to the rules and procedures of DTC, the Registrar shall:
(A) authenticate and deliver to the IAI transferee Certificated
Notes in an equivalent amount to the beneficial interest in the Rule
144A Global Note being transferred in accordance with the foregoing;
and
(B) decrease the Rule 144A Global Note and debit the account of the
specified Agent Member account at DTC for such amount in accordance
with the foregoing.
(iv) if (1) the Holder of a beneficial interest in a Rule 144A Global
Note or one or more IAI Note(s) wishes to transfer such interest (or any
portion thereof) to a Non-U.S. Person pursuant to Regulation S and (2) such
Non-U.S. Person wishes to hold its interest in the Notes through a
beneficial interest in the Regulation S Global Note, (x) upon receipt by
the Registrar of:
(A) instructions from the Holder of the Rule 144A Global Note or
the IAI Note(s) directing the Registrar to credit or cause to be
credited a beneficial interest in the Regulation S Global Note equal
to the principal amount (or portion thereof) of the beneficial
interest in the Rule 144A Global Note or the IAI Note(s) to be
transferred, specifying the Agent Member accounts with DTC to be
credited and debited, if any, and
35
<PAGE>
(B) a certificate in the form of Exhibit E from the transferor
---------
and (y) subject to the rules and procedures of DTC, the Registrar shall:
(1) increase the Regulation S Global Note and credit or cause to be
credited the specified Agent Member account at DTC for such amount
in accordance with the foregoing, and
(2) in the case of the transfer of a beneficial interest in the
Rule 144A Global Note, decrease the Rule 144A Global Note for such
amount and debit or cause to be debited the specified Agent Member
account at DTC for such amount in accordance with the foregoing, or
in the case of the transfer of one or more IAI Note(s), cancel the
IAI Note(s) delivered to it and, if the entire principal amount of
such IAI Note(s) is not being transferred, issue one or more IAI
Notes to the transferor IAI in an amount equal to the principal
amount not transferred in accordance with the foregoing.
(v) Transfers of beneficial interests in the Rule 144A Global Note
not described in this Section 2.8 shall be made in accordance with the
-----------
rules and procedures of DTC.
(vi) After the expiration of the Resale Restriction Termination date
applicable thereto, beneficial interests in Rule 144A Global Notes and IAI
Notes may be transferred without requiring the certifications described
above or any additional certification.
(b) The following provisions shall apply with respect to any proposed
transfer of a beneficial interest in a Regulation S Global Note prior to the
expiration of the applicable Restricted Period therefor:
(i) if the Holder of a beneficial interest in a Regulation S Global
Note wishes to transfer such interest (or any portion thereof) to a QIB
pursuant to Rule 144A, (x) upon receipt by the Registrar of:
(A) instructions from the Holder of the Regulation S Global Note
directing the Registrar to credit or cause to be credited a
beneficial interest in the Rule 144A Global Note equal to the
principal amount of the beneficial interest in the Regulation S
Global Note to be transferred, specifying the Agent Member accounts
at DTC to be credited and debited, and
(B) a certificate in the form of Exhibit C duly executed by the
---------
transferor, and
(y) in accordance with the rules and procedures of DTC, the Registrar
shall:
(1) increase the Rule 144A Global Note and credit or caused to be
credited the specified Agent Member account at DTC for such amount
in accordance with the foregoing, and
36
<PAGE>
(2) decrease the Regulation S Global Note amount and debit or cause
to be debited the specified Agent Member account at DTC for such
amount in accordance with the foregoing.
(ii) if the Holder of a beneficial interest in a Regulation S Global
Note wishes to transfer such interest (or any portion thereof) to an IAI,
(x) upon receipt by the Registrar of:
(A) instructions from the Holder of the Regulation S Global Note
directing the Registrar to issue one or more Certificated Notes in
specified amounts in the name of the transferee IAI, debit or cause to
be debited an equivalent amount of beneficial interest in the
Regulation S Global Note and specifying the Agent Member account with
DTC to be debited with such decrease, and
(B) a certificate in the form of Exhibit D from the IAI transferee,
---------
and (y) in accordance with the rules and procedures of DTC, the Registrar
shall:
(1) authenticate and deliver to the IAI transferee Certificated
Note(s) in an equivalent amount to the beneficial interest in the
Regulation S Global Note being transferred in accordance with the
foregoing, and
(2) decrease the Regulation S Global Note and debit to the account of
the specified Agent Member account at DTC for such amount in
accordance with the foregoing.
(iii) except for transfers of beneficial interests in the Regulation
S Global Note described in this Section 2.8, transfers of beneficial
-----------
interests in the Regulation S Global Note shall be made in accordance with
the rules and procedures of DTC.
(iv) After the expiration of the Restricted Period applicable
thereto, interests in the Regulation S Global Note may be transferred
without requiring the certification described above or any additional
certification.
(c) Other Transfers. Any other transfer of Initial Notes prior to
---------------
the expiration of the Resale Restriction Termination Date therefor or, in the
case of a Regulation S Global Note, the Restricted Period therefor, shall be
made only upon receipt by the Registrar and the Company of such Opinions of
Counsel, certifications and/or other information satisfactory to each of them in
order to ensure compliance with the Securities Act.
(d) Restricted Notes Legend. Upon the transfer, exchange or
-----------------------
replacement of Notes (or beneficial interests in a Global Note) not bearing a
Private Placement Legend, the Registrar shall deliver Notes (or beneficial
interests in a Global Note) that do not bear a Private Placement Legend. Upon
the transfer, exchange or replacement of Notes (or beneficial interests
37
<PAGE>
in a Global Note) bearing a Private Placement Legend, the Registrar shall
deliver only Notes that bear a Private Placement Legend unless
(i) such Notes (or beneficial interests) are exchanged in the
Registered Exchange Offer;
(ii) such Notes (or beneficial interests) are transferred pursuant to
an effective Registration Statement;
(iii) such Notes are transferred, replaced or exchanged following the
expiration of the Resale Restriction Termination Period therefor or, in the
case of a Regulation S Global Note, the relevant Restricted Period; or
(iv) in connection with such transfer, the Registrar shall have
received an Opinion of Counsel satisfactory to it to the effect that
neither such legend nor the related restrictions on transfer are required
in order to maintain compliance with the provisions of the Securities Act.
The Company shall deliver to the Trustee an Officer's Certificate promptly upon
effectiveness, withdrawal or suspension of any registration statement applicable
to any Notes.
(e) If one or more Exchange Global Notes have been issued, upon the
transfer of any Note (or beneficial interest therein) for which a Private
Placement Legend would not be required pursuant to clause (d) for such Note (or
beneficial interest) following such transfer, such Note (or beneficial interest
therein) may be exchanged for a beneficial interest in the Exchange Global Note.
If no Exchange Global Note has been issued, upon the transfer of any Note
bearing a Private Placement Legend (or beneficial interest therein) for which a
Private Placement Legend would not be required pursuant to clause (d) for such
Note (or beneficial interest) following such transfer, such Note (or beneficial
interest therein) may be exchanged for a beneficial interest in a Global Note
without a Private Placement Legend.
(f) The Registrar shall retain copies of all letters, notices and
other written communications received pursuant to this Article II. The Company
----------
shall have the right to inspect and make copies of all such letters, notices or
other written communications at any reasonable time upon the giving of
reasonable written notice to the Registrar.
(g) (i) To permit registrations of transfers and exchanges, the
Company shall, subject to the other terms and conditions of this Article
-------
II, execute and the Trustee shall authenticate Certificated Notes and
--
Global Notes at the Registrar's or co-registrar's request.
(ii) In accordance with the Registration Rights Agreement, the
Trustee shall, upon receipt of a Company Order, exchange Initial Notes for
Exchange Notes or Private Exchange Notes, as the case may be.
38
<PAGE>
(iii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any transfer tax, assessments, or similar
governmental charge payable in connection therewith (other than any such
transfer taxes, assessments or similar governmental charges payable upon
exchange or transfer solely as a result of Section 2.10, Section 3.11,
------------ ------------
Section 3.18, Article V or Section 9.5).
------------ --------- -----------
(iv) The Registrar or co-registrar shall not be required to
register the transfer of or exchange of any Note for a period beginning (1)
15 days before the mailing of a notice of an offer to repurchase or redeem
Notes and ending at the close of business on the day of such redemption or
(2) 15 days before an interest payment date and ending on such interest
payment date.
(v) Prior to the due presentation for registration of transfer
of any Note, the Company, the Trustee, the Paying Agent, the Registrar or
any co-registrar may deem and treat the person in whose name a Note is
registered as the absolute owner of such Note for the purpose of receiving
payment of principal of, or interest or Liquidated Damages, if any, on,
such Note and for all other purposes whatsoever, whether or not such Note
is overdue, and none of the Company, the Trustee, the Paying Agent, the
Registrar or any co-registrar shall be affected by notice to the contrary.
(vi) Any Certificated Note delivered in exchange for an interest
in a Global Note shall, except as otherwise provided by Section 2.8, bear
-----------
the applicable legend regarding transfer restrictions applicable to the
Certificated Note.
(vii) All Notes issued upon any transfer or exchange pursuant to
the terms of this Indenture shall evidence the same debt and shall be
entitled to the same benefits under this Indenture as the Notes surrendered
upon such transfer or exchange.
(h) No Obligation of the Trustee.
----------------------------
(i) The Trustee shall have no responsibility or obligation to any
beneficial owner of a Global Note, a member of, or a participant in, DTC or
other Person with respect to the accuracy of the records of DTC or its
nominee or of any participant or member thereof, with respect to any
ownership interest in the Notes or with respect to the delivery to any
participant, member, beneficial owner or other Person (other than DTC) of
any notice (including any notice of redemption) or the payment of any
amount or delivery of any Notes (or other security or property) under or
with respect to such Notes. All notices and communications to be given to
the Holders and all payments to be made to Holders in respect of the Notes
shall be given or made only to or upon the order of the registered Holders
(which shall be DTC or its nominee in the case of a Global Note). The
rights of beneficial owners in any Global Note shall be exercised only
through DTC subject to the applicable rules and procedures of DTC. The
Trustee may rely and shall be fully protected in relying upon information
furnished by DTC with respect to its members, participants and any
beneficial owners.
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(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer
imposed under this Indenture or under applicable law with respect to any
transfer of any interest in any Note (including any transfers between or
among DTC participants, members or beneficial owners in any Global Note)
other than to require delivery of such certificates and other documentation
or evidence as are expressly required by, and to do so if and when
expressly required by, the terms of this Indenture, and to examine the same
to determine substantial compliance as to form with the express
requirements hereof.
Section 2.9. Mutilated, Destroyed, Lost or Stolen Notes. If a
------------------------------------------
mutilated Note is surrendered to the Registrar or if the Holder of a Note claims
that the Note has been lost, destroyed or wrongfully taken, the Company shall
issue and the Trustee shall authenticate a replacement Note if the requirements
of Section 8-405 of the Uniform Commercial Code are met and the Holder satisfies
any other reasonable requirements of the Trustee. If required by the Trustee or
the Company, such Holder shall furnish an indemnity bond sufficient in the
judgment of the Company and the Trustee to protect the Company, the Trustee, the
Paying Agent, the Registrar and any co-registrar from any loss which any of them
may suffer if a Note is replaced, and, in the absence of notice to the Company
or the Trustee that such Note has been acquired by a bona fide purchaser, the
Company shall execute and upon Company Order the Trustee shall authenticate and
make available for delivery, in exchange for any such mutilated Note or in lieu
of any such destroyed, lost or stolen Note, a new Note of like tenor and
principal amount, bearing a number not contemporaneously Outstanding. In case
any such mutilated, destroyed, lost or stolen Note has become or is about to
become due and payable, the Company in its discretion may, instead of issuing a
new Note, pay such Note.
Upon the issuance of any new Note under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) in connection therewith.
Every new Note issued pursuant to this Section 2.9 in exchange for any
-----------
mutilated Note or in lieu of any destroyed, lost or stolen Note shall constitute
an original additional contractual obligation of the Company, any Note Guarantor
(if applicable) and any other obligor upon the Notes, whether or not the
mutilated, destroyed, lost or stolen Note shall be at any time enforceable by
anyone, and shall be entitled to all benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
Section 2.10. Temporary Notes. Until definitive Notes are ready for
---------------
delivery, the Company may prepare and the Trustee shall authenticate temporary
Notes. Temporary Notes shall be substantially in the form of definitive Notes
but may have variations that the Company considers appropriate for temporary
Notes. Without unreasonable delay, the Company shall prepare definitive Notes,
and the temporary Notes shall thereafter be exchangeable for definitive Notes
upon surrender of the temporary Notes at any office or agency maintained by the
Company for that purpose and such exchange shall be without charge to the
Holder. Upon surrender for cancellation of any one or more temporary Notes, the
Company shall execute, and the Trustee
40
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shall authenticate and make available for delivery in exchange therefor, one or
more definitive Notes representing an equal principal amount of Notes. Until so
exchanged, the Holder of temporary Notes shall in all respects be entitled to
the same benefits under this Indenture as a Holder of definitive Notes.
Section 2.11. Cancellation. The Company at any time may deliver
------------
Notes to the Trustee for cancellation. The Registrar and the Paying Agent shall
forward to the Trustee any Notes surrendered to them for registration of
transfer, exchange or payment. The Trustee and no one else shall cancel and
return to the Company all Notes surrendered for registration of transfer,
exchange, payment or cancellation. The Company may not issue new Notes to
replace Notes it has paid or delivered to the Trustee for cancellation for any
reason other than in connection with a transfer or exchange.
Section 2.12. Payment of Interest; Defaulted Interest. (a) Interest
---------------------------------------
on any Note which is payable, and is punctually paid or duly provided for, on
any interest payment date shall be paid to the Person in whose name such Note
(or one or more predecessor Notes) is registered at the close of business on the
regular record date for such interest at the office of the Paying Agent of the
Company maintained for such purpose pursuant to Section 2.3.
-----------
(b) Any interest on any Note which is payable, but is not paid when
the same becomes due and payable and such nonpayment continues for a period of
30 days shall forthwith cease to be payable to the Holder on the regular record
date by virtue of having been such Holder, and such defaulted interest and (to
the extent lawful) interest on such defaulted interest at the rate of 1.0% per
annum in excess of the rate shown on the Notes (such defaulted interest and
interest thereon herein collectively called "Defaulted Interest") shall, without
------------------
regard to any applicable grace period, be paid by the Company at its election in
each case, as provided in clause (i) or (ii) below:
(i) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Notes (or their respective predecessor
Notes) are registered at the close of business on a Special Record Date (as
defined below) for the payment of such Defaulted Interest, which shall be
fixed in the following manner. The Company shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each
Note and the date (not less than 30 days after such notice) of the proposed
payment (the "Special Interest Payment Date"), and at the same time the
-----------------------------
Company shall deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such Defaulted Interest
or shall make arrangements satisfactory to the Trustee for such deposit
prior to the Special Interest Payment Date, such money when deposited to be
held in trust for the benefit of the Persons entitled to such Defaulted
Interest as in this clause provided. Thereupon the Trustee shall fix a
record date (the "Special Record Date") for the payment of such Defaulted
-------------------
Interest which shall be not more than 15 days and not less than 10 days
prior to the Special Interest Payment Date and not less than 10 days after
the receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such Special Record Date, and
in the name and at the expense of the Company, shall cause notice of the
proposed
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payment of such Defaulted Interest and the Special Record Date and
Special Interest Payment Date therefor to be given in the manner provided
for in Section 13.2 not less than 10 days prior to such Special Record
------------
Date. Notice of the proposed payment of such Defaulted Interest and the
Special Record Date and Special Interest Payment Date therefor having been
so given, such Defaulted Interest shall be paid on the Special Interest
Payment Date to the Persons in whose names the Notes (or their respective
predecessor Notes) are registered at the close of business on such Special
Record Date and shall no longer be payable pursuant to the following clause
(ii).
(ii) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Notes may be listed, and upon such notice
as may be required by such exchange, if, after notice given by the Company
to the Trustee of the proposed payment pursuant to this clause, such manner
of payment shall be deemed practical by the Trustee.
(c) Subject to the foregoing provisions of this Section, each Note
delivered under this Indenture upon registration of transfer or exchange or in
lieu of any other Note shall carry the rights to interest accrued and unpaid,
and to accrue, which were carried by such other Note.
Section 2.13. Computation of Interest. Interest on the Notes shall
-----------------------
be computed on the basis of a 360-day year of twelve 30-day months.
Section 2.14. Add-On Notes. The Company may, from time to time,
------------
subject to compliance with any other applicable provisions of this Indenture
(including, without limitation, Section 3.9), without the consent of the
-----------
Holders, create and issue pursuant to this Indenture additional notes having
terms and conditions identical to those of the Notes issued on the Issue Date
except for the issue date ("Add-On Notes") (or the same except for the payment
------------
of interest accruing prior to the issue date of such Add-On Notes or except for
the first payment of interest following the issue date of such Add-On Notes and
as provided in the following sentence), which Add-On Notes will be treated,
together with any other Outstanding Notes, as a single issue of securities
except as provided in Section 2.15. The Company may, in connection with the
issuance of any Add-On Notes, by Board Resolution or supplemental indenture make
appropriate adjustments to this Article II applicable to such Add-On Notes in
----------
order to ensure compliance with the Securities Act and any registration rights
or similar agreement applicable to such Add-On Notes.
Section 2.15. CUSIP Numbers. (a) The Company in issuing the Notes
-------------
may use "CUSIP" or "ISIN" numbers (if then generally in use) and, if so, the
Trustee shall use CUSIP or ISIN numbers in notices of redemption as a
convenience to Holders; provided, however, that any such notice may state that
no representation is made as to the correctness of such numbers either as
printed on the Notes or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Notes, and any such redemption shall not be affected by any defect in or
omission of such CUSIP or ISIN numbers.
(b) In the event that the Company shall issue and the Trustee shall
authenticate any Add-On Notes pursuant to Section 2.2, the Company shall obtain
-----------
a CUSIP or ISIN number
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<PAGE>
for such series of Add-On Notes that is the same as the CUSIP or ISIN number
printed on the Notes then Outstanding, provided that the Company obtains an
Opinion of Counsel that such Add-On Notes will not be issued with original issue
discount in an amount different from the unamortized portion of any original
issue discount at which the Notes Outstanding were issued. In addition, if any
Add-On Notes are required to carry a Private Placement Legend and other Notes
Outstanding at such time are not or vice versa or if any Add-On Notes have a
later Resale Restriction Termination Date than other Outstanding Notes bearing a
Private Placement Legend, the Company may obtain and use a different CUSIP or
ISIN number for such Add-On Notes for such time as such difference applies.
ARTICLE III
COVENANTS
Section 3.1. Payment of Notes. (a) The Company shall pay the
----------------
principal of, or interest or Liquidated Damages, if any, on, the Notes on the
dates and in the manner provided in the Notes and in this Indenture. Principal,
interest and Liquidated Damages, if any, shall be considered paid on the date
due if on such date the Trustee or the Paying Agent holds in accordance with
this Indenture money sufficient to pay all principal, interest or Liquidated
Damages, if any, then due and the Trustee or the Paying Agent, as the case may
be, is not prohibited from paying such money to the Noteholders on that date
pursuant to the terms of this Indenture.
(b) The Company shall pay, to the extent such payments are lawful,
interest (including Post-Petition Interest in any proceeding under any
Bankruptcy Law) on overdue principal at the rate specified therefor in the
Notes, and on Defaulted Interest (without regard to applicable grace periods) at
the rate specified therefor in the Notes.
(c) Notwithstanding anything to the contrary contained in this
Indenture, the Company may, to the extent it is required to do so by law, deduct
or withhold income or other similar taxes imposed by the United States of
America from principal or interest payments hereunder.
Section 3.2. Maintenance of Office or Agency. (a) The Company shall
-------------------------------
maintain each office or agency required under Section 2.3. The Company will
-----------
give prompt written notice to the Trustee of any change in the location of any
such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the corporate trust office of the Trustee (the "Corporate Trust
---------------
Office"), and the Company hereby appoints the Trustee as its agent to receive
- ------
all such presentations, surrenders, notices and demands.
(b) The Company may also from time to time designate one or more
other offices or agencies (in or outside of The City of New York) where the
Notes may be presented or surrendered for any or all such purposes and may from
time to time rescind any such designation; provided, however, that no such
designation or rescission shall in any manner relieve the
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<PAGE>
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, City of New York for such purposes. The Company will give prompt
written notice to the Trustee of any such designation or rescission and any
change in the location of any such other office or agency.
Section 3.3. Corporate Existence. Subject to Article IV, Section
------------------- ---------- -------
3.11 and Section 10.2, the Company will do or cause to be done all things
- ---- ------------
necessary to preserve and keep in full force and effect its corporate existence
and that of each Restricted Subsidiary and the corporate rights (charter and
statutory), licenses and franchises of the Company and each Restricted
Subsidiary; provided, however, that the Company shall not be required to
preserve any such existence (except the Company's), right, license or franchise
if the Board of Directors of the Company shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company and
each of its Restricted Subsidiaries, taken as a whole, and that the loss thereof
is not, and will not be, disadvantageous in any material respect to the Holders.
Section 3.4. Payment of Taxes and Other Claims. The Company will pay
---------------------------------
or discharge or cause to be paid or discharged, before the same shall become
delinquent, (i) all material taxes, assessments and governmental charges levied
or imposed upon the Company or any Restricted Subsidiary or upon the income,
profits or property of the Company or any Restricted Subsidiary and (ii) all
lawful claims for labor, materials and supplies, which, if unpaid, might by law
become a material liability or Lien upon the property of the Company or any
Restricted Subsidiary; provided, however, that the Company shall not be required
to pay or discharge or cause to be paid or discharged any such tax, assessment,
charge or claim whose amount, applicability or validity is being contested in
good faith by appropriate proceedings and for which appropriate reserves, if
necessary (in the good faith judgment of management of the Company), are being
maintained in accordance with GAAP or where the failure to effect such payment
will not be disadvantageous to the Holders in any material respect.
Section 3.5. Compliance Certificate. The Company shall deliver to
----------------------
the Trustee within 120 days after the end of each fiscal year of the Company an
Officers' Certificate stating that in the course of the performance by the
signers of their duties as Officers of the Company they would normally have
knowledge of any Default or Event of Default and whether or not the signers know
of any Default or Event of Default that occurred during such period. If the
signers of such a certificate have knowledge of a Default or Event of Default,
the certificate shall describe the Default or Event of Default, its status and
what action the Company is taking or proposes to take with respect thereto. The
Company also shall comply with TIA (S) 314(a)(4).
Section 3.6. Maintenance of Properties. The Company and its
-------------------------
Restricted Subsidiaries shall cause all property used or useful in the conduct
of their business or businesses to be maintained and kept in good condition,
repair and working order and supplied with all necessary equipment and shall
cause to be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as, in the judgment of the Company, may be necessary
so that the business carried on in connection therewith may be properly and
advantageously conducted at all times; provided that nothing in this Section 3.6
-----------
shall prevent the Company or any of its Subsidiaries from discontinuing the
operation or maintenance of any of such property
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<PAGE>
if such discontinuance is, in the judgment of the Company, desirable in the
conduct of its business or the business of its Subsidiaries and not
disadvantageous in any material respect to the Holders.
Section 3.7. Further Instruments and Acts. Upon request of the
----------------------------
Trustee, the Company will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
Section 3.8. Waiver of Stay, Extension or Usury Laws.
---------------------------------------
The Company and each Note Guarantor covenants (to the extent that it
may lawfully do so) that it will not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law that would prohibit or forgive the
Company or such Note Guarantor from paying all or any portion of the principal
of, or interest or Liquidated Damages, if any, on, the Notes as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this Indenture; and (to the extent
that it may lawfully do so) the Company and each Note Guarantor hereby expressly
waives all benefit or advantage of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
Section 3.9. Limitation on Incurrence of Additional Indebtedness.
---------------------------------------------------
(1) The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, Incur any Indebtedness
(including Acquired Indebtedness) other than Permitted Indebtedness; provided,
that the Company and any Note Guarantor may Incur Indebtedness (including
Acquired Indebtedness) if, at the time of and immediately after giving pro forma
effect to the Incurrence thereof and the application of the proceeds therefrom,
the Consolidated Fixed Charge Coverage Ratio of the Company is greater than 2.0
to 1.0.
(2) For purposes of determining compliance with, and the outstanding
principal amount of any particular Indebtedness Incurred pursuant to and in
compliance with, this Section 3.9, the amount of Indebtedness issued at a price
-----------
that is less than the principal amount thereof will be equal to the amount of
the liability in respect thereof determined in accordance with GAAP. Accrual of
interest, the accretion or amortization of original issue discount, the payment
of regularly scheduled interest in the form of additional Indebtedness of the
same instrument or the payment of regularly scheduled dividends on Disqualified
Stock in the form of additional Disqualified Stock with the same terms will not
be deemed to be an Incurrence of Indebtedness for purposes of this Section 3.9.
-----------
Section 3.10. Limitation on Restricted Payments. The Company will
---------------------------------
not, and will not cause or permit any of its Restricted Subsidiaries to,
directly or indirectly, take any of the following actions (each, a "Restricted
----------
Payment"):
- -------
45
<PAGE>
(a) declare or pay any dividend or return of capital or make any
distribution on or in respect of shares of Capital Stock of the Company or any
Restricted Subsidiary to holders of such Capital Stock, other than: (i)
dividends or distributions payable in Qualified Capital Stock of the Company or
in warrants, rights or options to purchase or acquire shares of Qualified
Capital Stock of the Company, (ii) dividends or distributions payable to the
Company and/or a Restricted Subsidiary, or (iii) pro rata dividends or
distributions to the Company and/or a Restricted Subsidiary and minority holders
of Capital Stock of a Restricted Subsidiary;
(b) purchase, redeem or otherwise acquire or retire for value any
Capital Stock of the Company or any Restricted Subsidiary (except for Permitted
Investments) or any warrants, rights or options to purchase or acquire shares of
any class of such Capital Stock, other than purchases, redemptions, acquisitions
or retirements for value of any such Capital Stock, warrants, rights or options
owned by the Company and/or any Restricted Subsidiary or on a pro rata basis
from the Company and/or any Restricted Subsidiaries, on the one hand, and
minority holders of Capital Stock of a Restricted Subsidiary, on the other hand;
(c) make any principal payment on, purchase, defease, redeem, prepay,
decrease or otherwise acquire or retire for value, prior to any scheduled final
maturity, scheduled repayment or scheduled sinking fund payment, as the case may
be, any Subordinated Indebtedness; or
(d) make any Investment (other than Permitted Investments);
if at the time of the Restricted Payment immediately after giving
effect thereto:
(1) a Default or an Event of Default shall have occurred and be
continuing;
(2) the Company is not able to Incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with Section 3.9;
-----------
or
(3) the aggregate amount (the amount expended for these purposes, if
other than in cash, being the Fair Market Value of the relevant property) of
Restricted Payments, including the proposed Restricted Payment, made subsequent
to the Issue Date to the date of such proposed Restricted Payment shall exceed
the sum of:
(A) 50% of cumulative Consolidated Net Income or, if cumulative
Consolidated Net Income shall be a loss, minus 100% of the loss, accrued
during the period, treated as one accounting period, beginning on the first
day of the fiscal quarter that includes the Issue Date to the end of the
most recent fiscal quarter for which consolidated financial information of
the Company is available; plus
(B) 100% of the aggregate net cash proceeds received by the Company or
any Restricted Subsidiary from any Person from any: (i) contribution to the
equity capital of the Company not representing an interest in Disqualified
Capital Stock or issuance and sale (other than to a Restricted Subsidiary)
of Qualified Capital Stock of the company, in each case, subsequent to the
Issue Date, and (ii) issuance and sale (other than to a
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Restricted Subsidiary) subsequent to the Issue Date of any Indebtedness for
borrowed money of the Company or any Restricted Subsidiary that has been
converted into or exchanged for Qualified Capital Stock of the Company
(excluding any net cash proceeds applied in accordance with clause (3) of
the following paragraph); plus
(C) without duplication of any amounts included in clause (A) above or
(D) or (E) below, in the case of any of the following Investments made
after the Issue Date: (i) the disposition of such Investment by, or
repayment of such Investment to, the Company or a Restricted Subsidiary, or
(ii) the receipt by the Company or any Restricted Subsidiary of any
dividends, distributions or interest payments from such Investment, or
(iii) if such Investment was a guaranty, the release of the guaranty,
an amount equal to the lesser of: (i) the amount of such Investment treated
as a Restricted Payment pursuant to clause (d) above, and (ii) the amount
in cash received by the Company or any Restricted Subsidiary upon such
disposition, repayment, dividend or distribution or, in the case of a
released guaranty, the amount of such guaranty less any payments made in
respect thereof; plus
(D) without duplication of any amounts included in clause (C) above
and excluding any amounts covered by (E) below, in the event the Company or
any Restricted Subsidiary makes any Investment in a Person that, as a
result of or in connection with such Investment, becomes a Restricted
Subsidiary, an amount equal to the Company's or any Restricted Subsidiary's
existing Investment in such Person that was previously treated as a
Restricted Payment pursuant to clause (d) above; plus
(E) so long as the Designation of such Unrestricted Subsidiary was
treated as a Restricted Payment made after the Issue Date, in the case of a
Revocation with respect to any Unrestricted Subsidiary after the Issue Date
in accordance with Section 3.14, an amount equal to the lesser of: (i) the
------------
Company's Investment in such Unrestricted Subsidiary at the time of such
Revocation; and (ii) that portion of the Fair Market Value of the net
assets of such Unrestricted Subsidiary at the time of such Revocation that
is proportionate to the Company's equity interest in such Unrestricted
Subsidiary; and (iii) the Designation Amount with respect to such
Unrestricted Subsidiary upon its Designation which was treated as a
Restricted Payment plus any Investment made after Designation and prior to
Revocation that was treated as a Restricted Payment, in each case less any
amounts included in clause (A) or (C) above; plus
(F) $15 million.
Notwithstanding the preceding, this covenant does not prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration of such dividend if the dividend would have been permitted on the
date of declaration;
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(2) if no Default or Event of Default shall have occurred and be
continuing, the acquisition of any shares of Capital Stock of the Company or any
warrants, rights or options to purchase or acquire shares of Capital Stock of
the Company,
(a) in exchange for Qualified Capital Stock of the Company or
(b) through the application of the net cash proceeds received by the
Company from a substantially concurrent sale of Qualified Capital Stock of
the Company or a contribution to the equity capital of the Company not
representing an interest in Disqualified Capital Stock, in each case not
received from a Restricted Subsidiary; provided, that the value of any such
Qualified Capital Stock, issued in exchange for such acquired Capital
Stock, warrants, rights or options and any such net cash proceeds shall be
excluded from clause (3)(B) of the first paragraph of this covenant (and
were not included therein at any time);
(3) if no Default or Event of Default shall have occurred and be
continuing, the voluntary prepayment, purchase, defeasance, redemption or other
acquisition or retirement for value of any Subordinated Indebtedness:
(a) solely in exchange for shares of Qualified Capital Stock of the
Company, or
(b) through the application of net cash proceeds of a substantially
concurrent sale, other than to a Restricted Subsidiary of the Company, of:
(i) Qualified Capital Stock of the Company or (ii) Refinancing Indebtedness
for such Subordinated Indebtedness;
provided, that the value of such Capital Stock or warrants, rights or options
issued in exchange for such Subordinated Indebtedness and any such net case
proceeds shall be excluded from clause (3)(B) of the first paragraph of this
Section 3.10 (and were not included therein at any time);
- ------------
(4) if no Default or Event of Default shall have occurred and be
continuing, repurchases by the Company of Common Stock of the Company or
options, warrants or other securities exercisable or convertible in Common Stock
of the Company from employees or directors of the Company or any of its
Subsidiaries or their authorized representatives upon the death, disability or
termination of employment or directorship of such employees or directors, in an
aggregate amount not to exceed $2.5 million in any calendar year and $7 million
in the aggregate; and
(5) making payments to dissenting shareholders pursuant to applicable
law in connection with a consolidation, merger or transfer of assets permitted
under Article IV.
----------
In determining the aggregate amount of Restricted Payments made subsequent to
the Issue Date, amounts expended pursuant to clauses (1) (without duplication
for the declaration of the relevant dividend), (4) and (5) shall be included in
such calculation and amounts expended pursuant to clauses (2) and (3) shall not
be included in such calculation.
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Section 3.11. Limitation on Asset Sales. The Company will not, and
-------------------------
will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale
unless:
(a) the Company or the applicable Restricted Subsidiary, as the case
may be, receives consideration at the time of such Asset Sale at least equal to
the Fair Market Value of the assets sold or otherwise disposed of, and
(b) at least 75% of the consideration received for the assets sold by
the Company or the Restricted Subsidiary, as the case may be, in such Asset Sale
shall be in the form of:
(1) cash or Cash Equivalents or
(2) (A) tangible assets to be used by the Company or any Restricted
Subsidiary in a Permitted Business or
(B) Capital Stock of a Person principally engaged in a Permitted
Business that will become, upon such purchase, a Restricted Subsidiary
(collectively, "Replacement Assets"), in each case, received at the time of
------------------
such Asset Sale;
provided, that the amount of any (i) Indebtedness for borrowed money (other than
Subordinated Indebtedness) of the Company or such Restricted Subsidiary (other
than Subordinated Indebtedness) that is actually assumed by the transferee in
such Asset Sale and from which the Company or such Restricted Subsidiary is
fully and unconditionally released and (ii) any securities, notes or other
obligations received by the Company or such Restricted Subsidiary from a
transferee that are converted by the Company or such Restricted Subsidiary into
cash (to the extent of cash received) within 30 days of receipt thereof, shall
be deemed to be cash for purposes of determining the percentage of cash
consideration received by the Company or such Restricted Subsidiary.
(c) The Company or such Restricted Subsidiary, as the case may be, may
apply the Net Cash Proceeds of any such Asset Sale within 270 days thereof to:
(1) repay any Indebtedness that is not Subordinated Indebtedness and
permanently reduce the commitments, if any, with respect thereto;
(2) to purchase Replacement Assets from a Person other than the
Company and its Restricted Subsidiaries; or
(3) any combination of (1) and (2).
(d) To the extent all or a portion of the Net Cash Proceeds of any
Asset Sale are not applied within 270 days of the Asset Sale as described in
clause (1) or (2) of the immediately preceding paragraph, the Company will make
an offer to purchase (the "Net Proceeds Offer"), at a price equal to 100% of the
------------------
principal amount of the Notes to be purchased, plus accrued and unpaid interest
thereon (the "Net Proceeds Offer Amount"), to the date of purchase (the "Net
------------------------- ---
Proceeds Offer Payment Date"). Pursuant to a Net Proceeds Offer, the Company
- ---------------------------
shall purchase
49
<PAGE>
from all tendering Holders on a pro rata basis (and on a pro rata basis with the
holders of any other Senior Subordinated Indebtedness with similar provisions
requiring the Company to offer to purchase such Senior Subordinated Indebtedness
with the proceeds of Asset Sales), that principal amount of Notes and such other
Senior Subordinated Indebtedness to be purchased equal to such unapplied Net
Cash Proceeds. The purchase of Notes pursuant to a Net Proceeds Offer shall
occur not less than 20 business days following the date thereof (or any longer
period as may be required by law) nor more than 60 days following the 270th day
following the Asset Sale. The Company may, however, defer a Net Proceeds Offer
until there is an aggregate amount of unapplied Net Cash Proceeds equal to or in
excess of $10 million resulting from one or more Asset Sales (at which time, the
entire amount of unapplied Net Cash Proceeds, and not just the amount in excess
of $10 million, shall be applied as required pursuant to this paragraph).
(e) Each Net Proceeds Offer will be mailed, by first-class mail, to
the record Holders as shown on the register of Holders within 20 days following
such 270th day, with a copy to the Trustee, which notice shall govern the terms
of the Net Proceeds Offer, and state:
(1) that a Net Proceeds Offer is being made pursuant to this Section
-------
3.11 and that all Notes that are timely tendered will be accepted for payment;
- ----
(2) the Net Proceeds Offer Amount and the Net Proceeds Offer Payment
Date, which date shall be a Business Day no earlier than 20 Business Days nor
later than 60 calendar days subsequent to the 270th day following the Asset
Sale;
(3) that any Notes or portions thereof not tendered or accepted for
payment will continue to accrue interest;
(4) that, unless the Company defaults in the payment of the Net
Proceeds Offer Amount with respect thereto, all Notes or portions thereof
accepted for payment pursuant to the Net Proceeds Offer shall cease to accrue
interest from and after the Net Proceeds Offer Payment Date;
(5) that any Holder electing to have any Notes or portions thereof
purchased pursuant to the Net Proceeds Offer will be required to surrender such
Notes, with the form entitled "Option of Holder to Elect Purchase" on the
reverse of such Notes completed, to the Paying Agent at the address specified in
the notice prior to the close of business on the third Business Day preceding
the Net Proceeds Offer Payment Date;
(6) that any Holder shall be entitled to withdraw such election if
the Paying Agent receives, not later than the close of business on the second
Business Day preceding the Net Proceeds Offer Payment Date, a facsimile
transmission or letter, setting forth the name of the Holder, the principal
amount of Notes delivered for purchase, and a statement that such Holder is
withdrawing such Holder's election to have such Notes or portions thereof
purchased pursuant to the Net Proceeds Offer;
50
<PAGE>
(7) that any Holder electing to have Notes purchased pursuant to the
Net Proceeds Offer must specify the principal amount that is being tendered for
purchase, which principal amount must be $1,000 or an integral multiple thereof;
(8) that any Holder of Certificated Notes whose Certificated Notes
are being purchased only in part will be issued new Certificated Notes equal in
principal amount to the unpurchased portion of the Certificated Note or Notes
surrendered, which unpurchased portion will be equal in principal amount to
$1,000 or an integral multiple thereof;
(9) that the Trustee will return to the Holder of a Global Note that
is being purchased in part, such Global Note with a notation on the schedule of
increases or decreases thereof adjusting the principal amount thereof to be
equal to the unpurchased portion of such Global Note; and
(10) any other information necessary to enable any Holder to tender
Notes and to have such Notes purchased pursuant to this Section 3.11.
------------
Upon receiving notice of the Net Proceeds Offer, Holders may elect to tender
their Notes in whole or in part in integral multiples of $1,000 in exchange for
cash. To the extent Holders of Notes and holders of other Senior Subordinated
Indebtedness, if any, which are the subject of a Net Proceeds Offer properly
tender Notes or such other Senior Subordinated Indebtedness in an aggregate
amount exceeding the amount of unapplied Net Cash Proceeds, the Company will
purchase the Notes and such other Senior Subordinated Indebtedness on a pro rata
basis (based on amounts tendered).
(f) On the Net Proceeds Offer Payment Date, the Company will, to the
extent lawful:
(1) accept for payment all Notes or portions thereof properly
tendered pursuant to the Net Proceeds Offer;
(2) deposit with the Paying Agent an amount equal to the Net Proceeds
Offer Amount in respect of all Notes or portions thereof so tendered; and
(3) deliver or cause to be delivered to the Trustee the Notes so
accepted together with an Officers' Certificate stating the aggregate principal
amount of Notes or portions thereof being purchased by the Company.
(g) The Paying Agent will promptly mail to each Holder of Notes so
tendered the Net Proceeds Offer Amount for the Holder's Notes, and the Trustee
will promptly authenticate and mail (or cause to be transferred by book entry)
to each Holder a new Note equal in principal amount to any unpurchased portion
of the Notes surrendered, if any; provided that each new Note will be in
principal amount of $1,000 or an integral multiple thereof.
(h) The Company will comply with the requirements of Rule 14e-1 and
any other applicable securities laws and regulations under the Exchange Act in
connection with the
51
<PAGE>
purchase of Notes pursuant to a Net Proceeds Offer. To the extent that the
provisions of any securities laws, or regulations conflict with this Section
-------
3.11, the Company shall comply with the applicable securities laws and
- ----
regulations and shall not be deemed to have breached its obligations under this
Section 3.11 by virtue thereof.
- ------------
(i) Upon completion of a Net Proceeds Offer, the amount of Net Cash
Proceeds will be reset at zero. Accordingly, to the extent that the aggregate
amount of Notes and other Indebtedness tendered pursuant to a Net Proceeds Offer
is less than the aggregate amount of unapplied Net Cash Proceeds, the Company
may use any remaining Net Cash Proceeds for any purpose not otherwise prohibited
by this Indenture.
(j) In the event of the transfer of substantially all (but not all)
of the property and assets of the Company and its Restricted Subsidiaries as an
entirety to a Person in a transaction permitted under Article IV, the Surviving
----------
Entity shall be deemed to have sold the properties and assets of the Company and
its Restricted Subsidiaries not so transferred for purposes of this covenant,
and shall comply with the provisions of this covenant with respect to the deemed
sale as if it were an Asset Sale. In addition, the Fair Market Value of
properties and assets of the Company or its Restricted Subsidiaries so deemed to
be sold shall be deemed to be Net Cash Proceeds for purposes of this covenant.
(k) If at any time any non-cash consideration received by the Company
or any Restricted Subsidiary, as the case may be, in connection with any Asset
Sale is converted into or sold or otherwise disposed of for cash (other than
interest received with respect to any non-cash consideration), the conversion or
disposition shall be deemed to constitute an Asset Sale hereunder and the Net
Cash Proceeds thereof shall be applied in accordance with this covenant.
Section 3.12. Limitation on Dividend and Other Payment Restrictions
-----------------------------------------------------
Affecting Restricted Subsidiaries. (a) Except as provided in clause (b)
- ---------------------------------
below, the Company will not, and will not cause or permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or permit to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to:
(1) pay dividends or make any other distributions on or in respect of
its Capital Stock to the Company or any other Restricted Subsidiary or pay
any Indebtedness owed to the Company or any other Restricted Subsidiary;
(2) make loans or advances to, or guarantee any Indebtedness or other
obligations of, or make any Investment in, the Company or any other
Restricted Subsidiary; or
(3) transfer any of its property or assets to the Company or any other
Restricted Subsidiary.
(b) Clause (a) will not apply to encumbrances or restrictions existing
under or by reason of:
(1) applicable law;
52
<PAGE>
(2) this Indenture;
(3) any encumbrances or restrictions existing as of the Issue Date or
pursuant to any agreement governing Indebtedness in existence on the Issue
Date, in each case as in effect on the Issue Date;
(4) the Senior Credit Facility as in effect on the Issue Date, and any
amendments, restatements, renewals, replacements or refinancings thereof,
including to increase the availability thereunder; provided, that any
amendment, restatement, renewal, replacement or refinancing is not
materially more restrictive with respect to such encumbrances or
restrictions than those in existence on the Issue Date;
(5) customary non-assignment provisions of any contract and customary
provisions restricting assignment or subletting in any lease governing a
leasehold interest of any Restricted Subsidiary, or any customary
restriction on the ability of a Restricted Subsidiary to dividend,
distribute or otherwise transfer any asset which secures Indebtedness
secured by a Lien permitted to be Incurred under this Indenture of such
Restricted Subsidiary;
(6) Liens filed in favor of trade vendors;
(7) any instrument governing Acquired Indebtedness, which encumbrance
or restriction is not applicable to any Person, or the properties or assets
of any Person, other than the Person or the properties or assets of the
Person so acquired;
(8) restrictions with respect to a Restricted Subsidiary of the
Company imposed pursuant to a binding agreement which has been entered into
for the sale or disposition of Capital Stock or assets of such Restricted
Subsidiary; provided, that such restrictions apply solely to the Capital
Stock or assets of such Restricted Subsidiary being sold;
(9) customary restrictions imposed on the transfer of copyrighted or
patented materials, including as a result of the Royalty Agreement; or
(10) an agreement governing Indebtedness Incurred to Refinance
Indebtedness issued, assumed or Incurred pursuant to an agreement referred
to in clause (3), (4) or (5) above; provided, that such refinancing
agreement is not materially more restrictive with respect to such
encumbrances or restrictions than those contained in the agreement referred
to in such clause (3), (4) or (5).
Section 3.13. Limitation on the Ownership of Capital Stock of
-----------------------------------------------
Restricted Subsidiaries. (a) The Company will not sell or dispose of any
- -----------------------
Capital Stock of any Restricted Subsidiary and will not permit any Restricted
Subsidiary to issue any Capital Stock;
(b) Clause (a) will not apply to:
53
<PAGE>
(1) Capital Stock held by the Company or a Restricted Subsidiary or
directors' qualifying shares or shares held by foreign Persons pursuant to
local laws governing the formation and ownership of foreign Persons;
(2) the sale of 100% of the shares of the Capital Stock of any
Restricted Subsidiary owned by the Company or any Restricted Subsidiary to
any Person other than the Company or effected in accordance Section 3.11
------------
and Article IV;
----------
(3) Preferred Stock, other than Disqualified Capital Stock, of a
Special Purpose Financing Vehicle;
(4) in the case of Restricted Subsidiaries other than Wholly Owned
Restricted Subsidiaries, issuance of Capital Stock on a pro rata basis to
the Company and its Restricted Subsidiaries and minority shareholders of
such Restricted Subsidiary (or on less than a pro rata basis to any such
minority holder if such minority holder does not acquire its pro rata
amount); and
(5) the sale of Capital Stock of a Restricted Subsidiary or issuance
by a Restricted Subsidiary of Capital Stock if following such sale or
issuance:
(A) such Restricted Subsidiary is no longer a Subsidiary,
(B) the Company's continuing Investment in such former Restricted
Subsidiary is in compliance with Section 3.10 and
------------
(C) any sale of Capital Stock by the Company or any Restricted
Subsidiary is made in compliance with Section 3.11.
------------
Section 3.14. Limitation on Designation of Unrestricted Subsidiaries.
------------------------------------------------------
The Company may designate after the Issue Date any Subsidiary of the Company as
an "Unrestricted Subsidiary" under this Indenture (a "Designation") only if:
-----------
(1) no Default or Event of Default shall have occurred and be
continuing at the time of or after giving effect to such Designation;
(2) at the time of and after giving effect to such Designation, the
Company could Incur $1.00 of additional Indebtedness (other than Permitted
Indebtedness) pursuant to Section 3.9; and
-----------
(3) the Company would be permitted to make an Investment at the time
of Designation (assuming the effectiveness of such Designation and treating such
Designation as an Investment at the time of Designation) pursuant to Section
-------
3.10 in an amount (the "Designation Amount") equal to the amount of the
- ---- ------------------
Company's Investment in such Subsidiary on such date.
Neither the Company nor any Restricted Subsidiary will at any time:
54
<PAGE>
(1) provide credit support for, subject any of its property or assets
(other than the Capital Stock of any Unrestricted Subsidiary) to the
satisfaction of, or guarantee, any Indebtedness of any Unrestricted Subsidiary
(including any undertaking, agreement or instrument evidencing such
Indebtedness); or
(2) be directly or indirectly liable for any Indebtedness of any
Unrestricted Subsidiary,
except, in the case of (1) or (2), to the extent treated and permitted
as a Restricted Payment or Permitted Investment in accordance with Section 3.10
------------
and permitted under Section 3.9.
-----------
The Company may revoke any Designation of a Subsidiary as an
Unrestricted Subsidiary (a "Revocation") only if:
----------
(1) No Default or Event of Default shall have occurred and be
continuing at the time of and after giving effect to such Revocation; and
(2) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately following such Revocation would, if Incurred at such
time, have been permitted to be Incurred for all purposes of this Indenture.
The Designation of a Subsidiary of the Company as an Unrestricted
Subsidiary shall be deemed to include the Designation of all of the Subsidiaries
of such Subsidiary. All Designations and Revocations must be evidenced by
resolutions of the Board of Directors of the Company, delivered to the Trustee
certifying compliance with the preceding provisions.
Section 3.15. Limitation on Layered Indebtedness. The Company will
----------------------------------
not, and will not permit any Note Guarantor to, directly or indirectly, Incur
any Indebtedness that is subordinate in right of payment to any other
Indebtedness, unless such Indebtedness is subordinate in right of payment to, or
ranks equally with, the Notes or, in the case of a Note Guarantor, its Note
Guarantee.
Section 3.16. Limitation on Liens. The Company will not, and will
-------------------
not cause or permit any of its Restricted Subsidiaries to, directly or
indirectly, Incur any Liens of any kind (except for Liens securing Senior
Indebtedness and Permitted Liens) against or upon any of their respective
properties or assets, whether owned on the Issue Date or acquired after the
Issue Date, or any proceeds therefrom, to secure any Indebtedness unless
contemporaneously therewith effective provision is made:
(1) in the case of the Company to secure the Notes and all other
amounts due under this Indenture; and
(2) in the case of a Note Guarantor, to secure such Note Guarantor's
Note Guarantee and all other amounts due under this Indenture,
55
<PAGE>
in each case, equally and ratably with such Indebtedness (or, in the event that
such Indebtedness is subordinated in right of payment to the Notes or such Note
Guarantee, as the case may be, prior to such Indebtedness) with a Lien on the
same properties and assets securing such Indebtedness for so long as such
Indebtedness is secured by such Lien.
Section 3.17. Limitation on Transactions with Affiliates. (a) The
------------------------------------------
Company will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, enter into any transaction or series of related
transactions (including, without limitation, the purchase, sale, lease or
exchange of any property or the rendering of any service) with, or for the
benefit of, any of its Affiliates (each an "Affiliate Transaction"), unless:
---------------------
(1) the terms of such Affiliate Transaction are no less favorable than
those that could reasonably be expected to be obtained in a comparable
transaction at such time on an arm's-length basis from a Person that is not
an Affiliate of the Company;
(2) in the event that such Affiliate Transaction involves aggregate
payments, or transfers of property or services with a Fair Market Value in
excess of $5 million, the terms of such Affiliate Transaction shall be
approved by a majority of the members of the Board of Directors of the
Company (including a majority of the disinterested members thereof), the
approval to be evidenced by a Board Resolution stating that the Board of
Directors has determined that such transaction complies with the preceding
provisions; and
(3) in the event that such Affiliate Transaction involves aggregate
payments, or transfer of property or services with a fair market value, in
excess of $10 million, the Company shall, prior to the consummation
thereof, obtain a favorable opinion as to the fairness of such transaction
or series of related transactions to the Company and the relevant
Restricted Subsidiary (if any) from a financial point of view from an
Independent Financial Advisor and file the same with the Trustee.
(b) Clause (a) shall not apply to:
(1) transactions with or among the Company and any Restricted
Subsidiary or between or among Restricted Subsidiaries;
(2) reasonable fees and compensation paid to, and any indemnity
provided on behalf of, and any customary employment arrangement with,
officers, directors, employees, consultants or agents of the Company or any
Restricted Subsidiary as approved in good faith by the Company's Board of
Directors;
(3) any transactions undertaken pursuant to any contractual
obligations or rights as in existence on the Issue Date and as they may be
modified or extended so long as any such modification is not materially
adverse to the Holders;
(4) any Restricted Payments or Permitted Investments made in
compliance with Section 3.10;
------------
56
<PAGE>
(5) loans and advances to officers, directors and employees of the
Company or any Restricted Subsidiary for travel, entertainment, moving and
other relocation expenses, in each case made in the ordinary course of
business and not exceeding $5 million outstanding at any one time;
(6) leasing transactions with Unrestricted Subsidiaries entered into
in the ordinary course of business; and
(7) transactions between the Company and any Unrestricted Subsidiary
all of the Voting Stock of which is owned by the Company and substantially
all of the assets of which consist of Indebtedness of the Company Incurred
in accordance with Section 3.9.
-----------
Section 3.18. Change of Control. (a) Upon the occurrence of a
-----------------
Change of Control, each Holder will have the right to require that the Company
purchase all or a portion (in integral multiples of $1,000) of the Holder's
Notes pursuant to the Change of Control Offer described below ("Change of
---------
Control Offer"), at a purchase price equal to 101% of the principal amount
- -------------
thereof plus accrued and unpaid interest and Liquidated Damages thereon (the
"Change of Control Purchase Price") to the date of purchase (the "Change of
-------------------------------- ---------
Control Payment Date").
- --------------------
(b) Within 30 days following the date upon which the Change of
Control occurred, the Company must send, by first-class mail, a notice to each
Holder, with a copy to the Trustee, which notice shall govern the terms of the
Change of Control Offer and state:
(1) that a Change of Control has occurred and a Change of Control
Offer is being made pursuant to this Section 3.18, and that all Notes that are
------------
timely tendered will be accepted for payment;
(2) the Change of Control Purchase Price, and the Change of Control
Payment Date, which date shall be a Business Day no earlier than 30 calendar
days nor later than 60 calendar days subsequent to the date such notice is
mailed;
(3) that any Notes or portions thereof not tendered or accepted for
payment will continue to accrue interest;
(4) that, unless the Company defaults in the payment of the Change of
Control Purchase Price with respect thereto, all Notes or portions thereof
accepted for payment pursuant to the Change of Control Offer shall cease to
accrue interest from and after the Change of Control Payment Date;
(5) that any Holder electing to have any Notes or portions thereof
purchased pursuant to a Change of Control Offer will be required to tender such
Notes, with the form entitled "Option of Holder to Elect Purchase" on the
reverse of such Notes completed, to the Paying Agent at the address specified in
the notice prior to the close of business on the third Business Day preceding
the Change of Control Payment Date;
57
<PAGE>
(6) that any Holder shall be entitled to withdraw such election if
the Paying Agent receives, not later than the close of business on the second
Business Day preceding the Change of Control Payment Date, a facsimile
transmission or letter, setting forth the name of the Holder, the principal
amount of Notes delivered for purchase, and a statement that such Holder is
withdrawing such Holder's election to have such Notes or portions thereof
purchased pursuant to the Change of Control Offer;
(7) that any Holder electing to have Notes purchased pursuant to the
Change of Control Offer must specify the principal amount that is being tendered
for purchase, which principal amount must be $1,000 or an integral multiple
thereof;
(8) that any Holder of Certificated Notes whose Certificated Notes
are being purchased only in part will be issued new Certificated Notes equal in
principal amount to the unpurchased portion of the Certificated Note or Notes
surrendered, which unpurchased portion will be equal in principal amount to
$1,000 or an integral multiple thereof;
(9) that the Trustee will return to the Holder of a Global Note that
is being purchased in part, such Global Note with a notation on Schedule A
thereof adjusting the principal amount thereof to be equal to the unpurchased
portion of such Global Note; and
(10) any other information necessary to enable any Holder to tender
Notes and to have such Notes purchased pursuant to this Section 3.18.
------------
(c) On the Change of Control Payment Date, the Company will, to the
extent lawful:
(1) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer;
(2) deposit with the Paying Agent an amount equal to the Change of
Control Payment in respect of all Notes or portions thereof so tendered;
and
(3) deliver or cause to be delivered to the Trustee the Notes so
accepted together with an Officers' Certificate stating the aggregate
principal amount of Notes or portions thereof being purchased by the
Company.
(d) The Paying Agent will promptly mail to each Holder of Notes so
tendered the Change of Control Payment for the Holder's Notes, and the Trustee
will promptly authenticate and mail (or cause to be transferred by book entry)
to each Holder a new Note equal in principal amount to any unpurchased portion
of the Notes surrendered, if any; provided that each new Note will be in
principal amount of $1,000 or an integral multiple thereof.
(e) The Company will not be required to make a Change of Control
Offer upon a Change of Control if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Indenture applicable to a
58
<PAGE>
Change of Control Offer made by the Company and purchases all Notes validly
tendered and not withdrawn under such Change of Control Offer.
(f) The Company will comply with the requirements of Rule 14e-1 and
any other applicable securities laws and regulations under the Exchange Act in
connection with the purchase of Notes pursuant to a Change of Control Offer. To
the extent that the provisions of any securities laws or regulations conflict
with this Section 3.18, the Company will comply with the applicable securities
------------
laws and regulations and will not be deemed to have breached its obligations
under this Section 3.18 by virtue thereof.
------------
Section 3.19. Reports to Holders. Notwithstanding that the Company
------------------
may not be subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act, so long as any Notes remain Outstanding, the Company will:
(1) provide the Trustee and the Noteholders with the annual reports
and information, documents and other reports as are specified in Sections 13 and
15(d) of the Exchange Act and applicable to a U.S. corporation subject to such
Sections within 15 days after the times specified for the filing of the
information, documents and reports under such Sections; and
(2) file with the Commission, to the extent permitted, the
information, documents and reports referred to in clause (1) within the periods
specified under such Sections.
In addition, at any time when the Company is subject to or is not
current in its reporting obligations under clause (2) of the preceding sentence,
the Company will make available, upon request, to any holder and any prospective
purchaser of Notes the information required pursuant to Rule 144A(d)(4) under
the Securities Act.
Section 3.20. Payments for Consent. Neither the Company nor any of
--------------------
its Subsidiaries shall, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder of
any Notes for or as an inducement to any consent, waiver or amendment of any
terms or provisions of the Notes, unless such consideration is offered to be
paid or agreed to be paid to all Holders of the Notes that so consent, waive or
agree to amend in the time frame set forth in the solicitation documents
relating to such consent, waiver or agreement.
ARTICLE IV
SUCCESSOR COMPANY
Section 4.1. Merger, Consolidation and Sale of Assets. The Company
----------------------------------------
will not, in a single transaction or series of related transactions, consolidate
or merge with or into any Person (whether or not the Company is the surviving
Person), or sell, assign, transfer, lease, convey or otherwise dispose of (or
cause or permit any Restricted Subsidiary to sell, assign, transfer, lease,
convey or otherwise dispose of) all or substantially all of the Company's and
its Restricted
59
<PAGE>
Subsidiaries' properties and assets (determined on a consolidated
basis for the Company and its Restricted Subsidiaries) to any Person unless:
(a) either:
(1) the Company shall be the surviving or continuing corporation or
(2) the Person (if other than the Company) formed by such
consolidation or into which the Company is merged or the Person which
acquires by sale, assignment, transfer, lease, conveyance or other
disposition the properties and assets of the Company and of the Company's
Restricted Subsidiaries substantially as an entirety (the "Surviving
---------
Entity"):
------
(A) shall be a corporation, limited liability company,
partnership, trust or similar entity organized and validly existing
under the laws of the United States or any State thereof or the
District of Columbia and
(B) shall expressly assume, by supplemental indenture (in form
and substance satisfactory to the Trustee), executed and delivered to
the Trustee, the due and punctual payment of the principal of, and
premium, if any, and interest or Liquidated Damages, if any, on all of
the Notes and the performance and observance of every covenant of the
Notes and this Indenture on the part of the Company to be performed or
observed;
(b) immediately after giving effect to such transaction and the
assumption contemplated by clause (a)(2)(B) above (including giving effect on a
pro forma basis to any Indebtedness, including any Acquired Indebtedness,
Incurred or anticipated to be Incurred in connection with or in respect of such
transaction), the Company or such Surviving Entity, as the case may be:
(1) shall have a Consolidated Net Worth equal to or greater than the
Consolidated Net Worth of the Company immediately prior to such
transaction; and
(2) shall be able to Incur at least $1.00 of additional Indebtedness
(other than Permitted Indebtedness) pursuant to Section 3.9.
-----------
(c) immediately before and immediately after giving effect to such
transaction and the assumption contemplated by clause (a)(2)(B) above
(including, without limitation, giving effect on a pro forma basis to any
Indebtedness, including any Acquired Indebtedness, Incurred or anticipated to be
Incurred and any Lien granted in connection with or in respect of the
transaction), no Default or Event of Default shall have occurred or be
continuing;
(d) each Note Guarantor (including Persons which become Note
Guarantors as a result of the transaction) shall have confirmed by Supplemental
Indenture that its Note Guarantee shall apply for such Person's Obligations in
respect of this Indenture and the Notes; and
60
<PAGE>
(e) the Company or the Surviving Entity shall have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, each stating that
the consolidation, merger, sale, assignment, transfer, lease, conveyance or
other disposition and, if required in connection with such transaction, the
supplemental indenture, comply with the applicable provisions of this Indenture
and that all conditions precedent in this Indenture relating to the transaction
have been satisfied.
For purposes of the preceding, the transfer (by lease, assignment,
sale or otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties or assets of one or more Restricted
Subsidiaries of the Company, the Capital Stock of which constitutes all or
substantially all of the properties and assets of the Company, shall be deemed
to be the transfer of all or substantially all of the properties and assets of
the Company.
The provisions of clauses (a) through (d) above shall not apply to:
(1) any transfer of the properties or assets of a Restricted
Subsidiary of the Company to the Company or to a Restricted Subsidiary, or
(2) any merger of a Restricted Subsidiary into the Company.
The provisions of clause (b) above shall not apply to any merger of
the Company into a Restricted Subsidiary.
Upon any consolidation, combination or merger or any transfer of all
or substantially all of the properties and assets of the Company and its
Restricted Subsidiaries in accordance with the preceding, in which the Company
is not the continuing corporation, the Surviving Entity formed by such
consolidation or into which the Company is merged or to which such conveyance,
lease or transfer is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture and the
Notes with the same effect as if such Surviving Entity had been named as such.
For the avoidance of doubt, compliance with this Article IV shall not affect the
----------
obligation of the Company (including a Surviving Entity, if applicable) under
Section 3.18, if applicable.
- ------------
ARTICLE V
REDEMPTION OF NOTES
Section 5.1. Optional Redemption. The Notes may be redeemed, as a
-------------------
whole or from time to time in part, subject to the conditions and at the
redemption prices specified in the form of Notes set forth in Exhibit A and
---------
Exhibit B hereto.
- ---------
Section 5.2. Applicability of Article. Redemption of Notes at the
------------------------
election of the Company or otherwise, as permitted or required by any provision
of this Indenture, shall be made in accordance with such provision and this
Article.
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Section 5.3. Election to Redeem; Notice to Trustee. (a) The
-------------------------------------
election of the Company to redeem any Notes pursuant to Section 5.1 shall be
-----------
evidenced by a Board Resolution. In case of any redemption at the election of
the Company, the Company shall, upon not less than 30 and not more than 60 days
prior to the Redemption Date fixed by the Company, notify the Trustee of the
provision of the Notes pursuant to which the redemption is being made, the
Redemption Date, the principal amount of Notes to be redeemed and shall deliver
to the Trustee such documentation and records as shall enable the Trustee to
select the Notes to be redeemed.
(b) In the event that less than all of the Notes are to be redeemed
at any time, selection of such Notes for redemption will be made by the Trustee
in compliance with the requirements of the principal national securities
exchange, if any, on which such Notes are listed or, if such Notes are not then
listed on a national securities exchange, on a pro rata basis, by lot or by such
method as the Trustee shall deem fair and appropriate; provided, however, that
no Notes of a principal amount of $1,000 or less shall be redeemed in part and
Notes of a principal amount in excess of $1,000 may be redeemed in part in
multiples of $1,000 only; and provided, further, that if a partial redemption is
made with the proceeds of a Public Equity Offering, selection of the Notes or
portions thereof for redemption shall, subject to the preceding proviso, be made
by the Trustee only on a pro rata basis or on as nearly a pro rata basis as is
practicable (subject to the procedures of DTC or a successor depositary), unless
such method is otherwise prohibited. Notice of redemption shall be mailed by
first-class mail at least 30 but not more than 60 days before the Redemption
Date to each Holder of Notes to be redeemed at its registered address. If any
Note is to be redeemed in part only, the notice of redemption that relates to
such Note shall state the portion of the principal amount thereof to be
redeemed. A new Note in a principal amount equal to the unredeemed portion
thereof will be issued in the name of the Holder thereof upon cancellation of
the original Note. On and after the Redemption Date, interest will cease to
accrue on Notes or portions thereof called for redemption on such Redemption
Date as long as the Company had deposited with the Paying Agent or Trustee (if
not then serving as the Paying Agent) funds in satisfaction of the applicable
redemption price.
(c) For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to redemption of Notes shall relate, in the
case of any Note redeemed or to be redeemed only in part, to the portion of the
principal amount of such Note which has been or is to be redeemed.
Section 5.4. Notice of Redemption. (a) Notice of redemption shall
--------------------
be given in the manner provided for in Section 13.2 not less than 30 nor more
------------
than 60 days prior to the Redemption Date, to each Holder of Notes to be
redeemed. At the Company's request, the Trustee shall give notice of redemption
in the Company's name and at the Company's expense; provided, however, that the
Company shall deliver to the Trustee, at least 45 days prior to the Redemption
Date, an Officers' Certificate requesting that the Trustee give such notice and
setting forth the information to be stated in such notice as provided in the
following items.
(b) All notices of redemption shall state:
(1) the Redemption Date,
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(2) the redemption price and the amount of accrued interest to the
Redemption Date payable as provided in Section 5.6, if any,
-----------
(3) if less than all Outstanding Notes are to be redeemed, the
identification of the particular Notes (or portion thereof) to be redeemed, as
well as the aggregate principal amount of Notes to be redeemed and the aggregate
principal amount of Notes to be Outstanding after such partial redemption,
(4) in case any Note is to be redeemed in part only, the notice which
relates to such Note shall state that on and after the Redemption Date, upon
surrender of such Note, the Holder will receive, without charge, a new Note or
Notes of authorized denominations for the principal amount thereof remaining
unredeemed,
(5) that on the Redemption Date the redemption price (and accrued
interest and Liquidated Damages, if any, to the Redemption Date payable as
provided in Section 5.6) will become due and payable upon each such Note, or the
-----------
portion thereof, to be redeemed, and, unless the Company defaults in making the
redemption payment, that interest on Notes called for redemption (or the portion
thereof) will cease to accrue on and after said date,
(6) the place or places where such Notes are to be surrendered for
payment of the redemption price and accrued interest, if any,
(7) the name and address of the Paying Agent,
(8) that Notes called for redemption must be surrendered to the
Paying Agent to collect the redemption price,
(9) the CUSIP or ISIN number, and that no representation is made as
to the accuracy or correctness of the CUSIP or ISIN number, if any, listed in
such notice or printed on the Notes, and
(10) the paragraph of the Notes pursuant to which the Notes are to be
redeemed.
Section 5.5. Deposit of Redemption Price. On or prior to 10:00 A.M.
---------------------------
on the relevant Redemption Date, the Company shall deposit with the Trustee or
with a Paying Agent (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust as provided in Section 2.4) an amount of money
-----------
sufficient to pay the redemption price of, and accrued interest on, all the
Notes which are to be redeemed on that date.
Section 5.6. Notes Payable on Redemption Date. Notice of redemption
--------------------------------
having been given in accordance with this Article V, the Notes so to be redeemed
---------
shall, on the Redemption Date, become due and payable at the redemption price
therein specified (together with accrued interest, if any, to the Redemption
Date), and from and after such date (unless the Company shall default in the
payment of the redemption price and accrued interest) such Notes (or portion or
portions thereof called for redemption) shall cease to bear interest. Upon
surrender of any such Note for redemption in accordance with said notice, such
Note shall be paid by the
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Company at the redemption price, together with accrued interest, if any, to the
Redemption Date (subject to the rights of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date). If
any Note called for redemption shall not be so paid upon surrender thereof for
redemption, the principal of, premium, if any, and overdue interest and
Liquidated Damages, if any, shall, until paid, bear interest from the Redemption
Date at the rate borne by the Notes.
Section 5.7. Notes Redeemed in Part. Upon surrender of a Note which
----------------------
is to be redeemed in part, the Company shall execute, and the Trustee shall
authenticate and make available for delivery to the Holder of such Note at the
expense of the Company, a new Note or Notes, of any authorized denomination as
requested by such Holder, in an aggregate principal amount equal to and in
exchange for the unredeemed portion of the principal of the Note so surrendered,
provided, that each such new Note will be in a principal amount of $1,000 or
integral multiple thereof.
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.1. Events of Default. The following are "Events of
----------------- ---------
Default":
- -------
(a) default in the payment when due of the principal of or premium, if
any, on any Notes, including the failure to make a required payment to purchase
Notes tendered pursuant to an optional redemption, Change of Control Offer or a
Net Proceeds Offer and whether or not prohibited by Article X and Article XII of
--------- -----------
this Indenture;
(b) default for 30 days or more in the payment when due of interest on
any Notes when due, whether or not prohibited by Article X and Article XII;
--------- -----------
(c) the failure to perform or comply with Article IV;
----------
(d) the failure by the Company or any Restricted Subsidiary to comply
with any other covenant or agreement contained in this Indenture or in the Notes
for 45 days or more after written notice to the Company from the Trustee or the
Holders of at least 25% in aggregate principal amount of the outstanding Notes;
(e) default by the Company or any Restricted Subsidiary under any
Indebtedness which:
(1) is caused by a failure to pay principal of or premium, if any, or
interest or Liquidated Damages, if any, on such Indebtedness prior to the
expiration of any applicable grace period provided in such Indebtedness on the
date of such default; or
(2) results in the acceleration of such Indebtedness prior to its
stated maturity;
and the principal amount of any Indebtedness covered by (1) or (2) at
the relevant time aggregates $10 million or more.
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<PAGE>
(f) failure by the Company or any of its Restricted Subsidiaries to
pay final nonappealable judgments against any of them (to the extent not covered
by third-party insurance as to which the insurer has not disclaimed coverage or
to the extent not adequately reserved for in accordance with GAAP) aggregating
$10 million or more, which judgments are not paid, discharged, waived, bonded or
stayed for a period of 60 days or more;
(g) the entry by a court having jurisdiction in the premises of (i) a
decree or order for relief in respect of the Company or any Significant
Subsidiary of the Company in an involuntary case or proceeding under any
Bankruptcy Law or (ii) a decree or order (A) adjudging the Company or any
Significant Subsidiary of the Company a bankrupt or insolvent, or (B) approving
as properly filed a petition seeking reorganization, arrangement, adjustment or
composition of, or in respect of, the Company or any Significant Subsidiary of
the Company under any Bankruptcy Law, or (C) appointing a Custodian of the
Company or any Significant Subsidiary of the Company or of any substantial part
of the property of the Company or any Significant Subsidiary of the Company, or
(D) ordering the winding-up or liquidation of the affairs of the Company or any
Significant Subsidiary of the Company, and in each case, the continuance of any
such decree or order for relief or any such other decree or order unstayed and
in effect for a period of 60 consecutive calendar days; or
(h) (i) the commencement by the Company or any Significant Subsidiary
of the Company of a voluntary case or proceeding under any Bankruptcy Law or of
any other case or proceeding to be adjudicated a bankrupt or insolvent; or (ii)
the consent by the Company or any Significant Subsidiary of the Company to the
entry of a decree or order for relief in respect of the Company or any
Significant Subsidiary of the Company in an involuntary case or proceeding under
any Bankruptcy Law or to the commencement of any bankruptcy or insolvency case
or proceeding against the Company or any Significant Subsidiary of the Company;
or (iii) the filing by the Company or any Significant Subsidiary of the Company
of a petition or answer or consent seeking reorganization or relief under any
Bankruptcy Law; or (iv) the consent by the Company or any Significant Subsidiary
of the Company to the filing of such petition or to the appointment of or taking
possession by a Custodian of the Company or any Significant Subsidiary of the
Company or of any substantial part of the property of the Company or any
Significant Subsidiary of the Company, or (v) the making by the Company or any
Significant Subsidiary of the Company of an assignment for the benefit of
creditors; or (vi) the admission by the Company or any Significant Subsidiary of
the Company in writing of its inability to pay its debts generally as they
become due; or (vii) the approval by stockholders of the Company or any
Significant Subsidiary of the Company of any plan or proposal for the
liquidation or dissolution of the Company or any Significant Subsidiary of the
Company; or (viii) the taking of corporate action by the Company or any
Significant Subsidiary of the Company in furtherance of any such action; or
(i) except as permitted by this Indenture, the Note Guarantee of a
Note Guarantor constituting a Significant Subsidiary, or the Note Guarantees of
a group of Note Guarantors that, taken together, would constitute a Significant
Subsidiary, are held to be unenforceable or invalid in a judicial proceeding or
ceases for any reason to be in full force and effect or any Note
65
<PAGE>
Guarantor, or any Person acting on behalf of any Note Guarantor, denies or
disaffirms such Note Guarantor's obligations under its Note.
The foregoing will constitute Events of Default whatever the reason
for any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body.
The Company shall deliver to a Trust Officer of the Trustee, within 30
days after the Company obtains knowledge of the occurrence thereof, written
notice in the form of an Officers' Certificate of any Default or Event of
Default under clauses (c)-(f) or (i) of this Section 6.1, their status and what
-----------
action the Company is taking or proposes to take in respect thereof.
Section 6.2. Acceleration.
------------
(a) If an Event of Default (other than an Event of Default specified
in clauses (g) and (h) of Section 6.1) shall occur and be continuing, the
-----------
Trustee or the Holders of at least 25% in principal amount of Outstanding Notes
may declare the principal of (and premium, if any) and accrued and unpaid
interest and Liquidated Damages, if any, on all the Notes to be immediately due
and payable by notice in writing to the Company and the Trustee specifying the
respective Event of Default and that it is a "notice of acceleration" (the
"Acceleration Notice"), and the same shall become immediately due and payable.
-------------------
If an Event of Default specified in 6.1(g) or 6.1(h) occurs and is continuing,
then all unpaid principal of, and premium, if any, and accrued and unpaid
interest and Liquidated Damages, if any, on all of the Outstanding Notes shall
ipso facto become and be immediately due and payable without any declaration or
other act on the part of the Trustee or any Holder.
(b) At any time after a declaration of acceleration with respect to
the Notes, the Holders of a majority in principal amount of the Outstanding
Notes may rescind and cancel such declaration and its consequences: (i) if the
rescission would not conflict with any judgment or decree; (ii) if all existing
Events of Default have been cured or waived except nonpayment of principal,
interest or Liquidated Damages, if any, that has become due solely because of
the acceleration; (iii) to the extent the payment of such interest is lawful,
interest on overdue installments of interest, overdue principal and Liquidated
Damages, if any, which has become due otherwise than by such declaration of
acceleration, has been paid; and (iv) if the Company has paid the Trustee its
reasonable compensation and reimbursed the Trustee for its reasonable expenses,
disbursements and advances (including counsel fees and expenses). No such
rescission shall affect any subsequent Default or impair any right consequent
thereto.
Section 6.3. Other Remedies. If an Event of Default occurs and is
--------------
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of, premium, if any, or interest or Liquidated Damages, if any, on
the Notes or to enforce the performance of any provision of the Notes or this
Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or
66
<PAGE>
any Noteholder in exercising any right or remedy accruing upon an Event of
Default shall not impair the right or remedy or constitute a waiver of or
acquiescence in the Event of Default. No remedy is exclusive of any other
remedy. All available remedies are cumulative.
Section 6.4. Waiver of Past Defaults. Subject to Section 9.2, the
----------------------- -----------
Holders of not less than a majority in principal amount of the Outstanding Notes
by written notice to the Trustee or by written consent may waive any existing
Default or Event of Default and its consequences, except a Default in the
payment of principal of, premium, if any, and interest or Liquidated Damages, if
any, on any Note. The Company shall deliver to the Trustee an Officers'
Certificate stating that the requisite percentage of Holders have consented to
such waiver and attaching copies of such consents. When a Default or Event of
Default is waived, it is cured and ceases to exist.
Section 6.5. Control by Majority. The Holders of a majority in
-------------------
aggregate principal amount of the then Outstanding Notes may direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee or of exercising any trust or power conferred on the Trustee. Subject
to Sections 7.1 and 7.2, however, the Trustee may refuse to follow any direction
------------ ---
that conflicts with law or this Indenture, that the Trustee determines is unduly
prejudicial to the rights of other Noteholders or that may involve the Trustee
in personal liability; provided, however, that the Trustee may take any other
action deemed proper by the Trustee that is not inconsistent with such
direction. In the event the Trustee takes any action or follows any direction
pursuant to this Indenture, the Trustee shall be entitled to indemnification
reasonably satisfactory to it in its sole discretion against any loss or expense
caused by taking such action or following such direction.
Section 6.6. Limitation on Suits. No Holder of any Notes will have
-------------------
any right to institute any proceeding hereunder, unless (i) such Holder gives to
a Trust Officer of the Trustee written notice of a continuing Event of Default,
(ii) Holders of at least 25% in principal amount of the Outstanding Notes make a
written request to pursue the remedy, (iii) such Holders of the Notes provide
satisfactory indemnity to the Trustee, (iv) the Trustee does not comply within
60 days and (v) during such 60 day period the Holders of a majority in principal
amount of the Outstanding Notes do not give the Trustee a written direction
which, in the opinion of the Trustee, is inconsistent with the request.
Otherwise, no Holder of any Note will have any right to institute any proceeding
with respect to this Indenture or for any remedy hereunder, except (i) a Holder
of a Note may institute suit for enforcement of payment of the principal of and
premium, if any, or interest or Liquidated Damages, if any, on such Note on or
after the respective due dates expressed in such Note or (ii) the institution of
any proceeding hereunder or any remedy hereunder, including, without limitation,
acceleration, by the Holders of a majority in principal amount of the
Outstanding Notes; provided, however, that upon institution of any proceeding or
exercise of any remedy, such Holder or Holders provide the Trustee with prompt
notice thereof.
Section 6.7. Rights of Holders to Receive Payment. Notwithstanding
------------------------------------
any other provision of this Indenture (including, without limitation, Section
-------
6.6), the right of any Holder to receive payment of principal of, premium, if
- ---
any, or interest or Liquidated Damages, if any, on the Notes held by such
Holder, on or after the respective due dates expressed in the Notes, or to
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<PAGE>
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
Section 6.8. Collection Suit by Trustee. If an Event of Default
--------------------------
specified in clauses (a) or (b) of Section 6.1 occurs and is continuing, the
-----------
Trustee may recover judgment in its own name and as trustee of an express trust
against the Company or any other obligor on the Notes for the whole amount then
due and owing (together with applicable interest on any overdue principal, and
to the extent lawful, interest on overdue interest) and the amounts provided for
in Section 7.7.
-----------
Section 6.9. Trustee May File Proofs of Claim. The Trustee may file
--------------------------------
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Noteholders allowed
in any judicial proceedings relative to the Company, its Subsidiaries or its or
their respective creditors or properties and, unless prohibited by law or
applicable regulations, may vote on behalf of the Holders in any election of a
trustee in bankruptcy or other Person performing similar functions, and any Note
Custodian in any such judicial proceeding is hereby authorized by each Holder to
make payments to the Trustee and, in the event that the Trustee shall consent to
the making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and its counsel, and any other amounts due
the Trustee under Section 7.7.
-----------
Section 6.10. Priorities. If the Trustee collects any money or
----------
property pursuant to this Article VI, it shall pay out the money or property in
----------
the following order:
FIRST: to the Trustee for amounts due under Section 7.7;
-----------
SECOND: if the Holders proceed against the Company directly without
the Trustee in accordance with this Indenture, to the Holders for their
collection costs;
THIRD: to the Holders for amounts due and unpaid on the Notes for
principal, premium, if any, and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the Notes
for principal and interest, respectively; and
FOURTH: to the Company or, to the extent the Trustee collects any
amount pursuant to Article XI hereof from any Note Guarantor, to such Note
----------
Guarantor.
The Trustee may fix a record date and payment date for any payment to
Noteholders pursuant to this Section. At least 15 days before such record date,
the Company shall mail to each Noteholder and the Trustee a notice that states
the record date, the payment date and amount to be paid.
Section 6.11. Undertaking for Costs. In any suit for the enforcement
---------------------
of any right or remedy under this Indenture or in any suit against the Trustee
for any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant in the suit of
68
<PAGE>
an undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section does not apply to a
suit by the Trustee, a suit by the Company, a suit by a Holder pursuant to
Section 6.7 or a suit by Holders of more than 10% in principal amount of the
- -----------
Outstanding Notes.
ARTICLE VII
TRUSTEE
Section 7.1. Duties of Trustee. (a) If a Default or an Event of
-----------------
Default has occurred and is continuing, the Trustee shall exercise the rights
and powers vested in it by this Indenture and use the same degree of care and
skill in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of his own affairs; provided that if an Event of
Default occurs and is continuing, the Trustee will be under no obligation to
exercise any of the rights or powers under this Indenture at the request or
direction of any of the Holders unless such Holders have offered reasonable
indemnity to the Trustee against loss, liability or expense.
(b) Except during the continuance of a Default or an Event of
Default:
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
in the case of any such certificates or opinions which by any provisions
hereof are specifically required to be furnished to the Trustee, the
Trustee shall examine such certificates and opinions to determine whether
or not they conform to the requirements of this Indenture (but need not
confirm or investigate the accuracy of mathematical calculations or other
facts stated therein).
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b) of this
Section;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Trust Officer unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
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<PAGE>
(3) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.2 or Section 6.5.
----------- -----------
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money or
assets received by it except as the Trustee may agree in writing with the
Company.
(f) Money or assets held in trust by the Trustee need not be
segregated from other funds or assets except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
(i) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(j) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders shall have security or indemnity
satisfactory to the Trustee against the costs, expenses (including reasonable
attorneys' fees and expenses) and liabilities that might be incurred by it in
compliance with such request or direction.
Section 7.2. Rights of Trustee. Subject to Section 7.1; (a) the
----------------- -----------
Trustee may rely on any document reasonably believed by it to be genuine and to
have been signed or presented by the proper person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may consult
with counsel and may require an Officers' Certificate and an Opinion of Counsel,
which shall conform to the provisions of Section 13.5. The Trustee shall not be
------------
liable for any action it takes or omits to take in good faith in reliance on an
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed with
due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute
willful misconduct or negligence.
70
<PAGE>
(e) The Trustee may consult with counsel of its selection, and the
advice or opinion of counsel with respect to legal matters relating to this
Indenture and the Notes shall be full and complete authorization and protection
from liability in respect to any action taken, omitted or suffered by it
hereunder in good faith and in accordance with the advice or opinion of such
counsel.
Section 7.3. Individual Rights of Trustee. The Trustee in its
----------------------------
individual or any other capacity may become the owner or pledgee of Notes and
may otherwise deal with the Company or its Affiliates with the same rights it
would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar or
co-Paying Agent may do the same with like rights. However, the Trustee is
subject to Sections 7.10 and 7.11.
------------- ----
Section 7.4. Trustee's Disclaimer'. The Trustee shall not be
--------------------
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Notes, it shall not be accountable for the Company's use
of the proceeds from the Notes, and it shall not be responsible for any
statement of the Company in this Indenture or in any document issued in
connection with the sale of the Notes or in the Notes other than the Trustee's
certificate of authentication.
Section 7.5. Notice of Defaults. If a Default or Event of Default
------------------
occurs and is continuing and if a Trust Officer has actual knowledge thereof,
the Trustee shall mail to each Noteholder notice of the Default or Event of
Default within five days after it is known to a Trust Officer or written notice
of it is received by the Trustee. Except in the case of a Default or Event of
Default in payment of principal of, premium, if any, or interest or Liquidated
Damages, if any, on any Note (including payments pursuant to the optional
redemption or required repurchase provisions of such Note, if any), the Trustee
may withhold the notice if and so long as a committee of its Trust Officers in
good faith determines that withholding the notice is not opposed to the
interests of the Noteholders.
Section 7.6. Reports by Trustee to Holders. The Trustee shall comply
-----------------------------
with TIA (S) 313. The Company agrees to notify promptly the Trustee whenever
the Notes become listed on any securities exchange and of any delisting thereof.
Section 7.7. Compensation and Indemnity. (a) The Company and the
--------------------------
Note Guarantors, jointly and severally, shall pay to the Trustee and any
predecessor trustee from time to time such compensation as shall be agreed to in
writing by the Company and the Trustee for its acceptance of this Indenture and
services hereunder as the Company and the Trustee shall from time to time agree
in writing. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company and the Note
Guarantors, jointly and severally, shall reimburse the Trustee upon request for
all reasonable out-of-pocket advancements, disbursements and expenses incurred
or made by it, including costs of collection, costs of preparing and reviewing
reports, certificates and other documents, costs of preparation and mailing of
notices to Noteholders and reasonable costs of counsel retained by the Trustee
in connection with the delivery of an Opinion of Counsel or otherwise, in
addition to the compensation for its services. Such expenses shall include the
reasonable compensation and
71
<PAGE>
expenses, disbursements and advances of the Trustee's agents, counsel,
accountants and experts and any taxes or other expenses incurred by a trust
created pursuant to Section 8.1 hereof.
-----------
(b) The Company and the Note Guarantors shall jointly and severally
indemnify the Trustee and its agents against any and all loss, liability or
expense (including reasonable attorneys' fees and expenses) incurred by them
without negligence or bad faith on its part in connection with the
administration of this trust and the performance of its duties hereunder,
including the costs and expenses of enforcing this Indenture (including this
Section 7.7) and of defending itself against any claims (whether asserted by any
- -----------
Noteholder, the Company or otherwise). The Trustee shall notify the Company
promptly of any claim for which it may seek indemnity. Failure by the Trustee
to so notify the Company shall not relieve the Company or the Note Guarantors of
their obligations hereunder. The Company and the Note Guarantors shall defend
the claim and the Trustee may employ its own counsel and the Company and the
Note Guarantors shall pay the fees and expenses of such counsel provided that
the Company and the Note Guarantors shall not be required to pay such fees and
expenses if they assume the Trustee's defense, and, in the reasonable judgment
of outside counsel to the Trustee, there is no conflict of interest between the
Company or the Note Guarantors and the Trustee in connection with such defense.
The Company and the Note Guarantors need not reimburse any expense or indemnify
against any loss, liability or expense incurred by the Trustee through the
Trustee's own willful misconduct, negligence or bad faith.
(c) To secure the Company's payment obligations in this Section, the
Trustee shall have a lien prior to the Notes on all money or property held or
collected by the Trustee other than money or property held in trust to pay
principal of and interest on particular Notes. The Trustee's right to receive
payment of any amounts due under this Section 7.7 shall not be subordinate to
-----------
any other liability or Indebtedness of the Company.
(d) The Company's payment obligations pursuant to this Section shall
survive the discharge of this Indenture. When the Trustee incurs expenses
(including the reasonable fees and expenses of its agent and counsel) after the
occurrence of a Default specified in clauses (g) and (h) of Section 6.1 with
-----------
respect to the Company, the expenses and the compensation for services shall be
preferred over the status of the Holders in a proceeding under any Bankruptcy
Law and are intended to constitute expenses of administration under any
Bankruptcy Law; provided, however, that this shall not affect the Trustee's
rights as set forth in this Section or Section 6.10.
------------
The Company's obligations under this Section 7.7 and any claim arising
-----------
hereunder shall survive the resignation or removal of any Trustee, the discharge
of the Company's obligations pursuant to Article VIII and any rejection or
------------
termination under any Bankruptcy Law.
Section 7.8. Replacement of Trustee. (a) The Trustee may resign at
----------------------
any time by so notifying the Company. The Holders of a majority in principal
amount of the Outstanding Notes may remove the Trustee by so notifying the
Trustee and may appoint a successor Trustee. The Company shall remove the
Trustee if:
(1) the Trustee fails to comply with Section 7.10;
------------
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(2) the Trustee is adjudged bankrupt or insolvent under any
Bankruptcy Law;
(3) a receiver or other public officer takes charge of the Trustee or
its property; or
(4) the Trustee otherwise becomes incapable of acting.
(b) If the Trustee resigns or is removed by the Company or by the
Holders of a majority in principal amount of the Outstanding Notes and such
Holders or the Company do not reasonably promptly appoint a successor Trustee,
or if a vacancy exists in the office of the Trustee for any reason (the Trustee
in such event being referred to herein as the retiring Trustee), the Company
shall promptly appoint a successor Trustee.
(c) A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Noteholders. The retiring Trustee shall promptly transfer, after
payment of all sums then owing to the Trustee pursuant to Section 7.7, all
-----------
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.7.
-----------
(d) If a successor Trustee does not take office within 60 days after
the retiring Trustee resigns or is removed, the retiring Trustee or the Holders
of at least 10% in principal amount of the Outstanding Notes may petition, at
the Company's expense, any court of competent jurisdiction for the appointment
of a successor Trustee.
(e) If the Trustee fails to comply with Section 7.10, any Noteholder
------------
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
(f) Notwithstanding the replacement of the Trustee pursuant to this
Section, the Company's obligations under Section 7.7 shall continue for the
-----------
benefit of the retiring Trustee.
Section 7.9. Successor Trustee by Merger. If the Trustee
---------------------------
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger, conversion
or consolidation to the Trustee shall succeed to the trusts created by this
Indenture, any of the Notes shall have been authenticated but not delivered, any
such successor to the Trustee may adopt the certificate of authentication of any
predecessor trustee, and deliver such Notes so authenticated; and in case at
that time any of the Notes shall not have been authenticated, any successor to
the Trustee may authenticate such Notes either in the name of any predecessor
hereunder or in the name of the successor to the Trustee; and in all such cases
such certificates shall have the full force which it is anywhere in the Notes or
in this Indenture provided that the certificate of the Trustee shall have.
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<PAGE>
Section 7.10. Eligibility; Disqualification. The Trustee shall at
-----------------------------
all times satisfy the requirements of TIA (S) 310(a). The Trustee (or in the
case of a corporation included in a bank holding company, the related bank
holding company) shall have a combined capital and surplus of at least $25
million as set forth in its most recent published annual report of condition.
The Trustee shall comply with TIA (S) 310(b); provided, however, that there
shall be excluded from the operation of TIA (S) 310(b)(1) any indenture or
indentures under which other securities or certificates of interest or
participation in other securities of the Company are outstanding if the
requirements for such exclusion set forth in TIA (S) 310(b)(1) are met.
Section 7.11. Preferential Collection of Claims Against Company. The
-------------------------------------------------
Trustee shall comply with TIA (S) 311(a), excluding any creditor relationship
listed in TIA (S) 311(b). A Trustee who has resigned or been removed shall be
subject to TIA (S) 311(a) to the extent indicated therein.
ARTICLE VIII
DISCHARGE OF INDENTURE; DEFEASANCE
Section 8.1. Termination of the Company's Obligations'.
----------------------------------------
(a) This Indenture will be discharged and will cease to be of further
effect (except as to surviving rights, or registration of transfer or exchange
of the Notes, as expressly provided for below) as to all Outstanding Notes when:
(i) either (A) all the Notes theretofore authenticated and delivered
(except lost, stolen or destroyed Notes which have been replaced or paid
and Notes for whose payment money has theretofore been deposited in trust
or segregated and held in trust by the Company and thereafter repaid to the
Company or discharged from such trust) have been delivered to the Trustee
for cancellation or (B) all Notes not theretofore delivered to the Trustee
for cancellation have become due and payable, or will be due and payable
within one year or are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption, and the Company has irrevocably deposited or caused to be
deposited with the Trustee cash or U.S. Government Obligations sufficient
to pay and discharge the entire Indebtedness on the Notes not theretofore
delivered to the Trustee for cancellation, for principal of, premium, if
any, and interest and Liquidated Damages, if any, on the Notes to the
earlier of the Stated Maturity or the Redemption Date together with
irrevocable instructions from the Company directing the Trustee to apply
such funds and/or the proceeds of such U.S. Government Obligations to the
payment thereof at maturity or redemption, as the case may be;
(ii) no Default or Event of Default with respect to this Indenture or
the Notes shall have occurred and be continuing on the date of such deposit
or shall occur as a result of such deposit and such deposit will not result
in a breach or violation of, or constitute a default under, any other
instrument to which the Company is a party or by which it is bound;
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<PAGE>
(iii) the Company shall have paid all other sums payable by it
hereunder or under the Notes; and
(iv) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent providing for the termination of the Company's obligations under
the Notes and this Indenture have been complied with. Such Opinion of
Counsel shall also state that such satisfaction and discharge does not
result in a default under any instrument evidencing debt senior to the
Notes or any other agreement or instrument then known to such counsel that
binds or affects the Company or the Company.
Notwithstanding the foregoing paragraph, the Company's obligations in
Sections 2.5, 2.8, 2.9, 3.1, 3.2, 3.8, 7.7 and in this Article VIII shall
- ------------ --- --- --- --- --- --- ------------
survive until all Notes are no longer Outstanding. After all Notes are no
longer Outstanding, the Company's obligations in Sections 7.7, 8.4 and 8.5 shall
----------------- ---
survive.
After such delivery or irrevocable deposit, the Trustee upon request
shall acknowledge in writing the discharge of the Company's obligations under
the Notes and this Indenture except for those surviving obligations specified
above.
Section 8.2. Legal Defeasance and Covenant Defeasance.
----------------------------------------
(a) The Company may, at its option, at any time, elect to have either
paragraph (b) or (c) below be applied to all Outstanding Notes upon compliance
with the conditions set forth in Section 8.3.
-----------
(b) Upon the Company's exercise under paragraph (a) hereof of the
option applicable to this paragraph (b), the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.3, be deemed to have been
-----------
discharged from its Obligations with respect to all Outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
-----
Defeasance"). For this purpose, Legal Defeasance means that the Company shall
- ----------
be deemed to have paid and discharged the entire Indebtedness represented by the
Outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 8.4 hereof and the other Sections of this Indenture
-----------
referred to in (i) and (ii) below, and to have satisfied all its other
Obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions, which shall
survive until otherwise terminated or discharged hereunder: (i) the rights of
Holders of Outstanding Notes to receive solely from the trust fund described in
Section 8.4 hereof, and as more fully set forth in such Section 8.4, payments in
- ----------- -----------
respect of the principal of, premium, if any, and interest and Liquidated
Damages, if any, on such Notes when such payments are due, (ii) the Company's
obligations with respect to such Notes under Article II and Section 3.2 hereof,
---------- -----------
(iii) the rights, powers, trusts, duties and immunities of the Trustee hereunder
and the Company's obligations in connection therewith and (iv) this Article
-------
VIII. Subject to compliance with this Article VIII, the Company may exercise
- ---- ------------
its option under this paragraph (b) notwithstanding the prior exercise of its
option under paragraph (c) hereof.
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<PAGE>
(c) Upon the Company's exercise under paragraph (a) hereof of the
option applicable to this paragraph (c), the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.3 hereof, be released from
-----------
its obligations under the covenants contained in Sections 3.4-3.6, 3.9-3.20 and
---------------- --------
4.1(b) hereof with respect to the Outstanding Notes on and after the date the
- ------
conditions set forth below are satisfied (hereinafter, "Covenant Defeasance"),
-------------------
and the Notes shall thereafter be deemed not outstanding for the purposes of any
direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be Outstanding for all other purposes hereunder (it being understood
that such Notes shall not be deemed outstanding for accounting purposes). For
this purpose, such Covenant Defeasance means that, with respect to the
Outstanding Notes, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event or Default under clauses of
Section 6.1(c)-(f) or (i) hereof, but, except as specified above, the remainder
- ------------------ ---
of this Indenture and such Notes shall be unaffected thereby.
Section 8.3. Conditions to Defeasance. In order for the Company to
------------------------
exercise its legal defeasance option or its covenant defeasance option:
(1) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders cash in U.S. dollars, U.S. Government
Obligations, or a combination thereof, in such amounts as will be sufficient, in
the opinion of a nationally recognized firm of independent public accountants,
to pay the principal of, premium, if any, and interest and Liquidated Damages,
if any, on the Notes on the stated date for payment thereof or on the applicable
Redemption Date, as the case may be;
(2) in the case of Legal Defeasance, the Company shall have delivered
to the Trustee an Opinion of Counsel in the United States reasonably acceptable
to the Trustee to the effect that:
(a) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling; or
(b) since the Issue Date, there has been a change in the applicable
federal income tax law, in either case to the effect that, and based thereon
such Opinion of Counsel shall state that, the Holders will not recognize income,
gain or loss for federal income tax purposes as a result of such Legal
Defeasance and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such Legal
Defeasance had not occurred;
(3) in the case of Covenant Defeasance, the Company shall have
delivered to the Trustee an Opinion of Counsel in the United States reasonably
acceptable to the Trustee to the effect that the Holders will not recognize
income, gain or loss for federal income tax purposes as a result of such
Covenant Defeasance and will be subject to federal income tax on the same
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<PAGE>
amounts, in the same manner and at the same times as would have been the case if
such Covenant Defeasance had not occurred;
(4) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit, other than a Default or Event of Default
resulting from the borrowing of funds to be applied to such deposit;
(5) the Trustee shall have received an Officers' Certificate stating
that such Legal Defeasance or Covenant Defeasance shall not result in a breach
or violation of, or constitute a default under this Indenture or any other
material agreement or instrument to which the Company or any of its Restricted
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound;
(6) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders over any other creditors of the Company or any
Subsidiary of the Company or with the intent of defeating, hindering, delaying
or defrauding any other creditors of the Company or others;
(7) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that after the 91st day following the deposit, the trust
funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally;
(8) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for, in the case of the Officers' Certificate, in clauses (1)
through (7) and, in the case of the Opinion of Counsel, in clauses (1) (with
respect to the validity and perfection of a security interest), (2), (3) and (5)
of this paragraph relating to the Legal Defeasance or the Covenant Defeasance,
as applicable, have been complied with; and
(9) the Company shall have delivered to the Trustee an Opinion of
Counsel (subject to customary assumptions and exclusions) to the effect that the
trust resulting from the deposit does not constitute, or is qualified as, a
regulated investment company under the Investment Company Act of 1940.
Section 8.4. Application of Trust Money. The Trustee shall hold in
--------------------------
trust cash or U.S. Government Obligations deposited with it pursuant to this
Article VIII. It shall apply the deposited money and the money from U.S.
- ------------
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of, and interest and Liquidated Damages,
if any, on, the Notes.
Section 8.5. Repayment to Company. (a) Subject to Sections 7.7 and
-------------------- ------------
8.1, the Trustee and the Paying Agent shall promptly turn over to the Company
- ---
upon receipt by the Trustee of the Company's written request any excess money or
securities held by them upon payment of all the Obligations under this
Indenture.
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<PAGE>
(b) Subject to any applicable abandoned property law, the Trustee and
the Paying Agent shall pay to the Company upon written request any money held by
them for the payment of principal of, or interest or Liquidated Damages, if any,
on, the Notes that remains unclaimed for two years, and, thereafter, Noteholders
entitled to the money must look to the Company for payment as general creditors.
Section 8.6. Indemnity for U.S. Government Obligations. The Company
-----------------------------------------
shall pay and shall indemnify the Trustee against any tax, fee or other charge
imposed on or assessed against deposited U.S. Government Obligations or the
principal and interest received on such U.S. Government Obligations.
Section 8.7. Reinstatement. If the Trustee or Paying Agent is unable
-------------
to apply any money or U.S. Government Obligations in accordance with this
Article VIII by reason of any legal proceeding or by reason of any order or
- ------------
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Obligations of the Company under
this Indenture and the Notes shall be revived and reinstated as though no
deposit had occurred pursuant to this Article VIII until such time as the
------------
Trustee or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article VIII; provided, however, that, if
------------
the Company has made any payment of interest or Liquidated Damages, if any, on,
or principal of, any Notes because of the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money or U.S. Government Obligations held by the
Trustee or Paying Agent.
ARTICLE IX
AMENDMENTS
Section 9.1. Without Consent of Holders. The Company, the Note
--------------------------
Guarantors and the Trustee may amend this Indenture or the Notes without notice
to or consent of any Noteholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article IV in respect of the assumption by a
----------
Surviving Entity of an obligation of the Company under this Indenture;
(3) to provide for uncertificated Notes in addition to or in place of
Certificated Notes; provided, however, that the uncertificated Notes are
issued in registered form for purposes of Section 163(f) of the Code;
(4) to add guarantees with respect to the Notes or to secure the
Notes;
(5) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the
Company;
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<PAGE>
(6) to comply with any requirements of the Commission in connection
with qualifying this Indenture under the TIA;
(7) to make any change that does not, in the opinion of the Trustee,
adversely affect the rights of any Noteholder in any material respect;
(8) to provide for the issuance of the Exchange Notes pursuant to the
Registration Rights Agreement; or
(9) to provide for the issuance of Add-On Notes, which will have
terms identical to the other Notes and which will be treated, together with
any other Outstanding Notes, as a single issue of Notes, except as
specified in Section 2.14 or Section 2.15.
------------ ------------
After an amendment under this Section becomes effective, the Company
shall mail to Noteholders a notice briefly describing such amendment. The
failure to give such notice to all Noteholders, or any defect therein, shall not
impair or affect the validity of an amendment under this Section.
Section 9.2. With Consent of Holders. The Company, the Note
-----------------------
Guarantors and the Trustee may amend this Indenture or the Notes without notice
to any Noteholder but with the written consent of the Holders of at least a
majority in principal amount of the Outstanding Notes (including, without
limitation, consents obtained in connection with a purchase of, or tender offer
or exchange offer for, Notes). It shall not be necessary for the consent of the
Holders under this Section to approve the particular form of any proposed
amendment, but it shall be sufficient if such consent approves the substance
thereof. However, no amendment may modify Article X or Article XII with respect
--------- -----------
to the Company or any Note Guarantor in a manner that materially adversely
affects the rights of any Holder without the consent of at least 75% in
principal amount of the then Outstanding Notes, and, without the consent of each
Noteholder affected, an amendment may not:
(i) reduce the amount of Notes whose Holders must consent to an
amendment or waiver;
(ii) reduce the rate of or change or have the effect of changing the
time for payment of interest, including Defaulted Interest, on any
Notes;
(iii) reduce the principal of or change or have the effect of
changing the Stated Maturity of any Notes, or change the date on which
any Notes may be subject to redemption, or reduce the redemption price
therefor;
(iv) make any Notes payable in money other than that stated in the
Notes;
(v) make any change in provisions of this Indenture entitling each
Holder to receive payment of principal of, premium, if any, and
interest and Liquidated Damages, if any, on such Note on or after the
due date thereof or to bring suit to
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<PAGE>
enforce such payment, or permitting Holders of a majority in principal
amount of Notes to waive Defaults or Events of Default;
(vi) amend, change or modify in any material respect the obligation
of the Company to make and consummate a Net Proceeds Offer pursuant to
Section 3.11 or make and consummate a Change of Control Offer pursuant
------------
to Section 3.18; or
------------
(vii) eliminate or modify in any manner a Note Guarantor's
obligations with respect to its Note Guarantee which adversely affects
Holders in any material respect (except as contemplated in this
Indenture).
After an amendment under this Section becomes effective, the Company
shall mail to Noteholders a notice briefly describing such amendment. The
failure to give such notice to all Noteholders, or any defect therein, shall not
impair or affect the validity of an amendment under this Section.
An amendment under this Section 9.2 may not make any change that
-----------
adversely affects the rights under Article X or Article XII of any holder of
--------- -----------
Senior Indebtedness then outstanding unless the holders of such Senior
Indebtedness (or any group or representative thereof authorized to give a
consent) consent to such change.
Section 9.3. Compliance with Trust Indenture Act. Every amendment to
-----------------------------------
this Indenture or the Notes shall comply with the TIA as then in effect.
Section 9.4. Revocation and Effect of Consents and Waivers. A
---------------------------------------------
consent to an amendment or a waiver by a Holder of a Note shall bind the Holder
and every subsequent Holder of that Note or portion of the Note that evidences
the same debt as the consenting Holder's Note, even if notation of the consent
or waiver is not made on the Note. However, any such Holder or subsequent
Holder may revoke the consent or waiver as to such Holder's Note or portion of
the Note if the Trustee receives the notice of revocation before the date the
amendment or waiver becomes effective. After an amendment or waiver becomes
effective, it shall bind every Noteholder. An amendment or waiver shall become
effective upon receipt by the Trustee of the requisite number of written
consents under Section 9.1 or 9.2 as applicable.
----------- ---
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Noteholders entitled to give their consent or
take any other action described above or required or permitted to be taken
pursuant to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Noteholders at such
record date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any such action, whether or not such Persons continue to be Holders after
such record date. No such consent shall become valid or effective more than 90
days after such record date.
Section 9.5. Notation on or Exchange of Notes. If an amendment
--------------------------------
changes the terms of a Note, the Trustee may require the Holder of the Note to
deliver it to the Trustee. The Trustee may place an appropriate notation on the
Note regarding the changed terms and return it
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<PAGE>
to the Holder. Alternatively, if the Company or the Trustee so determines, the
Company in exchange for the Note shall issue and the Trustee shall authenticate
a new Note that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Note shall not affect the validity of such amendment.
Section 9.6. Trustee to Sign Amendments, etc. The Trustee shall sign
-------------------------------
any amendment, supplement or waiver authorized pursuant to this Article IX if
----------
the amendment does not adversely affect the rights, duties, liabilities or
immunities of the Trustee. If it does, the Trustee may but need not sign it.
In signing such amendment, supplement or waiver the Trustee shall receive
indemnity reasonably satisfactory to it and to receive, and (subject to Sections
--------
7.1 and 7.2) shall be fully protected in relying upon, such evidence as it deems
- --- ---
appropriate, including, without limitation, solely on an Opinion of Counsel and
an Officer's Certificate, each stating that such amendment, supplement or waiver
is authorized or permitted by this Indenture.
ARTICLE X
SUBORDINATION OF THE NOTES
Section 10.1. Agreement to Subordinate. The Company agrees, and each
------------------------
Noteholder by accepting a Note agrees, that the Indebtedness evidenced by the
Notes is subordinated in right of payment, to the extent and in the manner
provided in this Article X, to the prior payment in full in cash of all
---------
Obligations due in respect of the Senior Indebtedness and that the subordination
is for the benefit of and enforceable by the holders of such Senior
Indebtedness. Only Senior Indebtedness of the Company shall rank senior to the
Notes in accordance with the provisions set forth herein. The Notes shall in
all respects rank pari passu with, or be senior to, all other Indebtedness of
the Company. All provisions of this Article X shall be subject to Section 10.12.
--------- -------------
Section 10.2. Liquidation, Dissolution, Bankruptcy. Upon any payment
------------------------------------
or distribution of the assets of the Company to creditors upon a total or
partial liquidation or a total or partial dissolution of the Company or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company or its property:
(1) holders of Senior Indebtedness of the Company shall be entitled
to receive payment in full of such Senior Indebtedness in cash before
Noteholders shall be entitled to receive any payment of principal of, premium,
if any, or interest or Liquidated Damages, if any, on the Notes; and
(2) until such Senior Indebtedness is paid in full in cash, any
distribution to which Noteholders would be entitled but for this Article X shall
---------
be made to holders of such Senior Indebtedness as their interests may appear,
except that Noteholders may receive (a) Permitted Junior Securities and (b)
payments and other distributions made from any defeasance trust created pursuant
to Section 8.1 hereof.
-----------
Section 10.3. Default on Senior Indebtedness of the Company. The
---------------------------------------------
Company may not pay the principal of, premium, if any, or interest or Liquidated
Damages, if any, on the
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Notes or make any deposit pursuant to Section 8.1 and may not repurchase, redeem
-----------
or otherwise retire any Notes (collectively, "pay the Notes") (other than
-------------
payments in the form of Permitted Junior Securities and payments and other
distributions made from any defeasance trust created pursuant to Section 8.1
-----------
hereof) if (i) any Designated Senior Indebtedness of the Company is not paid
when due or (ii) any other default on such Designated Senior Indebtedness occurs
and the maturity of such Designated Senior Indebtedness is accelerated in
accordance with its terms unless, in either case, (x) the default has been cured
or waived and any such acceleration has been rescinded or (y) such Designated
Senior Indebtedness has been paid in full; provided, however, that the Company
may pay the Notes without regard to the foregoing if the Company and the Trustee
receive written notice approving such payment from the Representative of such
Designated Senior Indebtedness with respect to which either of the events set
forth in clause (i) or (ii) has occurred and is continuing. During the
continuance of any default (other than a default described in clause (i) or (ii)
of the immediately preceding sentence) with respect to any Designated Senior
Indebtedness of the Company pursuant to which the maturity thereof may be
accelerated immediately without further notice (except such notice as may be
required to effect such acceleration) or the expiration of any applicable grace
periods, the Company may not pay the Notes for a period (a "Payment Blockage
----------------
Period") commencing upon the receipt by the Trustee (with a copy to the Company)
- ------
of written notice (a "Blockage Notice") of such default from the Representative
---------------
of the holders of such Designated Senior Indebtedness specifying an election to
effect a Payment Blockage Period and ending 179 days thereafter (or earlier if
such Payment Blockage Period is terminated (i) by written notice to the Trustee
and the Company from the Person or Persons who gave such Blockage Notice, (ii)
because a Representative of the holders of such Designated Senior Indebtedness
has notified the Trustee that the default giving rise to such Blockage Notice is
no longer continuing or (iii) because such Designated Senior Indebtedness has
been repaid in full in cash). Notwithstanding the provisions described in the
immediately preceding sentence (but subject to the provisions contained in the
first sentence of this Section 10.3), unless the holders of such Designated
------------
Senior Indebtedness or the Representative of such holders have accelerated the
maturity of such Designated Senior Indebtedness, the Company may resume payments
on the Notes after such Payment Blockage Period. The Notes shall not be subject
to more than one Payment Blockage Period in any consecutive 360-day period,
irrespective of the number of defaults with respect to Designated Senior
Indebtedness during such period. For purposes of this Section 10.3, no default
------------
or event of default which existed or was continuing on the date of the
commencement of any Payment Blockage Period with respect to the Designated
Senior Indebtedness initiating such Payment Blockage Period shall be, or be
made, the basis of the commencement of a subsequent Payment Blockage Period by
the Representative of such Designated Senior Indebtedness, whether or not within
a period of 360 consecutive days, unless such default or event of default shall
have been cured or waived for a period of not less than 90 consecutive days.
Section 10.4. Acceleration of Payment of Notes. If payment of the
--------------------------------
Notes is accelerated because of an Event of Default, the Company or the Trustee
shall promptly notify the Representative of the holders of the Designated Senior
Indebtedness of the Company of the acceleration.
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Section 10.5. When Distribution Must Be Paid Over. If a distribution
-----------------------------------
is made to Noteholders that because of this Article X should not have been made
---------
to them, the Noteholders who receive the distribution shall hold it in trust for
holders of Senior Indebtedness of the Company and pay it over to them or their
Representative as their interests may appear.
Section 10.6. Subrogation. After all Senior Indebtedness of the
-----------
Company is paid in full in cash and until the Notes are paid in full,
Noteholders shall be subrogated to the rights of holders of such Senior
Indebtedness to receive distributions applicable to such Senior Indebtedness. A
distribution made under this Article X to holders of such Senior Indebtedness
---------
which otherwise would have been made to Noteholders is not, as between the
Company and Noteholders, a payment by the Company on such Senior Indebtedness.
Section 10.7. Relative Rights. This Article X defines the relative
--------------- ---------
rights of Noteholders and holders of Senior Indebtedness of the Company.
Nothing in this Indenture shall:
(1) impair, as between the Company and Noteholders, the obligation of
the Company, which is absolute and unconditional, to pay principal of, premium,
if any, and interest and Liquidated Damages, if any, on the Notes in accordance
with their terms; or
(2) prevent the Trustee or any Noteholder from exercising its
available remedies upon a Default, subject to the rights of holders of Senior
Indebtedness of the Company to receive distributions otherwise payable to
Noteholders.
Section 10.8. Subordination May Not Be Impaired by Company. No right
--------------------------------------------
of any holder of Senior Indebtedness of the Company to enforce the subordination
of the Indebtedness evidenced by the Notes shall be impaired by any act or
failure to act by the Company or by its failure to comply with this Indenture.
Section 10.9. Rights of Trustee and Paying Agent. Notwithstanding
----------------------------------
Section 10.3, the Trustee or Paying Agent may continue to make payments on the
- ------------
Notes and shall not be charged with knowledge of the existence of facts that
would prohibit the making of any such payments unless, not less than two
Business Days prior to the date of such payment, a Trust Officer of the Trustee
receives written notice satisfactory to it that payments may not be made under
this Article X. The Company, the Registrar or co-registrar, the Paying Agent, a
---------
Representative or a holder of Senior Indebtedness may give the notice; provided,
however, that, if the holders of an issue of Senior Indebtedness of the Company
have a Representative, only the Representative may give the notice.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness of the Company with the same rights it would have if it were not
Trustee. The Registrar and co-registrar and the Paying Agent may do the same
with like rights. The Trustee shall be entitled to all the rights set forth in
this Article X with respect to any Senior Indebtedness of the Company which may
---------
at any time be held by it, to the same extent as any other holder of such Senior
Indebtedness, and nothing in Article VII shall deprive the Trustee of any of its
-----------
rights as such
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holder. Nothing in this Article X shall apply to claims of, or payments to, the
---------
Trustee under or pursuant to Section 7.7.
-----------
Section 10.10. Distribution or Notice to Representative. Whenever a
----------------------------------------
distribution is to be made or a notice given to holders of Senior Indebtedness
of the Company, the distribution may be made and the notice given to their
Representative (if any).
Section 10.11. Article X Not to Prevent Events of Default or Limit
---------------------------------------------------
Right to Accelerate. The failure to make a payment pursuant to the Notes by
- -------------------
reason of any provision in this Article X shall not be construed as preventing
---------
the occurrence of a Default. Nothing in this Article X shall have any effect on
---------
the right of the Noteholders or the Trustee to accelerate the maturity of the
Notes.
Section 10.12. Trust Moneys Not Subordinated. Notwithstanding
-----------------------------
anything contained herein to the contrary, payments from money or the proceeds
of U.S. Government Obligations held in trust under Article VIII by the Trustee
------------
for the payment of principal of, premium, if any, and interest and Liquidated
Damages, if any, on the Notes shall not be subordinated to the prior payment of
any Senior Indebtedness or subject to the restrictions set forth in this Article
-------
X, and none of the Noteholders shall be obligated to pay over any such amount to
- -
the Company or any holder of Senior Indebtedness of the Company or any other
creditor of the Company.
Section 10.13. Trustee Entitled to Rely. Upon any payment or
------------------------
distribution pursuant to this Article X, the Trustee and the Noteholders shall
---------
be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 10.2
------------
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Noteholders or (iii) upon the Representative for the holders of Senior
Indebtedness of the Company for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of such Senior
Indebtedness and other Indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article X. In the event that the Trustee
---------
determines, in good faith, that evidence is required with respect to the right
of any Person as a holder of Senior Indebtedness of the Company to participate
in any payment or distribution pursuant to this Article X, the Trustee may
---------
request such Person to furnish evidence to the reasonable satisfaction of the
Trustee as to the amount of such Senior Indebtedness held by such Person, the
extent to which such Person is entitled to participate in such payment or
distribution and other facts pertinent to the rights of such Person under this
Article X, and, if such evidence is not furnished, the Trustee may defer any
- ---------
payment to such Person pending judicial determination as to the right of such
Person to receive such payment. The provisions of Sections 7.1 and 7.2 shall be
------------ ---
applicable to all actions or omissions of actions by the Trustee pursuant to
this Article X.
---------
Section 10.14. Trustee to Effectuate Subordination. Each Noteholder
-----------------------------------
by accepting a Note authorizes and directs the Trustee on such Noteholder's
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination
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between the Noteholders and the holders of such Senior Indebtedness of the
Company as provided in this Article X and appoints the Trustee as attorney-in-
---------
fact for any and all such purposes.
Section 10.15. Trustee Not Fiduciary for Holders of Senior
-------------------------------------------
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the
- ------------
holders of Senior Indebtedness and shall not be liable to any such holders if it
shall mistakenly pay over or distribute to Noteholders or the Company or any
other Person, money or assets to which any holders of Senior Indebtedness of the
Company shall be entitled by virtue of this Article X or otherwise.
---------
Section 10.16. Reliance by Holders of Senior Indebtedness on
---------------------------------------------
Subordination Provisions. Each Noteholder by accepting a Note acknowledges and
- ------------------------
agrees that the foregoing subordination provisions are, and are intended to be,
an inducement and a consideration to each holder of any Senior Indebtedness of
the Company, whether such Senior Indebtedness was created or acquired before or
after the issuance of the Notes, to acquire and continue to hold, or to continue
to hold, such Senior Indebtedness and such holder of such Senior Indebtedness
shall be deemed conclusively to have relied on such subordination provisions in
acquiring and continuing to hold, or in continuing to hold, such Senior
Indebtedness.
Section 10.17. No Waiver of Subordination Provisions. (a) No right
-------------------------------------
of any present or future holder of any Senior Indebtedness to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Company or by any act
or failure to act, in good faith, by any such holder, or by any non-compliance
by the Company with the terms, provisions and covenants of this Indenture,
regardless of any knowledge thereof that any such holder may have or be
otherwise charged with.
(b) Without limiting the generality of subsection (a) of this Section
-------
10.17, the holders of Senior Indebtedness may, at any time and from time to
- -----
time, without the consent of or notice to the Trustee or the Noteholders,
without incurring responsibility to the Noteholders and without impairing or
releasing the subordination provided in this Article X or the obligations
---------
hereunder of the Noteholders to the holders of Senior Indebtedness, do any one
or more of the following:
(i) change the manner, place or terms of payment or extend the time of
payment of, or renew or alter, or waive compliance with the terms of,
Senior Indebtedness or any instrument evidencing the same or any agreement
under which Senior Indebtedness is outstanding;
(ii) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Indebtedness;
(iii) release any Person liable in any manner for the collection or
payment of Senior Indebtedness; or
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<PAGE>
(iv) exercise or refrain from exercising any rights against the
Company and any other Person;
provided, however, that in no event shall any such actions limit the right of
- -------- -------
the Noteholders to take any action to accelerate the maturity of the Notes
pursuant to Article VI of this Indenture or to pursue any rights or remedies
----------
hereunder or under applicable laws if the taking of such action does not
otherwise violate the terms of this Article X, subject to the rights, if any,
---------
under this Article X of the holders from time to time of Senior Indebtedness to
---------
receive the cash, property or securities receivable upon the exercise of such
rights or remedies.
Section 10.18. Other Rights of Holders of Senior Indebtedness. All
----------------------------------------------
rights and interest under this Indenture of the holders of Senior Indebtedness
and all agreements and obligations of the Trustee, the Noteholders and the
Company under this Article X shall remain in full force and effect irrespective
---------
of:
(a) any lack of validity or enforceability of the Senior Credit
Facility and promissory notes evidencing the Senior Credit Facility or any other
agreement or instrument relating thereto or to any other Senior Indebtedness; or
(b) any other circumstance that might constitute a defense available
to or a discharge of a guarantor or surety (other than as a result of any
payments made on the Senior Credit Facility or other Senior Indebtedness).
The holders of Senior Indebtedness are hereby authorized to demand
specific performance of this Article X at any time when the Trustee, the Company
---------
or any Noteholder shall have failed to comply with any of these provisions.
The provisions of this Article X shall continue to be effective or be
---------
reinstated, as the case may be, if at any time any payment of any of the Senior
Indebtedness is rescinded or must otherwise be returned by any holder of Senior
Indebtedness upon the insolvency, bankruptcy or reorganization of the Company or
otherwise, all as though such payment had not been made.
ARTICLE XI
GUARANTEE
Section 11.1. Guarantee. (a) Each Note Guarantor hereby fully,
---------
unconditionally and irrevocably guarantees, as primary obligor and not merely as
surety, jointly and severally with each other Note Guarantor, to each Holder of
the Notes and the Trustee the full and punctual payment when due, whether at
maturity, by acceleration, by redemption or otherwise, of the Obligations (such
guaranteed Obligations, the "Guaranteed Obligations"). Each Note Guarantor
----------------------
further agrees (to the extent permitted by law) that the Obligations may be
extended or renewed, in whole or in part, without notice or further assent from
it, and that it will remain bound under this Article X notwithstanding any
---------
extension or renewal of any Obligation. Each of the Note Guarantors will agree
to pay, on a senior subordinated basis and in addition to the
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<PAGE>
amounts stated above, any and all expenses (including reasonable counsel fees
and expenses) incurred by the Trustee or the Holders in enforcing any rights
under such Note Guarantor's Note Guarantee.
(b) Each Note Guarantor waives presentation to, demand of payment
from and protest to the Company of any of the Obligations and also waives notice
of protest for nonpayment. Each Note Guarantor waives notice of any Default
under the Notes or the Obligations. The obligations of each Note Guarantor
hereunder shall not be affected by (a) the failure of any Holder to assert any
claim or demand or to enforce any right or remedy against the Company or any
other Person under this Indenture, the Notes or any other agreement or
otherwise; (b) any extension or renewal of any thereof; (c) any rescission,
waiver, amendment or modification of any of the terms or provisions of this
Indenture, the Notes or any other agreement; (d) the release of any security
held by any Holder or the Trustee for the Obligations or any of them; (e) the
failure of any Holder to exercise any right or remedy against any other Note
Guarantor; or (f) any change in the ownership of the Company.
(c) Each Note Guarantor further agrees that its Note Guarantee herein
constitutes a guarantee of payment when due (and not a guarantee of collection)
and waives any right to require that any resort be had by any Holder to any
security held for payment of the Guaranteed Obligations.
(d) The Guaranteed Obligations shall not be subject to any reduction,
limitation, impairment or termination for any reason (other than payment of the
Guaranteed Obligations in full), including any claim of waiver, release,
surrender, alteration or compromise, and shall not be subject to any defense of
setoff, counterclaim, recoupment or termination whatsoever or by reason of the
invalidity, illegality or unenforceability of the Guaranteed Obligations or
otherwise. Without limiting the generality of the foregoing, the Guaranteed
Obligations shall not be discharged or impaired or otherwise affected by the
failure of any Holder to assert any claim or demand or to enforce any remedy
under this Indenture, the Notes or any other agreement, by any waiver or
modification of any thereof, by any default, failure or delay, willful or
otherwise, in the performance of the Guaranteed Obligations, or by any other act
or thing or omission or delay to do any other act or thing which may or might in
any manner or to any extent vary the risk of each Note Guarantor or would
otherwise operate as a discharge of such Note Guarantor as a matter of law or
equity.
(e) Each Note Guarantor further agrees that its Note Guarantee herein
shall continue to be effective or be reinstated, as the case may be, if at any
time payment, or any part thereof, of principal of or interest or Liquidated
Damages, if any, on any of the Obligations is rescinded or must otherwise be
restored by any Holder upon the bankruptcy or reorganization of the Company or
otherwise.
(f) In furtherance of the foregoing and not in limitation of any
other right which any Holder has at law or in equity against each Note Guarantor
by virtue hereof, upon the failure of the Company to pay any of the Obligations
when and as the same shall become due, whether at maturity, by acceleration, by
redemption or otherwise, each Note Guarantor hereby promises
87
<PAGE>
to and will, upon receipt of written demand by the Trustee, forthwith pay, or
cause to be paid, in cash, to the Holders an amount equal to the sum of (i) the
unpaid amount of such Obligations then due and owing and (ii) accrued and unpaid
interest on such Obligations then due and owing (but only to the extent not
prohibited by law).
(g) Each Note Guarantor further agrees that, as between such Note
Guarantor, on the one hand, and the Holders, on the other hand, (x) the maturity
of the Guaranteed Obligations may be accelerated as provided in this Indenture
for the purposes of its Note Guarantee herein, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
Guaranteed Obligations and (y) in the event of any such declaration of
acceleration of such Guaranteed Obligations, such Guaranteed Obligations
(whether or not due and payable) shall forthwith become due and payable by the
Note Guarantor for the purposes of this Note Guarantee.
(h) Each Note Guarantee is, to the extent and in the manner set forth
in Article XII, subordinated and subject in right of payment to the prior
-----------
payment in full of all Senior Indebtedness of such Note Guarantor and is made
subject to such provisions of this Indenture.
Section 11.2. Limitation on Liability; Termination, Release and
-------------------------------------------------
Discharge. (a) The Guaranteed Obligation will be limited to the maximum amount
- ---------
as will, after giving effect to all other contingent and fixed liabilities of
such Note Guarantor and after giving effect to any collections from or payments
made by or on behalf of any other Note Guarantor in respect of the Guaranteed
Obligations of such other Note Guarantor or pursuant to its contribution
obligations under this Indenture, result in the Guaranteed Obligations of such
Note Guarantor under its Note Guarantee not constituting a fraudulent conveyance
or fraudulent transfer under federal or state law.
(b) Each Note Guarantor may consolidate with or merge into or sell
its assets to the Company or another Note Guarantor without limitation. Each
Note Guarantor may consolidate with or merge into or sell all or substantially
all its assets to a corporation, partnership or trust other than the Company or
another Note Guarantor (whether or not affiliated with the Note Guarantor),
except that if the surviving corporation of any such merger or consolidation is
a Subsidiary of the Company, such merger, consolidation or sale shall not be
permitted unless (i) the Person formed by or surviving any such consolidation or
merger assumes all the Guaranteed Obligations of such Note Guarantor pursuant to
a supplemental indenture in form and substance reasonably satisfactory to the
Trustee in respect of the Notes, this Indenture and the Note Guarantee, (ii)
immediately after giving effect to such transaction, no Default or Event of
Default exists; and (iii) the Company delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel addressed to the Trustee with respect to
the foregoing matters. Upon the sale or disposition of a Note Guarantor (by
merger, consolidation, the sale of its Capital Stock or the sale of all or
substantially all of its assets) to a Person (whether or not an Affiliate of the
Note Guarantor) which is not a Subsidiary of the Company, which sale or
disposition is otherwise in compliance with this Indenture (including Section
-------
3.11), such Note Guarantor will be deemed released from all its Guaranteed
- ----
Obligations and such Note Guarantee will terminate; provided, however, that any
such termination will occur only to the extent that all obligations of such Note
88
<PAGE>
Guarantor under the Senior Credit Facility and all of its guarantees of, and
under all of its pledges of assets or other security interests which secure, any
other Indebtedness of the Company will also terminate upon such release, sale or
transfer.
(c) A Note Guarantor will be deemed released and relieved from its
Guaranteed Obligations and its Note Guarantee without any further action
required on the part of the Company or such Note Guarantor if, in accordance
with the provisions of this Indenture:
(i) there is a legal defeasance of the Notes;
(ii) such Note Guarantor ceases to exist as a result of its merger
into the Company or another Note Guarantor or as a result of its liquidation in
a manner not giving rise to a Default or Event of Default;
(iii) there is a sale or other disposition of all or a portion of the
Capital Stock of such Note Guarantor to a Person other than the Company or one
of its Subsidiaries such that such Subsidiary is no longer a Subsidiary of the
Company; or
(iv) such Note Guarantor is designated as an Unrestricted Subsidiary.
Section 11.3. Right of Contribution. Each Note Guarantor that makes
---------------------
a payment or distribution under a Note Guarantee will be entitled to a
contribution from each other Note Guarantor in a pro rata amount, based on the
net assets of each Note Guarantor determined in accordance with GAAP. The
provisions of this Section 11.3 shall in no respect limit the obligations and
------------
liabilities of each Note Guarantor to the Trustee and the Holders and each Note
Guarantor shall remain liable to the Trustee and the Holders for the full amount
guaranteed by such Note Guarantor hereunder.
Section 11.4. No Subrogation. Each Note Guarantor agrees that it
--------------
shall not be entitled to any right of subrogation in respect of any Guaranteed
Obligations until payment in full of all Obligations and all obligations to
which the Obligations are subordinated. If any amount shall be paid to any Note
Guarantor on account of such subrogation rights at any time when all of the
Obligations and all obligations to which the Obligations are subordinated shall
not have been paid in full, such amount shall be held by such Note Guarantor in
trust for the Trustee and the Holders, segregated from other funds of such Note
Guarantor, and shall, forthwith upon receipt by such Note Guarantor, be turned
over to the Trustee in the exact form received by such Note Guarantor (duly
endorsed by such Note Guarantor to the Trustee, if required), to be applied
against the Obligations or obligations to which the Obligations are
subordinated. Each Note Guarantor further agrees that, as between it, on the
one hand, and the Holders and the Trustee, on the other hand, (x) the maturity
of the Guaranteed Obligations may be accelerated as provided in Article VI for
----------
the purposes of such Note Guarantor's Note Guarantee herein, notwithstanding any
stay, injunction or other prohibition preventing such acceleration in respect of
the Guaranteed Obligations, and (y) in the event of any declaration of
acceleration of such Obligations as provided in Article VI, such Obligations
----------
shall forthwith become due and payable by such Note Guarantor for the purposes
of this Section 11.4.
------------
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<PAGE>
Section 11.5. Additional Note Guarantees. The Company will cause any
--------------------------
Person that shall become a Domestic Restricted Subsidiary, other than a Special
Purpose Financing Vehicle, (an "Additional Guarantor") to concurrently Guarantee
--------------------
(an "Additional Guarantee") the Company's Obligations under this Indenture and
--------------------
the Notes by executing a Supplemental Indenture substantially in the form of
Exhibit F, it being understood that such Additional Guarantee shall be
- ---------
subordinated in right of payment to Senior Indebtedness of such Additional
Guarantor including Guarantees constituting Senior Indebtedness; provided,
however, that each Additional Guarantor will be automatically and
unconditionally released and discharged from its obligations under such
Additional Guarantee only in accordance with Section 11.2 above.
------------
ARTICLE XII
SUBORDINATION OF THE NOTE GUARANTEES
Section 12.1. Agreement to Subordinate. Each Note Guarantor agrees,
------------------------
and each Noteholder by accepting a Note agrees, that the Guaranteed Obligations
and the obligations of the Note Guarantors under Article XI are subordinated in
----------
right of payment, to the extent and in the manner provided in this Article XII,
-----------
to the prior payment in full in cash of all Senior Indebtedness of such Note
Guarantor and that the subordination is for the benefit of and enforceable by
the holders of such Senior Indebtedness. Only Senior Indebtedness of such Note
Guarantor shall rank senior to the Obligations of such Note Guarantor in
accordance with the provisions set forth herein. The Obligations of each Note
Guarantor shall in all respects rank pari passu with, or be senior to, all other
Indebtedness of such Note Guarantor.
Section 12.2. Liquidation, Dissolution, Bankruptcy. Upon any payment
------------------------------------
or distribution of the assets of any Note Guarantor to creditors upon a total or
partial liquidation or a total or partial dissolution of such Note Guarantor or
in a bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to such Note Guarantor or its property:
(1) holders of Senior Indebtedness of such Note Guarantor shall be
entitled to receive payment in full of such Senior Indebtedness in cash before
Noteholders shall be entitled to receive any payment pursuant to the Note
Guarantee of such Note Guarantor; and
(2) until the Senior Indebtedness of such Note Guarantor is paid in
full in cash, any distribution to which Noteholders would be entitled but for
this Article XII shall be made to holders of such Senior Indebtedness as their
-----------
interests may appear, except that Noteholders may receive (a) Permitted Junior
Securities and (b) payments and other distributions made from any defeasance
trust created pursuant to Section 8.1 hereof.
-----------
Section 12.3. Default on Senior Indebtedness of Note Guarantors.
-------------------------------------------------
Each Note Guarantor may not pay the principal of, premium, if any, or interest
or Liquidated Damages, if any, on the Notes or make any deposit pursuant to
Section 8.1 and may not repurchase, redeem or otherwise retire any Notes
- -----------
(collectively, "pay its Note Guarantee") (other than payment in the form of
----------------------
Permitted Junior Securities and payments and other distributions from any
defeasance trust created pursuant to Section 8.1 hereof) if (i) any Designated
-----------
Senior Indebtedness of the relevant Note Guarantor is not paid when due or (ii)
any other default on Designated Senior
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<PAGE>
Indebtedness of such Note Guarantor occurs and the maturity of such Designated
Senior Indebtedness is accelerated in accordance with its terms unless, in
either case, (x) the default has been cured or waived and any such acceleration
has been rescinded or (y) such Designated Senior Indebtedness has been paid in
full; provided, however, that such Note Guarantor may pay its Note Guarantee
without regard to the foregoing if such Note Guarantor and the Trustee receive
written notice approving such payment from the Representative of the Designated
Senior Indebtedness of such Note Guarantor with respect to which either of the
events set forth in clause (i) or (ii) has occurred and is continuing. During
the continuance of any default (other than a default described in clause (i) or
(ii) of the immediately preceding sentence) with respect to any Designated
Senior Indebtedness of such Note Guarantor pursuant to which the maturity
thereof may be accelerated immediately without further notice (except such
notice as may be required to effect such acceleration) or the expiration of any
applicable grace periods, such Note Guarantor may not pay its Note Guarantee for
the Payment Blockage Period commencing upon the receipt by the Trustee (with a
copy to such Note Guarantor) of a Blockage Notice of such default from the
Representative of the holders of such Designated Senior Indebtedness and ending
179 days thereafter (or earlier if such Payment Blockage Period is terminated
(i) by written notice to the Trustee and such Note Guarantor from the Person or
Persons who gave such Blockage Notice, (ii) because a Representative of the
holders of such Designated Senior Indebtedness has notified the Trustee that the
default giving rise to such Blockage Notice is no longer continuing or (iii)
because such Designated Senior Indebtedness has been repaid in full in cash).
Notwithstanding the provisions described in the immediately preceding sentence
(but subject to the provisions contained in the first sentence of this Section
-------
12.3), unless the holders of such Designated Senior Indebtedness of such Note
- ----
Guarantor or the Representative of such holders have accelerated the maturity of
such Designated Senior Indebtedness such Note Guarantor may resume payments on
its Note Guarantee after the end of such Payment Blockage Period. Each Note
Guarantee shall not be subject to more than one Payment Blockage Period in any
consecutive 360-day period, irrespective of the number of defaults with respect
to Designated Senior Indebtedness of a Note Guarantor during such period. For
purposes of this Section 12.3, no Default or Event of Default which existed or
------------
was continuing on the date of the commencement of any Payment Blockage Period
with respect to the Designated Senior Indebtedness initiating such Payment
Blockage Period shall be, or be made, the basis of the commencement of a
subsequent Payment Blockage Period by the Representative of such Designated
Senior Indebtedness, whether or not within a period of 360 consecutive days,
unless such default or event of default shall have been cured or waived for a
period of not less than 90 consecutive days.
Section 12.4. Demand for Payment. If a demand for payment is made on
------------------
any Note Guarantor pursuant to Article XI, the Trustee shall promptly notify the
----------
holders of the Designated Senior Indebtedness (or their Representatives) of such
Note Guarantor of such demand.
Section 12.5. When Distribution Must Be Paid Over. If a distribution
-----------------------------------
is made to Noteholders that because of this Article XII should not have been
-----------
made to them, the Noteholders who receive the distribution shall hold it in
trust for holders of the relevant Senior Indebtedness of such Note Guarantor and
pay it over to them or their Representative as their interests may appear.
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<PAGE>
Section 12.6. Subrogation. After all Senior Indebtedness of each
-----------
Note Guarantor is paid in full and until the Notes are paid in full, Noteholders
shall be subrogated to the rights of holders of such Senior Indebtedness to
receive distributions applicable to such Senior Indebtedness. A distribution
made under this Article XII to holders of such Senior Indebtedness which
-----------
otherwise would have been made to Noteholders is not, as between each Note
Guarantor and Noteholders, a payment by such Note Guarantor on such Senior
Indebtedness.
Section 12.7. Relative Rights. This Article XII defines the relative
--------------- -----------
rights of Noteholders and holders of Senior Indebtedness of each Note Guarantor.
Nothing in this Indenture shall:
(1) impair, as between each Note Guarantor and the Noteholders, the
obligation of such Note Guarantor, which is absolute and unconditional, to pay
its obligations to the extent set forth in Article XI; or
----------
(2) prevent the Trustee or any Noteholder from exercising its
available remedies upon a default by any Note Guarantor under its obligations,
subject to the rights of holders of Senior Indebtedness of such Note Guarantor
to receive distributions otherwise payable to Noteholders.
Section 12.8. Subordination May Not Be Impaired by Note Guarantors.
----------------------------------------------------
No right of any holder of Senior Indebtedness of any Note Guarantor to enforce
the subordination of the obligations of such Note Guarantor shall be impaired by
any act or failure to act by such Note Guarantor or by its failure to comply
with this Indenture.
Section 12.9. Rights of Trustee and Paying Agent. Notwithstanding
----------------------------------
Section 12.3, the Trustee or Paying Agent may continue to make payments on each
- ------------
Note Guarantee and shall not be charged with knowledge of the existence of facts
that would prohibit the making of any such payments unless, not less than two
Business Days prior to the date of such payment, a Trust Officer of the Trustee
receives written notice satisfactory to it that payments may not be made under
this Article XII. The Company, each Note Guarantor, the Registrar or co-
-----------
registrar, the Paying Agent, a Representative or a holder of Senior Indebtedness
of any Note Guarantor may give the notice; provided, however, that, if the
holders of an issue of Senior Indebtedness of any Note Guarantor has a
Representative, only the Representative may give the notice.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness with the same rights it would have if it were not Trustee. The
Registrar and co-registrar and the Paying Agent may do the same with like
rights. The Trustee shall be entitled to all the rights set forth in this
Article XII with respect to any Senior Indebtedness of any Note Guarantor which
- -----------
may at any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in Article VII shall deprive the Trustee of any of its
-----------
rights as such holder. Nothing in this Article XII shall apply to claims of, or
-----------
payments to, the Trustee under or pursuant to Section 7.7.
-----------
Section 12.10. Distribution or Notice to Representative. Whenever a
----------------------------------------
distribution is to be made or a notice given to holders of Senior Indebtedness
of any Note Guarantor, the distribution may be made and the notice given to
their Representative (if any).
92
<PAGE>
Section 12.11. Article XII Not to Prevent Defaults Under the Note
--------------------------------------------------
Guarantees or Limit Right To Demand Payment. The failure to make a payment
- -------------------------------------------
pursuant to any Note Guarantee by reason of any provision in this Article XII
-----------
shall not be construed as preventing the occurrence of a Default under such Note
Guarantee. Nothing in this Article XII shall have any effect on the right of the
-----------
Noteholders or the Trustee to make a demand for payment on any Note Guarantor
pursuant to Article XI.
----------
Section 12.12. Trustee Entitled to Rely. Upon any payment or
------------------------
distribution pursuant to this Article XII, the Trustee and the Noteholders shall
-----------
be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 12.2
------------
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Noteholders or (iii) upon the Representative for the holders of Senior
Indebtedness of any Note Guarantor for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the holders of such
Senior Indebtedness and other indebtedness of such Note Guarantor, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article XII. In the event that
-----------
the Trustee determines, in good faith, that evidence is required with respect to
the right of any Person as a holder of Senior Indebtedness of such Note
Guarantor to participate in any payment or distribution pursuant to this Article
-------
XII, the Trustee may request such Person to furnish evidence to the reasonable
- ---
satisfaction of the Trustee as to the amount of such Senior Indebtedness of such
Note Guarantor held by such Person, the extent to which such Person is entitled
to participate in such payment or distribution and other facts pertinent to the
rights of such Person under this Article XII, and, if such evidence is not
-----------
furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment. The
provisions of Sections 7.1 and 7.2 shall be applicable to all actions or
------------ ----
omissions of actions by the Trustee pursuant to this Article XII.
-----------
Section 12.13. Trustee to Effectuate Subordination. Each Noteholder
-----------------------------------
by accepting a Note authorizes and directs the Trustee on such Noteholder's
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Noteholders and the holders of Senior
Indebtedness of any Note Guarantor as provided in this Article XII and appoints
-----------
the Trustee as attorney-in-fact for any and all such purposes.
Section 12.14. Trustee Not Fiduciary for Holders of Senior
-------------------------------------------
Indebtedness of Note Guarantors. The Trustee shall not be deemed to owe any
- -------------------------------
fiduciary duty to the holders of Senior Indebtedness of any Note Guarantor and
shall not be liable to any such holders if it shall mistakenly pay over or
distribute to Noteholders or the Company or any other Person, money or assets to
which any holders of such Senior Indebtedness shall be entitled by virtue of
this Article XII or otherwise.
-----------
Section 12.15. Reliance by Holders of Senior Indebtedness on
---------------------------------------------
Subordination Provisions. Each Noteholder by accepting a Note acknowledges and
- ------------------------
agrees that the foregoing subordination provisions are, and are intended to be,
an inducement and a consideration to each holder of any Senior Indebtedness of
any Note Guarantor, whether such Senior Indebtedness was
93
<PAGE>
created or acquired before or after the issuance of the Notes, to acquire and
continue to hold, or to continue to hold, such Senior Indebtedness and such
holder of such Senior Indebtedness shall be deemed conclusively to have relied
on such subordination provisions in acquiring and continuing to hold, or in
continuing to hold, such Senior Indebtedness.
Section 12.16. No Waiver of Subordination Provisions. (a) No right
-------------------------------------
of any present or future holder of any Senior Indebtedness to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of any Note Guarantor or by
any act or failure to act, in good faith, by any such holder, or by any non-
compliance by any Note Guarantor with the terms, provisions and covenants of
this Indenture, regardless of any knowledge thereof that any such holder may
have or be otherwise charged with.
(b) Without limiting the generality of subsection (a) of this Section
-------
12.16, the holders of Senior Indebtedness may, at any time and from time to
- -----
time, without the consent of or notice to the Trustee or the Noteholders,
without incurring responsibility to the Noteholders and without impairing or
releasing the subordination provided in this Article XII or the obligations
-----------
hereunder of the Noteholders to the holders of Senior Indebtedness, do any one
or more of the following:
(i) change the manner, place or terms of payment or extend the time
of payment of, or renew or alter, or waive compliance with the terms of,
Senior Indebtedness or any instrument evidencing the same or any agreement
under which Senior Indebtedness is outstanding;
(ii) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Indebtedness;
(iii) release any Person liable in any manner for the collection or
payment of Senior Indebtedness; or
(iv) exercise or refrain from exercising any rights against any Note
Guarantor and any other Person;
provided, however, that in no event shall any such actions limit the right of
- -------- -------
the Noteholders to take any action to accelerate the maturity of the Notes
pursuant to Article VI of this Indenture or to pursue any rights or remedies
----------
hereunder or under applicable laws if the taking of such action does not
otherwise violate the terms of this Article XII, subject to the rights, if any,
-----------
under this Article XII of the holders from time to time of Senior Indebtedness
-----------
to receive the cash, property or securities receivable upon the exercise of such
rights or remedies.
Section 12.17. Other Rights of Holders of Senior Indebtedness. All
----------------------------------------------
rights and interest under this Indenture of the holders of Senior Indebtedness
and all agreements and obligations of the Trustee, the Noteholders and any Note
Guarantor under this Article XII shall remain in full force and effect
-----------
irrespective of:
94
<PAGE>
(a) any lack of validity or enforceability of the Senior Credit
Facility and promissory notes evidencing the Senior Credit Facility or any other
agreement or instrument relating thereto or to any other Senior Indebtedness; or
(b) any other circumstance that might constitute a defense available
to or a discharge of a guarantor or surety (other than as a result of any
payments made on the Senior Credit Facility or other Senior Indebtedness).
The holders of Senior Indebtedness are hereby authorized to demand
specific performance of this Article XII at any time when the Trustee, any Note
-----------
Guarantor or any Noteholder shall have failed to comply with any of these
provisions.
The provisions of this Article XII shall continue to be effective or
-----------
be reinstated, as the case may be, if at any time any payment of any of the
Senior Indebtedness is rescinded or must otherwise be returned by any holder of
Senior Indebtedness upon the insolvency, bankruptcy or reorganization of any
Note Guarantor or otherwise, all as though such payment had not been made.
ARTICLE XIII
MISCELLANEOUS
Section 13.1. Trust Indenture Act Controls. If any provision of this
----------------------------
Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the provision required by
the TIA shall control. Each Note Guarantor in addition to performing its
Guaranteed Obligations shall perform such other obligations as may be imposed
upon it with respect to this Indenture under the TIA.
Section 13.2. Notices. Any notice or communication shall be in
-------
writing and delivered in person or mailed by first-class mail, overnight courier
or facsimile transmission addressed as follows:
if to the Company or any Note Guarantor:
Global Imaging Systems, Inc.
P.O. Box 273478
Tampa, FL 33688-3478
Attention: Chief Financial Officer
if to the Trustee:
United States Trust Company of New York
114 West 47th Street
New York, NY 10036-1532
Attention: Corporate Trust Department
95
<PAGE>
The Company, the Note Guarantors or the Trustee by notice to the other
may designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a registered Noteholder shall be
mailed to the Noteholder at the Noteholder's address as it appears on the
registration books of the Registrar and shall be sufficiently given if so mailed
within the time prescribed.
Failure to mail a notice or communication to a Noteholder or any
defect in it shall not affect its sufficiency with respect to other Noteholders.
If a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
Section 13.3. Communication by Holders with Other Holders.
-------------------------------------------
Noteholders may communicate pursuant to TIA (S) 312(b) with other Noteholders
with respect to their rights under this Indenture or the Notes. The Company,
the Trustee, the Registrar and anyone else shall have the protection of TIA (S)
312(c).
Section 13.4. Certificate and Opinion as to Conditions Precedent.
--------------------------------------------------
Upon any request or application by the Company to the Trustee to take or refrain
from taking any action under this Indenture, the Company shall furnish to the
Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
Section 13.5. Statements Required in Certificate or Opinion. Each
---------------------------------------------
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
96
<PAGE>
In giving such Opinion of Counsel, counsel may rely as to factual
matters on an Officers' Certificate or on certificates of public officials.
Section 13.6. Rules by Trustee, Paying Agent and Registrar. The
--------------------------------------------
Trustee may make reasonable rules for action by, or a meeting of, Noteholders.
The Registrar and the Paying Agent may make reasonable rules for their
functions.
SECTION 13.7. GOVERNING LAW, ETC. (A) THIS INDENTURE, THE NOTES AND
-------------------
THE NOTE GUARANTEES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK, BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAW OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
(b) Each of the Company and the Note Guarantors hereby (i) agrees
that any suit, action or proceeding against it arising out of or relating to
this Indenture or the Notes, as the case may be, may be instituted in any
Federal or state court sitting in The City of New York, (ii) waives to the
extent permitted by applicable law, any objection which it may now or hereafter
have to the laying of venue of any such suit, action or proceeding, and any
claim that any suit, action or proceeding in such a court has been brought in an
inconvenient forum, (iii) irrevocably submits or will submit, as the case may
be, to the non-exclusive jurisdiction of such courts in any suit, action or
proceeding, (iv) agrees that final judgment in any such suit, action or
proceeding brought in such a court shall be conclusive and binding and may be
enforced in the courts of the jurisdiction of which it is subject by a suit upon
judgment and (v) agrees that service of process by mail to the address specified
herein shall constitute personal service of such process on it in any such suit,
action or proceeding.
Section 13.8. No Recourse Against Others. An incorporator, or any
--------------------------
past, present or future director, officer, employee, stockholder or controlling
person, as such, of the Company or any Note Guarantor shall not have any
liability for any Obligations of the Company under the Notes, this Indenture or
the Note Guarantees or for any claim based on, in respect of or by reason of
such Obligations or their creation. By accepting a Note, each Noteholder shall
waive and release all such liability. The waiver and release shall be part of
the consideration for the issue of the Notes.
Section 13.9. Successors. All agreements of the Company and any Note
----------
Guarantor in this Indenture and the Notes shall bind their respective
successors. All agreements of the Trustee in this Indenture shall bind its
successors.
Section 13.10. Multiple Originals. The parties may sign any number
------------------
of copies of this Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement. One signed copy is enough to prove
this Indenture.
Section 13.11. Severability. In case any provision in this Indenture
------------
or in the Notes shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
97
<PAGE>
Section 13.12. Qualification of Indenture. The Company shall qualify
--------------------------
this Indenture under the TIA in accordance with the terms and conditions of the
Registration Rights Agreement and shall pay all reasonable costs and expenses
(including reasonable attorneys' fees and expenses for the Company, the Trustee
and the Holders) incurred in connection therewith, including, but not limited
to, costs and expenses of qualification of this Indenture and the Notes and
printing this Indenture and the Notes. The Trustee shall be entitled to receive
from the Company any such Officers' Certificates, Opinions of Counsel or other
documentation as it may reasonably request in connection with any such
qualification of this Indenture under the TIA.
Section 13.13. Table of Contents; Headings. The table of contents,
---------------------------
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
98
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed as of the date first written above.
GLOBAL IMAGING SYSTEMS, INC.
By /s/ Raymond Schilling
-----------------------
Name: Raymond Schilling
Title: Vice President, Chief Financial
Officer, Secretary and Treasurer
Each NOTE GUARANTOR listed in Annex A hereto
By /s/ Raymond Schilling
-----------------------
Name: Raymond Schilling, on behalf of, and
in his capacity as an authorized
signatory for, each of the Note
Guarantors listed in Annex A hereto
UNITED STATES TRUST COMPANY OF NEW YORK, AS
TRUSTEE
By /s/ Louis P. Young
-------------------
Name: Louis P. Young
Title: Vice President
99
<PAGE>
ANNEX A
Note Guarantors
---------------
1. American Photocopy Equipment Company of
Pittsburgh
2. Berney, Inc.
3. Business Equipment Unlimited
4. Cameron Office Products, Inc.
5. Capital Copy Products, Inc.
6. Capitol Office Solutions, Inc.
7. Carr Business Machines of Great Neck, Inc.
8. Centre Business Products, Inc.
9. Connecticut Business Systems, Inc.
10. Conway Office Products, Inc.
11. Copy Service and Supply, Inc.
12. COS Financial, Inc.
13. Dahill Industries, Inc.
14. Distinctive Business Products, Inc.
15. Duplicating Specialties, Inc. dba Copytronix
16. Eastern Copy Products, Inc.
17. Electronic Systems of Richmond, Inc.
18. Electronic Systems, Inc.
19. Felco Office Systems, Inc.
20. Global Imaging Finance Company
21. Global Imaging Operations, Inc.
22. ProView, Inc.
23. Quality Business Systems, Inc.
24. Southern Business Communications, Inc.
25. Southern Copy Systems, Inc.
<PAGE>
EXHIBIT A
FORM OF FACE OF INITIAL NOTE
No. [___]
CUSIP NO. ____________
[If the Note is a Regulation S Global Note, include:]
ISIN NO. ____________
[Include the following legend for Global Notes only:]
THIS IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE REFERRED TO
HEREINAFTER.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW
YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL
BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH
IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[The following legend shall appear on all Certificated Notes prior to the
Resale Restriction Termination Date:]
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR
AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER
AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIED WITH THE
FOREGOING RESTRICTIONS AS PROVIDED FOR IN THE INDENTURE.
[The following legend shall appear on all Notes prior to the Resale
Restriction Termination Date or expiration of the Restricted Period
therefor:]
A-1
<PAGE>
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A ADOPTED UNDER THE SECURITIES ACT) OR (B) IT
IS AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7)
UNDER THE SECURITIES ACT) (AN "ACCREDITED INVESTOR") OR (C) IT IS NOT A
U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH REGULATION S ADOPTED UNDER THE SECURITIES ACT; (2) AGREES
THAT IT WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS NOTE
RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE ISSUER OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A ADOPTED UNDER THE
SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN ACCREDITED INVESTOR THAT
IS ACQUIRING THE NOTE FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
ACCREDITED INVESTOR, IN EITHER CASE, IN A MINIMUM PRINCIPAL AMOUNT OF THE
NOTES OF U.S. $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR
FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, AND THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS
FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE
OBTAINED FROM THE TRUSTEE), (D) OUTSIDE THE UNITED STATES IN COMPLIANCE
WITH REGULATION S ADOPTED UNDER THE SECURITIES ACT, (E) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 ADOPTED UNDER THE
SECURITIES ACT (IF AVAILABLE), OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT; AND (3) AGREES THAT IT WILL GIVE TO
EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN
TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS NOTE, IF THE PROPOSED
TRANSFEREE IS AN ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE TRUSTEE AND THE ISSUER SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR
IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED
STATES" AND "U.S. PERSON" HAVE THE
A-2
<PAGE>
MEANINGS GIVEN TO THEM BY REGULATION S ADOPTED UNDER THE SECURITIES ACT.
GLOBAL NOTE
Representing 10 3/4% Senior Subordinated Notes Due 2007
Global Imaging Systems, Inc., a Delaware corporation, promises to pay
to [ ], or registered assigns, the principal sum of $[ ] Dollars,
as revised by the Schedule of Increases and Decreases in Global Note attached
hereto, on February 15, 2007.
Interest Payment Dates: February 15 and August 15
Record Dates: February 1 and August 1
Additional provisions of this Note are set forth on the other side of
this Note.
A-3
<PAGE>
Unless the certificate of authentication hereon has been duly executed
by the Trustee referred to on the reverse hereof by manual signature, this Note
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purposes.
IN WITNESS WHEREOF, Global Imaging Systems, Inc. has caused this Note
to be duly executed.
GLOBAL IMAGING SYSTEMS, INC.
By _________________________
Name: Thomas S. Johnson
Title: President
By _________________________
Name: Raymond Schilling
Title: Vice President, Chief Financial
Officer, Secretary and Treasurer
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee, certifies that this is one of the Notes referred to in the
Indenture.
By_________________________
Authorized Signatory Date:________, 1999
A-4
<PAGE>
FORM OF REVERSE SIDE OF INITIAL NOTE
10 3/4% Senior Subordinated Notes due 2007
1. Interest
--------
Global Imaging Systems, Inc., a Delaware corporation (such company,
and its successors and assigns under the Indenture hereinafter referred to,
being herein called the "Company"), promises to pay interest on the principal
amount of this Note at the rate per annum shown above.
The Company will pay interest and Liquidated Damages, if any,
semiannually on February 15 and August 15 of each year commencing August 15,
1999. Interest on the Notes will accrue from the most recent date to which
interest has been paid on the Notes or, if no interest has been paid, from and
including March 8, 1999. Interest will be computed on the basis of a 360-day
year of twelve 30-day months.
The Company shall pay interest on overdue principal and, to the extent
such payments are lawful, interest on overdue installments of interest and
interest on Liquidated Damages, if any, (without regard to any applicable grace
periods) at the rate of 1.0% per annum in excess of the rate shown on this Note.
2. Method of Payment
-----------------
By at least 10:00 a.m. (New York City time) on the date on which any
principal of, premium, if any, or interest or Liquidated Damages, if any, on,
any Note is due and payable, the Company shall irrevocably deposit with the
Trustee or the Paying Agent (or, if the Company is then acting as Paying Agent,
then the Company shall, as Paying Agent, segregate and hold in trust) money
sufficient to pay such principal of, premium, if any, and interest and
Liquidated Damages, if any. The Company will pay interest (except Defaulted
Interest) and Liquidated Damages, if any, to the Persons who are registered
Holders of Notes at the close of business on the February 1 or August 1
immediately preceding the interest payment date even if Notes are canceled,
repurchased or redeemed after the record date and on or before the interest
payment date. Holders must surrender Notes to a Paying Agent to collect
principal payments. The Company will pay principal of, premium, if any, and
interest and Liquidated Damages, if any, in money of the United States that at
the time of payment is legal tender for payment of public and private debts.
Payments in respect of Notes represented by a Global Note (including principal,
premium, if any, interest and Liquidated Damages, if any) will be made by the
transfer of immediately available funds to the accounts specified by the
Depository Trust Company. All payments in respect of a Certificated Note
(including principal, premium, if any, and interest) will be made by mailing a
check to the registered address of each Holder thereof; provided, however, that
payments on the Notes may also be made by wire transfer to a U.S. dollar account
maintained by the payee with a bank in the United States if such Holder elects
payment by wire transfer by giving written notice to the Trustee or the Paying
Agent to such effect designating such account no later than 15 days immediately
preceding the relevant due date for payment.
A-5
<PAGE>
3. Paying Agent and Registrar
--------------------------
Initially, United States Trust Company of New York will act as
Trustee, Paying Agent and Registrar. The Company may appoint and change any
Paying Agent, Registrar or co-registrar without notice to any Noteholder. The
Company may act as Paying Agent, Registrar or co-registrar.
4. Indenture
---------
The Company issued the Notes under an Indenture dated as of March 8,
1999 (as it may be amended or supplemented from time to time in accordance with
the terms thereof, the "Indenture"), among the Company, the Note Guarantors
party thereto and the Trustee. The terms of the Notes include those stated in
the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-77bbbb) as in effect on the date
------
of the Indenture (the "Act"). Capitalized terms used herein and not defined
herein have the meanings ascribed thereto in the Indenture. The Notes are
subject to all such terms, and Noteholders are referred to the Indenture and the
Act for a statement of those terms. Each Noteholder by accepting a Note, agrees
to be bound by all of the terms and provisions of the Indenture, as amended from
time to time.
The Notes are general unsecured senior subordinated obligations of the
Company unlimited in aggregate principal amount; $100,000,000 in aggregate
principal amount will be initially issued on the Issue Date. This Note is one
of the Initial Notes referred to in the Indenture. The Initial Notes and the
Exchange Notes will be treated as a single class of securities under the
Indenture. The Indenture imposes certain limitations on the Company and its
Restricted Subsidiaries, and Noteholders are referred to the Indenture for a
statement of those limitations.
The Company may, from time to time, subject to compliance with any
other applicable provisions of the Indenture, without the consent of the
Holders, create and issue pursuant to the Indenture additional Notes having
terms and conditions identical to those of the Notes issued on the Issue Date
("Add-On Notes") (or the same except for the payment of interest accruing prior
to the issue date of such Add-On Notes or except for the first payment of
interest following the issue date of such Add-On Notes), which Add-On Notes will
be treated, together with any other Outstanding Notes, as a single issue of
securities.
To guarantee the due and punctual payment of the principal, premium,
if any, and interest and Liquidated Damages, if any, on the Notes and all other
amounts payable by the Company under the Indenture and the Notes when and as the
same shall be due and payable, whether at maturity, by acceleration or
otherwise, according to the terms of the Notes and the Indenture, the Company's
existing Domestic Restricted Subsidiaries have unconditionally guaranteed,
jointly and severally, such obligations on a senior subordinated basis pursuant
to the terms of the Indenture. In addition, any future Domestic Restricted
Subsidiaries of the Company (other than Special Purpose Financing Vehicles) are
required pursuant to the terms of the Indenture to unconditionally guarantee the
Notes on a senior subordinated basis by executing a supplemental indenture.
A-6
<PAGE>
5. Redemption
----------
Optional Redemption. The Notes will be redeemable, at the Company's
option, in whole at any time or in part from time to time, on and after February
15, 2003, upon not less than 30 nor more than 60 days' notice, at the following
redemption prices (expressed as percentages of the principal amount thereof) if
redeemed during the twelve-month period commencing on February 15 of the year
set forth below, plus, in each case, accrued interest and Liquidated Damages, if
any, to the date of redemption (subject to the right of Holders of record on a
record date to receive interest due on the related interest payment date that is
on or prior to such date of redemption):
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2003.................................................... 105.375%
2004.................................................... 102.688%
2005 and thereafter..................................... 100.000%
</TABLE>
Optional Redemption upon Public Equity Offerings. In addition, at any
time, or from time to time, on or prior to February 15, 2002, the Company may,
at its option, use the net cash proceeds of one or more Public Equity Offerings
(as defined below) to redeem in the aggregate up to 35% of the aggregate
principal amount of the Notes originally issued at a redemption price equal to
110.750% of the principal amount thereof, plus accrued and unpaid interest
thereon to the date of redemption (subject to the right of Holders of record on
a record date to receive interest due on the related interest payment date that
is on or prior to such date of redemption); provided, however, that after giving
effect to any such redemption at least 65% of the aggregate principal amount of
the Notes originally issued remains outstanding. In order to effect the
foregoing redemption with the proceeds of any Public Equity Offering, the
Company shall make such redemption not more than 60 days after the consummation
of such Public Equity Offering.
As used in the preceding paragraph, "Public Equity Offering" means an
underwritten public offering of Qualified Capital Stock of the Company pursuant
to a registration statement filed with the Commission in accordance with the
Securities Act of 1933, as amended (the "Securities Act"), or any successor
statute.
In the event that less than all of the Notes are to be redeemed at any
time, selection of such Notes for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which such Notes are listed or, if such Notes are not then listed on
a national securities exchange, on a pro rata basis, by lot or by such method as
the Trustee shall deem fair and appropriate; provided, however, that no Notes of
a principal amount of $1,000 or less shall be redeemed in part and Notes of a
principal amount in excess of $1,000 may be redeemed in part in multiples of
$1,000 only; and provided, further, that if a partial redemption is made with
the proceeds of a Public Equity Offering, selection of the Notes or portions
thereof for redemption shall, subject to the preceding proviso, be made by the
Trustee only on a pro rata basis or on as nearly a pro rata basis as is
practicable (subject to the procedures of DTC or a successor depositary), unless
such method is otherwise
A-7
<PAGE>
prohibited. Notice of redemption shall be mailed by first-class mail at least 30
but not more than 60 days before the Redemption Date to each Holder of Notes to
be redeemed at its registered address. If any Note is to be redeemed in part
only, the notice of redemption that relates to such Note shall state the portion
of the principal amount thereof to be redeemed. A new Note in a principal amount
equal to the unredeemed portion thereof will be issued in the name of the Holder
thereof upon cancellation of the original Note. On and after the Redemption
Date, interest will cease to accrue on Notes or portions thereof called for
redemption as long as the Company has deposited with the Paying Agent or Trustee
(if not then serving as the Paying Agent) funds in satisfaction of the
applicable redemption price pursuant to the Indenture.
6. Repurchase Provisions
---------------------
Upon the occurrence of a Change of Control, each Holder will have the
right to require that the Company purchase all or a portion (in integral
multiples of $1,000) of such Holder's Notes pursuant to the offer described
below (the "Change of Control Offer"), at a purchase price equal to 101% of the
principal amount thereof plus accrued and unpaid interest and Liquidated Damages
thereon to the date of purchase (subject to the right of Holders of record on a
record date to receive interest due on the related interest payment date that is
on or prior to such date of purchase). Within 30 days following the date upon
which the Change of Control occurred, the Company must send, by first-class
mail, a notice to each Holder, with a copy to the Trustee, which notice shall
govern the terms of the Change of Control Offer. Such notice shall state, among
other things, the purchase date, which must be no earlier than 30 days nor later
than 60 days from the date such notice is mailed, other than as may be required
by law (the "Change of Control Payment Date"). Holders electing to have a Note
purchased pursuant to a Change of Control Offer will be required to surrender
the Note, with the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Note completed, to the Paying Agent at the address specified in
the notice prior to the close of business on the third business day prior to the
Change of Control Payment Date.
To the extent all or a portion of the Net Cash Proceeds of any Asset
Sale are not applied within 270 days of such Asset Sale in certain ways
described in the Indenture, the Company will make an offer to purchase (the "Net
Proceeds Offer") at a purchase price equal to 100% of the principal amount of
the Notes to be purchased, plus accrued and unpaid interest thereon (the "Net
Proceeds Amount"), to the date of purchase (the "Net Proceeds Offer Payment
Date") not less than 20 business days following the date on which such offer is
made (or such longer period as may be required by law) nor more than 60 days
following the 270th day following such Asset Sale, from all Holders on a pro
rata basis (and on a pro rata basis with the holders of any other Senior
Subordinated Indebtedness with similar provisions requiring the Company to offer
to purchase such Senior Subordinated Indebtedness with the proceeds of Asset
Sales), that principal amount of Notes and such other Senior Subordinated
Indebtedness equal to such unapplied Net Cash Proceeds at a price equal to the
unapplied Net Cash Proceeds. Notwithstanding the foregoing, the Company may
defer the Net Proceeds Offer until there is an aggregate amount of unapplied Net
Cash Proceeds equal to or in excess of $10.0 million resulting from one or more
Asset Sales (at which time, the entire amount of unapplied Net Cash Proceeds,
and not just the amount in excess of $10.0 million, shall be applied as required
A-8
<PAGE>
pursuant to this paragraph).
7. Denominations; Transfer; Exchange
---------------------------------
The Notes are in registered form without coupons in denominations of
principal amount of $1,000 and whole multiples of $1,000. A Holder may transfer
or exchange Notes in accordance with the Indenture. The Registrar may require a
Holder, among other things, to furnish appropriate endorsements or transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture. The Registrar need not register the transfer of or exchange (i) any
Notes selected for redemption (except, in the case of a Note to be redeemed in
part, the portion of the Note not to be redeemed) for a period beginning 15 days
before the mailing of a notice of Notes to be redeemed and ending on the date of
such redemption or (ii) any Notes for a period beginning 15 days before an
interest payment date and ending on such interest payment date.
8. Persons Deemed Owners
---------------------
The registered holder of this Note may be treated as the owner of it
for all purposes.
9. Unclaimed Money
---------------
If money for the payment of principal, interest or Liquidated Damages
remains unclaimed for two years, the Trustee or Paying Agent shall pay the money
back to the Company at its request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must look
only to the Company and not to the Trustee for payment.
10. Discharge Prior to Redemption or Maturity
-----------------------------------------
Subject to certain conditions set forth in the Indenture, the Company
at any time may terminate some or all of its obligations under the Notes and the
Indenture if the Company deposits with the Trustee cash or U.S. Government
Obligations for the payment of principal and interest on the Notes to redemption
or maturity, as the case may be.
11. Amendment, Waiver
-----------------
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Notes may be amended with the written consent of the Holders of
at least a majority in principal amount of the then Outstanding Notes and (ii)
any Default (other than with respect to nonpayment, or in respect of a provision
that cannot be amended without the written consent of each Noteholder affected)
or noncompliance with any provision may be waived with the written consent of
the Holders of a majority in principal amount of the then Outstanding Notes.
Subject to certain exceptions set forth in the Indenture, without the consent of
any Noteholder, the Company and the Trustee may amend the Indenture or the Notes
to, among other things, cure any ambiguity, omission, defect or inconsistency,
or to comply with Article IV of the Indenture, or to
----------
A-9
<PAGE>
provide for uncertificated Notes in addition to or in place of Certificated
Notes, or to add guarantees with respect to the Notes or to secure the Notes, or
to add additional covenants or surrender rights and powers conferred on the
Company, or to comply with any request of the Commission in connection with
qualifying the Indenture under the Act, or to make any change that does not
adversely affect the rights of any Noteholder, or to provide for the issuance of
Exchange Notes or Add-On Notes.
12. Defaults and Remedies
---------------------
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the Notes may declare all the
Outstanding Notes to be due and payable immediately. Certain events of
bankruptcy or insolvency are Events of Default which will result in the Notes
being due and payable immediately upon the occurrence of such Events of Default.
Noteholders may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Notes unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the
Outstanding Notes may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Noteholders notice of any continuing Default or
Event of Default (except a Default or Event of Default in payment of principal
or interest) if it determines that withholding notice is in their interest.
13. Trustee Dealings with the Company
---------------------------------
Subject to certain limitations set forth in the Indenture, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Notes and may otherwise deal with the Company or its
Affiliates with the same rights it would have if it were not Trustee.
14. No Recourse Against Others
--------------------------
An incorporator, or any past, present or future director, officer,
employee, stockholder or controlling person, as such, of the Company or any Note
Guarantor shall not have any liability for any obligations of the Company under
the Notes or any Note Guarantees, the Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. By accepting a
Note, each Noteholder waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Notes.
15. Authentication
--------------
This Note shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent acting on its behalf) manually signs the
certificate of authentication on the other side of this Note.
A-10
<PAGE>
16. Abbreviations
-------------
Customary abbreviations may be used in the name of a Noteholder or an
assignee, such as TEN COM (= tenants in common), TEN ENT (= tenants by the
entirety), JT TEN (= joint tenants with rights of survivorship and not as
tenants in common), CUST (= custodian) and U/G/M/A (= Uniform Gift to Minors
Act).
17. CUSIP Numbers
-------------
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Company has caused CUSIP numbers to be
printed on the Notes and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Noteholders. No representation is
made as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
[Include if this is a Regulation S Note]
18. ISIN Numbers
------------
The Company has caused ISIN numbers to be printed on the Notes and has
directed the Trustee to use ISIN numbers in notices of redemption as a
convenience to Noteholders. No representation is made as to the accuracy of
such numbers either as printed on the Notes or as contained in any notice of
redemption and reliance may be placed only on the other identification numbers
placed thereon.
19. Registration Rights
-------------------
Pursuant to the Registration Rights Agreement, the Company and the
Note Guarantors will be obligated to consummate an exchange offer for the
Initial Notes pursuant to which the Holder of this Note shall have the right to
exchange this Note for Exchange Notes, which will have been registered under the
Securities Act, in like principal amount and having terms identical in all
material respects as the Notes. The Holders shall be entitled to receive
Liquidated Damages in the event such exchange offer is not consummated and upon
certain other conditions, all pursuant to and in accordance with the terms of
the Registration Rights Agreement.
20. Governing Law
-------------
This Note shall be governed by, and construed in accordance with, the
laws of the State of New York, but without giving effect to applicable
principles of conflicts of law to the extent that the application of the law of
another jurisdiction would be required thereby.
A-11
<PAGE>
The Company will furnish to any Noteholder upon written request and
without charge to the Noteholder a copy of the Indenture which has in it the
text of this Note in larger type. Requests may be made to:
Global Imaging Systems, Inc
P.O. Box 273478
Tampa, Florida 33688-3478
A-12
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below:
I or we assign and transfer this Note to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Note on the books of the
Company. The agent may substitute another to act for him.
______________________________________________________________________________
Date: ____________________ Your Signature: ___________________
Signature Guarantee: ______________________________
(Signature must be guaranteed)
______________________________________________________________________________
Sign exactly as your name appears on the other side of this Note.
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
A-13
<PAGE>
[To be attached to Global Notes only:]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE
The following increases or decreases in this Global Note have been
made:
<TABLE>
<CAPTION>
<S> <C> <C>
Date of Exchange Amount of decrease in Principal Amount of increase in Principal
Amount of this Global Note Amount of this Global Note Note following such decrease or increase
- -------------------------- ------------------------------- ----------------------------------------
Signature of authorized signatory
of Trustee or Note Custodian
- ---------------------------------
</TABLE>
A-14
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 3.11 or Section 3.18 of the Indenture, check either box:
------------ ------------
[ ] [ ]
Section 3.11 Section 3.18
------------ ------------
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 3.11 or Section 3.18 of the Indenture, state the
------------ ------------
principal amount you want the Company to redeem (must be integral multiple of
$1,000): $
Date: __________ Your Signature ____________________________
(Sign exactly as your name appears on the
other side of the Note)
Signature Guarantee: _______________________________________
(Signature must be guaranteed)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
A-15
<PAGE>
EXHIBIT B
FORM OF FACE OF EXCHANGE NOTE
[Include the following two paragraphs for Global Notes only:]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW
YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL
BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH
IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
No. [___] Principal Amount $[__________________],
as revised by the Schedule of Increases
and Decreases in Global Note attached
hereto
CUSIP NO. ____________
[If the Note is a Regulation S Global Note, include:]
ISIN NO. ____________
B-1
<PAGE>
10 3/4% Senior Subordinated Notes due 2007
Global Imaging Systems, Inc., a Delaware corporation, promises to pay
to [_________], or registered assigns, the principal sum of [____________], as
revised by the Schedule of Increases and Decreases in Global Note attached
hereto, on February 15, 2007.
Interest Payment Dates: February 15 and August 15
Record Dates: February 1 and August 1
Additional provisions of this Note are set forth on the other side of
this Note.
Global Imaging Systems, Inc.
By_________________________________
Name:
Title:
By_________________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
United States Trust Company of New York,
as Trustee, certifies that this is one of the Notes referred to in the
Indenture.
UNITED STATES TRUST COMPANY OF NEW YORK
By _______________________
Authorized Signatory Date: March 8, 1999
FORM OF REVERSE SIDE OF EXCHANGE NOTE
10 3/4% Senior Subordinated Notes due 2007
1. Interest
--------
Global Imaging Systems, Inc., a Delaware corporation (such company,
and its successors and assigns under the Indenture hereinafter referred to,
being herein called the "Company"), promises to pay interest on the principal
amount of this Note at the rate per annum shown above.
B-2
<PAGE>
The Company will pay interest and Liquidated Damages, if any,
semiannually on February 15 and August 15 of each year commencing August 15,
1999. Interest on the Notes will accrue from the most recent date to which
interest has been paid on the Notes or, if no interest has been paid, from and
including March 8, 1999. Interest will be computed on the basis of a 360-day
year of twelve 30-day months.
The Company shall pay interest on overdue principal and, to the extent
such payments are lawful, interest on overdue installments of interest and
interest on Liquidated Damages, if any, (without regard to any applicable grace
periods) at the rate of 1.0% per annum in excess of the rate shown on this Note.
2. Method of Payment
-----------------
By at least 10:00 a.m. (New York City time) on the date on which any
principal of, premium, if any, or interest or Liquidated Damages, if any, on,
any Note is due and payable, the Company shall irrevocably deposit with the
Trustee or the Paying Agent (or, if the Company is then acting as Paying Agent,
then the Company shall, as Paying Agent, segregate and hold in trust) money
sufficient to pay such principal of, premium, if any, and interest and
Liquidated Damages, if any. The Company will pay interest (except Defaulted
Interest) and Liquidated Damages, if any, to the Persons who are registered
Holders of Notes at the close of business on the February 1 or August 1
immediately preceding the interest payment date even if Notes are canceled,
repurchased or redeemed after the record date and on or before the interest
payment date. Holders must surrender Notes to a Paying Agent to collect
principal payments. The Company will pay principal of, premium, if any, and
interest and Liquidated Damages, if any, in money of the United States that at
the time of payment is legal tender for payment of public and private debts.
Payments in respect of Notes represented by a Global Note (including principal,
premium, if any, interest and Liquidated Damages, if any) will be made by the
transfer of immediately available funds to the accounts specified by the
Depository Trust Company. All payments in respect of a Certificated Note
(including principal, premium, if any, and interest) will be made by mailing a
check to the registered address of each Holder thereof; provided, however, that
payments on the Notes may also be made by wire transfer to a U.S. dollar account
maintained by the payee with a bank in the United States if such Holder elects
payment by wire transfer by giving written notice to the Trustee or the Paying
Agent to such effect designating such account no later than 15 days immediately
preceding the relevant due date for payment.
3. Paying Agent and Registrar
--------------------------
Initially, United States Trust Company of New York will act as
Trustee, Paying Agent and Registrar. The Company may appoint and change any
Paying Agent, Registrar or co-registrar without notice to any Noteholder. The
Company may act as Paying Agent, Registrar or co-registrar.
4. Indenture
---------
The Company issued the Notes under an Indenture dated as of March 8,
1999 (as it may be amended or supplemented from time to time in accordance with
the terms thereof, the
B-3
<PAGE>
"Indenture"), among the Company, the Note Guarantors party thereto and the
Trustee. The terms of the Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939 (15
U.S.C. (S)(S) 77aaa-77bbbb) as in effect on the date of the Indenture (the
- ------
"Act"). Capitalized terms used herein and not defined herein have the meanings
ascribed thereto in the Indenture. The Notes are subject to all such terms, and
Noteholders are referred to the Indenture and the Act for a statement of those
terms. Each Noteholder by accepting a Note, agrees to be bound by all of the
terms and provisions of the Indenture, as amended from time to time.
The Notes are general unsecured senior subordinated obligations of the
Company unlimited in aggregate principal amount; $100,000,000 in aggregate
principal amount will be initially issued on the Issue Date. This Note is one
of the Exchange Notes referred to in the Indenture. The Initial Notes and the
Exchange Notes will be treated as a single class of securities under the
Indenture. The Indenture imposes certain limitations on the Company and its
Restricted Subsidiaries and Noteholders are referred to the Indenture for a
statement of those limitations.
The Company may, from time to time, subject to compliance with any
other applicable provisions of the Indenture, without the consent of the
Holders, create and issue pursuant to the Indenture additional Notes having
terms and conditions identical to those of the Notes issued on the Issue Date
(Add-On Notes") (or the same except for the payment of interest accruing prior
to the issue date of such Add-On Notes or except for the first payment of
interest following the issue date of such Add-On Notes), which Add-On Notes will
be treated, together with any other Outstanding Notes, as a single issue of
securities.
To guarantee the due and punctual payment of the principal, premium,
if any, and interest and Liquidated Damages, if any, on the Notes and all other
amounts payable by the Company under the Indenture and the Notes when and as the
same shall be due and payable, whether at maturity, by acceleration or
otherwise, according to the terms of the Notes and the Indenture, the Company's
existing Domestic Restricted Subsidiaries have unconditionally guaranteed,
jointly and severally, such obligations on a senior subordinated basis pursuant
to the terms of the Indenture. In addition, any future Domestic Restricted
Subsidiaries of the Company (other than Special Purpose Financing Vehicles) are
required pursuant to the terms of the Indenture to unconditionally guarantee the
Notes on a senior subordinated basis by executing a supplemental indenture.
5. Redemption
----------
Optional Redemption. The Notes will be redeemable, at the Company's
option, in whole at any time or in part from time to time, on and after February
15, 2003, upon not less than 30 nor more than 60 days' notice, at the following
redemption prices (expressed as percentages of the principal amount thereof) if
redeemed during the twelve-month period commencing on February 15 of the year
set forth below, plus, in each case, accrued interest and Liquidated Damages, if
any, to the date of redemption (subject to the right of Holders of record on a
record
B-4
<PAGE>
date to receive interest due on the related interest payment date that is
on or prior to such date of redemption):
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2003.................................................. 105.375%
2004.................................................. 102.688%
2005 and thereafter................................... 100.000%
</TABLE>
Optional Redemption upon Public Equity Offerings. In addition, at any
time, or from time to time, on or prior to February 15, 2002, the Company may,
at its option, use the net cash proceeds of one or more Public Equity Offerings
(as defined below) to redeem in the aggregate up to 35% of the aggregate
principal amount of the Notes originally issued at a redemption price equal to
110.750% of the principal amount thereof, plus accrued and unpaid interest
thereon to the date of redemption (subject to the right of Holders of record on
a record date to receive interest due on the related interest payment date that
is on or prior to such date of redemption); provided, however, that after giving
effect to any such redemption at least 65% of the aggregate principal amount of
the Notes originally issued remains outstanding. In order to effect the
foregoing redemption with the proceeds of any Public Equity Offering, the
Company shall make such redemption not more than 60 days after the consummation
of such Public Equity Offering.
As used in the preceding paragraph, "Public Equity Offering" means an
underwritten public offering of Qualified Capital Stock of the Company pursuant
to a registration statement filed with the Commission in accordance with the
Securities Act of 1933, as amended (the "Securities Act"), or any successor
statute.
In the event that less than all of the Notes are to be redeemed at any
time, selection of such Notes for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which such Notes are listed or, if such Notes are not then listed on
a national securities exchange, on a pro rata basis, by lot or by such method as
the Trustee shall deem fair and appropriate; provided, however, that no Notes of
a principal amount of $1,000 or less shall be redeemed in part and Notes of a
principal amount in excess of $1,000 may be redeemed in part in multiples of
$1,000 only; and provided, further, that if a partial redemption is made with
the proceeds of a Public Equity Offering, selection of the Notes or portions
thereof for redemption shall, subject to the preceding proviso, be made by the
Trustee only on a pro rata basis or on as nearly a pro rata basis as is
practicable (subject to the procedures of DTC or a successor depositary), unless
such method is otherwise prohibited. Notice of redemption shall be mailed by
first-class mail at least 30 but not more than 60 days before the Redemption
Date to each Holder of Notes to be redeemed at its registered address. If any
Note is to be redeemed in part only, the notice of redemption that relates to
such Note shall state the portion of the principal amount thereof to be
redeemed. A new Note in a principal amount equal to the unredeemed portion
thereof will be issued in the name of the Holder thereof upon cancellation of
the original Note. On and after the Redemption Date, interest will cease to
accrue on Notes or portions thereof called for redemption as long as the
B-5
<PAGE>
Company has deposited with the Paying Agent or Trustee (if not then serving as
the Paying Agent) funds in satisfaction of the applicable redemption price
pursuant to the Indenture.
6. Repurchase Provisions
---------------------
Upon the occurrence of a Change of Control, each Holder will have the
right to require that the Company purchase all or a portion (in integral
multiples of $1,000) of such Holder's Notes pursuant to the offer described
below (the "Change of Control Offer"), at a purchase price equal to 101% of the
principal amount thereof plus accrued and unpaid interest and Liquidated Damages
thereon to the date of purchase (subject to the right of Holders of record on a
record date to receive interest due on the related interest payment date that is
on or prior to such date of purchase). Within 30 days following the date upon
which the Change of Control occurred, the Company must send, by first-class
mail, a notice to each Holder, with a copy to the Trustee, which notice shall
govern the terms of the Change of Control Offer. Such notice shall state, among
other things, the purchase date, which must be no earlier than 30 days nor later
than 60 days from the date such notice is mailed, other than as may be required
by law (the "Change of Control Payment Date"). Holders electing to have a Note
purchased pursuant to a Change of Control Offer will be required to surrender
the Note, with the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Note completed, to the Paying Agent at the address specified in
the notice prior to the close of business on the third business day prior to the
Change of Control Payment Date.
To the extent all or a portion of the Net Cash Proceeds of any Asset
Sale are not applied within 270 days of such Asset Sale in certain ways
described in the Indenture, the Company will make an offer to purchase (the "Net
Proceeds Offer") at a purchase price equal to 100% of the principal amount of
the Notes to be purchased, plus accrued and unpaid interest thereon (the "Net
Proceeds Amount"), to the date of purchase (the "Net Proceeds Offer Payment
Date") not less than 20 business days following the date on which such offer is
made (or such longer period as may be required by law) nor more than 60 days
following the 270th day following such Asset Sale, from all Holders on a pro
rata basis (and on a pro rata basis with the holders of any other Senior
Subordinated Indebtedness with similar provisions requiring the Company to offer
to purchase such Senior Subordinated Indebtedness with the proceeds of Asset
Sales), that principal amount of Notes and such other Senior Subordinated
Indebtedness equal to such unapplied Net Cash Proceeds at a price equal to the
unapplied Net Cash Proceeds. Notwithstanding the foregoing, the Company may
defer the Net Proceeds Offer until there is an aggregate amount of unapplied Net
Cash Proceeds equal to or in excess of $10.0 million resulting from one or more
Asset Sales (at which time, the entire amount of unapplied Net Cash Proceeds,
and not just the amount in excess of $10.0 million, shall be applied as required
pursuant to this paragraph).
7. Denominations; Transfer; Exchange
---------------------------------
The Notes are in registered form without coupons in denominations of
principal amount of $1,000 and whole multiples of $1,000. A Holder may transfer
or exchange Notes in accordance with the Indenture. The Registrar may require a
Holder, among other things, to
B-6
<PAGE>
furnish appropriate endorsements or transfer documents and to pay any taxes and
fees required by law or permitted by the Indenture. The Registrar need not
register the transfer of or exchange (i) any Notes selected for redemption
(except, in the case of a Note to be redeemed in part, the portion of the Note
not to be redeemed) for a period beginning 15 days before the mailing of a
notice of Notes to be redeemed and ending on the date of such redemption or (ii)
any Notes for a period beginning 15 days before an interest payment date and
ending on such interest payment date.
8. Persons Deemed Owners
---------------------
The registered holder of this Note may be treated as the owner of it
for all purposes.
9. Unclaimed Money
---------------
If money for the payment of principal, interest or Liquidated Damages
remains unclaimed for two years, the Trustee or Paying Agent shall pay the money
back to the Company at its request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must look
only to the Company and not to the Trustee for payment.
10. Discharge Prior to Redemption or Maturity
-----------------------------------------
Subject to certain conditions set forth in the Indenture, the Company
at any time may terminate some or all of its obligations under the Notes and the
Indenture if the Company deposits with the Trustee cash or U.S. Government
Obligations for the payment of principal and interest on the Notes to redemption
or maturity, as the case may be.
11. Amendment, Waiver
-----------------
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Notes may be amended with the written consent of the Holders of
at least a majority in principal amount of the then Outstanding Notes and (ii)
any Default (other than with respect to nonpayment, or in respect of a provision
that cannot be amended without the written consent of each Noteholder affected)
or noncompliance with any provision may be waived with the written consent of
the Holders of a majority in principal amount of the then Outstanding Notes.
Subject to certain exceptions set forth in the Indenture, without the consent of
any Noteholder, the Company and the Trustee may amend the Indenture or the Notes
to, among other things, cure any ambiguity, omission, defect or inconsistency,
or to comply with Article IV of the Indenture, or to provide for uncertificated
----------
Notes in addition to or in place of Certificated Notes, or to add guarantees
with respect to the Notes or to secure the Notes, or to add additional covenants
or surrender rights and powers conferred on the Company, or to comply with any
request of the Commission in connection with qualifying the Indenture under the
Act, or to make any change that does not adversely affect the rights of any
Noteholder, or to provide for the issuance of Exchange Notes or Add-On Notes.
B-7
<PAGE>
12. Defaults and Remedies
---------------------
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the Notes may declare all the
Outstanding Notes to be due and payable immediately. Certain events of
bankruptcy or insolvency are Events of Default which will result in the Notes
being due and payable immediately upon the occurrence of such Events of Default.
Noteholders may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Notes unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the
Outstanding Notes may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Noteholders notice of any continuing Default or
Event of Default (except a Default or Event of Default in payment of principal
or interest) if it determines that withholding notice is in their interest.
13. Trustee Dealings with the Company
---------------------------------
Subject to certain limitations set forth in the Indenture, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Notes and may otherwise deal with the Company or its
Affiliates with the same rights it would have if it were not Trustee.
14. No Recourse Against Others
--------------------------
An incorporator, or any past, present or future director, officer,
employee, stockholder or controlling person, as such, of the Company or any Note
Guarantor shall not have any liability for any obligations of the Company under
the Notes or any Note Guarantees, the Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. By accepting a
Note, each Noteholder waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Notes.
15. Authentication
--------------
This Note shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent acting on its behalf) manually signs the
certificate of authentication on the other side of this Note.
16. Abbreviations
-------------
Customary abbreviations may be used in the name of a Noteholder or an
assignee, such as TEN COM (= tenants in common), TEN ENT (= tenants by the
entirety), JT TEN (= joint tenants with rights of survivorship and not as
tenants in common), CUST (= custodian) and U/G/M/A (= Uniform Gift to Minors
Act).
B-8
<PAGE>
17. CUSIP Numbers
-------------
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Company has caused CUSIP numbers to be
printed on the Notes and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Noteholders. No representation is
made as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
[Include if this is a Regulation S Note]
18. ISIN Numbers
------------
The Company has caused ISIN numbers to be printed on the Notes and has
directed the Trustee to use ISIN numbers in notices of redemption as a
convenience to Noteholders. No representation is made as to the accuracy of
such numbers either as printed on the Notes or as contained in any notice of
redemption and reliance may be placed only on the other identification numbers
placed thereon.
19. Governing Law
-------------
This Note shall be governed by, and construed in accordance with, the
laws of the State of New York, but without giving effect to applicable
principles of conflicts of law to the extent that the application of the law of
another jurisdiction would be required thereby.
The Company will furnish to any Noteholder upon written request and
without charge to the Noteholder a copy of the Indenture which has in it the
text of this Note in larger type. Requests may be made to:
Global Imaging Systems, Inc.
P.O. Box 273478
Tampa, Florida 33688-3478
B-9
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below:
I or we assign and transfer this Note to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Note on the books
of the Company. The agent may substitute another to act for him.
________________________________________________________________________________
Date: _______________ Your Signature ____________________
Signature Guarantee: ____________________________________
(Signature must be guaranteed)
________________________________________________________________________________
Sign exactly as your name appears on the other side of this Note.
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
B-10
<PAGE>
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE
The following increases or decreases in this Global Note have been made:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Date of Amount of decrease in Principal Amount of increase in Principal Principal Amount of this Global
Exchange Amount of this Global Note Amount of this Global Note Note following such decrease or
increase
- ------------- ------------------------------- ------------------------------- ----------------------------------------
Signature of authorized signatory
of Trustee or Note Custodian
- ---------------------------------
</TABLE>
B-11
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 3.11 or Section 3.18 of the Indenture, check either box:
------------ ------------
[_] [_]
Section 3.11 Section 3.18
------------ ------------
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 3.11 or Section 3.18 of the Indenture, state the
------------ ------------
principal amount you want the Company to redeem (must be integral multiple of
$1,000): $
<TABLE>
<CAPTION>
<S> <C>
Date: _______________ Your Signature: _________________________
(Sign exactly as your name appears on the other side of the Note)
</TABLE>
Signature Guarantee: _______________________________________
(Signature must be guaranteed)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
B-12
<PAGE>
EXHIBIT C
Form of Transfer Certificate for Transfer to QIBs
-------------------------------------------------
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
Re: Global Imaging Systems, Inc. 10 3/4% Senior Subordinated Notes due
2007 (the "Notes")
-------
Dear Sirs:
Reference is hereby made to the Indenture dated as of March 8, 1999
(as amended and supplemented from time to time, the "Indenture") between the
Company, as issuer and United States Trust Company of New York, as Trustee.
Capitalized terms used but not defined herein shall have the meanings given them
in the Indenture. This letter relates to $___________ aggregate principal
amount of Notes which are held in the name of [name of transferor] (the
"Transferor") to effect the transfer of such Notes in exchange for an equivalent
beneficial interest in the Rule 144A Global Note.
In connection with such request, and with respect to such Notes, the
Transferor does hereby certify that such Notes are being transferred in
accordance with (i) the transfer restrictions set forth in the Notes and (ii)
Rule 144A under the United States Securities Act of 1933, as amended ("Rule
144A"), to a transferee that the Transferor reasonably believes is purchasing
the Notes for its own account or an account with respect to which the transferee
exercises sole investment discretion, and the transferee, as well as any such
account, is a "qualified institutional buyer" within the meaning of Rule 144A,
in a transaction meeting the requirements of Rule 144A and in accordance with
applicable securities laws of any state of the United States or any other
jurisdiction.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
Very truly yours,
[Name of Transferor]
By ____________________________ Dated: ___________
C-1
<PAGE>
EXHIBIT D
Form of Certificate to be Delivered in Connection with Transfers to
-------------------------------------------------------------------
Institutional Accredited Investors
----------------------------------
[Date]
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
Re: Global Imaging Systems, Inc. 10 3/4% Senior Subordinated
--------------------------------------------------------
Notes due 2007 (the "Notes")
----------------------------
Dear Sirs:
This certificate is delivered to request a transfer of US $
principal amount of the Notes of Global Imaging Systems, Inc. (the "Company").
Upon transfer, the Notes should be registered in the name of the new
owner as follows:
Name: ___________________________________ [as nominee for us]/1/
Address: ________________________________
Taxpayer ID Number: _____________________
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended
(the "Securities Act")) purchasing for our own account or for the account of
such an institutional "accredited investor" at least $250,000 principal amount
of the Notes, and we are acquiring the Notes for investment and not with a view
to, or for offer or sale in connection with, any distribution in violation of
the Securities Act. We have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risk of our
investment in the Notes and we invest in or purchase securities similar to the
Notes in the normal course of our business. We and any accounts for which we
are acting are each able to bear the economic risk of our or its investment.
2. We understand that the Notes have not been registered under
the Securities Act and, unless so registered, may not be sold except as
permitted in the following sentence. We agree on our own behalf and on behalf
of any investor account for which we are purchasing Notes to offer, sell or
otherwise transfer such Notes prior to the date (the "Resale Restriction
___________________________
/1/ (Strike if applicable.)
D-1
<PAGE>
Termination Date") which is two years after the later of the date of original
issue and the last date on which the Issuer or any affiliate of the Issuer was
the owner of such Notes (or any predecessor thereto) only (a) to the Issuer or
any subsidiaries thereof, (b) inside the United States to a qualified
institutional buyer in compliance with Rule 144A adopted under the Securities
Act, (c) inside the United States to an accredited investor that delivers a
certification substantially in the form of this certification, (d) outside the
United States in compliance with Regulation S adopted under the Securities Act,
(e) pursuant to the exemption from registration provided by Rule 144 adopted
under the Securities Act (if available), or (f) pursuant to an effective
registration statement under the Securities Act, subject to the Issuer's and the
trustee's right prior to any such offer, sale or transfer pursuant to clauses
(d) and (e) to require the delivery of an opinion of counsel, certification
and/or other information satisfactory to each of them. As used herein, the
terms "Offshore Transaction" and "United States" have the meaning given to them
by Regulation S adopted under the Securities Act." The foregoing restrictions
on resale will not apply subsequent to the Resale Restriction Termination Date.
TRANSFEREE: Dated: ___________
D-2
<PAGE>
EXHIBIT E
Form of Certificate to be Delivered in Connection with Transfers Pursuant to
----------------------------------------------------------------------------
Regulation S
------------
[Date]
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
Re: Global Imaging Systems, Inc. 10 3/4% Senior Subordinated Notes
--------------------------------------------------------------
due 2007 (the "Notes")
---------------------
Dear Sirs:
In connection with our proposed sale of $________ aggregate principal
amount of the Notes, we confirm that such sale has been effected pursuant to and
in accordance with Regulation S under the United States Securities Act of 1933,
as amended (the "Securities Act"), and, accordingly, we represent that:
(a) the offer of the Notes was not made to a person in the United
States;
(b) either (i) at the time the buy order was originated, the
transferee was outside the United States or we and any person acting on our
behalf reasonably believed that the transferee was outside the United
States or (ii) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been pre-
arranged with a buyer in the United States;
(c) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(a) of
Regulation S, as applicable;
(d) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(e) we are the beneficial owner of the principal amount of Notes
being transferred.
In addition, if the sale is made during a restricted period and the
provisions of Rule 904(b)(1) or Rule 904(b)(2) of Regulation S are applicable
thereto, we confirm that such sale has been made in accordance with the
applicable provisions of Rule 904(b)(1) or Rule 904(b)(2), as the case may be.
E-1
<PAGE>
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
____________________________ Dated: __________
E-2
<PAGE>
EXHIBIT F
FORM OF NOTE GUARANTEE
----------------------
This Supplemental Indenture, dated as of [__________] (this
"Supplemental Indenture" or "Guarantee"), among [name of future Note Guarantor]
- ----------------------- ---------
(the "Note Guarantor"), Global Imaging Systems, Inc.(together with its
--------------
successors and assigns, the "Company"), each other then existing Note Guarantor
-------
under the Indenture referred to below, and United States Trust Company of New
York, as Trustee under the Indenture referred to below.
W I T N E S S E T H:
WHEREAS, the Company, the existing note guarantors and the Trustee
have heretofore executed and delivered an Indenture, dated as of March 8, 1999
(as amended, supplemented, waived or otherwise modified, the "Indenture"),
---------
providing for the issuance of 10 3/4% Senior Subordinated Notes due 2007 of the
Company (the "Notes");
-----
WHEREAS, the Indenture provides that the Company is required to cause
each Restricted Subsidiary created or acquired by the Company to execute and
deliver to the Trustee a Note Guarantee pursuant to which such Restricted
Subsidiary will unconditionally Guarantee, on a joint and several basis with the
other Note Guarantors, the full and prompt payment of the principal of, premium,
if any, and interest on the Notes on a senior basis; and
WHEREAS, pursuant to Section 9.1 of the Indenture, the Trustee and the
-----------
Company are authorized to execute and deliver this Supplemental Indenture to
amend the Indenture, without the consent of any Noteholder;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Note Guarantor, the Company, any other Note Guarantors and the Trustee mutually
covenant and agree for the equal and ratable benefit of the holders of the Notes
as follows:
Article I
Definitions
-----------
Section 1.1. Defined Terms. As used in this Note Guarantee, terms
-------------
defined in the Indenture or in the preamble or recital hereto are used herein as
therein defined, except that the term "Holders" in this Note Guarantee shall
-------
refer to the term "Holders" as defined in the Indenture and the Trustee acting
on behalf or for the benefit of such holders. The words "herein," "hereof" and
"hereby" and other words of similar import used in this Supplemental Indenture
refer to this Supplemental Indenture as a whole and not to any particular
section hereof.
<PAGE>
Article II
Agreement to be Bound; Guarantee
--------------------------------
Section 2.1. Agreement to be Bound. The Note Guarantor hereby
---------------------
becomes a party to the Indenture as a Note Guarantor and as such will have all
of the rights and be subject to all of the obligations and agreements of a Note
Guarantor under the Indenture. The Note Guarantor agrees to be bound by all of
the provisions of the Indenture applicable to a Note Guarantor and to perform
all of the obligations and agreements of a Note Guarantor under the Indenture.
Section 2.2. Guarantee. The Guarantor hereby fully, unconditionally
---------
and irrevocably guarantees, as primary obligor and not merely as surety, jointly
and severally with each other Note Guarantor, to each Holder of the Notes and
the Trustee, the full and punctual payment when due, whether at maturity, by
acceleration, by redemption or otherwise, of the Obligations pursuant to Article
-------
XI of the Indenture.
- --
Article III
Miscellaneous
-------------
Section 3.1. Notices. All notices and other communications to the
-------
Note Guarantor shall be given, as provided in the Indenture, to the Note
Guarantor, at its address set forth below, with a copy to the Company as
provided in the Indenture for notices to the Company.
Section 3.2. Parties. Nothing expressed or mentioned herein is
-------
intended or shall be construed to give any Person, firm or corporation, other
than the Holders and the Trustee, any legal or equitable right, remedy or claim
under or in respect of this Supplemental Indenture or the Indenture or any
provision herein or therein contained.
Section 3.3. Governing Law. This Supplemental Indenture shall be
-------------
governed by, and construed in accordance with, the laws of the State of New
York, but without giving effect to applicable principles of conflicts of law to
the extent that the application of the law of another jurisdiction would be
required thereby.
Section 3.4. Severability Clause. In case any provision in this
-------------------
Supplemental Indenture shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby and such provision shall be ineffective only to the
extent of such invalidity, illegality or unenforceability.
Section 3.5. Ratification of Indenture; Supplemental Indentures Part
-------------------------------------------------------
of Indenture. Except as expressly amended hereby, the Indenture is in all
- ------------
respects ratified and confirmed and all the terms, conditions and provisions
thereof shall remain in full force and effect. This Supplemental Indenture
shall form a part of the Indenture for all purposes, and every holder of Notes
heretofore or hereafter authenticated and delivered shall be bound hereby. The
Trustee makes no representation or warranty as to the validity or sufficiency of
this Supplemental Indenture.
F-2
<PAGE>
Section 3.6. Counterparts. The parties hereto may sign one or more
------------
copies of this Supplemental Indenture in counterparts, all of which together
shall constitute one and the same agreement.
Section 3.7. Headings. The headings of the Articles and the Sections
--------
in this Note Guarantee are for convenience of reference only and shall not be
deemed to alter or affect the meaning or interpretation of any provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.
[NAME OF NOTE GUARANTOR],
as a Note Guarantor
By________________________________
Name:
Title:
Global Imaging Systems, Inc.
By________________________________
Name:
Title:
[Existing Note Guarantors], as a Note Guarantor
By________________________________
Name:
Title:
United States Trust Company of New York, as
Trustee
By________________________________
Name:
Title:
F-3
<PAGE>
EXHIBIT 10.7A
GLOBAL IMAGING SYSTEMS, INC.
1998 STOCK OPTION AND INCENTIVE PLAN
INCENTIVE STOCK OPTION AGREEMENT
This Stock Option Agreement is made as of _______________, 1998, by and
between Global Imaging Systems, Inc., a Delaware corporation (the "Company"),
and ________________________, an individual who is employed by, or providing
services to, the Company or one of its affiliates (the "Optionee").
WHEREAS, the Board of Directors and stockholders of the Company have duly
adopted and approved the Global Imaging Systems, Inc. 1998 Stock Option and
Incentive Plan (the "Plan"), which Plan authorizes the Company to grant to
eligible individuals options for the purchase of shares of the Company's common
stock, par value $.01 per share (the "Stock"); and
WHEREAS, the Company has determined that it is desirable and in its best
interests to grant to the Optionee, pursuant to the Plan, an option to purchase
a certain number of shares of Stock, in order to provide the Optionee with an
incentive to advance the interests of the Company and any affiliate thereof;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties hereto do hereby agree as follows:
1. GRANT OF OPTION
Subject to the terms of the Plan (attached hereto as Exhibit A), the
---------
Company hereby grants to the Optionee the right and option (the "Option") to
purchase from the Company, on the terms and subject to the conditions set forth
in the Plan and in this Option Agreement, _________ shares of Stock. This
Option shall constitute an incentive stock option within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"). The date of
grant of this Option is ______________, 1998 (the "Grant Date").
2. PARACHUTE LIMITATIONS
Notwithstanding any other provision of this Stock Option Agreement or
of any other agreement, contract, or understanding heretofore or hereafter
entered into by the Optionee and the Company or any Subsidiary, except an
agreement, contract, or understanding hereafter entered into that expressly
modifies or excludes application of this Section (the "Other Agreements"), and
notwithstanding any formal or informal plan or other arrangement heretofore or
<PAGE>
hereafter adopted by the Company (or any Subsidiary) for the direct or indirect
compensation of the Optionee (including groups or classes of participants or
beneficiaries of which the Optionee is a member), whether or not such
compensation is deferred, is in cash, or is in the form of a benefit to or for
the Optionee (a "Benefit Arrangement"), if the Optionee is a "disqualified
individual," as defined in Section 280G(c) of the Code, the Option and any right
to receive any payment or other benefit under this Stock Option Agreement shall
not become exercisable or vested (i) to the extent that such right to exercise,
vesting, payment, or benefit, taking into account all other rights, payments, or
benefits to or for Optionee under the Plan, all Other Agreements, and all
Benefit Arrangements, would cause any payment or benefit to the Optionee under
this Stock Option Agreement to be considered a "parachute payment" within the
meaning of Section 280G(b)(2) of the Code as then in effect (a "Parachute
Payment") and (ii) if, as a result of receiving a Parachute Payment, the
---
aggregate after-tax amounts received by the Optionee from the Company under this
Stock Option Agreement, the Plan, all Other Agreements, and all Benefit
Arrangements would be less than the maximum after-tax amount that could be
received by Optionee without causing any such payment or benefit to be
considered a Parachute Payment. In the event that the receipt of any such right
to exercise, vesting, payment, or benefit under this Stock Option Agreement, in
conjunction with all other rights, payments, or benefits to or for the Optionee
under the Plan, any Other Agreement or any Benefit Arrangement would cause the
Optionee to be considered to have received a Parachute Payment under this Stock
Option Agreement that would have the effect of decreasing the after-tax amount
received by the Optionee as described in clause (ii) of the preceding sentence,
then the Optionee shall have the right, in the Optionee's sole discretion, to
designate those rights, payments, or benefits under this Stock Option Agreement,
the Plan, any Other Agreements, and any Benefit Arrangements that should be
reduced or eliminated so as to avoid having the payment or benefit to the
Optionee under this Stock Option Agreement be deemed to be a Parachute Payment.
3. TERMS OF PLAN
The Option granted pursuant to this Stock Option Agreement is granted
subject to the terms and conditions set forth in the Plan. All terms and
conditions of the Plan are hereby incorporated into this Stock Option Agreement
by reference and shall be deemed to be part of this Stock Option Agreement,
without regard to whether such terms and conditions are not otherwise set forth
in this Stock Option Agreement. To the extent any capitalized words used in
this Stock Option Agreement are not defined, they shall have the definitions
stated for them in the Plan. In the event that there is any inconsistency
between the provisions of this Stock Option Agreement and of the Plan, the
provisions of the Plan shall govern.
<PAGE>
4. OPTION PRICE
The purchase price (the "Option Price") for each share subject to the
Option granted by this Stock Option Agreement is $_____.
5. VESTING IN OPTION
The Option becomes vested as to _____ percent of the shares
purchasable pursuant to the Option on _____________ (the first "Anniversary
Date"), if the Optionee has been providing services to the Company or any of its
affiliates continuously from the date of grant to the Anniversary Date.
Thereafter, so long as the Optionee's service has not been interrupted, the
Option becomes vested as to an additional _________ percent of the shares
subject to the Option after each of the next ______ Anniversary Dates. Service
for this purpose includes service as an employee, director, advisor or
consultant providing bona fide services to the Company or any of its affiliates.
For purposes of this Stock Option Agreement, termination of service would not be
deemed to occur if the Optionee, after terminating service in one capacity,
continues to provide service to the Company or any of its affiliates in another
capacity. Termination of service is sometimes also referred to herein as
termination of employment or other relationship with the Company or any of its
affiliates.
6. TERM AND EXERCISE OF OPTION
6.1. TERM
The Option shall terminate and all rights to purchase the shares
thereunder shall cease upon the expiration of ten years after the Grant Date,
unless terminated earlier pursuant to another provision of this Stock Option
Agreement.
6.2. OPTION PERIOD AND LIMITATIONS ON EXERCISE
The Optionee may exercise the Option (subject to the limitations on
exercise set forth in this Stock Option Agreement and in the Plan), to the
extent the Option is vested and has not terminated. Any limitation on the
exercise of an Option may be rescinded, modified or waived by the Committee, in
its sole discretion, at any time and from time to time after the Grant Date of
the Option, so as to accelerate the time at which the Option may be exercised.
If the Optionee terminates employment or other relationship with the Company by
reason of "permanent and total disability" (within the meaning of Section
22(e)(3) of the Code), the Option shall continue to vest, and shall be
exercisable to the extent that it is vested, for a period of one year after such
termination of employment or service, subject to earlier termination of the
Option as provided in SECTION 6.1 above.
<PAGE>
6.3. LIMITATIONS ON EXERCISE OF OPTION
Notwithstanding the foregoing Sections, in no event may the Option be
exercised: (i) in whole or in part, after ten years following the Grant Date,
as set forth in SECTION 1 above, (ii) following termination of employment or
other relationship for Cause (as defined below) or (iii) following termination
of employment or other relationship except as provided in SECTIONS 7.1, 7.2, and
7.3 below. For purposes of this Stock Option Agreement, "Cause" means (i) gross
negligence or willful misconduct in connection with the performance of duties;
(ii) conviction of a criminal offense (other than minor traffic offenses); or
(iii) material breach of any term of any employment, consulting or other
services, confidentiality, intellectual property or non-competition agreements,
if any, between Optionee and the Company or any of its affiliates.
6.4. METHOD OF EXERCISE
The Option may be exercised, to the extent it is exercisable, by the
Optionee's delivery to the Company of written notice of exercise on any business
day, at the Company's principal office, addressed to the attention of the
Committee. Such notice shall specify the number of shares of Stock with respect
to which the Option is being exercised and shall be accompanied by payment in
full of the Option Price of the shares for which the Option is being exercised.
The minimum number of shares of Stock with respect to which an Option may be
exercised, in whole or in part, at any time shall be the lesser of (i) 100
shares and (ii) the maximum number of shares available for purchase under the
Option at the time of exercise. Payment of the Option Price for the shares
purchased pursuant to the exercise of the Option shall be made (i) in cash or in
cash equivalents; (ii) through the tender to the Company of shares of Stock,
which shares, if acquired from the Company, shall have been held by the Optionee
for at least six months and which shall be valued, for purposes of determining
the extent to which the Option Price has been paid thereby, at their Fair Market
Value on the date of exercise; or (iii) by a combination of the methods
described in (i) and (ii). If the Stock is publicly traded, payment in full of
the Option Price need not accompany the written notice of exercise provided that
the notice of exercise directs that the certificate or certificates for the
shares of Stock for which the Option is exercised be delivered to a licensed
broker acceptable to the Company as the agent for the individual exercising the
Option and, at the time such certificate or certificates are delivered, the
broker tenders to the Company cash (or cash equivalents acceptable to the
Company) equal to the Option Price for the shares of Stock purchased pursuant to
the exercise of the Option plus the amount (if any) of federal and/or other
taxes which the Company may in its judgment, be required to withhold with
respect to the exercise of the Option. An attempt to exercise the Option other
than as set forth above shall be invalid and of no force and effect. An
individual holding or exercising an Option shall have none of the rights of a
stockholder (for example, the right to receive cash or dividend payments or
distributions attributable to the subject shares of Stock or to direct the
<PAGE>
voting of the subject shares of Stock ) until the shares of Stock covered
thereby are fully paid and issued to him. Except as provided in SECTION 10
hereof, no adjustment shall be made for dividends, distributions or other rights
for which the record date is prior to the date of such issuance.
7. TERMINATION OF THE SERVICE RELATIONSHIP
7.1. TERMINATION OF EMPLOYMENT OR OTHER RELATIONSHIP
Upon the termination of the Optionee's employment or other
relationship with the Company other than by reason of death or "permanent and
total disability" (within the meaning of Section 22(e)(3) of the Code), the
Option or portion thereof held by the Optionee that has not vested in accordance
with the provisions of SECTION 5 hereof shall terminate immediately, and,
subject to SECTION 6.3 above, any Option or portion thereof that has vested in
accordance with the provisions of SECTION 5 hereof but has not been exercised
shall terminate at the close of business on the 90th day following the
Optionee's termination of employment or other relationship (or, if such 90th day
is a Saturday, Sunday or holiday, at the close of business on the next preceding
day that is not a Saturday, Sunday or holiday), unless the Board of Directors of
the Company (the "Board"), in its discretion, extends the period during which
the Option may be exercised (which period may not be extended beyond the
original term of the Option). Upon termination of the Option or portion
thereof, the Optionee shall have no further right to purchase shares of Stock
pursuant to such Option or portion thereof. Whether a leave of absence or leave
on military or government service shall constitute a termination of employment
or other relationship for purposes of the Optionee shall be determined by the
Board, which determination shall be final and conclusive. For purposes of the
Option, a termination of employment, service or other relationship shall not be
deemed to occur if the Optionee is immediately thereafter employed with the
Company or any other Service Provider, or is engaged as a Service Provider or an
Outside Director of the Company. Whether a termination of a Service Provider's
or an Outside Director's relationship with the Company shall have occurred shall
be determined by the Committee, which determination shall be final and
conclusive.
7.2. RIGHTS IN THE EVENT OF DEATH
If the Optionee dies while employed by, or in the service of, the
Company or any of its affiliates, the executors or administrators or legatees or
distributees of such Optionee's estate shall have the right at any time within
one year after the date of such Optionee's death, and prior to termination of
the Option pursuant to SECTION 6.1 above, to exercise, in whole or in part, any
Option held by such Optionee at the date of such Optionee's death, whether or
not such Option was exercisable immediately prior to such Optionee's death.
<PAGE>
7.3. RIGHTS IN THE EVENT OF DISABILITY
If the Optionee's employment or other relationship with the Company or
any of its affiliates is terminated by reason of the "permanent and total
disability" (within the meaning of Section 22(e)(3) of the Code) of the
Optionee, then such Optionee shall have the right, at any time within one year
after such termination of employment or other relationship and prior to
termination of the Option pursuant to SECTION 6.1 above, to exercise, in whole
or in part, the Option held by such Optionee at the date of such termination of
employment or other relationship, to the extent such Option is then exercisable.
Whether a termination of employment or other relationship is to be considered by
reason of "permanent and total disability" for purposes of this Stock Option
Agreement shall be determined by the Committee, which determination shall be
final and conclusive.
8. TRANSFERABILITY
During the lifetime of the Optionee, only such Optionee (or, in the
event of legal incapacity or incompetency, the Optionee's guardian or legal
representative) may exercise the Option, and no Option shall be assignable or
transferable by the Optionee, other than by will or the laws of descent and
distribution.
9. REQUIREMENTS OF LAW
The Company shall not be required to sell or issue any securities
under the Option if the sale or issuance of such securities would constitute a
violation by the Optionee, the individual exercising the Option, or the Company
of any provisions of any law or regulation of any governmental authority,
including without limitation any federal or state securities laws or
regulations. If at any time the Company shall determine, in its discretion,
that the listing, registration or qualification of any securities subject to the
Option upon any securities exchange or under any governmental regulatory body is
necessary or desirable as a condition of, or in connection with, the issuance or
purchase of securities hereunder, the Option may not be exercised in whole or in
part unless such listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not acceptable to the
Company, and any delay caused thereby shall in no way affect the date of
termination of the Option. Specifically in connection with the 1933 Act, upon
the exercise of the Option, unless a registration statement under such act is in
effect with respect to the securities covered by the Option, the Company shall
not be required to sell or issue such securities unless the Committee has
received evidence satisfactory to it that the holder of such Option may acquire
such securities pursuant to an exemption from registration under such act. Any
determination in this connection by the Committee shall be final, binding, and
conclusive. The Company may, but shall in no event be obligated to, register
any securities covered hereby pursuant to the 1933 Act. The Company shall not
be
<PAGE>
obligated to take any affirmative action in order to cause the exercise of the
Option or the issuance of securities pursuant thereto to comply with any law or
regulation of any governmental authority. As to any jurisdiction that expressly
imposes the requirement that the Option shall not be exercisable until the
securities covered by such Option are registered or are exempt from
registration, the exercise of such Option (under circumstances in which the laws
of such jurisdiction apply) shall be deemed conditioned upon the effectiveness
of such registration or the availability of such an exemption.
10. EFFECT OF CHANGES IN CAPITALIZATION
10.1. CHANGES IN STOCK
If the number of outstanding shares of Stock is increased or
decreased or the shares of Stock are changed into or exchanged for a different
number or kind of shares or other securities of the Company on account of any
recapitalization, reclassification, stock split, reverse split, combination of
shares, exchange of shares, stock dividend or other distribution payable in
capital stock, or other increase or decrease in such shares effected without
receipt of consideration by the Company, occurring after the date of grant of
the Option, the number and kind of shares of Stock for which the Option was
granted shall be adjusted proportionately and accordingly so that the
proportionate interest of the Optionee immediately following such event shall,
to the extent practicable, be the same as immediately before such event. Any
such adjustment in the Option shall not change the aggregate Option Price
payable with respect to shares that are subject to the unexercised portion of
the Option but shall include a corresponding proportionate adjustment in the
Option Price per share.
10.2. DISSOLUTION, LIQUIDATION, SALE OF ASSETS, REORGANIZATION IN WHICH THE
COMPANY IS NOT THE SURVIVING ENTITY, ETC.
Subject to SECTION 10.3 hereof, if the Company shall be the surviving
entity in any reorganization, merger, or consolidation of the Company with one
or more other entities in which no Change of Control occurs, the Option shall
pertain to and apply to the securities to which the Optionee would have been
entitled immediately following such reorganization, merger, or consolidation,
with a corresponding proportionate adjustment of the Option Price per share so
that the aggregate Option Price thereafter shall be the same as the aggregate
Option Price of the shares remaining subject to the Option immediately prior to
such reorganization, merger, or consolidation. "Change of Control" means (i)
the dissolution or liquidation of the Company or a merger, consolidation, or
reorganization of the Company with one or more other entities in which the
Company is not the surviving entity, (ii) a sale of substantially all of the
assets of the Company to another entity, or (iii) any transaction (including
without limitation
<PAGE>
a merger or reorganization in which the Company is the surviving entity) which
results in any person or entity (other than persons who are stockholders or
affiliates of the Company at the time the Plan is approved by the Company's
stockholders) owning 50% or more of the combined voting power of all classes of
stock of the Company.
10.3. REORGANIZATION, SALE OF ASSETS OR SALE OF STOCK WHICH INVOLVES A
CHANGE OF CONTROL.
Subject to the exceptions set forth in the last sentence of this
SECTION 10.3 (i) upon the occurrence of a Change of Control, fifteen days prior
to the scheduled consummation of a Change of Control, the Option shall become
immediately exercisable to the extent not previously exercisable and shall
remain exercisable for a period of fifteen days. Any exercise of an Option
during such fifteen-day period shall be conditioned upon the consummation of the
event and shall be effective only immediately before the consummation of the
event. Upon consummation of any Change of Control, the Option, to the extent
not exercised, shall terminate. The Board shall send written notice of an event
that will result in such a termination to the Optionee not later than the time
at which the Company gives notice thereof to its stockholders. Neither SECTION
10.2 nor this SECTION 10.3 shall apply to any Change of Control to the extent
that (A) provision is made in writing in connection with such Change of Control
for the assumption of the Option, or the substitution for such Option of new
options covering the stock of a successor entity, or a parent or subsidiary
thereof, with appropriate adjustments as to the number and kinds of shares and
exercise prices, in which event the Option shall continue in the manner and
under the terms so provided or (B) a majority of the full Board determines that
such Change of Control shall not trigger application of the provisions of
SECTION 10.2 or this SECTION 10.3.
10.4. ADJUSTMENTS
Adjustments under this SECTION 10 related to stock or securities of
the Company shall be made by the Board, whose determination in that respect
shall be final, binding, and conclusive. No fractional shares of Stock or units
of other securities shall be issued pursuant to any such adjustment, and any
fractions resulting from any such adjustment shall be eliminated in each case by
rounding downward to the nearest whole share or unit.
10.5. NO LIMITATIONS ON COMPANY
The grant of the Option shall not affect or limit in any way the
right or power of the Company to make adjustments, reclassifications,
reorganizations, or changes of its capital or business structure or to merge,
consolidate, dissolve, or liquidate, or to sell or transfer all or any part of
its business or assets.
<PAGE>
11. DISCLAIMER OF RIGHTS
No provision in the Plan or in the Stock Option Agreement shall be
construed to confer upon any individual the right to remain in the employ or
service of the Company or any affiliate, or to interfere in any way with any
contractual or other right or authority of the Company or Service Provider
either to increase or decrease the compensation or other payments to any
individual at any time, or to terminate any employment or other relationship
between any individual and the Company. In addition, notwithstanding anything
contained in the Plan to the contrary, the Option shall not be affected by any
change of duties or position of the Optionee, so long as the Optionee continues
to be a director, officer, consultant or employee of the Company. The
obligation of the Company to pay any benefits pursuant to this Stock Option
Agreement shall be interpreted as a contractual obligation to pay only those
amounts described herein, in the manner and under the conditions prescribed
herein. The Plan and the Stock Option Agreement shall in no way be interpreted
to require the Company to transfer any amounts to a third party trustee or
otherwise hold any amounts in trust or escrow for payment to any participant or
beneficiary under the terms of the Plan. The Optionee shall not have any of the
rights of a stockholder with respect to the shares of Stock subject to an Option
except to the extent the certificates for such shares of Stock shall have been
issued upon the exercise of the Option.
12. FORFEITURE OF RIGHTS
The Company at any time shall have the right to cause a forfeiture of
the rights of the Optionee on account of the Optionee taking actions in
competition with the Company. Unless otherwise specified in an employment or
other agreement between the Company and the Optionee, the Optionee takes actions
in competition with the Company if he or she directly or indirectly owns any
interest in, operates, joins, controls or participates as a partner, director,
principal, officer, or agent of, enters into the employment of, acts as a
consultant to, or performs any services for, any entity which has material
operations which compete with any business in which the Company or any of its
Subsidiaries is engaged during the Optionee's employment or other relationship
with the Company or any of its affiliates or at the time of the Optionee's
termination of employment or other relationship.
13. CAPTIONS
The use of captions in this Stock Option Agreement is for the
convenience of reference only and shall not affect the meaning of any provision
of such Stock Option Agreement.
<PAGE>
14. WITHHOLDING OF TAXES
The Company or a Subsidiary, as the case may be, shall have the right
to deduct from payments of any kind otherwise due to the Optionee any Federal,
state, or local taxes of any kind required by law to be withheld upon the
issuance of any shares of Stock upon the exercise of the Option. At the time of
such exercise, the Optionee shall pay to the Company or the Subsidiary, as the
case may be, any amount that the Company or the Subsidiary may reasonably
determine to be necessary to satisfy such withholding obligation. Subject to
the prior approval of the Company or the Subsidiary, which may be withheld by
the Company or the Subsidiary, as the case may be, in its sole discretion, the
Optionee may elect to satisfy such obligations, in whole or in part, (i) by
causing the Company or the Subsidiary to withhold shares of Stock otherwise
issuable to the Optionee or (ii) by delivering to the Company or the Subsidiary
shares of Stock already owned by the Optionee. The shares of Stock so delivered
or withheld shall have an aggregate Fair Market Value equal to such withholding
obligations. The Fair Market Value of the shares of Stock used to satisfy such
withholding obligation shall be determined by the Company or the Subsidiary as
of the date that the amount of tax to be withheld is to be determined. The
Optionee who has made an election pursuant to this SECTION 14 may satisfy his or
her withholding obligation only with shares of Stock that are not subject to any
repurchase, forfeiture, unfulfilled vesting, or other similar requirements.
15. SEVERABILITY
If any provision of the Plan or this Stock Option Agreement shall be
determined to be illegal or unenforceable by any court of law in any
jurisdiction, the remaining provisions thereof and hereof shall be severable and
enforceable in accordance with their terms, and all provisions shall remain
enforceable in any other jurisdiction.
16. INTERPRETATION OF THIS STOCK OPTION AGREEMENT
All decisions and interpretations made by the Company or the Committee
with regard to any question arising under the Plan or this Stock Option
Agreement shall be final, binding and conclusive on the Company and the Optionee
and any other person entitled to exercise the Option as provided for herein.
17. GOVERNING LAW
The validity and construction of this Stock Option Agreement shall be
governed by the laws of the State of Delaware but not including the choice of
law rules thereof.
<PAGE>
18. BINDING EFFECT
Subject to all restrictions provided for in this Stock Option
Agreement, the Plan and by applicable law limiting assignment and transfer of
this Stock Option Agreement and the Option provided for herein, this Stock
Option Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, executors, administrators, successors, and
assigns.
19. NOTICE
All notices or other communications which may be or are required to be
given by any party to any other party pursuant to this Stock Option Agreement
shall be in writing and shall be mailed by first-class, registered or certified
mail, return receipt requested, postage prepaid, or transmitted by hand delivery
or telecopier (fax), addressed as follows:
If to the Company:
Global Imaging Systems, Inc.
PO Box 273478
Tampa, Florida 33688-3478
Attention: Raymond Schilling
Telecopy: (813) 264-7877
If to Optionee:
At the address set forth below under Optionee's name at the
foot of this Agreement.
Each party may designate by notice in writing a new address to which any notice
or other communication may thereafter be so given. Each notice or other
communication which shall be mailed, delivered or transmitted in the manner
described above, shall be deemed sufficiently given for all purposes at such
time as it is delivered to the addressee with the return receipt, the delivery
receipt, the affidavit of personal courier or, with respect to a telecopy, upon
acknowledgment of receipt thereof and in all cases at such time as delivery is
refused by the addressee upon presentation.
20. PREMATURE DISPOSITION
Optionee shall provide written notice to the Company within 15 days of
any disposition of Stock acquired pursuant to the exercise of this Option if
such disposition occurs earlier than the later of (i) two years after the Grant
Date or (ii) one year after the exercise of this Option.
<PAGE>
21. ENTIRE AGREEMENT
This Stock Option Agreement and the Plan together constitute the
entire agreement between the parties hereto with respect to the subject matter
hereof. Neither this Stock Option Agreement nor any term hereof may be amended,
waived, discharged or terminated except by a written instrument signed by the
Company and the Optionee; provided, however, that the Company unilaterally may
-------- -------
waive any provision hereof in writing to the extent that such waiver does not
adversely affect the interests of the Optionee hereunder, but no such waiver
shall operate as or be construed to be a subsequent waiver of the same provision
or a waiver of any other provision hereof.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Stock Option Agreement, or caused this Stock Option Agreement to
be duly executed and delivered in their name and on their behalf, as of the day
and year first above written.
GLOBAL IMAGING SYSTEMS, INC.
By:_____________________________
OPTIONEE:
________________________________
[Insert Name of Optionee]
ADDRESS FOR NOTICE TO OPTIONEE:
________________________________
________________________________
________________________________
[Insert Optionee Address]
EXHIBIT A: GLOBAL IMAGING SYSTEMS, INC. 1998 STOCK OPTION AND INCENTIVE PLAN
- ---------
<PAGE>
EXHIBIT 10.7B
GLOBAL IMAGING SYSTEMS, INC.
1998 STOCK OPTION AND INCENTIVE PLAN
NON-INCENTIVE STOCK OPTION AGREEMENT
This Stock Option Agreement is made as of June 22, 1998, by and between
Global Imaging Systems, Inc., a Delaware corporation (the "Company"), and
________________________, an individual who is employed by, or providing
services to, the Company or one of its affiliates (the "Optionee").
WHEREAS, the Board of Directors and stockholders of the Company have duly
adopted and approved the Global Imaging Systems, Inc. 1998 Stock Option and
Incentive Plan (the "Plan"), which Plan authorizes the Company to grant to
eligible individuals options for the purchase of shares of the Company's common
stock, par value $.01 per share (the "Stock"); and
WHEREAS, the Company has determined that it is desirable and in its best
interests to grant to the Optionee, pursuant to the Plan, an option to purchase
a certain number of shares of Stock, in order to provide the Optionee with an
incentive to advance the interests of the Company and any affiliate thereof;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties hereto do hereby agree as follows:
1. GRANT OF OPTION
Subject to the terms of the Plan (attached hereto as Exhibit A), the
---------
Company hereby grants to the Optionee the right and option (the "Option") to
purchase from the Company, on the terms and subject to the conditions set forth
in the Plan and in this Option Agreement, _________ shares of Stock. This
Option shall not constitute an incentive stock option within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). The
date of grant of this Option is (the "Grant Date").
2. PARACHUTE LIMITATIONS
Notwithstanding any other provision of this Stock Option Agreement or
of any other agreement, contract, or understanding heretofore or hereafter
entered into by the Optionee and the Company or any Subsidiary, except an
agreement, contract, or understanding hereafter entered into that expressly
modifies or excludes application of this Section (the "Other Agreements"), and
notwithstanding any formal or informal plan or other arrangement heretofore or
<PAGE>
hereafter adopted by the Company (or any Subsidiary) for the direct or indirect
compensation of the Optionee (including groups or classes of participants or
beneficiaries of which the Optionee is a member), whether or not such
compensation is deferred, is in cash, or is in the form of a benefit to or for
the Optionee (a "Benefit Arrangement"), if the Optionee is a "disqualified
individual," as defined in Section 280G(c) of the Code, the Option and any right
to receive any payment or other benefit under this Stock Option Agreement shall
not become exercisable or vested (i) to the extent that such right to exercise,
vesting, payment, or benefit, taking into account all other rights, payments, or
benefits to or for Optionee under the Plan, all Other Agreements, and all
Benefit Arrangements, would cause any payment or benefit to the Optionee under
this Stock Option Agreement to be considered a "parachute payment" within the
meaning of Section 280G(b)(2) of the Code as then in effect (a "Parachute
Payment") and (ii) if, as a result of receiving a Parachute Payment, the
---
aggregate after-tax amounts received by the Optionee from the Company under this
Stock Option Agreement, the Plan, all Other Agreements, and all Benefit
Arrangements would be less than the maximum after-tax amount that could be
received by Optionee without causing any such payment or benefit to be
considered a Parachute Payment. In the event that the receipt of any such right
to exercise, vesting, payment, or benefit under this Stock Option Agreement, in
conjunction with all other rights, payments, or benefits to or for the Optionee
under the Plan, any Other Agreement or any Benefit Arrangement would cause the
Optionee to be considered to have received a Parachute Payment under this Stock
Option Agreement that would have the effect of decreasing the after-tax amount
received by the Optionee as described in clause (ii) of the preceding sentence,
then the Optionee shall have the right, in the Optionee's sole discretion, to
designate those rights, payments, or benefits under this Stock Option Agreement,
the Plan, any Other Agreements, and any Benefit Arrangements that should be
reduced or eliminated so as to avoid having the payment or benefit to the
Optionee under this Stock Option Agreement be deemed to be a Parachute Payment.
3. TERMS OF PLAN
The Option granted pursuant to this Stock Option Agreement is granted
subject to the terms and conditions set forth in the Plan. All terms and
conditions of the Plan are hereby incorporated into this Stock Option Agreement
by reference and shall be deemed to be part of this Stock Option Agreement,
without regard to whether such terms and conditions are not otherwise set forth
in this Stock Option Agreement. To the extent any capitalized words used in
this Stock Option Agreement are not defined, they shall have the definitions
stated for them in the Plan. In the event that there is any inconsistency
between the provisions of this Stock Option Agreement and of the Plan, the
provisions of the Plan shall govern.
<PAGE>
4. OPTION PRICE
The purchase price (the "Option Price") for each share subject to the
Option granted by this Stock Option Agreement is $ .
5. VESTING IN OPTION
The Option becomes vested as to twenty percent (20%) of the shares
purchasable pursuant to the Option on June 22, 1999 (the first "Anniversary
Date"), if the Optionee has been providing services to the Company or any of its
affiliates continuously from the date of grant to the Anniversary Date.
Thereafter, so long as the Optionee's service has not been interrupted, the
Option becomes vested as to an additional twenty percent (20%) of the shares
subject to the Option after each of the next four Anniversary Dates. Service
for this purpose includes service as an employee, director, advisor or
consultant providing bona fide services to the Company or any of its affiliates.
For purposes of this Stock Option Agreement, termination of service would not be
deemed to occur if the Optionee, after terminating service in one capacity,
continues to provide service to the Company or any of its affiliates in another
capacity. Termination of service is sometimes also referred to herein as
termination of employment or other relationship with the Company or any of its
affiliates.
6. TERM AND EXERCISE OF OPTION
6.1. TERM
The Option shall terminate and all rights to purchase the shares
thereunder shall cease upon the expiration of ten years after the Grant Date,
unless terminated earlier pursuant to another provision of this Stock Option
Agreement.
6.2. OPTION PERIOD AND LIMITATIONS ON EXERCISE
The Optionee may exercise the Option (subject to the limitations on
exercise set forth in this Stock Option Agreement and in the Plan), to the
extent the Option is vested and has not terminated. Any limitation on the
exercise of an Option may be rescinded, modified or waived by the Committee, in
its sole discretion, at any time and from time to time after the Grant Date of
the Option, so as to accelerate the time at which the Option may be exercised.
If the Optionee terminates employment or other relationship with the Company by
reason of "permanent and total disability" (within the meaning of Section
22(e)(3) of the Code), the Option shall continue to vest, and shall be
exercisable to the extent that it is vested, for a period of one year after such
termination of employment or service, subject to earlier termination of the
Option as provided in SECTION 6.1 above.
<PAGE>
6.3. LIMITATIONS ON EXERCISE OF OPTION
Notwithstanding the foregoing Sections, in no event may the Option be
exercised: (i) in whole or in part, after ten years following the Grant Date,
as set forth in SECTION 1 above, (ii) following termination of employment or
other relationship for Cause (as defined below) or (iii) following termination
of employment or other relationship except as provided in SECTIONS 7.1, 7.2, and
7.3 below. For purposes of this Stock Option Agreement, "Cause" means (i) gross
negligence or willful misconduct in connection with the performance of duties;
(ii) conviction of a criminal offense (other than minor traffic offenses); or
(iii) material breach of any term of any employment, consulting or other
services, confidentiality, intellectual property or non-competition agreements,
if any, between Optionee and the Company or any of its affiliates.
6.4. METHOD OF EXERCISE
The Option may be exercised, to the extent it is exercisable, by the
Optionee's delivery to the Company of written notice of exercise on any business
day, at the Company's principal office, addressed to the attention of the
Committee. Such notice shall specify the number of shares of Stock with respect
to which the Option is being exercised and shall be accompanied by payment in
full of the Option Price of the shares for which the Option is being exercised.
The minimum number of shares of Stock with respect to which an Option may be
exercised, in whole or in part, at any time shall be the lesser of (i) 100
shares and (ii) the maximum number of shares available for purchase under the
Option at the time of exercise. Payment of the Option Price for the shares
purchased pursuant to the exercise of the Option shall be made (i) in cash or in
cash equivalents; (ii) through the tender to the Company of shares of Stock,
which shares, if acquired from the Company, shall have been held by the Optionee
for at least six months and which shall be valued, for purposes of determining
the extent to which the Option Price has been paid thereby, at their Fair Market
Value on the date of exercise; or (iii) by a combination of the methods
described in (i) and (ii). If the Stock is publicly traded, payment in full of
the Option Price need not accompany the written notice of exercise provided that
the notice of exercise directs that the certificate or certificates for the
shares of Stock for which the Option is exercised be delivered to a licensed
broker acceptable to the Company as the agent for the individual exercising the
Option and, at the time such certificate or certificates are delivered, the
broker tenders to the Company cash (or cash equivalents acceptable to the
Company) equal to the Option Price for the shares of Stock purchased pursuant to
the exercise of the Option plus the amount (if any) of federal and/or other
taxes which the Company may in its judgment, be required to withhold with
respect to the exercise of the Option. An attempt to exercise the Option other
than as set forth above shall be invalid and of no force and effect. An
individual holding or exercising an Option shall have none of the rights of a
stockholder (for example, the right to receive cash or dividend payments or
distributions attributable to the subject shares of Stock or to direct the
<PAGE>
voting of the subject shares of Stock ) until the shares of Stock covered
thereby are fully paid and issued to him. Except as provided in SECTION 10
hereof, no adjustment shall be made for dividends, distributions or other rights
for which the record date is prior to the date of such issuance.
7. TERMINATION OF THE SERVICE RELATIONSHIP
7.1. TERMINATION OF EMPLOYMENT OR OTHER RELATIONSHIP
Upon the termination of the Optionee's employment or other
relationship with the Company other than by reason of death or "permanent and
total disability" (within the meaning of Section 22(e)(3) of the Code), the
Option or portion thereof held by the Optionee that has not vested in accordance
with the provisions of SECTION 5 hereof shall terminate immediately, and,
subject to SECTION 6.3 above, any Option or portion thereof that has vested in
accordance with the provisions of SECTION 5 hereof but has not been exercised
shall terminate at the close of business on the 90th day following the
Optionee's termination of employment or other relationship (or, if such 90th day
is a Saturday, Sunday or holiday, at the close of business on the next preceding
day that is not a Saturday, Sunday or holiday), unless the Board of Directors of
the Company (the "Board"), in its discretion, extends the period during which
the Option may be exercised (which period may not be extended beyond the
original term of the Option). Upon termination of the Option or portion
thereof, the Optionee shall have no further right to purchase shares of Stock
pursuant to such Option or portion thereof. Whether a leave of absence or leave
on military or government service shall constitute a termination of employment
or other relationship for purposes of the Optionee shall be determined by the
Board, which determination shall be final and conclusive. For purposes of the
Option, a termination of employment, service or other relationship shall not be
deemed to occur if the Optionee is immediately thereafter employed with the
Company or any other Service Provider, or is engaged as a Service Provider or an
Outside Director of the Company. Whether a termination of a Service Provider's
or an Outside Director's relationship with the Company shall have occurred shall
be determined by the Committee, which determination shall be final and
conclusive.
7.2. RIGHTS IN THE EVENT OF DEATH
If the Optionee dies while employed by, or in the service of, the
Company or any of its affiliates, the executors or administrators or legatees or
distributees of such Optionee's estate shall have the right at any time within
one year after the date of such Optionee's death, and prior to termination of
the Option pursuant to SECTION 6.1 above, to exercise, in whole or in part, any
Option held by such Optionee at the date of such Optionee's death, whether or
not such Option was exercisable immediately prior to such Optionee's death.
<PAGE>
7.3. RIGHTS IN THE EVENT OF DISABILITY
If the Optionee's employment or other relationship with the Company or
any of its affiliates is terminated by reason of the "permanent and total
disability" (within the meaning of Section 22(e)(3) of the Code) of the
Optionee, then such Optionee shall have the right, at any time within one year
after such termination of employment or other relationship and prior to
termination of the Option pursuant to SECTION 6.1 above, to exercise, in whole
or in part, the Option held by such Optionee at the date of such termination of
employment or other relationship, to the extent such Option is then exercisable.
Whether a termination of employment or other relationship is to be considered by
reason of "permanent and total disability" for purposes of this Stock Option
Agreement shall be determined by the Committee, which determination shall be
final and conclusive.
8. TRANSFERABILITY
8.1. GENERAL RULE
Except as provided in SECTION 8.2, during the lifetime of an Optionee,
only the Optionee (or, in the event of legal incapacity or incompetency, the
Optionee's guardian or legal representative) may exercise the Option. Except as
provided in SECTION 8.2, the Option shall not be assignable or transferable by
the Optionee, other than by will or the laws of descent and distribution.
8.2. FAMILY TRANSFERS.
An Optionee may transfer all or part of the Option to (i) any
Immediate Family Member, (ii) a trust or trusts for the exclusive benefit of any
Immediate Family Member, or (iii) a partnership in which Immediate Family
Members are the only partners, provided that (x) there may be no consideration
for any such transfer, and (y) subsequent transfers of the transferred Option
are prohibited except those in accordance with this SECTION 8.2 or by will or
the laws of descent and distribution. Following transfer, the Option shall
continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer, provided that for purposes of SECTION 8.2 hereof
the term "Optionee" shall be deemed to refer to the transferee. The events of
termination of the employment or other relationship of SECTION 7.1 hereof shall
continue to be applied with respect to the original Optionee, following which
the Option shall be exercisable by the transferee only to the extent and for the
periods specified in SECTIONS 7.1, 7.2 or 7.3. "Immediate Family Members" means
the spouse, children and grandchildren of the Optionee.
9. REQUIREMENTS OF LAW
The Company shall not be required to sell or issue any securities
under the Option if the sale or issuance of such securities would constitute a
<PAGE>
violation by the Optionee, the individual exercising the Option, or the Company
of any provisions of any law or regulation of any governmental authority,
including without limitation any federal or state securities laws or
regulations. If at any time the Company shall determine, in its discretion,
that the listing, registration or qualification of any securities subject to the
Option upon any securities exchange or under any governmental regulatory body is
necessary or desirable as a condition of, or in connection with, the issuance or
purchase of securities hereunder, the Option may not be exercised in whole or in
part unless such listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not acceptable to the
Company, and any delay caused thereby shall in no way affect the date of
termination of the Option. Specifically in connection with the 1933 Act, upon
the exercise of the Option, unless a registration statement under such act is in
effect with respect to the securities covered by the Option, the Company shall
not be required to sell or issue such securities unless the Committee has
received evidence satisfactory to it that the holder of such Option may acquire
such securities pursuant to an exemption from registration under such act. Any
determination in this connection by the Committee shall be final, binding, and
conclusive. The Company may, but shall in no event be obligated to, register
any securities covered hereby pursuant to the 1933 Act. The Company shall not
be obligated to take any affirmative action in order to cause the exercise of
the Option or the issuance of securities pursuant thereto to comply with any law
or regulation of any governmental authority. As to any jurisdiction that
expressly imposes the requirement that the Option shall not be exercisable until
the securities covered by such Option are registered or are exempt from
registration, the exercise of such Option (under circumstances in which the laws
of such jurisdiction apply) shall be deemed conditioned upon the effectiveness
of such registration or the availability of such an exemption.
10. EFFECT OF CHANGES IN CAPITALIZATION
10.1. CHANGES IN STOCK
If the number of outstanding shares of Stock is increased or
decreased or the shares of Stock are changed into or exchanged for a different
number or kind of shares or other securities of the Company on account of any
recapitalization, reclassification, stock split, reverse split, combination of
shares, exchange of shares, stock dividend or other distribution payable in
capital stock, or other increase or decrease in such shares effected without
receipt of consideration by the Company, occurring after the date of grant of
the Option, the number and kind of shares of Stock for which the Option was
granted shall be adjusted proportionately and accordingly so that the
proportionate interest of the Optionee immediately following such event shall,
to the extent practicable, be the same as immediately before such event. Any
such adjustment in the Option shall not change the aggregate Option Price
payable with respect to shares that are
<PAGE>
subject to the unexercised portion of the Option but shall include a
corresponding proportionate adjustment in the Option Price per share.
10.2. DISSOLUTION, LIQUIDATION, SALE OF ASSETS, REORGANIZATION IN WHICH THE
COMPANY IS NOT THE SURVIVING ENTITY, ETC.
Subject to SECTION 10.3 hereof, if the Company shall be the surviving
entity in any reorganization, merger, or consolidation of the Company with one
or more other entities in which no Change of Control occurs, the Option shall
pertain to and apply to the securities to which the Optionee would have been
entitled immediately following such reorganization, merger, or consolidation,
with a corresponding proportionate adjustment of the Option Price per share so
that the aggregate Option Price thereafter shall be the same as the aggregate
Option Price of the shares remaining subject to the Option immediately prior to
such reorganization, merger, or consolidation. "Change of Control" means (i)
the dissolution or liquidation of the Company or a merger, consolidation, or
reorganization of the Company with one or more other entities in which the
Company is not the surviving entity, (ii) a sale of substantially all of the
assets of the Company to another entity, or (iii) any transaction (including
without limitation a merger or reorganization in which the Company is the
surviving entity) which results in any person or entity (other than persons who
are stockholders or affiliates of the Company at the time the Plan is approved
by the Company's stockholders) owning 50% or more of the combined voting power
of all classes of stock of the Company.
10.3. REORGANIZATION, SALE OF ASSETS OR SALE OF STOCK WHICH INVOLVES A
CHANGE OF CONTROL.
Subject to the exceptions set forth in the last sentence of this
SECTION 10.3 (i) upon the occurrence of a Change of Control, fifteen days prior
to the scheduled consummation of a Change of Control, the Option shall become
immediately exercisable to the extent not previously exercisable and shall
remain exercisable for a period of fifteen days. Any exercise of an Option
during such fifteen-day period shall be conditioned upon the consummation of the
event and shall be effective only immediately before the consummation of the
event. Upon consummation of any Change of Control, the Option, to the extent
not exercised, shall terminate. The Board shall send written notice of an event
that will result in such a termination to the Optionee not later than the time
at which the Company gives notice thereof to its stockholders. Neither SECTION
10.2 nor this SECTION 10.3 shall apply to any Change of Control to the extent
that (A) provision is made in writing in connection with such Change of Control
for the assumption of the Option, or the substitution for such Option of new
options covering the stock of a successor entity, or a parent or subsidiary
thereof, with appropriate adjustments as to the number and kinds of shares and
exercise prices, in which event the Option shall
<PAGE>
continue in the manner and under the terms so provided or (B) a majority of the
full Board determines that such Change of Control shall not trigger application
of the provisions of SECTION 10.2 or this SECTION 10.3.
10.4. ADJUSTMENTS
Adjustments under this SECTION 10 related to stock or securities of
the Company shall be made by the Board, whose determination in that respect
shall be final, binding, and conclusive. No fractional shares of Stock or units
of other securities shall be issued pursuant to any such adjustment, and any
fractions resulting from any such adjustment shall be eliminated in each case by
rounding downward to the nearest whole share or unit.
10.5. NO LIMITATIONS ON COMPANY
The grant of the Option shall not affect or limit in any way the
right or power of the Company to make adjustments, reclassifications,
reorganizations, or changes of its capital or business structure or to merge,
consolidate, dissolve, or liquidate, or to sell or transfer all or any part of
its business or assets.
11. DISCLAIMER OF RIGHTS
No provision in the Plan or in the Stock Option Agreement shall be
construed to confer upon any individual the right to remain in the employ or
service of the Company or any affiliate, or to interfere in any way with any
contractual or other right or authority of the Company or Service Provider
either to increase or decrease the compensation or other payments to any
individual at any time, or to terminate any employment or other relationship
between any individual and the Company. In addition, notwithstanding anything
contained in the Plan to the contrary, the Option shall not be affected by any
change of duties or position of the Optionee, so long as the Optionee continues
to be a director, officer, consultant or employee of the Company. The
obligation of the Company to pay any benefits pursuant to this Stock Option
Agreement shall be interpreted as a contractual obligation to pay only those
amounts described herein, in the manner and under the conditions prescribed
herein. The Plan and the Stock Option Agreement shall in no way be interpreted
to require the Company to transfer any amounts to a third party trustee or
otherwise hold any amounts in trust or escrow for payment to any participant or
beneficiary under the terms of the Plan. The Optionee shall not have any of the
rights of a stockholder with respect to the shares of Stock subject to an Option
except to the extent the certificates for such shares of Stock shall have been
issued upon the exercise of the Option.
12. FORFEITURE OF RIGHTS
The Company at any time shall have the right to cause a forfeiture
of the rights of the Optionee on account of the Optionee taking actions in
competition
<PAGE>
with the Company. Unless otherwise specified in an employment or other agreement
between the Company and the Optionee, the Optionee takes actions in competition
with the Company if he or she directly or indirectly owns any interest in,
operates, joins, controls or participates as a partner, director, principal,
officer, or agent of, enters into the employment of, acts as a consultant to, or
performs any services for, any entity which has material operations which
compete with any business in which the Company or any of its Subsidiaries is
engaged during the Optionee's employment or other relationship with the Company
or any of its affiliates or at the time of the Optionee's termination of
employment or other relationship.
13. CAPTIONS
The use of captions in this Stock Option Agreement is for the
convenience of reference only and shall not affect the meaning of any provision
of such Stock Option Agreement.
14. WITHHOLDING OF TAXES
The Company or a Subsidiary, as the case may be, shall have the right
to deduct from payments of any kind otherwise due to the Optionee any Federal,
state, or local taxes of any kind required by law to be withheld upon the
issuance of any shares of Stock upon the exercise of the Option. At the time of
such exercise, the Optionee shall pay to the Company or the Subsidiary, as the
case may be, any amount that the Company or the Subsidiary may reasonably
determine to be necessary to satisfy such withholding obligation. Subject to
the prior approval of the Company or the Subsidiary, which may be withheld by
the Company or the Subsidiary, as the case may be, in its sole discretion, the
Optionee may elect to satisfy such obligations, in whole or in part, (i) by
causing the Company or the Subsidiary to withhold shares of Stock otherwise
issuable to the Optionee or (ii) by delivering to the Company or the Subsidiary
shares of Stock already owned by the Optionee. The shares of Stock so delivered
or withheld shall have an aggregate Fair Market Value equal to such withholding
obligations. The Fair Market Value of the shares of Stock used to satisfy such
withholding obligation shall be determined by the Company or the Subsidiary as
of the date that the amount of tax to be withheld is to be determined. The
Optionee who has made an election pursuant to this SECTION 14 may satisfy his or
her withholding obligation only with shares of Stock that are not subject to any
repurchase, forfeiture, unfulfilled vesting, or other similar requirements.
15. SEVERABILITY
If any provision of the Plan or this Stock Option Agreement shall be
determined to be illegal or unenforceable by any court of law in any
jurisdiction, the remaining provisions thereof and hereof shall be severable and
enforceable in
<PAGE>
accordance with their terms, and all provisions shall remain enforceable in any
other jurisdiction.
16. INTERPRETATION OF THIS STOCK OPTION AGREEMENT
All decisions and interpretations made by the Company or the Committee
with regard to any question arising under the Plan or this Stock Option
Agreement shall be final, binding and conclusive on the Company and the Optionee
and any other person entitled to exercise the Option as provided for herein.
17. GOVERNING LAW
The validity and construction of this Stock Option Agreement shall be
governed by the laws of the State of Delaware but not including the choice of
law rules thereof.
18. BINDING EFFECT
Subject to all restrictions provided for in this Stock Option
Agreement, the Plan and by applicable law limiting assignment and transfer of
this Stock Option Agreement and the Option provided for herein, this Stock
Option Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, executors, administrators, successors, and
assigns.
19. NOTICE
All notices or other communications which may be or are required to be
given by any party to any other party pursuant to this Stock Option Agreement
shall be in writing and shall be mailed by first-class, registered or certified
mail, return receipt requested, postage prepaid, or transmitted by hand delivery
or telecopier (fax), addressed as follows:
If to the Company:
Global Imaging Systems, Inc.
PO Box 273478
Tampa, Florida 33688-3478
Attention: Raymond Schilling
Telecopy: (813) 264-7877
If to Optionee:
At the address set forth below under Optionee's name at the
foot of this Agreement.
<PAGE>
Each party may designate by notice in writing a new address to which any notice
or other communication may thereafter be so given. Each notice or other
communication which shall be mailed, delivered or transmitted in the manner
described above, shall be deemed sufficiently given for all purposes at such
time as it is delivered to the addressee with the return receipt, the delivery
receipt, the affidavit of personal courier or, with respect to a telecopy, upon
acknowledgment of receipt thereof and in all cases at such time as delivery is
refused by the addressee upon presentation.
20. ENTIRE AGREEMENT
This Stock Option Agreement and the Plan together constitute the
entire agreement between the parties hereto with respect to the subject matter
hereof. Neither this Stock Option Agreement nor any term hereof may be amended,
waived, discharged or terminated except by a written instrument signed by the
Company and the Optionee; provided, however, that the Company unilaterally may
-------- -------
waive any provision hereof in writing to the extent that such waiver does not
adversely affect the interests of the Optionee hereunder, but no such waiver
shall operate as or be construed to be a subsequent waiver of the same provision
or a waiver of any other provision hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Stock Option Agreement, or caused this Stock Option Agreement to
be duly executed and delivered in their name and on their behalf, as of the day
and year first above written.
GLOBAL IMAGING SYSTEMS, INC.
By: ______________________________
Thomas S. Johnson
President
OPTIONEE:
__________________________________
Name:_____________________________
ADDRESS FOR NOTICE TO OPTIONEE:
__________________________________
__________________________________
__________________________________
[Insert Optionee Address]
<PAGE>
EXHIBIT A:
---------
GLOBAL IMAGING SYSTEMS, INC. 1998 STOCK OPTION AND INCENTIVE PLAN
SEE ATTACHED
<PAGE>
EXHIBIT 10.7C
GLOBAL IMAGING SYSTEMS, INC.
1998 STOCK OPTION AND INCENTIVE PLAN
DIRECTOR NON-INCENTIVE STOCK OPTION AGREEMENT
This Stock Option Agreement is made as of _______________, 1998, by and
between Global Imaging Systems, Inc., a _______________ corporation (the
"Company"), and ________________________, a non-employee member of the Board of
Directors of the Company (the "Optionee").
WHEREAS, the Board of Directors and stockholders of the Company have duly
adopted and approved the Global Imaging Systems, Inc. 1998 Stock Option and
Incentive Plan (the "Plan"), which Plan authorizes the Company to grant to
eligible individuals options for the purchase of shares of the Company's common
stock, par value $.01 per share (the "Stock"); and
WHEREAS, the Company has determined that it is desirable and in its best
interests to grant to the Optionee, pursuant to the Plan, an option to purchase
a certain number of shares of Stock, in order to provide the Optionee with an
incentive to advance the interests of the Company and any affiliate thereof;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties hereto do hereby agree as follows:
1. GRANT OF OPTION
Subject to the terms of the Plan (attached hereto as Exhibit A), the
---------
Company hereby grants to the Optionee the right and option (the "Option") to
purchase from the Company, on the terms and subject to the conditions set forth
in the Plan and in this Option Agreement, _________ shares of Stock. This
Option shall not constitute an incentive stock option within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). The
date of grant of this Option is ______________, 1998 (the "Grant Date").
2. PARACHUTE LIMITATIONS
Notwithstanding any other provision of this Stock Option Agreement or
of any other agreement, contract, or understanding heretofore or hereafter
entered into by the Optionee and the Company or any Subsidiary, except an
agreement, contract, or understanding hereafter entered into that expressly
modifies or excludes application of this Section (the "Other Agreements"), and
notwithstanding any formal or informal plan or other arrangement heretofore or
hereafter adopted by the Company (or any Subsidiary) for the direct or indirect
<PAGE>
compensation of the Optionee (including groups or classes of participants or
beneficiaries of which the Optionee is a member), whether or not such
compensation is deferred, is in cash, or is in the form of a benefit to or for
the Optionee (a "Benefit Arrangement"), if the Optionee is a "disqualified
individual," as defined in Section 280G(c) of the Code, the Option and any right
to receive any payment or other benefit under this Stock Option Agreement shall
not become exercisable or vested (i) to the extent that such right to exercise,
vesting, payment, or benefit, taking into account all other rights, payments, or
benefits to or for Optionee under the Plan, all Other Agreements, and all
Benefit Arrangements, would cause any payment or benefit to the Optionee under
this Stock Option Agreement to be considered a "parachute payment" within the
meaning of Section 280G(b)(2) of the Code as then in effect (a "Parachute
Payment") and (ii) if, as a result of receiving a Parachute Payment, the
---
aggregate after-tax amounts received by the Optionee from the Company under this
Stock Option Agreement, the Plan, all Other Agreements, and all Benefit
Arrangements would be less than the maximum after-tax amount that could be
received by Optionee without causing any such payment or benefit to be
considered a Parachute Payment. In the event that the receipt of any such right
to exercise, vesting, payment, or benefit under this Stock Option Agreement, in
conjunction with all other rights, payments, or benefits to or for the Optionee
under the Plan, any Other Agreement or any Benefit Arrangement would cause the
Optionee to be considered to have received a Parachute Payment under this Stock
Option Agreement that would have the effect of decreasing the after-tax amount
received by the Optionee as described in clause (ii) of the preceding sentence,
then the Optionee shall have the right, in the Optionee's sole discretion, to
designate those rights, payments, or benefits under this Stock Option Agreement,
the Plan, any Other Agreements, and any Benefit Arrangements that should be
reduced or eliminated so as to avoid having the payment or benefit to the
Optionee under this Stock Option Agreement be deemed to be a Parachute Payment.
3. TERMS OF PLAN
The Option granted pursuant to this Stock Option Agreement is granted
subject to the terms and conditions set forth in the Plan. All terms and
conditions of the Plan are hereby incorporated into this Stock Option Agreement
by reference and shall be deemed to be part of this Stock Option Agreement,
without regard to whether such terms and conditions are not otherwise set forth
in this Stock Option Agreement. To the extent any capitalized words used in
this Stock Option Agreement are not defined, they shall have the definitions
stated for them in the Plan. In the event that there is any inconsistency
between the provisions of this Stock Option Agreement and of the Plan, the
provisions of the Plan shall govern.
<PAGE>
4. OPTION PRICE
The purchase price (the "Option Price") for each share subject to the
Option granted by this Stock Option Agreement is $_____.
5. VESTING IN OPTIONS
The Option becomes vested as to twenty percent of the shares
purchasable pursuant to the Option on _____________ (the first "Anniversary
Date"), if the Optionee has been providing services to the Company or any of its
affiliates continuously from the date of grant to the Anniversary Date.
Thereafter, so long as the Optionee's service has not been interrupted, the
Option becomes vested as to an additional twenty percent of the shares subject
to the Option after each of the next four Anniversary Dates. Service for this
purpose includes service as an employee, director, advisor or consultant
providing bona fide services to the Company or any of its affiliates. For
purposes of this Stock Option Agreement, termination of service would not be
deemed to occur if the Optionee, after terminating service in one capacity,
continues to provide service to the Company or any of its affiliates in another
capacity. Termination of service is sometimes also referred to herein as
termination of employment or other relationship with the Company or any of its
affiliates.
6. TERM AND EXERCISE OF OPTION
6.1. TERM
The Option shall terminate and all rights to purchase the shares
thereunder shall cease upon the expiration of ten years after the Grant Date,
unless terminated earlier pursuant to another provision of this Stock Option
Agreement.
6.2. OPTION PERIOD AND LIMITATIONS ON EXERCISE
The Optionee may exercise the Option (subject to the limitations on
exercise set forth in this Stock Option Agreement and in the Plan), to the
extent the Option is vested and has not terminated. Any limitation on the
exercise of an Option may be rescinded, modified or waived by the Committee, in
its sole discretion, at any time and from time to time after the Grant Date of
the Option, so as to accelerate the time at which the Option may be exercised.
If the Optionee terminates employment or other relationship with the Company by
reason of "permanent and total disability" (within the meaning of Section
22(e)(3) of the Code), the Option shall continue to vest, and shall be
exercisable to the extent that it is vested, for a period of one year after such
termination of employment or service, subject to earlier termination of the
Option as provided in SECTION 6.1 above.
<PAGE>
6.3. LIMITATIONS ON EXERCISE OF OPTION
Notwithstanding the foregoing Sections, in no event may the Option be
exercised: (i) in whole or in part, after ten years following the Grant Date,
as set forth in SECTION 1 above, (ii) following termination of Optionee's
relationship with the Company for Cause (as defined below) or (iii) following
termination of Optionee's relationship due to death except as provided in
SECTION 7.2. For purposes of this Stock Option Agreement, "Cause" means (i)
gross negligence or willful misconduct in connection with the performance of
duties; (ii) conviction of a criminal offense (other than minor traffic
offenses); or (iii) material breach of any term of any employment, consulting or
other services, confidentiality, intellectual property or non-competition
agreements, if any, between Optionee and the Company or any of its affiliates.
6.4. METHOD OF EXERCISE
The Option may be exercised, to the extent it is exercisable, by the
Optionee's delivery to the Company of written notice of exercise on any business
day, at the Company's principal office, addressed to the attention of the
Committee. Such notice shall specify the number of shares of Stock with respect
to which the Option is being exercised and shall be accompanied by payment in
full of the Option Price of the shares for which the Option is being exercised.
The minimum number of shares of Stock with respect to which an Option may be
exercised, in whole or in part, at any time shall be the lesser of (i) 100
shares and (ii) the maximum number of shares available for purchase under the
Option at the time of exercise. Payment of the Option Price for the shares
purchased pursuant to the exercise of the Option shall be made (i) in cash or in
cash equivalents; (ii) through the tender to the Company of shares of Stock,
which shares, if acquired from the Company, shall have been held by the Optionee
for at least six months and which shall be valued, for purposes of determining
the extent to which the Option Price has been paid thereby, at their Fair Market
Value on the date of exercise; or (iii) by a combination of the methods
described in (i) and (ii). If the Stock is publicly traded, payment in full of
the Option Price need not accompany the written notice of exercise provided that
the notice of exercise directs that the certificate or certificates for the
shares of Stock for which the Option is exercised be delivered to a licensed
broker acceptable to the Company as the agent for the individual exercising the
Option and, at the time such certificate or certificates are delivered, the
broker tenders to the Company cash (or cash equivalents acceptable to the
Company) equal to the Option Price for the shares of Stock purchased pursuant to
the exercise of the Option plus the amount (if any) of federal and/or other
taxes which the Company may in its judgment, be required to withhold with
respect to the exercise of the Option. An attempt to exercise the Option other
than as set forth above shall be invalid and of no force and effect. An
individual holding or exercising an Option shall have none of the rights of a
stockholder (for example, the right to receive cash or dividend payments or
distributions attributable to the subject shares of Stock or to direct the
<PAGE>
voting of the subject shares of Stock ) until the shares of Stock covered
thereby are fully paid and issued to him. Except as provided in SECTION 10
hereof, no adjustment shall be made for dividends, distributions or other rights
for which the record date is prior to the date of such issuance.
7. TERMINATION OF THE SERVICE RELATIONSHIP
7.1. TERMINATION OF EMPLOYMENT OR OTHER RELATIONSHIP
Upon the termination of the Optionee's employment or other
relationship with the Company other than by reason of death or "permanent and
total disability" (within the meaning of Section 22(e)(3) of the Code), the
Option or portion thereof held by the Optionee that has not vested in accordance
with the provisions of SECTION 5 hereof shall terminate immediately, and,
subject to SECTION 6.1 above any Option or portion thereof that has vested in
accordance with the provisions of SECTION 5 hereof but has not been exercised
shall terminate at the close of business on the 90th day following the
Optionee's termination of employment or other relationship (or, if such 90th day
is a Saturday, Sunday or holiday, at the close of business on the next preceding
day that is not a Saturday, Sunday or holiday), unless the Board of Directors of
the Company (the "Board"), in its discretion, extends the period during which
the Option may be exercised (which period may not be extended beyond the
original term of the Option). Upon termination of the Option or portion
thereof, the Optionee shall have no further right to purchase shares of Stock
pursuant to such Option or portion thereof. Whether a leave of absence or leave
on military or government service shall constitute a termination of employment
or other relationship for purposes of the Optionee shall be determined by the
Board, which determination shall be final and conclusive. For purposes of the
Option, a termination of employment, service or other relationship shall not be
deemed to occur if the Optionee is immediately thereafter employed with the
Company or any other Service Provider, or is engaged as a Service Provider or an
Outside Director of the Company. Whether a termination of a Service Provider's
or an Outside Director's relationship with the Company shall have occurred shall
be determined by the Committee, which determination shall be final and
conclusive.
7.2. RIGHTS IN THE EVENT OF DEATH
If the Optionee dies while employed by, or in the service of, the
Company or any of its affiliates, the executors or administrators or legatees or
distributees of such Optionee's estate shall have the right at any time within
one year after the date of such Optionee's death, and prior to termination of
the Option pursuant to SECTION 6.1 above, to exercise, in whole or in part, any
Option held by such Optionee at the date of such Optionee's death, whether or
not such Option was exercisable immediately prior to such Optionee's death.
<PAGE>
7.3. RIGHTS IN THE EVENT OF DISABILITY
If the Optionee's employment or other relationship with the Company or
any of its affiliates is terminated by reason of the "permanent and total
disability" (within the meaning of Section 22(e)(3) of the Code) of the
Optionee, then such Optionee shall have the right, at any time within one year
after such termination of employment or other relationship and prior to
termination of the Option pursuant to SECTION 6.1 above, to exercise, in whole
or in part, the Option held by such Optionee at the date of such termination of
employment or other relationship, to the extent such Option is then exercisable.
Whether a termination of employment or other relationship is to be considered by
reason of "permanent and total disability" for purposes of this Stock Option
Agreement shall be determined by the Committee, which determination shall be
final and conclusive.
8. TRANSFERABILITY
8.1. GENERAL RULE
Except as provided in SECTION 8.2, during the lifetime of an Optionee,
only the Optionee (or, in the event of legal incapacity or incompetency, the
Optionee's guardian or legal representative) may exercise the Option. Except as
provided in SECTION 8.2, the Option shall not be assignable or transferable by
the Optionee, other than by will or the laws of descent and distribution.
8.2. FAMILY TRANSFERS.
An Optionee may transfer all or part of the Option to (i) any
Immediate Family Member, (ii) a trust or trusts for the exclusive benefit of any
Immediate Family Member, or (iii) a partnership in which Immediate Family
Members are the only partners, provided that (x) there may be no consideration
for any such transfer, and (y) subsequent transfers of the transferred Option
are prohibited except those in accordance with this SECTION 8.2 or by will or
the laws of descent and distribution. Following transfer, the Option shall
continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer, provided that for purposes of SECTION 8.2 hereof
the term "Optionee" shall be deemed to refer to the transferee. The events of
termination of the Optionee in SECTION 6.3 hereof shall continue to be applied
with respect to the original Optionee, following which the Option shall be
exercisable by the transferee only to the extent and for the periods specified
in SECTION Error! Reference source not found.. "Immediate Family Members" means
the spouse, children and grandchildren of the Optionee.
9. REQUIREMENTS OF LAW
The Company shall not be required to sell or issue any securities
under the Option if the sale or issuance of such securities would constitute a
<PAGE>
violation by the Optionee, the individual exercising the Option, or the Company
of any provisions of any law or regulation of any governmental authority,
including without limitation any federal or state securities laws or
regulations. If at any time the Company shall determine, in its discretion,
that the listing, registration or qualification of any securities subject to the
Option upon any securities exchange or under any governmental regulatory body is
necessary or desirable as a condition of, or in connection with, the issuance or
purchase of securities hereunder, the Option may not be exercised in whole or in
part unless such listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not acceptable to the
Company, and any delay caused thereby shall in no way affect the date of
termination of the Option. Specifically in connection with the 1933 Act, upon
the exercise of the Option, unless a registration statement under such act is in
effect with respect to the securities covered by the Option, the Company shall
not be required to sell or issue such securities unless the Committee has
received evidence satisfactory to it that the holder of such Option may acquire
such securities pursuant to an exemption from registration under such act. Any
determination in this connection by the Committee shall be final, binding, and
conclusive. The Company may, but shall in no event be obligated to, register
any securities covered hereby pursuant to the 1933 Act. The Company shall not
be obligated to take any affirmative action in order to cause the exercise of
the Option or the issuance of securities pursuant thereto to comply with any law
or regulation of any governmental authority. As to any jurisdiction that
expressly imposes the requirement that the Option shall not be exercisable until
the securities covered by such Option are registered or are exempt from
registration, the exercise of such Option (under circumstances in which the laws
of such jurisdiction apply) shall be deemed conditioned upon the effectiveness
of such registration or the availability of such an exemption.
10. EFFECT OF CHANGES IN CAPITALIZATION
10.1. CHANGES IN STOCK
If the number of outstanding shares of Stock is increased or
decreased or the shares of Stock are changed into or exchanged for a different
number or kind of shares or other securities of the Company on account of any
recapitalization, reclassification, stock split, reverse split, combination of
shares, exchange of shares, stock dividend or other distribution payable in
capital stock, or other increase or decrease in such shares effected without
receipt of consideration by the Company, occurring after the date of grant of
the Option, the number and kind of shares of Stock for which the Option was
granted shall be adjusted proportionately and accordingly so that the
proportionate interest of the Optionee immediately following such event shall,
to the extent practicable, be the same as immediately before such event. Any
such adjustment in the Option shall not change the aggregate Option Price
payable with respect to shares that are
<PAGE>
subject to the unexercised portion of the Option but shall include a
corresponding proportionate adjustment in the Option Price per share.
10.2. DISSOLUTION, LIQUIDATION, SALE OF ASSETS, REORGANIZATION IN WHICH
THE COMPANY IS NOT THE SURVIVING ENTITY, ETC.
Subject to SECTION 10.3 hereof, if the Company shall be the
surviving entity in any reorganization, merger, or consolidation of the Company
with one or more other entities in which no Change of Control occurs, the Option
shall pertain to and apply to the securities to which the Optionee would have
been entitled immediately following such reorganization, merger, or
consolidation, with a corresponding proportionate adjustment of the Option Price
per share so that the aggregate Option Price thereafter shall be the same as the
aggregate Option Price of the shares remaining subject to the Option immediately
prior to such reorganization, merger, or consolidation. "Change of Control"
means (i) the dissolution or liquidation of the Company or a merger,
consolidation, or reorganization of the Company with one or more other entities
in which the Company is not the surviving entity, (ii) a sale of substantially
all of the assets of the Company to another entity, or (iii) any transaction
(including without limitation a merger or reorganization in which the Company is
the surviving entity) which results in any person or entity (other than persons
who are stockholders or affiliates of the Company at the time the Plan is
approved by the Company's stockholders) owning 50% or more of the combined
voting power of all classes of stock of the Company.
10.3. REORGANIZATION, SALE OF ASSETS OR SALE OF STOCK WHICH INVOLVES A
CHANGE OF CONTROL.
Subject to the exceptions set forth in the last sentence of this
SECTION 10.3 (i) upon the occurrence of a Change of Control, fifteen days prior
to the scheduled consummation of a Change of Control, the Option shall become
immediately exercisable to the extent not previously exercisable and shall
remain exercisable for a period of fifteen days. Any exercise of an Option
during such fifteen-day period shall be conditioned upon the consummation of the
event and shall be effective only immediately before the consummation of the
event. Upon consummation of any Change of Control, the Option, to the extent
not exercised, shall terminate. The Board shall send written notice of an event
that will result in such a termination to the Optionee not later than the time
at which the Company gives notice thereof to its stockholders. Neither SECTION
10.2 nor this SECTION 10.3 shall apply to any Change of Control to the extent
that (A) provision is made in writing in connection with such Change of Control
for the assumption of the Option, or the substitution for such Option of new
options covering the stock of a successor entity, or a parent or subsidiary
thereof, with appropriate adjustments as to the number and kinds of shares and
exercise prices, in which event the Option shall continue in the manner and
under the terms so provided or (B) a majority of the full
<PAGE>
Board determines that such Change of Control shall not trigger application of
the provisions of SECTION 10.2 or this SECTION 10.3.
10.4. ADJUSTMENTS
Adjustments under this SECTION 10 related to stock or securities of
the Company shall be made by the Board, whose determination in that respect
shall be final, binding, and conclusive. No fractional shares of Stock or units
of other securities shall be issued pursuant to any such adjustment, and any
fractions resulting from any such adjustment shall be eliminated in each case by
rounding downward to the nearest whole share or unit.
10.5. NO LIMITATIONS ON COMPANY
The grant of the Option shall not affect or limit in any way the
right or power of the Company to make adjustments, reclassifications,
reorganizations, or changes of its capital or business structure or to merge,
consolidate, dissolve, or liquidate, or to sell or transfer all or any part of
its business or assets.
11. DISCLAIMER OF RIGHTS
No provision in the Plan or in the Stock Option Agreement shall be
construed to confer upon any individual the right to remain in the employ or
service of the Company or any affiliate, or to interfere in any way with any
contractual or other right or authority of the Company or Service Provider
either to increase or decrease the compensation or other payments to any
individual at any time, or to terminate any employment or other relationship
between any individual and the Company. In addition, notwithstanding anything
contained in the Plan to the contrary, the Option shall not be affected by any
change of duties or position of the Optionee, so long as the Optionee continues
to be a director, officer, consultant or employee of the Company. The
obligation of the Company to pay any benefits pursuant to this Stock Option
Agreement shall be interpreted as a contractual obligation to pay only those
amounts described herein, in the manner and under the conditions prescribed
herein. The Plan and the Stock Option Agreement shall in no way be interpreted
to require the Company to transfer any amounts to a third party trustee or
otherwise hold any amounts in trust or escrow for payment to any participant or
beneficiary under the terms of the Plan. The Optionee shall not have any of the
rights of a stockholder with respect to the shares of Stock subject to an Option
except to the extent the certificates for such shares of Stock shall have been
issued upon the exercise of the Option.
12. FORFEITURE OF RIGHTS
The Company at any time shall have the right to cause a forfeiture of
the rights of the Optionee on account of the Optionee taking actions in
competition with the Company. Unless otherwise specified in an employment or
other agreement between the Company and the Optionee, the Optionee takes actions
in
<PAGE>
competition with the Company if he or she directly or indirectly owns any
interest in, operates, joins, controls or participates as a partner, director,
principal, officer, or agent of, enters into the employment of, acts as a
consultant to, or performs any services for, any entity which has material
operations which compete with any business in which the Company or any of its
Subsidiaries is engaged during the Optionee's employment or other relationship
with the Company or any of its affiliates or at the time of the Optionee's
termination of employment or other relationship.
13. CAPTIONS
The use of captions in this Stock Option Agreement is for the
convenience of reference only and shall not affect the meaning of any provision
of such Stock Option Agreement.
14. WITHHOLDING OF TAXES
The Company or a Subsidiary, as the case may be, shall have the right
to deduct from payments of any kind otherwise due to the Optionee any Federal,
state, or local taxes of any kind required by law to be withheld upon the
issuance of any shares of Stock upon the exercise of the Option. At the time of
such exercise, the Optionee shall pay to the Company or the Subsidiary, as the
case may be, any amount that the Company or the Subsidiary may reasonably
determine to be necessary to satisfy such withholding obligation. Subject to
the prior approval of the Company or the Subsidiary, which may be withheld by
the Company or the Subsidiary, as the case may be, in its sole discretion, the
Optionee may elect to satisfy such obligations, in whole or in part, (i) by
causing the Company or the Subsidiary to withhold shares of Stock otherwise
issuable to the Optionee or (ii) by delivering to the Company or the Subsidiary
shares of Stock already owned by the Optionee. The shares of Stock so delivered
or withheld shall have an aggregate Fair Market Value equal to such withholding
obligations. The Fair Market Value of the shares of Stock used to satisfy such
withholding obligation shall be determined by the Company or the Subsidiary as
of the date that the amount of tax to be withheld is to be determined. The
Optionee who has made an election pursuant to this SECTION 14 may satisfy his or
her withholding obligation only with shares of Stock that are not subject to any
repurchase, forfeiture, unfulfilled vesting, or other similar requirements.
15. SEVERABILITY
If any provision of the Plan or this Stock Option Agreement shall be
determined to be illegal or unenforceable by any court of law in any
jurisdiction, the remaining provisions thereof and hereof shall be severable and
enforceable in accordance with their terms, and all provisions shall remain
enforceable in any other jurisdiction.
<PAGE>
16. INTERPRETATION OF THIS STOCK OPTION AGREEMENT
All decisions and interpretations made by the Company or the Committee
with regard to any question arising under the Plan or this Stock Option
Agreement shall be final, binding and conclusive on the Company and the Optionee
and any other person entitled to exercise the Option as provided for herein.
17. GOVERNING LAW
The validity and construction of this Stock Option Agreement shall be
governed by the laws of the State of Delaware but not including the choice of
law rules thereof.
18. BINDING EFFECT
Subject to all restrictions provided for in this Stock Option
Agreement, the Plan and by applicable law limiting assignment and transfer of
this Stock Option Agreement and the Option provided for herein, this Stock
Option Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, executors, administrators, successors, and
assigns.
19. NOTICE
All notices or other communications which may be or are required to be
given by any party to any other party pursuant to this Stock Option Agreement
shall be in writing and shall be mailed by first-class, registered or certified
mail, return receipt requested, postage prepaid, or transmitted by hand delivery
or telecopier (fax), addressed as follows:
If to the Company:
Global Imaging Systems, Inc.
PO Box 273478
Tampa, Florida 33688-3478
Attention: Raymond Schilling
Telecopy: (813) 264-7877
If to Optionee:
At the address set forth below under Optionee's name at the
foot of this Agreement.
Each party may designate by notice in writing a new address to which any notice
or other
<PAGE>
communication may thereafter be so given. Each notice or other communication
which shall be mailed, delivered or transmitted in the manner described above,
shall be deemed sufficiently given for all purposes at such time as it is
delivered to the addressee with the return receipt, the delivery receipt, the
affidavit of personal courier or, with respect to a telecopy, upon
acknowledgment of receipt thereof and in all cases at such time as delivery is
refused by the addressee upon presentation.
20. ENTIRE AGREEMENT
This Stock Option Agreement and the Plan together constitute the
entire agreement between the parties hereto with respect to the subject matter
hereof. Neither this Stock Option Agreement nor any term hereof may be amended,
waived, discharged or terminated except by a written instrument signed by the
Company and the Optionee; provided, however, that the Company unilaterally may
-------- -------
waive any provision hereof in writing to the extent that such waiver does not
adversely affect the interests of the Optionee hereunder, but no such waiver
shall operate as or be construed to be a subsequent waiver of the same provision
or a waiver of any other provision hereof.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Stock Option Agreement, or caused this Stock Option Agreement to
be duly executed and delivered in their name and on their behalf, as of the day
and year first above written.
GLOBAL IMAGING SYSTEMS, INC.
By:_____________________________
OPTIONEE:
________________________________
[Insert Name of Optionee]
ADDRESS FOR NOTICE TO OPTIONEE:
________________________________
________________________________
________________________________
[Insert Optionee Address]
<PAGE>
EXHIBIT A: GLOBAL IMAGING SYSTEMS, INC. 1998 STOCK OPTION AND INCENTIVE PLAN
- ---------
<PAGE>
EXHIBIT 10.31
MERGER AGREEMENT
AND PLAN OF MERGER
Dated as of February 26, 1999
Effective as of February 1, 1999
By and Among
GLOBAL IMAGING SYSTEMS, INC.
("Global"),
DAHILL ACQUISITION, INC.
("Newco"),
DAHILL INDUSTRIES, INC.
(the "Company")
and
RANDALL E. DAVIDSON
(the "Seller")
<PAGE>
TABLE OF CONTENTS
<TABLE>
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Page
<S> <C>
ARTICLE I DEFINITIONS....................................................... 1
1.1 Definitions......................................................... 1
ARTICLE II MERGER........................................................... 7
2.1 The Merger.......................................................... 7
2.2 Effective Time of the Merger........................................ 7
2.3 Articles of Incorporation........................................... 7
2.4 Bylaws.............................................................. 7
2.5 Directors and Officers of Surviving Corporation..................... 7
2.6 Effect of the Merger................................................ 8
2.7 Conversion of Shares and Options.................................... 8
2.8 Purchase Price...................................................... 8
2.9 Payment of Purchase Price........................................... 8
2.10 Dissenting Shares................................................... 9
2.11 Closing............................................................. 9
(a) Date and Place.................................................. 9
(b) Deliveries at the Closing....................................... 10
(c) Termination..................................................... 10
2.12 Escrow Arrangements................................................. 10
2.13 Purchase Price Adjustments.......................................... 11
(a) Funded Indebtedness............................................. 11
(b) Working Capital................................................. 11
(c) Effective Date Cash on Hand..................................... 11
2.14 Closing Review...................................................... 12
2.15 Post-Closing Purchase Price Adjustment.............................. 12
2.16 Shareholders' Representative........................................ 13
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLERS... 15
3.1 Capitalization...................................................... 15
3.2 No Liens on Shares.................................................. 15
3.3 Other Rights to Acquire Capital Stock............................... 15
3.4 Due Organization.................................................... 15
3.5 Subsidiaries........................................................ 16
3.6 Due Authorization................................................... 16
3.7 Financial Statements................................................ 16
3.8 Certain Actions..................................................... 17
3.9 Properties.......................................................... 18
3.10 Licenses and Permits................................................ 18
3.11 Intellectual Property............................................... 19
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3.12 Compliance with Laws................................................ 19
3.13 Insurance.......................................................... 19
3.14 Employee Benefit Plans.............................................. 20
(a) Employee Welfare Benefit Plans.................................. 20
(b) Employee Pension Benefit Plans.................................. 20
(c) Employment and Non-Tax Qualified Deferred Compensation
Arrangements................................................... 20
3.15 Contracts and Agreements............................................ 21
3.16 Claims and Proceedings.............................................. 21
3.17 Taxes............................................................... 21
3.18 Personnel........................................................... 23
3.19 Business Relations.................................................. 23
3.20 Accounts Receivable................................................. 24
3.21 Bank Accounts....................................................... 24
3.22 Warranties.......................................................... 24
3.23 Brokers............................................................. 24
3.24 Interest in Competitors, Suppliers,
Customers, Etc..................................................... 24
3.25 Indebtedness To and From Officers, Directors,
Shareholders, and Employees........................................ 24
3.26 Undisclosed Liabilities............................................. 25
3.27 Information Furnished............................................... 25
3.28 Personal Vehicles................................................... 25
3.29 No Other Warranties................................................. 25
ARTICLE IV GLOBAL AND NEWCO'S REPRESENTATIONS AND WARRANTIES................ 26
4.1 Due Organization.................................................... 26
4.2 Due Authorization................................................... 26
4.3 No Brokers.......................................................... 26
4.4 Investment.......................................................... 26
4.5 Information Furnished............................................... 26
ARTICLE V PRE-CLOSING COVENANTS............................................. 27
5.1 Consents of Others.................................................. 27
5.2 Best Efforts........................................................ 27
5.3 Powers of Attorney.................................................. 27
5.4 Conduct of Business Pending Closing................................. 27
5.5 Access to Records Before Closing.................................... 28
5.6 Landlord Consents................................................... 28
5.7 Termination of Company's Profit Sharing Plan........................ 28
ARTICLE VI POST-CLOSING..................................................... 28
6.1 General............................................................. 28
6.2 Transition.......................................................... 28
6.3 Confidentiality..................................................... 29
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6.4 Covenant Not to Compete.............................................. 29
6.5 Additional Matters................................................... 30
ARTICLE VII CONDITIONS TO OBLIGATION OF PARTIES TO CONSUMMATE CLOSING....... 30
7.1 Conditions to Global and Newco's Obligations......................... 30
(a) Covenants, Representations and Warranties....................... 31
(b) Consents........................................................ 31
(c) Suppliers/Leases................................................ 31
(d) Discharge of Indebtedness and Lien.............................. 31
(e) Phoenix Business Sold........................................... 31
(f) Transfer Taxes.................................................. 32
(g) Documents to be Delivered by the Seller and the Company......... 32
(i) Opinion of the Seller's Counsel.......................... 32
(ii) Certificates............................................. 32
(iii) Release.................................................. 32
(iv) Escrow Agreement......................................... 32
(v) Employment Agreements.................................... 32
(vi) Phoenix Business Right of First Refusal and License
Agreement............................................... 32
(vii) Equity Subscription Agreement............................ 33
(viii)Personal Vehicles........................................ 33
(ix) Seller Receivables....................................... 33
(x) Stock Certificates....................................... 33
(xi) Consummation of Merger................................... 33
7.2 Conditions to the Seller's and the Company's Obligations............. 33
(a) Covenants, Representations and Warranties....................... 33
(b) Consents........................................................ 33
(c) Documents to be Delivered by Global and Newco................... 34
(i) Certificates............................................. 34
(ii) Escrow Agreement......................................... 34
(iii) Employment Agreements.................................... 34
(iv) Equity Subscription Agreement............................ 34
(v) Phoenix Business License Agreement....................... 34
(d) Payment to the Seller, the Shareholders, the Company
Optionholder and the Escrow Agent.............................. 34
(e) Execution of Shareholder Consent................................ 34
ARTICLE VIII INDEMNIFICATION................................................ 35
8.1 Indemnification of Global............................................ 35
8.2 Defense of Claims.................................................... 35
8.3 Escrow Claim......................................................... 36
8.4 Indemnification of the Seller........................................ 36
8.5 Limits on Indemnification............................................ 36
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ARTICLE IX MISCELLANEOUS.................................................... 37
9.1 Modifications....................................................... 37
9.2 Notices............................................................. 37
9.3 Counterparts; Facsimile Transmission................................ 39
9.4 Expenses............................................................ 39
9.5 Binding Effect; Assignment.......................................... 39
9.6 Entire and Sole Agreement........................................... 39
9.7 Governing Law....................................................... 40
9.8 Survival of Representations, Warranties and Covenants............... 40
9.9 Invalid Provisions.................................................. 40
9.10 Public Announcements................................................ 40
9.11 Remedies Cumulative................................................. 40
9.12 Waiver.............................................................. 40
9.13 DISPUTE RESOLUTION.................................................. 40
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<PAGE>
LIST OF EXHIBITS
Exhibit A Form of Escrow Agreement
Exhibit B Form of Landlord Agreement
Exhibit C Opinion of the Company's and the Seller's Counsel
Exhibit D-1 Seller's and Company Officer's Certificates
Exhibit D-2 Company's Secretary's Certificate
Exhibit E Form of Release
Exhibit F Davidson Executive Agreement
Exhibit G-1 Global and Newco Officer's Certificates
Exhibit G-2 Global and Newco Secretary's Certificate
Exhibit H Equity Subscription Agreement
Exhibit I Phoenix Business Right of First Refusal Agreement
Exhibit J Form of Shareholder Consent
Exhibit K Form of License to Use Dahill Name
LIST OF SCHEDULES
Schedule 1.1 Manufacturer Financing
Schedule 2.9 Seller's Accounts
Schedule 2.12 Holders of Funded Indebtedness
Schedule 3.2 Liens on Shares
Schedule 3.1 Ownership of Shares
Schedule 3.4 Articles and Bylaws
Schedule 3.5 Subsidiaries
Schedule 3.7 Financial Statements
Schedule 3.8A Certain Actions
Schedule 3.8B Material Changes
Schedule 3.9 Properties
Schedule 3.10 Licenses and Permits
Schedule 3.11 Patents and Trademarks
Schedule 3.13 Insurance
Schedule 3.14 Employee Benefit Plans
Schedule 3.15 Contracts and Agreements
Schedule 3.16 Claims and Proceedings
Schedule 3.18 Personnel
Schedule 3.19 Business Relations
Schedule 3.20 Accounts Receivable
Schedule 3.21 Bank Accounts
Schedule 3.25 Indebtedness with Officers, Directors and Shareholders
Schedule 3.26 Undisclosed Liabilities
ANNEX A Preliminary Closing Balance Sheet
-vi-
<PAGE>
MERGER AGREEMENT AND PLAN OF MERGER
THIS MERGER AGREEMENT AND PLAN OF MERGER (the "Agreement") is entered
into as of February 26, 1999 by and among GLOBAL IMAGING SYSTEMS, INC., a
Delaware corporation ("Global"), DAHILL ACQUISITION, INC., a Texas corporation
("Newco"), DAHILL INDUSTRIES, INC., a Texas corporation (the "Company") and
Randall E. Davidson (the "Seller"). if the context so requires, references
herein to the Company shall mean the Surviving Corporation (as hereinafter
defined) for periods after the Closing Date.
W I T N E S S E T H:
WHEREAS, the Company is engaged in the distribution, sale and service
of copiers, fax machines and other office equipment in the State of Texas (the
"Business"); and
WHEREAS, the Seller owns more than 79% of all of the issued and
outstanding shares of capital stock of the Company (the "Shares"); and
WHEREAS, Global desires to purchase from the Seller and the other
shareholders of the Company (collectively, the "Shareholders") all of the Shares
pursuant to a merger between Newco and the Company on the terms and subject to
the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual premises and covenants
contained herein and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto covenant and agree
as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. In this Agreement, the following terms have the
meanings specified or referred to in this Section 1.1 and shall be equally
applicable to both the singular and plural forms. Any agreement referred to
below shall mean such agreement as amended, supplemented and modified from time
to time to the extent permitted by the applicable provisions thereof and by this
Agreement.
"Additional Escrow Period" has the meaning specified in Section 2.12.
"Additional Escrow Sum" has the meaning specified in Section 2.12.
"Affiliate" means, with respect to any Person, any other Person which
directly or indirectly controls, is controlled by or is under common control
with such Person.
<PAGE>
"Allocable Portions" shall mean the allocable portions of the Purchase
Price paid to Seller, Shareholders and Company Optionholders, if any, as set
forth in Schedule 2.9 hereto.
"Assumed Notes" means the notes payable or other obligations by the
Company to certain individuals (in the aggregate of $185,121) as specifically
set forth on Schedule 1.1 attached hereto.
"Buildings" means collectively those buildings listed on Schedule 3.9.
"Business" has the meaning specified in the first recital of the
Agreement
"Business Day" means any day in which the NASDAQ National Market
System is open for trading in the United States of America.
"Cash Shortfall" has the meaning set forth in Section 2.13(c).
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C. (S)(S) 9601 et seq., any amendments thereto, any
successor statutes, and any regulations promulgated thereunder.
"Closing" means the closing of the transfer of the Shares from the
Seller and Shareholders to Global pursuant to the Merger.
"Closing Balance Sheet" has the meaning specified in Section 2.14.
"Closing Date" has the meaning specified in Section 2.11.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning specified in the first paragraph of this
Agreement.
"Company Option" means a valid, enforceable, outstanding and
unexercised option to purchase capital stock of the Company.
"Company Optionholder" means the holder of a Company Option.
"Confidential Information" means all (a) confidential information and
trade secrets of the Company including, without limitation, any of the same
comprising the identity, lists or descriptions of any customers, referral
sources or organizations; (b) financial statements, cost reports or other
financial information; (c) contract proposals, or bidding information; (d)
business plans and training and operations methods and manuals; (e) personnel
records; (f) information concerning fee structures; and (g) management systems,
policies or procedures, including related forms and manuals. Confidential
Information shall not include any information (i) which is disclosed pursuant to
subpoena or other legal process, or (ii) which has been publicly disclosed.
"Contracts" has the meaning specified in Section 3.15.
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"Court Order" means any judgment, order, award or decree of any
foreign, federal, state, local or other court or tribunal and any award in any
arbitration proceeding.
"Dissenting Shares" has the meaning specified in Section 2.10.
"Effective Date" has the meaning specified in Section 2.11.
"Effective Date Cash" means the Company's cash on hand and cash
equivalents (such as bank accounts, short term government securities funds and
money market funds) at the Effective Date, less (a) the amount of any checks
outstanding on the Effective Date and (b) the amount of Funded Indebtedness paid
or provided for at Closing in accordance with Section 2.13(a), plus (x) the
amount paid to the Company at or immediately following the Closing in repayment
of the Seller Note and any other notes owed by any Shareholders to the Company
paid to the Company as set forth on Annex A and (y) the purchase price paid to
the Company by the Phoenix Purchaser in accordance with that one certain Assets
Purchase Agreement of even date with this Agreement (the "Phoenix Purchase
Agreement"), as such purchase price is finally adjusted and paid in accordance
with the Phoenix Purchase Agreement.
"Effective Time" has the meaning specified in Section 2.2.
"Employment Agreement" means the executive agreement with Seller to be
entered into at Closing in the form of Exhibit F.
"Encumbrance" means any lien, claim, charge, security interest,
mortgage, pledge, easement, conditional sale or other title retention agreement
or defect in title.
"Environmental Obligations" has the meaning specified in Section 3.12.
"Equitable Exceptions" has the meaning specified in Section 3.6.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" means Bank One, N.A.
"Escrow Agreement" means the Escrow Agreement to be executed by and
among the Seller, Global and the Escrow Agent in substantially the same form as
Exhibit A.
"Escrow Period" has the meaning specified in Section 2.12.
"Escrow Sum" has the meaning specified in Section 2.12.
"Financial Statements" has the meaning specified in Section 3.7.
"Company's Profit Sharing Plan" means a qualified plan under Code
Section 401(a) sponsored and maintained by Seller, which includes a qualified
cash or deferred arrangement, as defined in Section 401(k) of the Code.
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"Funded Indebtedness" means all (i) indebtedness of the Company for
borrowed money or pursuant to contracts, notes or other written instruments that
provide for the payment of interest prior to default; (ii) capital lease
obligations of the Company which are accrued or required to be accrued under
GAAP (but specifically excluding obligations of the Company under any of the
real estate leases or other leases described in the schedules to this
Agreement); (iii) obligations of the Company to pay the deferred purchase or
acquisition price for goods or services other than trade accounts payable or
accrued expenses in the ordinary course of business on no more than 120-day
payment terms; (iv) indebtedness of others guaranteed by the Company or secured
by an Encumbrance on any of the Company's Assets; (v) indebtedness of the
Company under extended credit terms of more than 60 days provided to the Company
by manufacturers, excluding any financing with Sharp, Mita or Minolta that is
incorporated as liabilities into Annex A; or (vi) any receivables owed by the
Company to the Seller not released at the Closing; provided, however, that
"Funded Indebtedness" shall not include any of the Assumed Notes.
"GAAP" shall mean generally accepted accounting principles,
consistently applied.
"Global" has the meaning specified in the first paragraph of this
Agreement.
"Global Stock" means the common stock, par value $.01 per share of
Global.
"Governmental Body" means any foreign, federal, state, local or other
governmental authority or regulatory body.
"Governmental Permits" has the meaning specified in Section 3.10.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"IRS" means the Internal Revenue Service.
"Independent Accountants" has the meaning specified in Section 2.14.
"Indemnifiable Costs" has the meaning specified in Section 8.1.
"Indemnified Parties" has the meaning specified in Section 8.1.
"Indemnification Basket Amount" has the meaning specified in Section
8.5.
"Intellectual Property" has the meaning specified in Section 3.11.
"Material Adverse Change" or "Material Adverse Effect" means a
material adverse change or effect on the assets, properties, Business,
operations, liabilities, or financial condition of the Company and its
subsidiaries, taken as a whole. In determining whether a
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"Material Adverse Change" or "Material Adverse Effect" has occurred, the
quantitative amounts set forth at the end of Article III shall be conclusive.
"Merger" has the meaning specified in Section 2.1 hereof.
"Merger Documents" has the meaning specified in Section 2.2 hereof.
"Newco" has the meaning specified in the first paragraph of this
Agreement.
"OSHA" means the Occupational Safety and Health Act, 29 U.S.C. (S)(S)
651 et seq., any amendment thereto, and any regulations promulgated thereunder.
"Permitted Exception" means (a) liens for Taxes and other governmental
charges and assessments which are not yet due and payable, (b) liens of
landlords and liens of carriers, warehousemen, mechanics and materialmen and
other like liens arising in the ordinary course of business for sums not yet due
and payable, (c) other liens or imperfections on property which are not material
in amount or do not materially detract from the value or the existing use of the
property affected by such lien or imperfection, and (d) such statements of fact
and exceptions shown on any title insurance policies delivered to Global.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization or Governmental Body.
"Phoenix Business" means the assets and liabilities of the Company
relating to its operations in Phoenix, Arizona.
"Phoenix Purchaser" has the meaning specified in Section 7.1(e).
"Preliminary Closing Balance Sheet" shall mean the Company's best
estimate of the Company's balance sheet as of the Effective Date as developed by
Global and the Company in accordance with GAAP in the form of Annex A hereto.
"Purchase Price" has the meaning specified in Section 2.8.
"RCRA" means the Resource Conservation and Recovery Act, 42 U.S.C.
(S)(S) 6901 et seq., and any successor statute, and any regulations promulgated
thereunder.
"Requirements of Laws" means any foreign, federal, state and local
laws, statutes, regulations, rules, codes or ordinances enacted, adopted, issued
or promulgated by any Governmental Body (including, without limitation, those
pertaining to electrical, building, zoning, environmental and occupational
safety and health requirements) or common law.
"Seller" has the meaning set forth in the first paragraph of this
Agreement.
"Seller Note" means that certain promissory note of Seller payable to
the Company in the aggregate principal amount of $500,000.
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"Shareholder Consent" means the agreement to be executed by each
Shareholder evidencing each Shareholder's agreement to be liable for his or her
Allocable Portion of any Indemnifiable Costs owed to Global pursuant to Section
8.1 hereof, which agreement shall be substantially in the form of Exhibit J
hereto.
"Shareholders" has the meaning specified in the second recital of this
Agreement.
"Shareholders' Representative" has the meaning set forth in Section
2.16 of this Agreement.
"Shares" means all of the issued and outstanding shares of the capital
stock of the Company.
"Special Company Expenses" means the reasonable legal and accounting
expenses of Seller incurred in connection with the transactions contemplated
hereby and the costs of the preparation of the Company's short period tax
return.
"Standard Escrow Period" has the meaning specified in Section 2.12.
"Standard Escrow Sum" has the meaning specified in Section 2.12.
"Surviving Corporation" has the meaning set forth in Section 2.1 of
this Agreement.
"Tax" or "Taxes" means any federal, state, local or foreign income,
alternative or add-on minimum, gross income, gross receipts, windfall profits,
severance, property, production, sales, use, transfer, gains, license, excise,
employment, payroll, withholding or minimum tax, transfer, goods and services,
or any other tax, custom, duty, governmental fee or other like assessment or
charge of any kind whatsoever, together with any interest or any penalty,
addition to tax or additional amount imposed thereon by any Governmental Body.
"Tax Return" means any return, report or similar statement required to
be filed with respect to any Taxes (including any attached schedules),
including, without limitation, any information return, claim for refund, amended
return and declaration of estimated Tax.
"Working Capital" shall mean the difference between the Company's
current assets and current liabilities as calculated in accordance with GAAP as
of the Effective Date; provided, however, that Working Capital shall not be
positively or negatively affected by (i) the application of cash after September
30, 1998 to the repayment of non-current liabilities; (ii) the repayment of the
Seller Note; (iii) Special Company Expenses; and (iv) the sale of the Phoenix
Business; provided, however, that all amounts due under the Assumed Notes
(whether or not current) shall be included as liabilities for the purposes of
calculating Working Capital.
"Working Capital Target" shall mean $6,281,774.
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ARTICLE II
MERGER
2.1 The Merger. At the Effective Time (as defined below), the
Company will be merged with and into Newco (the "Merger") and the separate
existence of the Company shall thereupon cease and the name of Newco, as the
surviving corporation in the Merger (the "Surviving Corporation"), shall by
virtue of the Merger be changed to "Dahill Industries, Inc.", and the Surviving
Corporation shall operate as "Dahill Industries, Inc." in the State of Texas.
The Merger shall have the effects set forth in the Texas Business Corporation
Act (collectively, the "TBCA").
2.2 Effective Time of the Merger. As soon as practicable after the
satisfaction or waiver of the conditions hereinafter set forth, the parties
hereto will file with the Secretary of the State of the State of Texas a
certificate or articles of merger or ownership and other documents (the "Merger
Documents"), in such respective forms as required by, and executed in accordance
with, the relevant provisions of the TBCA in order to effect the Merger. The
Merger shall become effective at such time as the Merger Documents shall have
been accepted for filing with the Secretary of the State of the State of Texas
or such other later times and dates as the parties shall agree should be
specified in the Merger Documents (the "Effective Time").
2.3 Articles of Incorporation. The Articles of Incorporation of
Newco in effect at the time of the Merger shall be the Articles of Incorporation
of the Surviving Corporation, until thereafter amended as provided thereunder
and in the TBCA.
2.4 Bylaws. The Bylaws of Newco in effect at the time of the
Merger shall be the Bylaws of the Surviving Corporation until altered, amended
or repealed, as provided thereunder and in the Articles of Incorporation and the
TBCA.
2.5 Directors and Officers of Surviving Corporation.
(i) The directors of Newco at the Effective Time shall be the
directors of the Surviving Corporation and shall hold office from the Effective
Time until their respective successors are duly elected or appointed and qualify
in the manner provided in the Articles of Incorporation and Bylaws of the
Surviving Corporation, or as otherwise provided by law.
(ii) The officers of Newco at the Effective Time shall be the
officers of the Surviving Corporation and shall hold office from the Effective
Time until their respective successors are duly elected or appointed and qualify
in the manner provided in the Articles of Incorporation and Bylaws of the
Surviving Corporation, or as otherwise provided by law.
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2.6 Effect of the Merger. The Merger shall have the effects set
forth in the TBCA. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all the properties, rights, privileges,
powers and franchise of the Company and Newco shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Newco
shall become the debts, liabilities and duties of the Surviving Corporation.
The purpose of the Surviving Corporation shall be the purposes of the Company
immediately prior to the Merger. The total number of shares which the Surviving
Corporation is authorized to issue shall be 10,000,000 shares of Common Stock,
no par value.
2.7 Conversion of Shares and Options. At the Effective Time, by
virtue of the Merger and without any action on the part of the Seller,
Shareholders or Company Optionholders:
(i) Each Share issued and outstanding immediately prior to the
Effective Time (other than Shares as to which the holders thereof shall have
properly exercised appraisal rights under the TBCA, if any) shall be converted
into the right to receive in cash its Allocable Portion of the Purchase Price
(as hereinafter defined).
(ii) Each Share held in the treasury of the Company immediately
prior to the Effective Time shall be canceled and retired and cease to exist.
(iii) Each share of common stock, no par value, of Newco issued
and outstanding immediately prior to the Effective Time shall be converted into
and exchangeable for one share of common stock, no par value, of the Surviving
Corporation.
(iv) Each Company Option shall terminate and shall be converted
into the right to receive, upon surrender of such option and release of all
claims under or relating to such Company Option, cash in the amount of the
following: (A) the number of shares subject to such Company Option held by such
Company Optionholder multiplied by (B) the difference between (x) the amount per
share that such Company Optionholder would have received with respect to such
Company Option if such Company Optionholder had exercised his or her option
immediately prior to the Effective Time and (y) the exercise price per share of
the Company Option held by such Company Optionholder (as set forth in such
Company Optionholder's option agreement with the Company).
2.8 Purchase Price. The total potential merger consideration for the
Shares and the Company Options (if any) (the "Purchase Price") shall be equal to
$24,000,000, subject to any adjustment required to be made pursuant to Section
2.13 or Section 2.15 below.
2.9 Payment of Purchase Price. The Purchase Price shall be payable
by Global at the Closing (as defined in Section 2.11 below) as follows:
(a) $21,235,000 of the Purchase Price, as adjusted in accordance
with Section 2.13 below, will be paid in cash by wire transfer of
funds to the account(s) specified by the Seller and Shareholders'
Representative in Schedule 2.9 (including the payment of $150,000 for
the covenant not to
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compete provided in Section 6.4), and such amount shall be allocated
among the Seller and the Shareholders in the Allocable Portions set
forth in Schedule 2.9 (subject to pro-rata adjustment in accordance
with Section 2.13 below);
(b) $1,200,000 of the Purchase Price shall be paid by Global to
Seller at the Closing in the form of shares of Global Stock issued in
the name of Seller and delivered to the Escrow Agent in accordance
with Section 2.12 below; and the number of shares of Global Stock
shall be determined based on the average of the closing bid price per
share of the Global Stock on the NASDAQ National Market System for the
ten (10) Business Days prior to the two (2) Business Days prior to
February 26, 1999; provided, however, that (A) in the event that such
average would result in a value for the Global Stock of less than $12
per share (as adjusted for any stock splits or stock dividends), then
Global shall have the right to pay such amount in cash by wire
transfer of funds to Seller and (B) in the event that such average
would result in a value for Global Stock of more than $24 per share
(as adjusted for any stock splits or stock dividends), then Seller
shall have the right to require that such amount be paid in cash by
wire transfer of funds to Seller; and
(c) $1,565,000 of the Purchase Price will be paid in cash by
wire transfer of funds to the Escrow Agent to be held in escrow in
accordance with the terms of the Escrow Agreement and the terms of
Section 2.12 below; and such $1,565,000 cash, together with the Global
Stock paid to Seller pursuant to Section 2.9(b) above, shall be paid
to the Escrow Agent at Closing in accordance with this Section 2.9(c)
shall be allocated among the Seller and the Shareholders based on the
Allocable Portions set forth in Schedule 2.9(c).
2.10 Dissenting Shares. Notwithstanding anything in this Agreement
to the contrary, Shares which are issued and outstanding immediately prior to
the Effective Time and which are held by Shareholders who have not voted such
Shares in favor of the Merger and who shall have delivered a written demand for
appraisal of such Shares in the manner provided in the TBCA (the "Dissenting
Shares") shall not be converted into or be exchangeable for the right to receive
the cash consideration provided above, unless and until such holder shall have
failed to perfect or shall have effectively withdrawn or lost his right to
appraisal and payment under the TBCA. If such holder shall have so failed to
perfect or shall have effectively withdrawn or lost such right, his Shares shall
thereupon be deemed to have been converted into and to have become exchangeable
for, at the Effective Time, the right to receive the cash consideration provided
herein.
2.11 Closing.
(a) Date and Place. The Closing of the purchase and sale of
the Shares pursuant to the Merger contemplated by this Agreement shall take
place at 10:00 a.m., Central Time, at the offices of Graves, Dougherty, Hearon &
Moody in Austin, Texas on
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February 26, 1999, or at such other date and time as the parties shall agree
(the "Closing Date"), effective as of February 1, 1999 (the "Effective Date").
(b) Deliveries at the Closing. At the Closing, (i) the Seller will
deliver to Global and Newco the various certificates,instruments, and documents
referred to in Section 7(a) below, (ii) Global and Newco will deliver to the
Seller and Shareholders the various certificates, instruments, and documents
referred to in Section 7(b) below, (iii) the Seller will deliver to Global and
Newco stock certificates representing all of his Shares, endorsed in blank or
accompanied by duly executed assignment documents, and the Shareholders will
deliver to Global and Newco stock certificates or loss certificate affidavits
(to the reasonable satisfaction of Global) representing all of the remaining
Shares, (iv) the Merger Documents will be filed and the Merger will be declared
effective in the State of Texas, and (v) Global and Newco will deliver by wire
transfer to the Shareholders' Representative, for the benefit of Sellers,
Shareholders and the Company Optionholders (if any), the Purchase Price
specified in Section 2.9 above as may be adjusted after the Closing pursuant to
Section 2.13 below; provided, however, that in the event that the Closing Date
occurs on a day other than a Business Day, then the filing of the Merger
Documents with the State of Texas and the wire transfer of the Purchase Price
shall occur on the next Business Day following the Closing Date.
(c) Termination. Global, Newco, the Company and the Seller may
terminate this Agreement at any time prior to the Closing Date by mutual written
consent. In addition, (i) Global may terminate this Agreement at any time prior
to the Closing by giving written notice to the Seller if the Closing shall not
have occurred on or before March 16, 1999 by reason of the failure of any
condition precedent under Section 7.1 hereof (unless the failure results
primarily from Global itself breaching any representation, warranty, or covenant
contained in this Agreement) and (ii) the Seller may terminate this Agreement by
giving written notice to Global at any time prior to the Closing if the Closing
shall not have occurred on or before March 16, 1999 by reason of the failure of
any condition precedent under Section 7.2 hereof (unless the failure results
primarily from either the Seller themselves or the Company itself breaching any
representation, warranty, or covenant contained in this Agreement). If the
transactions contemplated by this Agreement are terminated pursuant to this
Section 2.11(c) by notice in writing to the non-terminating party or parties,
this Agreement shall become void and of no further force and effect, except that
such termination shall not relieve (i) any party from its covenants in respect
of confidentiality contained in Section 6.3 and (ii) any party then in breach of
any representation, warranty, covenant or agreement contained in this Agreement
from liability in respect of such breach.
2.12 Escrow Arrangements. Pursuant to the Escrow Agreement to be entered
into among Seller, Global and the Escrow Agent, $1,200,000 of the Purchase Price
payable in cash and the Global Stock (collectively, the "Standard Escrow Sum")
plus $365,000 of the Purchase Price payable in cash (the "Additional Escrow
Sum") shall be delivered to the Escrow Agent at Closing. Any shares of Global
Stock deposited by Seller shall be valued as described in Section 2.9(b). Such
moneys and Global Stock, if any, (collectively, the Standard Escrow Sum and the
Additional Escrow Sum, together with all interest and dividends accrued thereon,
are hereinafter referred to as the "Escrow Sum") shall
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be held pursuant to the terms of the Escrow Agreement for payment from such
Escrow Sum of the amounts, if any, owing by the Seller and Shareholders to
Global pursuant to Section 2.15 (at any time during the Standard Escrow Period)
with respect to the Standard Escrow Sum or pursuant to the indemnification
obligations under Article VIII below with respect to the Standard Escrow Sum or
the Additional Escrow Sum, as applicable, and as set forth in the Escrow
Agreement. At the conclusion of the period ending on the first anniversary of
the Closing Date (such period being referred to herein as the "Standard Escrow
Period"), such remaining portion of the Standard Escrow Sum not then subject to
an unresolved claim by Global or previously paid to Global in accordance with
the terms of the Escrow Agreement and this Agreement shall be disbursed in
accordance with the Escrow Agreement. At the conclusion of the period ending on
the third anniversary of the Closing Date (such period being referred to herein
as the "Additional Escrow Period"), such remaining portion of the Escrow Sum not
theretofore claimed by or paid to Global or to Shareholders' Representative or
Seller in accordance with the terms of the Escrow Agreement and this Agreement
shall be disbursed pursuant to the Escrow Agreement or to Seller as more
particularly provided in the Escrow Agreement. The Shareholders' Representative
shall have the right to pay any escrow claims under the Escrow Agreement from
the Escrow Sum with respect to the Standard Escrow Sum in a combination of cash
and/or Global Stock, if any, as determined by the Shareholders' Representative
(as hereinafter defined). The Seller and Global agree that each will execute and
deliver such reasonable instruments and documents as are furnished by any other
party to enable such furnishing party to receive those portions of the Escrow
Sum to which the furnishing party is entitled under the provisions of the Escrow
Agreement and this Agreement. Any interest, dividends or other income on the
cash and Global Stock held in accordance with the Escrow Agreement will be
distributed to the Seller and Shareholders in accordance with the terms of the
Escrow Agreement.
2.13 Purchase Price Adjustments.
(a) Funded Indebtedness. At the Closing, the Company shall pay in
full (or make provision through the closing statement executed at the Closing
for payment immediately following the Closing), all Funded Indebtedness and
cause all liens, security interests or other Encumbrances securing the same to
be released. The portion of the Purchase Price payable at Closing pursuant to
Section 2.9(a) above will be reduced by the total amount of Funded Indebtedness
(including all indebtedness to NationsBank and TransAmerica), if any, not paid
or provided for at, or immediately following, the Closing as set forth in the
immediately preceding sentence, except to the extent that the Company's
Effective Date Cash exceeds $2,740,000.
(b) Working Capital. The portion of the Purchase Price payable at
Closing pursuant to Section 2.9(a) will be reduced, on a dollar-for-dollar
basis, by the amount, if any, by which the Working Capital as reflected on the
Preliminary Closing Balance Sheet is less than the Working Capital Target.
(c) Effective Date Cash on Hand. The portion of the Purchase Price
payable at Closing pursuant to Section 2.9(a) will be reduced, on a $0.50 per
dollar
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basis, by the amount, if any, (such deficit to be referred to as the "Cash
Shortfall") by which the Effective Date Cash as reflected on the Preliminary
Closing Balance Sheet is less than $2,240,000. Any adjustment under this Section
2.13(c) shall be in added to the Working capital for purposes of calculating
Working Capital under Section 2.13(b).
2.14 Closing Review. Within 120 days following the Closing Date,
there shall be delivered to the Shareholders' Representative a balance sheet of
the Company (the "Closing Balance Sheet") of the Company at and as of the
Effective Date. The Closing Balance Sheet shall be prepared in accordance with
GAAP by Global and in a manner consistent with the methodology utilized in the
preparation of the Preliminary Closing Balance Sheet, with the cost thereof
being borne solely by Global. In the event that the Shareholders' Representative
disputes any items on the Closing Balance Sheet within ten (10) days after the
Seller's receipt thereof, the parties shall jointly select and retain an
independent "Big Five" accounting firm (the "Independent Accountants") to review
the disputed item(s) on the Closing Balance Sheet. The final determination of
such disputed item(s) by the Independent Accountants shall be binding on the
parties and shall be reflected on the Closing Balance Sheet. The cost of
retaining the Independent Accountants shall be borne by the Seller; provided,
however, that Global shall reimburse the Seller for the cost of the Independent
Accountants in the event that such review results in an increase of more than 3%
in the Working Capital amount determined by Global in the Closing Balance Sheet.
2.15 Post-Closing Purchase Price Adjustment. In the event that the
Working Capital as reflected on the Closing Balance Sheet is less than the
Working Capital Target, then the Purchase Price will be adjusted downward, on a
dollar-for-dollar basis, to reflect the lesser of (i) the decrease, if any, in
Working Capital as reflected on the Closing Balance Sheet from the amount of
Working Capital reflected on the Preliminary Closing Balance Sheet or (ii) the
amount, if any, by which the Working Capital reflected on the Closing Balance
Sheet is less than the Working Capital Target. Conversely, the Purchase Price
will be adjusted upward, on a dollar-for dollar basis, to reflect the increase,
if any, in the total Working Capital as reflected on the Closing Balance Sheet
from the amount of Working Capital reflected on the Preliminary Closing Balance
Sheet; provided, however, that in no event shall such upward adjustment exceed
the total amount of any downward adjustment to the Purchase Price made pursuant
to Section 2.13(b) above. In addition, in the event that the Effective Date Cash
as reflected on the Closing Balance Sheet is less than 2,240,000, then the
Purchase Price will be adjusted downward, on a $0.50 per dollar basis, to
reflect the lesser of (i) the increase, if any, in the Cash Shortfall as
reflected on the Closing Balance Sheet from the Cash Shortfall reflected on the
Preliminary Closing Balance Sheet or (ii) the amount, if any, by which Effective
Date Cash reflected on the Closing Balance Sheet is less than 2,240,000.
Conversely, the Purchase Price will be adjusted upward, on a $0.50 per dollar
basis, to reflect any decrease in the Cash Shortfall; provided, however, that in
no event shall such upward adjustment exceed the total amount of any downward
adjustment to the Purchase Price made pursuant to Section 2.13(c). The post-
closing adjustment to the Purchase Price, if any, payable by the Seller and
Shareholders to Global shall be paid by the Seller and Shareholders to Global
from the Standard Escrow Sum. Any post closing adjustment payable by the Seller
and Shareholders to Global made in accordance with this Section 2.15 shall be
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allocated based on the Allocable Portions. In addition, the post-closing
adjustment to the Purchase Price, if any, payable by Global to the Seller and
Shareholders shall be paid to the Shareholders' Representative (for the benefit
of the Seller and the Shareholders) in immediately available funds and shall be
made within ten (10) business days of delivery of the Closing Balance Sheet,
unless the Seller disputes any items on the Closing Balance Sheet, in which case
it shall be paid within ten (10) business days after the Independent Accountants
finally determine the disputed item(s), and Global or Independent Accountants
deliver(s) to the Seller (and Global, if applicable) a Closing Balance Sheet
modified to reflect such determination.
2.16 Shareholders' Representative.
(a) In order to administer efficiently (A) the implementation of the
Agreement by the Seller and Shareholders, (B) the waiver of any condition to the
obligations of the Seller or the Shareholders to consummate the transactions
contemplated hereby, and (C) the settlement of any dispute with respect to the
Agreement, by execution of the Shareholder Consent, Shareholders have designated
Seller as their representative (the "Shareholders' Representative").
(b) By execution of the Shareholder Consent, the Shareholders
authorize the Shareholders' Representative (A) to take all action necessary in
connection with the implementation of the Agreement on behalf of the
Shareholders, the waiver of any condition to the obligations of the Shareholders
to consummate the transactions contemplated hereby, or the settlement of any
dispute, (B) to give and receive all notices required to be given under the
Agreement, (C) to take any and all additional action as is contemplated to be
taken by or on behalf of the Shareholders by the terms of this Agreement, and
(D) to receive for Seller, Shareholders and Company Optionholders, if any, the
Purchase Price, including, without limitation, that portion of the Purchase
Price paid at the Closing and any portion of the Standard Escrow Sum, the
Additional Escrow Sum and any interest accruing thereon disbursed under the
terms of the Escrow Agreement for the benefit of Seller, Shareholders and the
Company Optionholders (if any). The Shareholders' Representative shall have no
duty to invest any portion of the Purchase Price received by the Shareholders'
Representative or to accrue any interest thereon, and may deposit the Purchase
Price, pending its disbursement, in a non-interest bearing account or accounts.
(c) In the event that the Shareholders' Representative dies, becomes
legally incapacitated or resigns from such position, a person appointed by
Shareholders' Representative (in the event of his resignation) or Seller's
personal representative (in the event of his death or incapacity) shall fill
such vacancy and shall be deemed to be the Shareholders' Representative for all
purposes of this Agreement; however, no change in the Shareholders'
Representative shall be effective until Global is given notice of it by the
Seller and Shareholders.
(d) All decisions and actions by the Shareholders' Representative
shall be binding upon all of the Shareholders, and no Shareholder shall have the
right to object, dissent, protest or otherwise contest the same, in the absence
of fraud, gross negligence or willful misconduct of the Shareholders'
Representative.
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(e) By their execution of this Agreement and the Shareholder
Consent, the Seller and Shareholders have agreed that:
(i) Global shall be able to rely conclusively on the
instructions and decisions of the Shareholders' Representative as to
any actions required or permitted to be taken by the Shareholders or
the Shareholders' Representative hereunder, and no party hereunder
shall have any cause of action against Global for action taken by
Global in reliance upon the instructions or decisions of the
Shareholders' Representative;
(ii) all actions, decisions and instructions of the
Shareholders' Representative shall be conclusive and binding upon all
of the Shareholders; no Shareholder shall have any cause of action
against Global or the Company for any action taken or omitted to be
taken, decision made or omitted to be made or any instruction given or
omitted to be given by the Shareholders' Representative; and no
Shareholder shall have any cause of action against the Shareholders'
Representative for any action taken, decision made or instruction
given by the Shareholders' Representative under this Agreement, except
for fraud, gross negligence or willful breach of this Agreement by the
Shareholders' Representative;
(iii) the Shareholders' Representative shall be deemed to
fulfill any fiduciary obligation to the Shareholders or Company
Optionholders (if any) so long as no Shareholder is adversely affected
by any action or failure to act of the Shareholders' Representative in
a disproportionate measure compared to any other Shareholder;
(iv) remedies available at law for any breach of the
provisions of this Section 2.16 are inadequate; therefore, Global
shall be entitled to temporary and permanent injunctive relief without
the necessity of proving damages if Global brings an action to enforce
the provisions of this Section 2.16; and
(v) the provisions of this Section 2.16 are independent
and severable, shall constitute an irrevocable power of attorney,
coupled with an interest and surviving death, granted by the
Shareholders to the Shareholders' Representative and shall be binding
upon the executors, heirs, legal representatives and successors of
each Shareholder.
(vi) All fees and expenses incurred by the Shareholders'
Representative shall be paid by the Seller, Shareholders and Company
Optionholders (if any) based on their aggregate Allocable Portions of
the Purchase Price.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE SELLERS
The Company and the Seller jointly and severally represent and warrant to
Global and Newco that as of the date hereof and as of the Closing Date:
3.1 Capitalization. The authorized capital stock of the Company
consists of 21,000,000 shares of Common Stock, 6,940,670 of which are issued and
outstanding. All of the Shares are duly authorized, validly issued, fully paid,
and nonassessable. All of the Shares are owned of record and beneficially by the
Seller and Shareholders in the amounts set forth on Schedule 3.1 hereto. None of
the Shares was issued or will be transferred under this Agreement in violation
of any preemptive or preferential rights of any Person. The Seller and the
Shareholders collectively own all of the issued and outstanding capital stock of
the Company and the Seller owns more than 79% of all classes of the issued and
outstanding capital stock of the Company. Schedule 3.1 reflects any stock
dividends, stock splits or combinations consummated by the Company in the six
(6) month period prior to the execution of this Agreement.
3.2 No Liens on Shares. Except as shown on Schedule 3.2, Seller
owns his Shares, free and clear of any Encumbrances other than the rights and
obligations arising under this Agreement, and none of the Shares is subject to
any outstanding option, warrant, call, or similar right of any other Person to
acquire the same, and none of the Shares is subject to any restriction on
transfer thereof except for restrictions imposed by applicable federal and state
securities laws. At Closing and upon consummation of the Merger, Seller will
have full power and authority to convey good and marketable title to his Shares,
free and clear of any Encumbrances.
3.3 Other Rights to Acquire Capital Stock. Except as set forth in
this Agreement or on Schedule 3.3 attached hereto, there are no authorized or
outstanding warrants, options, or rights of any kind to acquire from the Company
any equity or debt securities of the Company, or securities convertible into or
exchangeable for equity or debt securities of the Company, and there are no
shares of capital stock of the Company reserved for issuance for any purpose nor
any contracts, commitments, understandings or arrangements which require the
Company to issue, sell or deliver any additional shares of its capital stock.
3.4 Due Organization. The Company is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Texas and
has full corporate power and authority to carry on the Business as now conducted
and as proposed to be conducted through Closing. Complete and correct copies of
the Articles of Incorporation and Bylaws of the Company, and all amendments
thereto, have been heretofore delivered to Global and are attached hereto as
Schedule 3.4. The Company is qualified to do business in the State of Texas and
in each jurisdiction in which the nature of the Business or the ownership
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of its properties requires such qualification except where the failure to be so
qualified does not and could not reasonably be expected to have a Material
Adverse Effect.
3.5 Subsidiaries. The Company does not, directly or indirectly have
any subsidiaries or any direct or indirect ownership interests in any Person.
The Seller do not own any other Person engaged in the Business.
3.6 Due Authorization. The execution, delivery, and performance of
this Agreement, the Merger Documents and the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action of the
Company other than shareholder approval. Upon attainment of shareholder approval
of the Merger, this Agreement will have been duly and validly executed and
delivered by the Company and the Seller and constitute the valid and binding
obligations of the Company and the Seller, enforceable in accordance with its
terms, except to the extent that enforceability may be limited by laws affecting
creditors' rights and debtors' obligations generally, and legal limitations
relating to remedies of specific performance and injunctive and other forms of
equitable relief (the "Equitable Exceptions"). Except for the Equitable
Exceptions and assuming all necessary consents to the consummation of the
transactions contemplated hereby, as specifically set forth on Schedules 3.9 and
3.15, are obtained, the execution, delivery, and performance of this Agreement
(as well as the Merger Documents and all other instruments, agreements,
certificates, or other documents contemplated hereby) by the Company and the
Seller, do not (a) violate any Requirements of Laws or any Court Order of any
Governmental Body applicable to the Company or the Seller, or their respective
property, (b) violate or conflict with, or permit the cancellation of, or
constitute a default under, any material agreement to which the Company or the
Seller are a party, or by which any of them or any of their respective property
is bound, (c) permit the acceleration of the maturity of any Material
indebtedness of, or Material indebtedness secured by the property of, the
Company or the Seller, or (d) violate or conflict with any provision of the
charter or bylaws of the Company.
3.7 Financial Statements. The following Financial Statements
(collectively the "Financial Statements") of the Company have been delivered to
Global by the Company and are attached hereto as Schedule 3.7: a balance sheet
of the Company as of December 31, 1998, and a statement of income of the Company
for the fiscal year ending December 31, 1998. The Financial Statements fairly
present the financial position, results of operations and changes in financial
position of the Company as of the indicated dates and for the indicated periods
except as provided on Schedule 3.7. Except to the extent reflected or provided
for in the Financial Statements or the notes thereto and obligations and
liabilities incurred in the ordinary course of business since the date of the
last of such Financial Statements, the Company has no additional liabilities on
the Company's balance sheet or notes thereto that are not so reflected, nor any
other obligations (whether absolute, contingent, or otherwise) which are
(individually or in the aggregate) Material (in amount or to the conduct of the
Business); and neither the Company nor the Seller have knowledge of any basis
for the assertion of any such liability or obligation.
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3.8 Certain Actions. Since December 31, 1998, the Company has not,
except as disclosed on Schedule 3.8A hereto or any of the Financial Statements
or notes thereto and except for certain bonuses paid in cash and capital stock
approved by Global and except for the repayment of the Funded Indebtedness, the
sale of the Phoenix Business and the other transactions expressly provided for
in this Agreement: (a) discharged or satisfied any Encumbrance or paid any
obligation or liability, absolute or contingent, other than current liabilities
incurred and paid in the ordinary course of the Business; (b) paid or declared
any dividends or distributions, or purchased, redeemed, acquired, or retired any
stock or indebtedness from any stockholder (other than distributions to pay
estimated income taxes of the Seller associated with the income of the Company);
(c) made or agreed to make any loans or advances or guaranteed or agreed to
guarantee any loans or advances to any party whatsoever; (d) suffered or
permitted any Encumbrance other than Permitted Exceptions to arise or be granted
or created against or upon any of its assets, real or personal, tangible or
intangible; (e) canceled, waived, or released or agreed to cancel, waive, or
release any of its receivables, rights, or claims against third parties in
excess of $15,000 individually or $35,000 in the aggregate; (f) sold, assigned,
pledged, mortgaged, or otherwise transferred, or suffered any material damage,
destruction, or loss (whether or not covered by insurance) to, any assets
(except in the ordinary course of the Business); (g) amended its charter or
bylaws; (h) paid or made a commitment to pay any severance or termination
payment to any employee or consultant; (i) made any material change in its
method of management or operation or method of accounting; (j) made any capital
expenditures, including, without limitation, replacements of equipment in the
ordinary course of the Business, or entered into commitments therefor, except
for capital expenditures or commitments therefor which do not, in the aggregate,
exceed $40,000; (k) made any investment or commitment therefor in any Person;
(l) made any payment or contracted for the payment of any bonus or other
compensation or personal expenses, other than (i) wages and salaries and
business expenses paid in the ordinary course of the Business, and (ii) wage and
salary adjustments made in the ordinary course of the Business for employees who
are not officers, directors, or shareholders of the Company; (m) made, amended,
or entered into any written employment contract or created or made any material
change in any bonus, stock option, pension, retirement, profit sharing or other
employee benefit plan or arrangement; (n) materially amended or experienced a
termination of any material contract, agreement, lease, franchise or license to
which the Company is a party that would or could reasonably be expected to have
a Material Adverse Effect, except in the ordinary course of the Business; or (o)
entered into any other material transactions that would or could reasonably be
expected to have a Material Adverse Effect except in the ordinary course of the
Business. Since December 31, 1998, except as disclosed on Schedule 3.8B hereto
or any of the Financial Statements or notes thereto, there has not been (a) any
Material Adverse Change including, but not limited to, the loss of any material
customers or suppliers of the Company, or in any material assets of the Company,
(b) any extraordinary contracts, commitments, orders or rebates, (c) any strike,
material slowdown, or demand for recognition by a labor organization by or with
respect to any of the employees of the Company, or (d) any shutdown, material
slow-down, or cessation of any material operations conducted by, or constituting
part of, the Company, nor has the Company agreed to do any of the foregoing.
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3.9 Properties. Attached hereto as Schedule 3.9 is a list containing
a description of each interest in real property (including, without limitation,
leasehold interests) and each item of personal property utilized by the Company
in the conduct of the Business having a book value in excess of $15,000 as of
the date hereof. Except for Permitted Exceptions or as expressly set forth on
Schedule 3.9 or in the applicable lease document, such real and personal
properties are free and clear of Encumbrances. The Seller and the Company have
delivered to Global a lien search obtained from the counties where the Company
conducts business and the Texas Secretary of State office of all UCC liens of
record against the Company's personal property in the State of Texas. All of the
properties and assets necessary for continued operation of the Business as
currently conducted (including, without limitation, all books, records,
computers and computer software and data processing systems) are owned, leased
or licensed by the Company and are reasonably suitable for the purposes for
which they are currently being used. With the exception of used equipment and
inventory valued at no more than $10,000 in the aggregate on the Company's
Financial Statements, the physical properties of the Company, including the real
properties leased by the Company, to the best knowledge of the Company and the
Seller, are in good operating condition and repair, normal wear and tear
excepted, and are free from any defects of a material nature. Except for
Permitted Exceptions or as otherwise set forth on Schedule 3.9, the Company has
full and unrestricted legal and equitable title to all such properties and
assets. The operation of the properties and Business of the Company in the
manner in which they are now and have been operated does not violate any zoning
ordinances, municipal regulations, or other Requirements of Laws, except for any
such violations which would not, individually or in the aggregate, have a
Material Adverse Effect. To the best of Seller's and the Company's Knowledge,
except for Permitted Exceptions or as set forth on Schedule 3.9, no restrictive
covenants, easements, rights-of-way, or regulations of record impair the uses of
the properties of the Company for the purposes for which they are now operated.
Except as set forth on Schedule 3.9, all leases of real or personal property by
the Company are legal, valid, binding, enforceable and in full force and effect
against the Company and, to the best Knowledge of Seller and the Company against
each other party thereto, and, assuming all necessary consents to the
consummation of the transactions contemplated herein, as set forth on Schedule
3.9, are obtained, will remain legal, valid, binding, enforceable and in full
force and effect on essentially the same terms immediately following the
Closing, except to the extent that enforceability may be limited by the
Equitable Exceptions. All facilities owned or leased by the Company have
received all material approvals of any Governmental Body (including Governmental
Permits) required to be obtained by the Company in connection with the operation
thereof and have been operated and maintained in accordance with all
Requirements of Laws applicable to the Company.
3.10 Licenses and Permits. Attached hereto as Schedule 3.10 is a
list of all Material licenses, certificates, privileges, immunities, approvals,
franchises, authorizations and permits held or applied for by the Company from
any Governmental Body (herein collectively called "Governmental Permits") the
absence of which could individually or the in the aggregate have a Material
Adverse Effect. The Company has complied in all material respects with the
terms and conditions of all such Governmental Permits, and the Company has not
received notification from any Governmental Body of violation of any such
Governmental
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Permit or the Requirements of Laws governing the issuance or continued validity
thereof other than violations (if any) which would not individually or in the
aggregate have a Material Adverse Effect. To the best knowledge of Seller and
the Company, no additional Governmental Permit is required from any Governmental
Body thereof in connection with the conduct of the Business which Governmental
Permit, if not obtained, would have a Material Adverse Effect.
3.11 Intellectual Property. Attached hereto as Schedule 3.11 is a
list and brief description of all patents, trademarks, tradenames, copyrights,
licenses, computer software or data (other than general commercial software) or
applications therefor owned by or registered in the name of the Company or in
which the Company has any rights, licenses, or immunities (collectively, the
"Intellectual Property"). The Company has furnished Global with copies of all
license agreements to which the Company is a party, either as licensor or
licensee, with respect to any Intellectual Property. Except as described on
Schedule 3.11 hereto, the Company has good title to or the right to use such
Intellectual Property and all inventions, processes, designs, formulae, trade
secrets and know-how necessary for the conduct of their Business, as presently
conducted without the payment of any royalty or similar payment, and the Company
is not infringing on any patent right, tradename, copyright or trademark right
or other Intellectual Property right of others, and neither the Company nor the
Seller are aware of any infringement by others of any such rights owned by the
Company.
3.12 Compliance with Laws. Except as would not have a Material
Adverse Effect, the Company has (i) complied in all material respects with all
Requirements of Laws, Governmental Permits and Court Orders applicable to the
Business and has filed with the proper Governmental Bodies all statements and
reports required by all Requirements of Laws, Governmental Permits and Court
Orders to which the Company or any of its employees (because of their activities
on behalf of the Company) are subject and (ii) conducted the Business and is in
compliance in all material respects with all federal, state and local energy,
public utility, health, safety and environmental Requirements of Laws,
Governmental Permits and Court Orders including the Clean Air Act, the Clean
Water Act, RCRA, the Safe Drinking Water Act, CERCLA, OSHA, the Toxic Substances
Control Act and any similar state, local or foreign laws (collectively
"Environmental Obligations") and all other federal, state, local or foreign
governmental and regulatory requirements, except where any such failure to
comply or file would not, in the aggregate, have a Material Adverse Effect. No
claim has been made by any Governmental Body (and, to the best knowledge of the
Company and the Seller, no such claim is anticipated) to the effect that the
Business fails to comply, in any respect, with any Requirements of Laws,
Governmental Permit or Environmental Obligation or that a Governmental Permit or
Court Order is necessary in respect thereto.
3.13 Insurance. Attached hereto as Schedule 3.13 is a list of all
coverages for fire, liability, or other forms of insurance and all fidelity
bonds held by or applicable to the Company. Copies of the binder for all such
insurance policies have been delivered to Global. To the best of the Company's
and the Seller's knowledge and belief, no event relating to the Company has
occurred which will result in (i) cancellation of any such insurance coverages;
(ii) a retroactive upward adjustment of premiums under any such insurance
coverages; or
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(iii) any prospective upward adjustment in such premiums. All of such insurance
coverages will remain in full force and effect following the Closing.
3.14 Employee Benefit Plans.
(a) Employee Welfare Benefit Plans. Except as disclosed on
Schedule 3.14, the Company does not maintain or contribute to any "employee
welfare benefit plan" as such term is defined in Section 3(1) of ERISA. With
respect to each such plan: (i) the plan is in material compliance with ERISA;
(ii) the plan has been administered in accordance with its governing documents;
(iii) neither the plan, nor any fiduciary with respect to the plan, has engaged
in any "prohibited transaction" as defined in Section 406 of ERISA other than
any transaction subject to a statutory or administrative exemption; (iv) except
for the processing of routine claims in the ordinary course of administration,
there is no material litigation, arbitration or disputed claim outstanding; and
(v) all premiums due on any insurance contract through which the plan is funded
have been paid.
(b) Employee Pension Benefit Plans. Except as disclosed in
Schedule 3.14, the Company does not maintain or contribute to any arrangement
that is or may be an "employee pension benefit plan" relating to employees, as
such term is defined in Section 3(2) of ERISA. With respect to each such plan:
(i) the plan is qualified under Section 401(a) of the Code, and any trust
through which the plan is funded meets the requirements to be exempt from
federal income tax under Section 501(a) of the Code; (ii) the plan is in
material compliance with ERISA; (iii) the plan has been administered in
accordance with its governing documents as modified by applicable law; (iv) the
plan has not suffered an "accumulated funding deficiency" as defined in Section
412(a) of the Code; (v) the plan has not engaged in, nor has any fiduciary with
respect to the plan engaged in, any "prohibited transaction" as defined in
Section 406 of ERISA or Section 4975 of the Code other than a transaction
subject to statutory or administrative exemption; (vi) the plan has not been
subject to a "reportable event" (as defined in Section 4043(b) of ERISA), the
reporting of which has not been waived by regulation of the Pension Benefit
Guaranty Corporation; (vii) no termination or partial termination of the plan
has occurred within the meaning of Section 411(d)(3) of the Code; (viii) all
contributions required to be made to the plan or under any applicable collective
bargaining agreement have been made to or on behalf of the plan; (ix) there is
no material litigation, arbitration or disputed claim outstanding; and (x) all
applicable premiums due to the Pension Benefit Guaranty Corporation for plan
termination insurance have been paid in full on a timely basis.
(c) Employment and Non-Tax Qualified Deferred Compensation
Arrangements. Except as disclosed in Schedule 3.14, the Company does not
maintain or contribute to any retirement or deferred or incentive compensation
or Merger, stock grant or stock option arrangement entered into between the
Company and any current or former officer, consultant, director or employee of
the Company that is not intended to be a tax qualified arrangement under Section
401(a) of the Code.
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3.15 Contracts and Agreements. Attached hereto as Schedule
3.15 is a list and brief description of all written or oral contracts,
commitments, leases, and other agreements (including, without limitation,
promissory notes, loan agreements, and other evidences of indebtedness,
guarantees, agreements with distributors, suppliers, dealers, franchisors and
customers, and service agreements) to which the Company is a party or by which
the Company or its properties are bound pursuant to which the obligations
thereunder of either party thereto are, or are contemplated as being, for any
one contract $35,000 or greater (collectively, the "Contracts"). The Company is
not and, to the best knowledge of the Seller and the Company, no other party
thereto is in default (and no event has occurred which, with the passage of time
or the giving of notice, or both, would constitute a default by the Company)
under any of the Contracts, and the Company has not waived any right under any
of the Contracts, except for any such defaults or waivers, which would not have
a Material Adverse Effect. Except for the Equitable Exceptions, all of the
Contracts are legal, valid, binding, enforceable and in full force and effect
and, assuming all necessary consents to the consummation of the transactions
contemplated herein, as specifically set forth on Schedules 3.9 and 3.15, are
obtained, will remain legal, valid, binding, enforceable and in full force and
effect on essentially the same terms immediately after the Closing, except to
the extent that enforceability may be limited by the Equitable Exceptions.
Except as set forth in Schedule 3.15, the Company has not guaranteed any
obligations of any other Person.
3.16 Claims and Proceedings. Attached hereto as Schedule 3.16
is a list and brief description of all claims, actions, suits, proceedings, or
investigations pending or, to the best knowledge and belief of the Seller or the
Company, threatened against or affecting the Company or any of its properties or
assets, at law or in equity, or before or by any court, municipality or other
Governmental Body. Except as set forth on Schedule 3.16, none of such claims,
actions, suits, proceedings, or investigations, if adversely determined, will
result in any Material liability or loss to the Company. The Company has not
been and the Company is not now, subject to any Court Order, stipulation, or
consent of or with any court or Governmental Body. No inquiry, action or
proceeding has been instituted or, to the best knowledge and belief of the
Seller or the Company, threatened or asserted against the Seller or the Company
to restrain or prohibit the carrying out of the transactions contemplated by
this Agreement or to challenge the validity of such transactions or any part
thereof or seeking damages on account thereof. To the best knowledge of the
Company and Seller, and except as set forth on Schedule 3.16, there is no basis
for any such valid claim or action.
3.17 Taxes.
(a) All Federal, foreign, state, county and local income,
gross receipts, excise, property, franchise, license, sales, use, withholding
and other Taxes due from the Company on or before the Closing will have been
paid and all Tax Returns which are required to be filed by the Company on or
before the Closing will have been filed within the time and in the manner
provided by law, and all such Tax Returns are true and correct and accurately
reflect the Tax liabilities of the Company. No Tax Returns of the Company are
presently subject to an extension of the time to file. All Taxes, assessments,
penalties, and interest of the Company which have become due pursuant to such
Tax Returns or any
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assessments received have been paid or adequately accrued on the Company's
Financial Statements. The provisions for Taxes reflected on the balance sheets
contained in the Financial Statements are adequate to cover all of the Company's
Tax liabilities for the respective periods then ended and all prior periods. The
Company has not executed any presently effective waiver or extension of any
statute of limitations against assessments and collection of Taxes, and there
are no pending or, to the best knowledge of the Seller or the Company,
threatened claims, assessments, notices, proposals to assess, deficiencies, or
audits with respect to any such Taxes. For Governmental Bodies with respect to
which the Company does not file Tax Returns, no such Governmental Body has given
the Company written notification that the Company is or may be subject to
taxation by that Governmental Body. The Company has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or owing
to any employee, shareholder, creditor, independent contractor or other party.
There are no Tax liens on any of the property or assets of the Company.
(b) Neither the Company nor any other corporation has
filed an election under Section 341(f) of the Code that is applicable to the
Company or any assets held by the Company. The Company has not made any
payments, is not obligated to make any payments, and is not a party to any
agreement that under certain circumstances could obligate it to make any
payments that will not be deductible under Section 280G of the Code. The Company
has not been a United States real property holding corporation within the
meaning of Section 897(c)(2) of the Code during the applicable period specified
in Section 897(c)(1)(A)(ii) of the Code. The Company is not a party to any Tax
allocation or sharing agreement. The Company has not and has never been (nor
does the Company have any liability for unpaid Taxes because it once was) a
member of an affiliated group during any part of a return year any corporation
other than the Company also was a member of the affiliated group. No Seller (A)
has been a member of an affiliated group, as defined in Section 1504(a) of the
Code, filing a consolidated federal income Tax Return (other than a group the
common parent of which was any Seller) and (B) has any Liability for the Taxes
of any Person under Treas. Reg. Section 1.1502-6 (or any similar provision of
state, local, or foreign law), as a transferee or successor, by contract or
otherwise.
(c) The Company is not liable for any Tax under Section
1374 of the Code in connection with a deemed sale of such Company's assets
caused by an election under Section 338(h)(10) of Code. The Company has not, in
the past ten (10) years, (i) acquired assets from another corporation in a
transaction in which the Company's Tax basis for the acquired assets was
determined in whole or in part by reference to the Tax basis of the acquired
assets (or any other property) in the hands of the transferor or (ii) acquired
the stock of any other corporation that is a qualified subchapter S subsidiary.
(d) The Company has not had at any time during the
Company's existence owned any subsidiaries (including any "qualified subchapter
S subsidiaries" within the meaning of Section 1361(b)(3)(13) of the Code).
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(e) No transaction contemplated by this Agreement is subject to
withholding under Section 1445 of the Code and no stock transfer taxes, real
estate transfer taxes or similar taxes will be imposed upon the transfer and
sale of the Shares pursuant to this Agreement.
3.18 Personnel. Attached hereto as Schedule 3.18 is a list of the
names and annual rates of compensation of the directors and executive officers
of the Company, and of the employees of the Company whose annual rates of
compensation during the fiscal year ended December 31, 1998 (including base
salary, bonus and incentive pay) exceed (or during the fiscal year ending
December 31, 1999 are expected to exceed) $60,000. Schedule 3.18 also summarizes
the bonus, profit sharing, percentage compensation, company automobile, club
membership, and other like benefits, if any, paid or payable to such directors,
officers, and employees during the Company's fiscal year ended December 31, 1998
and to the date hereof. Since December 31, 1998, the Company has not changed the
employment compensation, benefits or consulting payments to the Seller, except
in the ordinary course of business consistent with past practice and except for
cash dividends and distributions so long as (i) the Company has at least
$2,740,000 in cash available as of the Effective Date (as adjusted for entries
outside the Ordinary Course of Business between the Effective Date and the
Closing Date as set forth on the settlement and closing statement executed at
Closing and net of outstanding checks) (ii) the Working Capital balance at the
Closing is equal to or greater than the Working Capital Target and (iii) to the
best knowledge of the Company and the Seller, there will be no post closing
adjustment in accordance with Section 2.8 which decreases the Purchase Price.
Schedule 3.18 also contains a brief description of all material terms of
employment agreements to which the Company is a party and all severance benefits
which any director, officer or employee of the Company is or may be entitled to
receive. There is no pending or, to the best knowledge of the Seller or the
Company, threatened labor dispute or union organization campaign. None of the
employees of the Company are represented by any labor union or organization. The
Company is in compliance in all material respects with all Requirements of Laws
respecting employment and employment practices, terms and conditions of
employment, and wages and hours, and are not engaged in any unfair labor
practices. Neither the Company or the Seller has been advised that any of the
persons whose names are set forth on Schedule 3.18 or any other employee will
not agree to remain employed by the Company after the consummation of the
transactions contemplated hereby. There is no unfair labor practice claim
against the Company before the National Labor Relations Board, or any strike,
dispute, slowdown, or stoppage pending or, to the best knowledge of the Company
and the Seller, threatened against or involving the Company, and none has
occurred.
3.19 Business Relations. Except as set forth on Schedule 3.19,
neither the Company nor the Seller know that any Material customer or supplier
of the Company will cease to do business with the Company after the consummation
of the transactions contemplated hereby in the same manner and at the same
levels as previously conducted with the Company except for any reductions which,
individually or in the aggregate, do not result in a Material Adverse Change.
Neither the Seller nor the Company has received any written notice of any
Material disruption (including delayed deliveries or allocations by suppliers)
in the availability of any portion of the materials used by the Company nor is
the Company or the
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Seller aware of any facts which could lead them to believe that the Business
will be subject to any such Material disruption.
3.20 Accounts Receivable. All of the accounts, notes, and loans
receivable that have been recorded on the books of the Company are bona fide and
represent amounts validly due for goods sold or services rendered and, except as
disclosed on Schedule 3.20, all such amounts (net of any allowance for doubtful
accounts set forth in the Closing Balance Sheet and net of any excess of Working
Capital over the Working Capital Target as set forth on the Closing Balance
Sheet) will be collected in full within 180 days following the Closing Date.
Except as disclosed on Schedule 3.20 hereto (a) all of such accounts, notes, and
loans receivable are free and clear of any Encumbrances; (b) no claims of offset
have been asserted in writing against any of such accounts, notes, or loans
receivable; and (c) none of the obligors of such accounts, notes, or loans
receivable has given written notice that it will or may refuse to pay the full
amount or any portion thereof.
3.21 Bank Accounts. Attached hereto as Schedule 3.21 is a list of
all banks or other financial institutions with which the Company has an account
or maintains a safe deposit box, showing the type and account number of each
such account and safe deposit box and the names of the persons authorized as
signatories thereon or to act or deal in connection therewith.
3.22 Warranties. Except for warranty claims that are typical and in
the ordinary course of the Business, no written claim for breach of product or
service warranty to any customer has been made against the Company since January
1, 1997. To the best knowledge of the Seller and the Company, no state of facts
exists, and no event has occurred, which could reasonably be expected to form
the basis of any present claim against the Company for liability on account of
any express or implied warranty to any third party in connection with products
sold or services rendered by the Company, except for warranty claims which are
typical and in the ordinary course of business, none of which individually or in
the aggregate would have a Material Adverse Effect.
3.23 Brokers. Neither the Company nor the Seller have engaged, or
caused to be incurred any liability to any finder, broker, or sales agent in
connection with the origin, negotiation, execution, delivery, or performance of
this Agreement or the transactions contemplated hereby.
3.24 Interest in Competitors, Suppliers, Customers, Etc. No officer,
director, or shareholder of the Company or any affiliate of any such officer,
director, or shareholder, has any ownership interest in any competitor,
supplier, or customer of the Company (other than ownership of securities of a
publicly-held corporation of which such Person owns, or has real or contingent
rights to own, less than one percent of any class of outstanding securities) or
any property used in the operation of the Business.
3.25 Indebtedness To and From Officers, Directors, Shareholders, and
Employees. Attached hereto as Schedule 3.25 is a list and brief description of
the payment
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terms of all indebtedness of the Company to officers, directors, shareholders,
and employees of the Company and all indebtedness of officers, directors,
shareholders, and employees of the Company to the Company, excluding
indebtedness for travel advances or similar advances for expenses incurred on
behalf of and in the ordinary course of the Business, consistent with past
practices.
3.26 Undisclosed Liabilities. Except as indicated in Schedule 3.26
hereto and except as it would not, individually or in the aggregate, have a
Material Adverse Effect, the Company does not have any liabilities (whether
absolute, accrued, contingent or otherwise), except such liabilities which are
accrued or reserved against in the Financial Statements or disclosed in the
notes thereto, including without limitation any accounts payable or service
liabilities of the Company incurred prior to the Closing Date, other than
liabilities incurred in the ordinary course of the Business since the date of
the latest of such Financial Statements and liabilities arising under this
Agreement or incurred in connection with the transactions contemplated by this
Agreement.
3.27 Information Furnished. The Company and the Seller have made
available to Global true and correct copies of all material corporate records of
the Company and all items listed on the Schedules to the Agreement or referred
to in this Agreement and, to the best knowledge of Seller and the Company,
neither this Agreement, the Schedules hereto, nor any written information,
instrument, or document delivered to Global pursuant to this Agreement contains
any untrue statement of a material fact or omits any material fact necessary to
make the statements herein or therein, as the case may be, not misleading.
3.28 Personal Vehicles. All personal vehicles have been removed from
the Business prior to the Closing Date.
In making the representations and warranties set forth above, the term
"Material" or "material" shall, where appropriate in context of its use, be
deemed to mean an amount of money greater than $50,000. The terms "Material
Adverse Change," "material adverse trend," "Material Adverse Effect," or any
other term of like import shall mean the occurrence of any single event, or any
series of related events, or set of related circumstances, which proximately
causes an actual, direct economic loss to the Company, taken as a whole, in
excess of $50,000 per occurrence or $100,000 in the aggregate. The terms
"knowledge" and "best knowledge" shall mean actual knowledge of the person
indicated.
3.29 No Other Warranties. Except as expressly set forth in Sections
3.1 through 3.28, neither Seller nor the Company make any representations or
warranties, express or implied, including, without limitation, any warranties or
representations with respect to the future performance of the Company.
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ARTICLE IV
GLOBAL AND NEWCO'S REPRESENTATIONS AND WARRANTIES
Global and Newco jointly and severally represent and warrant to the Seller
as follows:
4.1 Due Organization. Global is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Delaware
and Newco is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Texas, and each of Global and Newco has
full corporate power and authority to execute, deliver and perform this
Agreement and to carry out the transactions contemplated hereby.
4.2 Due Authorization. The execution, delivery and performance of
this Agreement and the Merger Documents has been duly authorized by all
necessary corporate action of each of Global and Newco and the Agreement has
been duly and validly executed and delivered by each of Global and Newco and
constitutes the valid and binding obligation of each of Global and Newco,
enforceable in accordance with its terms, except to the extent that
enforceability may be limited by the Equitable Exceptions. The execution,
delivery, and performance of this Agreement (as well as the Merger Documents and
all other instruments, agreements, certificates or other documents contemplated
hereby) by each of Global and Newco, do not (a) violate any Requirements of Laws
or Court Order of any Governmental Body applicable to either Global or Newco or
either of their property, (b) violate or conflict with, or permit the
cancellation of, or constitute a default under any agreement to which either
Global or Newco is a party or by which either of them or theirs property is
bound, (c) permit the acceleration of the maturity of any indebtedness of, or
any indebtedness secured by the property of, Global or Newco, or (d) violate or
conflict with any provision of the charter or bylaws of Global or Newco.
4.3 No Brokers. Neither Global or Newco has engaged or caused to be
incurred any liability to any finder, broker or sales agent in connection with
the origin, negotiation, execution, delivery, or performance of this Agreement
or the transactions contemplated hereby for which the Company, Seller or
Shareholders could be liable.
4.4 Investment. Upon consummation of the Merger, Global will acquire
the Shares solely for investment purposes and for its own account and not with a
view to the distribution thereof.
4.5 Information Furnished. To the best knowledge of each of Global
and Newco, neither this Agreement, nor any written information, instrument, or
document delivered to the Seller or Shareholders by Global or Newco pursuant to
this Agreement contains any untrue statement of a material fact or omits any
material fact necessary to make the statements herein or therein, as the case
may be, not misleading.
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ARTICLE V
PRE-CLOSING COVENANTS
5.1 Consents of Others. Prior to the Closing, the Company and the
Seller shall use all reasonable efforts to obtain and to cause the Company to
obtain all authorizations, consents and permits required of the Company, the
Seller and Shareholders to permit them to consummate the transactions
contemplated by this Agreement, including, any vote of the Shareholders required
for consummation of the Merger.
5.2 Best Efforts. Global, Newco, the Company and the Seller shall
use all reasonable efforts to cause all conditions for the Closing to be met.
5.3 Powers of Attorney. The Company and the Seller shall cause the
Company to terminate at or prior to the Closing all powers of attorney granted
by the Company other than those relating to service of process, qualification or
pursuant to governmental regulatory or licensing agreements, or representation
before the IRS or other government agencies.
5.4 Conduct of Business Pending Closing. From the date of this
Agreement to the first to occur of the termination of this Agreement and the
Closing Date:
(i) Except as otherwise contemplated by this Agreement, or
as Global may otherwise consent to in writing, the Company and the
Seller shall conduct the Business only in the ordinary course and
shall not engage in any material activity or enter into any material
transaction which would cause a breach of any of the representations
and warranties contained in Article III.
(ii) The Company shall, and the Seller shall make a good
faith effort to cause the Company to, preserve substantially intact
its current business organization and present relationships with its
customers, vendors, suppliers and employees and to maintain all of its
insurance currently in effect.
(iii) The Seller and the Company shall give prompt notice
to Global of any notice of material default received by the Company or
the Business subsequent to the date of this Agreement under any
Contract or any Material Adverse Change occurring prior to the Closing
Date in the operation of the Company or the Business.
(iv) Neither the Company nor the Seller, nor any of their
representatives, shall solicit, encourage or discuss any Acquisition
Proposal (as hereinafter defined) or supply any non-public information
concerning the Company or the Business or the Company's assets to any
party other than Global or its representatives. As used herein,
"Acquisition Proposal" means any proposal other than the transactions
herein contemplated, for (i) any merger or other business combination
involving the Company or the Business, (ii) the acquisition of the
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Company or a material equity interest in the Company or a material
portion of its assets, or (iii) the dissolution or liquidation of the
Company.
5.5 Access to Records Before Closing. Prior to the Closing Date, the
Seller and the Company agree that they will give, or cause to be given, to
Global and Newco and their representatives, during normal business hours and at
Global's expense, full and unrestricted access to the Company's personnel,
officers, agents, employees, assets, properties, titles, contracts, corporate
minute and other books, records, files and documents of the Seller with respect
to the Business (including financial, tax basis, budget projections,
accountants' work papers and other information as Global may request) and to the
Business' personnel, customers, suppliers and independent accountants, to allow
Global to obtain such information as Global shall desire, and to make copies of
such information, to the extent reasonably necessary. All materials copied by
Global shall be maintained in confidence by Global and returned to the Seller
and/or the Company, as appropriate, if the Closing of the transactions
contemplated hereunder fails to occur.
5.6 Landlord Consents. The Company shall make a good faith effort to
cause the lessors of the Buildings to execute a Landlord Agreement in the form
attached hereto as Exhibit B, together with such changes as may be agreed to by
Global and/or Global's lenders.
5.7 Termination of Company's Profit Sharing Plan. Seller will adopt
all necessary corporate resolutions to terminate the Company's Profit Sharing
Plan, effective as of the day prior to the Closing Date. Immediately prior to
such termination, Seller will make all necessary payments to fund the
contributions: (i) necessary or required to maintain the tax-qualified status of
the Company's Profit Sharing Plan, and (ii) for elective deferrals made pursuant
to the Company's Profit Sharing Plan for the period prior to termination.
ARTICLE VI
POST-CLOSING COVENANTS
6.1 General. In case at any time after the Closing any further
action is legally necessary or reasonably desirable (as determined by Global and
the Seller) to carry out the purposes of this Agreement, each of the parties
will take such further action (including the execution and delivery of such
further instruments and documents) as any other party reasonably may request,
all at the sole cost and expense of the requesting party (unless the requesting
party is entitled to indemnification therefor under Article VIII below). The
Seller and Global acknowledge and agree that from and after the Closing, Global
will be entitled to possession of all documents, books, records, agreements, and
financial data of any sort relating to the Company, which shall be maintained at
the chief executive office of the Company; provided, however, that the Seller
shall be entitled to reasonable access to and to make copies of such books and
records at their sole cost and expense, and Global will maintain all of the same
for a period of at least six (6) years after Closing.
6.2 Transition. For a period of three (3) years following Closing,
the Seller will not take any action that primarily is designed or intended to
have the effect of discouraging any lessor, licensor, customer, supplier, or
other business associate of the
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Company from maintaining the same business relations with the Company after the
Closing as it maintained with the Company prior to the Closing. For a period of
three (3) years following Closing, the Seller will refer all customer inquiries
relating to the Business to the Company.
6.3 Confidentiality. Except to the extent that Confidential
Information solely related to the Phoenix Business is included in the sale of
the Phoenix Business or is necessary for the operation of the Phoenix Business,
the Seller will treat and hold as such all Confidential Information, refrain
from using any of the Confidential Information except in connection with this
Agreement or otherwise for the benefit of the Company, Global for a period of
three (3) years from the Closing, and deliver promptly to Global or destroy, at
the written request and option of Global, all tangible embodiments (and all
copies) of the Confidential Information which are in their possession, except as
otherwise permitted herein. In the event that any Seller is requested or
required (by oral question or written request for information or documents in
any legal proceeding, interrogatory, subpoena, civil investigative demand, or
similar legal proceeding) to disclose any Confidential Information, such Seller
will notify Global promptly of the request or requirement.
6.4 Covenant Not to Compete. For and in consideration of the
allocation of $150,000 of the Purchase Price paid to the Seller by Global,
Seller covenants and agrees, for a period of three (3) years from and after the
Closing Date, that he will not, directly or indirectly without the prior written
consent of Global, for or on behalf of any entity:
(a) become interested or engaged, directly or indirectly, as a
shareholder, bondholder, creditor, officer, director, partner, agent, contractor
with, employer or representative of, or in any manner associated with, or give
financial, technical or other assistance to, any Person, firm or corporation for
the purpose of engaging in the business of the Company, Global or their
affiliates in competition with the Company, Global or their respective
affiliates within a 100 mile radius of any of the Company's current office
facilities in the State of Texas (the "Current Trade Area");
(b) enter into any agreement with, service, assist or solicit
the business of any customers of the Company, Global or any of their respective
affiliates for the purpose of providing office equipment sales or service to
such customers in competition with the Company in the Current Trade Area or to
cause them to reduce or end their business with the Company; or
(c) enter into any agreement with, or solicit the employment of
employees, consultants or representatives of the Company for the purpose of
causing them to leave the employment of the Company, except for the current
employees of the Company who are currently providing services (and will continue
to provide services) on substantially a full-time basis to the Phoenix Business;
provided, however, that no owner of less than five percent (5%) of the
outstanding stock of any publicly-traded corporation shall be deemed to be in a
violation of this Section 6.4 solely by reason thereof.
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6.5 Additional Matters.
(a) The Seller shall cause the Company to file with the
appropriate governmental authorities all Tax Returns required to be filed by it
for any taxable period ending prior to the Effective Date and the Company shall
remit any Taxes due in respect of such Tax Returns. In addition, the Seller
shall cause JoAnn Midwikes (or such other tax preparer reasonably acceptable to
Global) to prepare a short period tax return for the Company covering the period
from January 1, 1999 through the Effective Date. The cost of preparation of such
short period tax return shall be paid for by the Company and properly accrued
for in accordance with GAAP on the Closing Balance Sheet, but shall not reduce
Working Capital.
(b) Global and the Seller recognize that each of them will need
access, from time to time, after the Closing Date, to certain accounting and Tax
records and information held by Global and/or the Company to the extent such
records and information pertain to events occurring on or prior to the Closing
Date; therefore, Global agree to cause the Company to (A) use its best efforts
to properly retain and maintain such records for a period of six (6) years from
the date the Tax Returns for the year in which the Closing occurs are filed or
until the expiration of the statute of limitations with respect to such year,
whichever is later, and (B) allow each Seller and his agents and representatives
at times and dates mutually acceptable to the parties, to reasonably inspect,
review and make copies of such records from time to time, such activities to be
conducted during normal business hours and at the inspecting party's expense.
(c) In the event that Seller or the Shareholders pay any
Indemnifiable Costs to Global as a result of any uncollected accounts receivable
of the Company after the expiration of 180 days from the Closing Date in excess
of the allowance for doubtful accounts included in the Closing Balance Sheet,
then the Shareholders' Representative shall have the right to require Global and
the Company to assign to Shareholder's Representative, on behalf of Seller,
Shareholders and the Optionholders (if any), such uncollected accounts
receivable of the Company which resulted in such payment of Indemnifiable Costs
to Global, and the Company and Global shall use reasonable efforts to provide
the Shareholder's Representative with any account information necessary to seek
collection thereof by the Shareholders' Representative.
6.6 Registration Rights Agreement. Global agrees to use its
reasonable best efforts to allow Seller to become a party to the Global
Registration Rights Agreement.
ARTICLE VII
CONDITIONS TO OBLIGATION OF PARTIES TO CONSUMMATE CLOSING
7.1 Conditions to Global and Newco's Obligations. The obligations of
Global and Newco under this Agreement to consummate the Closing are subject to
the conditions that:
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(a) Covenants, Representations and Warranties. The
Company and the Seller shall have performed in all material respects all
obligations and agreements and complied in all material respects with all
covenants contained in this Agreement to be performed and complied with by each
of them prior to or at the Closing Date. The representations and warranties of
the Company and the Seller set forth in this Agreement and the Schedules
attached hereto (as supplemented by Seller and the Company in good faith at any
time prior to Closing) shall be accurate in all material respects at and as of
the Closing Date with the same force and effect as though made on and as of the
Closing Date, except for any changes resulting from activities or transactions
which may have taken place after the date hereof and which are permitted or
contemplated by this Agreement or which have been entered into in the ordinary
course of business and except to the extent that such representations and
warranties are expressly made as of another specified date and, as to such
representation, the same shall be true in all material respects as of such
specified date.
(b) Consents. All statutory requirements for the valid
consummation by the Company and the Seller and Shareholders of the transactions
contemplated by this Agreement shall have been fulfilled and all authorizations,
consents and approvals, including expiration or early termination of all waiting
periods under the HSR Act and those of all federal, state, local and foreign
governmental agencies and regulatory authorities required to be obtained in
order to permit the consummation of the transactions contemplated hereby shall
have been obtained in form and substance reasonably satisfactory to Global,
unless such failure could not reasonably be expected to have a Material Adverse
Effect. All approvals of the Board of Directors and shareholders of the Company
necessary for the consummation of this Agreement, the Merger and the
transactions contemplated hereby shall have been obtained.
(c) Suppliers/Leases. The Seller shall have obtained,
where expressly required by written agreement between the Company and such
parties, the written consent of (i) the Company's Material office equipment
suppliers and (ii) the lessors of the Buildings to the transactions contemplated
by the Agreement. The lessors of the Buildings shall have provided a Landlord
Agreement to Global's lenders in substantially the same form as Exhibit B
hereto, except as specifically waived by Global.
(d) Discharge of Indebtedness and Liens. The Seller and
the Company shall have provided for the payment in full by the Company of all
Funded Indebtedness of the Company. The Seller shall have also provided for the
termination of all Encumbrances of record on the properties of the Company,
except for Permitted Exceptions. All liens or UCC filings against the Company
and each of the Subsidiaries or Affiliates of the Company which engaged in the
Business other than Permitted Exceptions shall have been terminated as of the
Closing.
(e) Phoenix Business Sold. All of the assets and
liabilities of the Phoenix Business shall have been sold by the Company to
Dahill Imaging Systems, Inc. (the "Phoenix Purchaser") pursuant to the Phoenix
Purchase Agreement. In addition, Seller and the Phoenix Purchaser shall enter a
right of first refusal agreement in favor of Global with
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respect to any sale of the Phoenix Business by Seller and/or Phoenix Purchaser
in the form of Exhibit I hereto.
(f) Transfer Taxes. The Seller and Shareholders shall be responsible
for all stock transfer or gains taxes imposed on the Seller and Shareholders
incurred in connection with this Agreement.
(g) Documents to be Delivered by the Seller and the Company. The
following documents shall be delivered at the Closing by the Seller and the
Company:
(i) Opinion of the Seller's Counsel. Global shall have
received an opinion of counsel to the Company and the Seller, dated the Closing
Date, in substantially the same form as the form of opinion that is Exhibit C
hereto.
(ii) Certificates. Global shall have received an officer's
certificate and a secretary's certificate of the Company executed by officers of
the Company, dated the Closing Date, in substantially the same forms as the
forms of certificates that are Exhibit D-1 and D-2, respectively, hereto.
(iii) Release. The Seller shall have furnished the Company with
a general release in substantially the same form as the form attached as Exhibit
E hereto.
(iv) Escrow Agreement. The Seller shall have delivered to
Global at the Closing the duly executed Escrow Agreement required pursuant to
Section 2.5 hereof.
(v) Employment Agreements. Seller shall have duly executed
and delivered the Employment Agreement in substantially the same form attached
as Exhibit F hereto, pursuant to which he will be employed by the Company
following the Closing.
(vi) Phoenix Business Right of First Refusal and License
Agreement. Seller and the Phoenix Purchaser shall have entered into a right of
first refusal agreement with Global in substantially the same form as the form
attached as Exhibit I hereto, whereby Global will be granted for three years the
right to purchase the stock or assets of the Phoenix Business upon the same
terms of any proposed sale of the Phoenix Business. The Phoenix Purchaser shall
have entered into the License Agreement in substantially the same form as the
form attached as Exhibit K hereto for the right to use the name "Dahill" solely
in connection with the Phoenix Business or otherwise (provided that the Phoenix
Purchaser complies with the terms and conditions of the License Agreement) and
solely in the State of Arizona.
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(vii) Equity Subscription Agreement. Seller shall have
executed and delivered to Global an Equity Subscription Agreement in
substantially the same form as the form attached hereto as Exhibit H.
(viii) Personal Vehicles. Seller shall have removed all
personal vehicles from the Business.
(ix) Seller Receivables. The Seller shall, and the Company
shall have caused, all of the Company's officers, directors and/or employees to
have repaid in full all debts and other obligations, if any, owed to the
Company, including the Seller Note;
(x) Stock Certificates. The Seller and Shareholders shall
have delivered the Shares accompanied by duly executed stock powers, together
with any stock transfer stamps or receipts for any transfer taxes required to be
paid thereon; and
(xi) Consummation of Merger. The Seller shall have executed,
delivered and filed with the State of Texas all of the Merger Documents
including any certificates and articles of merger necessary for consummation of
the Merger and the Merger shall be deemed to have become effective under the
laws of the State of Texas.
7.2 Conditions to the Seller's and the Company's Obligations. The
obligation of the Seller and the Company under this Agreement to consummate the
Closing is subject to the conditions that:
(a) Covenants, Representations and Warranties. Global and Newco
shall have each performed in all material respects all obligations and
agreements and complied in all material respects with all covenants contained in
this Agreement to be performed and complied with by Global or Newco prior to or
at the Closing and the representations and warranties of Global and Newco set
forth in Article IV hereof shall be accurate in all material respects, at and as
of the Closing Date, with the same force and effect as though made on and as of
the Closing Date except for any changes resulting from activities or
transactions which may have taken place after the date hereof and which are
permitted or contemplated by the Agreement or which have been entered into in
the ordinary course of the Business and except to the extent that such
representations and warranties are expressly made as of another specified date
and, as to such representations, the same shall be true as of such specified
date.
(b) Consents. All statutory requirements for the valid consummation
by Global and Newco of the transactions contemplated by this Agreement shall
have been fulfilled and all authorizations, consents and approvals, including
the affirmative vote of the Shareholders as to the consummation of the
transactions contemplated hereby and the expiration or early termination of all
waiting periods under the HSR Act and those of all federal, state, local and
foreign governmental agencies and regulatory authorities required to
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be obtained in order to permit the consummation by Global and Newco of the
transactions contemplated hereby shall have been obtained unless such failure
shall not have a Material Adverse Effect on the Business. Global shall have used
its reasonable efforts to have obtained the release of the Seller from all
personal guarantees with respect to the Company.
(c) Documents to be Delivered by Global and Newco. The
following documents shall be delivered at the Closing by Newco:
(i) Certificates. The Seller shall have received an
officers' certificate and a secretary's certificate executed by officers of each
of Global and Newco, dated the Closing Date, in substantially the same forms as
the forms of certificates that are Exhibit G-1 and G-2, respectively, hereto.
(ii) Escrow Agreement. Global shall have delivered to the
Seller at the Closing the duly executed Escrow Agreement required pursuant to
Section 2.5 hereof.
(iii) Employment Agreements. Global shall have caused the
Company to duly execute and deliver the Employment Agreement with Seller in the
same form attached as Exhibit F hereto, pursuant to which he will be employed by
the Company following the Closing.
(iv) Equity Subscription Agreement. Global shall have
executed and delivered to Seller an Equity Subscription Agreement in
substantially the same form as the form attached hereto as Exhibit H. In
addition, Global shall have used its reasonable best efforts to allow Seller to
become a party to the Global Registration Rights Agreement.
(v) Phoenix Business License Agreement. Newco shall have
entered into the License Agreement in substantially the same form as the form
attached as Exhibit K hereto.
(d) Payments to the Seller, the Shareholders the Company
Optionholders and the Escrow Agent. The Shareholders' Representative, for the
benefit of the Seller and Shareholders (and the Company Optionholders, if any)
shall have received the Purchase Price for the Shares (and Company Options, if
applicable). The Escrow Agent shall have received the Escrow Sum from Global.
(e) Execution of Shareholder Consent. At least 75% of all of
the Shareholders (excluding the Seller) shall have executed a counterpart to the
Shareholder Consent.
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ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification of Global. Except as provided in Section 8.5,
as Global's sole and exclusive monetary remedy for any breach by the Seller
hereunder, the Seller agree to jointly and severally indemnify and hold harmless
Global and each officer, director, and affiliate of Global, including without
limitation the Company or any successor of the Company (collectively, the
"Indemnified Parties") from and against any and all damages, losses, claims,
liabilities, demands, charges, suits, penalties, costs and expenses (including
court costs and reasonable attorneys' fees and expenses incurred in
investigating and preparing for any litigation or proceeding) (collectively, the
"Indemnifiable Costs"), which any of the Indemnified Parties may sustain, or to
which any of the Indemnified Parties may be subjected, arising out of (A) any
misrepresentation, breach or default by the Seller or the Company of or under
any of the representations, covenants, agreements or other provisions of this
Agreement or any agreement or document executed in connection herewith; (B) the
Company's tortious acts or omissions to act prior to Closing for which the
Company did not carry liability insurance for themselves as the insured party,
whether or not such acts or omissions to act result in a breach or violation of
any representation or warranty; (C) all Taxes resulting from the sale of the
Phoenix Business to the extent not accrued for on the Closing Balance Sheet and
reflected in the determination of Working Capital, and (D) the termination of
the Company's Profit Sharing Plan, including any Taxes, fines, fees or
assessments associated therewith. Notwithstanding anything to the contrary
contained in this Agreement, Shareholders shall be required to bear their
Allocable Portion of any Indemnifiable Costs paid to Global from the Standard
Escrow Sum and the Additional Escrow Sum.
8.2 Defense of Claims. If any legal proceeding shall be instituted,
or any claim or demand made, against any Indemnified Party in respect of which
the Seller may be liable hereunder, such Indemnified Party shall give prompt
written notice thereof to the Seller and, except as otherwise provided in
Section 8.4 below, the Seller shall have the right to defend, or cause the
Company or its successors to defend, any litigation, action, suit, demand, or
claim for which it may seek indemnification unless, such litigation, action,
suit, demand, or claim, or the resolution thereof, could reasonably be expected
to exceed the assets held in escrow or otherwise available with respect to
Seller's obligation to indemnify, and such Indemnified Party shall extend
reasonable cooperation in connection with such defense, which shall be at the
Seller's expense. In the event the Seller fail or refuse to defend the same
within a reasonable length of time, the Indemnified Parties shall be entitled to
assume the defense thereof, and the Seller shall be jointly and severally liable
to repay the Indemnified Parties for all expenses reasonably incurred in
connection with said defense (including reasonable attorneys' fees and
settlement payments) if it is determined that such request for indemnification
was proper. If the Seller shall not have the right to assume the defense of any
litigation, action, suit, demand, or claim in accordance with either of the two
preceding sentences, the Indemnified Parties shall have the absolute right to
control the defense of and to settle, in Indemnified Parties' sole discretion
such litigation, action, suit, demand, or claim, but Seller shall be entitled,
at his own expense, to participate in such litigation, action, suit, demand, or
claim; provided, however, that no settlement of a claim prior to a final
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<PAGE>
non-appealable judgment shall bind Seller with respect to an indemnification
obligation unless Seller shall have consented in writing to such settlement.
8.3 Escrow Claim. If any claim for indemnification is made by an
Indemnified Party or a Seller pursuant to this Article VIII prior to the
expiration of the Standard Escrow Period or the Additional Escrow Period, as
applicable, such Indemnified Party or Seller shall first apply to the Escrow
Agent for reimbursement of such claim in accordance with the provisions of the
Escrow Agreement prior to seeking reimbursement for such claim. Except for an
individual Shareholders' failure to own or legally transfer its Shares to Global
pursuant to the Merger, in the absence of fraud, the Shareholders (excluding the
Seller) shall have no further liability to Global except for their Allocable
Portions of any claims made by Global against the Standard Escrow Sum and the
Additional Escrow Sum. This provision shall not limit or impair any rights of
Seller to indemnification from a Shareholder under the Shareholder Consent or
any other document or legal basis thereof.
8.4 Indemnification of the Seller. Global agrees to indemnify and
hold harmless the Seller and the Company and each officer, director, shareholder
or affiliate of the Company (including the Shareholders), from and against any
Indemnifiable Costs arising out of any material misrepresentation, breach or
default by Global or Newco of or under any of the covenants, agreements or other
provisions of this Agreement or any agreement or document executed in connection
herewith. In addition, the Company and Global shall indemnify and hold harmless
the Seller for any payment or satisfaction of any guarantees by the Seller of
the Company's obligations occurring after the Closing Date including, without
limitation, liabilities under the Assumed Notes.
8.5 Limits on Indemnification. All Indemnifiable Costs sought by
any party hereunder shall be net of any insurance proceeds received by such
Person with respect to such claim (less the present value of any premium
increases occurring as a result of such claim). Except for any claims for
breach of the representations, warranties and covenants of the Seller under
Sections 3.1, 3.2, 3.3, 3.14, 3.17 or 6.5 hereof (for which indemnification
claims must be made prior to the expiration of the applicable statute of
limitations and if so made, such claims shall continue after such date until
finally resolved) and except for claims for breach of any covenant of this
Agreement that by its terms expires after the second anniversary hereof, the
right to make claims for indemnification provided under this Article VIII or to
assert any other claim arising under or in connection with this Agreement
(including, without limitation, any claim for breach of any warranty,
representation, or covenant) shall expire on the second anniversary of the
Closing Date (except for claims reasonably specified in writing prior to such
date which shall continue after such date until finally resolved).
Notwithstanding the foregoing, the right of Buyer to make any claim for damages
with respect to outstanding Company Options shall survive indefinitely and shall
not expire. The Seller and Shareholders shall not be obligated to pay any
amounts for indemnification under this Article VIII until the aggregate
indemnification obligation hereunder exceeds the Indemnification Basket Amount,
whereupon the Seller and Shareholders shall be liable for all amounts in excess
of the Indemnification Basket Amount for which indemnification may be sought;
provided, however, that the Indemnification Basket Amount will be reduced by
$50,000 for all claims for which
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<PAGE>
indemnification may be sought in connection with (i) claims by any Company
Optionholders and (ii) Taxes resulting from the sale of the Phoenix Business to
the extent not accrued for on the Closing Balance Sheet and reflected in the
determination of Working Capital. For purposes hereunder the "Indemnification
Basket Amount" shall be equal to $50,000 plus the excess of the Working Capital
over the sum of the (i) Special Company Expenses, (ii) uncollected accounts
receivable of the Company after the expiration of 180 days from the Closing Date
in excess of the allowance for doubtful accounts included in the Closing Balance
Sheet, and (iii) the Working Capital Target as determined pursuant to the
Closing Balance Sheet. Notwithstanding the foregoing, (x) in no event shall the
aggregate liability of the Seller to Global or other Indemnified Parties
hereunder exceed $12,000,000 (except for any claims for breach of the
representations, warranties and covenants of the Seller under Sections 3.1, 3.2
or 3.3 which shall be limited to the Purchase Price), (y) except as set forth in
the last sentence of this Section 8.5, the sole remedy of Global or other
Indemnified Parties for the breach of any representation or warranty of Seller
or the Company in this Agreement shall be limited to the recovery of
Indemnifiable Costs provided for under this Article VIII, subject to the
limitations set forth in this Article VIII, including, without limitation, the
time when certain claims expire and the application of the Indemnification
Basket Amount, and (z) in no event shall the Seller be liable under this Article
VIII for an Indemnifiable Cost to the extent that it resulted in a reduction of
the Purchase Price pursuant to Article II hereof. Global shall not be obligated
to pay any amounts for indemnification under this Article VIII, except the
indemnity with respect to the Assumed Notes, until the aggregate indemnification
obligation hereunder exceeds the sum of $50,000 and the Special Company
Expenses, whereupon Global shall be liable for all amounts in excess of the
Indemnification Basket Amount for which indemnification may be sought.
Notwithstanding the foregoing, in no event shall the aggregate liability of the
Global to Seller hereunder exceed $12,000,000. However nothing in this Article
VIII shall limit Global or the Seller in exercising or securing any remedies
provided by applicable common law with respect to the conduct of the Seller or
Global in connection with this Agreement or in the amount of damages that it can
recover from the other in the event that Global or the Seller successfully
proves intentional fraud or intentional fraudulent conduct in connection with
this Agreement.
ARTICLE IX
MISCELLANEOUS
9.1 Modifications. Any amendment, change or modification of this
Agreement shall be void unless in writing and signed by all parties hereto. No
failure or delay by any party hereto in exercising any right, power or privilege
hereunder (and no course of dealing between or among any of the parties) shall
operate as a waiver of any such right, power or privilege. No waiver of any
default on any one occasion shall constitute a waiver of any subsequent or other
default. No single or partial exercise of any such right, power or privilege
shall preclude the further or full exercise thereof.
9.2 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given when personally
delivered, or 48 hours
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<PAGE>
after deposited in the United States mail, first-class, postage prepaid, or by
facsimile addressed to the respective parties hereto as follows:
Global or Newco:
Global Imaging Systems, Inc.
3820 North Dale Boulevard, Suite 200A
Tampa, Florida 33624
Attention: Thomas Johnson, President
Fax No.: (813) 264-7877
Tel No.: (813) 960-5508
With a copy to:
Hogan & Hartson L.L.P.
Columbia Square
Thirteenth Street, NW
Washington, DC 20004-1109
Attention: Christopher J. Hagan
Fax No.: (202) 637-5910
Tel No.: (202) 637-5771
The Company:
Dahill Industries, Inc.
2600 Longhorn Blvd., Suite 103
Austin, Texas 78758
Attention: Randall E. Davidson
Fax No.: (512) 836-3191
Tel No.: (512) 836-2100
And with a copy to:
Graves, Dougherty, Hearon & Moody
515 Congress, Suite 2300
Austin, Texas 78701
Attention: Clarke Heidrick
Fax No.: 512-478-1976
Tel No.: 512-480-5600
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<PAGE>
Seller:
Randall E. Davidson
c/o Dahill Industries, Inc.
2600 Longhorn Blvd.
Austin, TX 78758
Fax No.: (512) 836-3191
Tel No.: (512) 836-2100
or to such other address as to any party hereto as such party shall designate by
like notice to the other parties hereto.
9.3 Counterparts; Facsimile Transmission. This Agreement may be
executed in several counterparts, each of which shall be deemed an original but
all of which counterparts collectively shall constitute one instrument, and in
making proof of this Agreement, it shall never be necessary to produce or
account for more than one such counterpart. Signatures of a party to this
Agreement or other documents executed in connection herewith which are sent to
the other parties by facsimile transmission shall be binding as evidence of
acceptance of the terms hereof or thereof by such signatory party, with
originals to be circulated to the other parties in due course.
9.4 Expenses. Each of the parties hereto will bear all costs,
charges and expenses incurred by such party in connection with this Agreement
and the consummation of the transactions contemplated herein; provided, however,
that (i) the Seller shall bear all costs and expenses of any broker involved in
this transaction and (ii) the Company shall bear all legal expenses of the
Seller and the Company with respect to this Agreement and the transactions
contemplated hereby; provided, however, that such legal expenses are properly
accrued for in accordance with GAAP on the Closing Balance Sheet.
9.5 Binding Effect; Assignment. This Agreement shall be binding upon
and inure to the benefit of the Company, Global, Newco and the Seller, their
heirs, representatives, successors, and permitted assigns, in accordance with
the terms hereof. This Agreement shall not be assignable by the Company or the
Seller without the prior written consent of Global. This Agreement shall be
assignable by Global to a wholly-owned subsidiary of Global or a wholly-owned
subsidiary of any such subsidiary without the prior written consent of the
Seller, but any such assignment shall not relieve Global of its obligations
hereunder. In addition, the indemnification rights of Global under Article VIII
hereof may be assigned by Global to First Union National Bank, N.A.
9.6 Entire and Sole Agreement. This Agreement and the other
schedules and agreements referred to herein, constitute the entire agreement
between the parties hereto and supersede all prior agreements, representations,
warranties, statements, promises, information, arrangements and understandings,
whether oral or written, express or implied, with respect to the subject matter
hereof.
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<PAGE>
9.7 Governing Law. This Agreement and its validity, construction,
enforcement, and interpretation shall be governed by the substantive laws of the
State of Texas (without reference to Texas' rules related to choice of laws).
9.8 Survival of Representations, Warranties and Covenants.
Regardless of any investigation at any time made by or on behalf of any party
hereto or of any information any party may have in respect thereof, all
covenants, agreements, representations and warranties and the related
indemnities made hereunder or pursuant hereto or in connection with the
transactions contemplated hereby shall survive the Closing for a period of two
(2) years, provided (a) the representations and warranties contained in Sections
3.14 and 3.17 of this Agreement, and the related indemnities, shall survive the
Closing until the expiration of the applicable statutes of limitations for
determining or contesting Tax liabilities, (b) the representations, warranties
and covenants contained in Sections 3.1, 3.2, 3.3, and 6.5 of this Agreement,
and the related indemnities, shall survive the Closing indefinitely and not
expire and (c) all covenants contained in Article VI hereof which have a
specific expiration date shall expire as of such date.
9.9 Invalid Provisions. If any provision of this Agreement is deemed
or held to be illegal, invalid or unenforceable, this Agreement shall be
considered divisible and inoperative as to such provision to the extent it is
deemed to be illegal, invalid or unenforceable, and in all other respects this
Agreement shall remain in full force and effect; provided, however, that if any
provision of this Agreement is deemed or held to be illegal, invalid or
unenforceable there shall be added hereto automatically a provision as similar
as possible to such illegal, invalid or unenforceable provision and be legal,
valid and enforceable. Further, should any provision contained in this Agreement
ever be reformed or rewritten by any judicial body of competent jurisdiction,
such provision as so reformed or rewritten shall be binding upon all parties
hereto.
9.10 Public Announcements. Neither party shall make any public
announcement of the transactions contemplated hereby without the prior written
consent of the other party, which consent shall not be unreasonably withheld.
9.11 Remedies Cumulative. The remedies of the parties under this
Agreement are cumulative and shall not exclude any other remedies to which any
party may be lawfully entitled, except to the extent expressly limited in this
Agreement.
9.12 Waiver. No failure or delay on the part of any party in
exercising any right, power, or privilege hereunder or under any of the
documents delivered in connection with this Agreement shall operate as a waiver
of such right, power, or privilege; nor shall any single or partial exercise of
any such right, power, or privilege preclude any other or further exercise
thereof or the exercise of any other right, power, or privilege.
9.13 DISPUTE RESOLUTION. ALL DISPUTES BETWEEN THE SELLERS AND
GLOBAL WITH RESPECT TO ANY PROVISION OF THIS AGREEMENT OR THE RIGHTS AND
OBLIGATIONS OF THE SELLERS AND GLOBAL HEREUNDER (OTHER THAN DISPUTES INVOLVING
ALLEGATIONS OF INTENTIONAL FRAUD), WHICH CANNOT BE RESOLVED BY MUTUAL AGREEMENT,
WILL BE RESOLVED BY BINDING ARBITRATION IN
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<PAGE>
ACCORDANCE WITH THE RULES OF THE AMERICAN ARBITRATION ASSOCIATION IN AUSTIN,
TEXAS, OR BY ANY OTHER MEANS OF ALTERNATIVE DISPUTE RESOLUTION MUTUALLY AGREED
UPON BY THE PARTIES. EACH PARTY SHALL BE ENTITLED TO DISCOVERY PURSUANT TO THE
FEDERAL RULES OF CIVIL PROCEDURE AND FEDERAL RULES OF EVIDENCE. THE
ARBITRATOR(S) SHALL BE LICENSED TO PRACTICE LAW IN THE STATE OF TEXAS.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed as of the date and year first above written.
GLOBAL:
GLOBAL IMAGING SYSTEMS, INC.
By: /s/ Mike Mueller
---------------------------------------------
Name: Mike Mueller
------------------------------------
Title: Vice President and
------------------------------------
Chief Operating Officer
------------------------------------
NEWCO:
DAHILL ACQUISITION, INC.
By: /s/ Todd S. Johnson
--------------------------------------------
Name: Todd S. Johnson
------------------------------------
Title: Vice President
------------------------------------
THE COMPANY:
DAHILL INDUSTRIES, INC.
By: /s/ Randall E. Davidson
--------------------------------------------
Name: Randall E. Davidson
-------------------------------------
Title: President
-------------------------------------
THE SELLER:
/s/ Randall E. Davidson
------------------------
Randall E. Davidson
<PAGE>
EXECUTION COPY
EXHIBIT 10.32
GLOBAL IMAGING SYSTEMS, INC.
10 3/4% SENIOR SUBORDINATED NOTES DUE 2007
REGISTRATION RIGHTS AGREEMENT
New York, New York
March 8, 1999
First Union Capital Markets Corp.,
Prudential Securities Incorporated,
Raymond James & Associates, Inc. and
Scotia Capital Markets (USA) Inc.
As Initial Purchasers under the Purchase Agreement
301 South College Street, TW-10
Charlotte, NC 28288-0606
Ladies and Gentlemen:
This Registration Rights Agreement (the "Agreement") is dated as of
---------
March 8, 1999, by and among Global Imaging Systems, Inc., a Delaware corporation
(the "Issuer"), each subsidiary of the Company listed on Annex A hereto (each
------
such subsidiary, a "Subsidiary Guarantor" and collectively, the "Subsidiary
---------- --------- ----------
Guarantors") and First Union Capital Markets Corp., Prudential Securities
- ----------
Incorporated, Raymond James & Associates, Inc. and Scotia Capital Markets (USA)
Inc. (the "Initial Purchasers").
------------------
This Agreement is being entered into in connection with a certain note
purchase agreement, dated March 3, 1999, among the Issuer, the Subsidiary
Guarantors and the Initial Purchasers (the "Purchase Agreement"), which provides
------------------
for the issuance and sale by the Issuer to the Initial Purchasers of
$100,000,000 aggregate principal amount of the Issuer's 10 3/4% Senior
Subordinated Notes Due 2007 (the "Notes"). The Notes are to be unconditionally
-----
guaranteed, on an unsecured and subordinated basis (the "Note Guarantees"), by
---------------
the Subsidiary Guarantors. In order to induce the Initial Purchasers to enter
into the Purchase Agreement, the Issuer has agreed to provide the registration
rights set forth in this Agreement for the benefit of the Initial Purchasers and
their direct and indirect transferees. The execution and delivery of this
Agreement is a condition to the obligation of the Initial Purchasers to purchase
the Notes under the Purchase Agreement. The parties hereby agree as follows:
1. Definitions. Capitalized terms used herein without definition
-----------
shall have their respective meanings set forth in the Purchase Agreement. As
used in this Agreement, the following capitalized defined terms shall have the
following meanings:
"Act" means the Securities Act of 1933, as amended, and the rules and
---
regulations of the Commission promulgated thereunder.
<PAGE>
"Affiliate" means, with respect to any specified person, any other
---------
person that, directly or indirectly, is in control of, is controlled by, or is
under common control with, such specified person. For purposes of this
definition, control of a person means the power, direct or indirect, to direct
or cause the direction of the management and policies of such person whether by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Agreement" has the meaning set forth in the preamble hereto.
---------
"Business Day" means any day excluding Saturday, Sunday or any other
------------
day which is a legal holiday under the laws of Charlotte, North Carolina or New
York, New York or is a day on which banking institutions therein located are
authorized or required by law or other governmental action to close.
"Commission" means the Securities and Exchange Commission.
----------
"Consummate" means, with respect to a Registered Exchange Offer, the
----------
occurrence of (a) the filing and effectiveness under the Act of the Exchange
Offer Registration Statement relating to the Exchange Notes to be issued in the
Registered Exchange Offer, (b) the maintenance of such Registration Statement
continuously effective and the keeping of the Registered Exchange Offer open for
a period not less than the minimum period required pursuant to Section 2(c)(ii)
hereof, (c) the Issuer's acceptance for exchange of all Transfer Restricted
Notes duly tendered and not validly withdrawn pursuant to the Registered
Exchange Offer and (d) the delivery of Exchange Notes by the Issuer to the
registrar under the Indenture in the same aggregate principal amount as the
aggregate principal amount of Transfer Restricted Notes duly tendered and not
validly withdrawn by Holders thereof pursuant to the Registered Exchange Offer
and the delivery of such Exchange Notes to such Holders. The term
"Consummation" has a meaning correlative to the foregoing.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
and the rules and regulations of the Commission promulgated thereunder.
"Exchange Notes" means debt securities of the Issuer substantially
--------------
identical in all material respects to the Notes (except that the Liquidated
Damages provisions and the transfer restrictions pertaining to the Notes will be
modified or eliminated, as appropriate), to be issued under the Indenture.
"Exchange Offer Registration Period" means the 180-Business Day period
----------------------------------
(or longer, if required by applicable law) following the Consummation of the
Registered Exchange Offer, exclusive of any period during which any stop order
shall be in effect suspending the effectiveness of the Exchange Offer
Registration Statement.
"Exchange Offer Registration Statement" means a registration statement
-------------------------------------
of the Issuer on an appropriate form under the Act with respect to the
Registered Exchange Offer, all amendments and supplements to such registration
statement, including post-effective
2
<PAGE>
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"Filing Date" has the meaning set forth in Section 2 hereto.
-----------
"Holder" means any holder from time to time of Transfer Restricted
------
Notes or Exchange Notes (including the Initial Purchasers).
"Indenture" means the indenture relating to the Notes and the Exchange
---------
Notes, to be dated as of the Closing Date, among the Issuer, the Subsidiary
Guarantors and United States Trust Company of New York, as trustee, as the same
may be amended, supplemented, waived or otherwise modified from time to time in
accordance with the terms thereof.
"Initial Purchasers" has the meaning set forth in the preamble hereto.
------------------
"Issue Date" means March 8, 1999.
----------
"Issuer" has the meaning set forth in the preamble hereto.
------
"Liquidated Damages" has the meaning set forth in Section 4 hereto.
------------------
"Losses" has the meaning set forth in Section 8(d) hereto.
------
"Majority Holders" means the Holders of a majority of the aggregate
----------------
principal amount of Transfer Restricted Notes registered under a Registration
Statement.
"Managing Underwriters" means the investment banker or investment
---------------------
bankers and manager or managers that shall administer an underwritten offering
under a Shelf Registration Statement.
"Note Guarantees" has the meaning set forth in the preamble hereto.
---------------
"Notes" has the meaning set forth in the preamble hereto.
-----
"Participating Broker-Dealer" means any Holder (which may include the
---------------------------
Initial Purchasers) that is a broker-dealer, electing to exchange Notes acquired
for its own account as a result of market-making activities or other trading
activities for Exchange Notes.
"Prospectus" means the prospectus included in any Registration
----------
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A under the Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Transfer Restricted Notes covered by such
Registration Statement, and all amendments and supplements to the Prospectus,
including post-effective amendments.
"Purchase Agreement" has the meaning set forth in the preamble hereto.
------------------
3
<PAGE>
"Registered Exchange Offer" means the proposed offer to the Holders to
-------------------------
issue and deliver to such Holders, in exchange for the Notes, a like principal
amount of Exchange Notes.
"Registration Statement" means any Exchange Offer Registration
----------------------
Statement or Shelf Registration Statement that covers any of the Transfer
Restricted Notes (including any Note Guarantees of each thereof) pursuant to the
provisions of this Agreement, amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto, and all material
incorporated by reference therein.
"Shelf Registration" means a registration effected pursuant to Section
------------------
3 hereof.
"Shelf Registration Period" has the meaning set forth in Section 3(c)
-------------------------
hereof.
"Shelf Registration Statement" means a "shelf" registration statement
----------------------------
of the Issuer pursuant to the provisions of Section 3 hereof, which covers some
or all of the Transfer Restricted Notes, as applicable, on an appropriate form
under Rule 415 under the Act, or any similar rule that may be adopted by the
Commission, all amendments and supplements to such registration statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
"Transfer Restricted Notes" means each Note upon original issuance
-------------------------
thereof and at all times subsequent thereto, each Exchange Note as to which
Section 3(a)(iii) and Section 3(a)(iv) apply upon original issuance and at all
times subsequent thereto, until in the case of any such Note or Exchange Note,
as the case may be, the earliest to occur of (i) the date on which such Note has
been exchanged by a person other than a Participating Broker-Dealer for an
Exchange Note (other than with respect to an Exchange Note as to which Section
3(a)(iii) and Section 3(a)(iv) apply), (ii) with respect to Exchange Notes
received by Participating Broker-Dealers in the Registered Exchange Offer, the
date on which such Exchange Note has been sold by such Participating Broker-
Dealer by means of the Prospectus contained in the Exchange Offer Registration
Statement, (iii) a Shelf Registration Statement covering such Note or Exchange
Note, as the case may be, has been declared effective by the Commission and such
Note or Exchange Note, as the case may be, has been disposed of in accordance
with such effective Shelf Registration Statement, (iv) the date on which such
Note or Exchange Note, as the case may be, is disposed of pursuant to Rule 144
under the Act or (v) such Note or Exchange Note, as the case may be, ceases to
be outstanding for purposes of the Indenture.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
-------------------
amended.
"Trustee" means the trustee with respect to the Notes or Exchange
-------
Notes, as applicable, under the Indenture.
2. Registered Exchange Offer; Resales of Exchange Notes by
-------------------------------------------------------
Participating Broker-Dealers; Private Exchange. (a) The Issuer and the
- ----------------------------------------------
Subsidiary Guarantors shall prepare and, not later than 60 days from the Issue
Date (or, if such 60th day is not a Business Day, by the
4
<PAGE>
first Business Day thereafter), shall file with the Commission the Exchange
Offer Registration Statement with respect to the Registered Exchange Offer (the
date of such filing hereinafter referred to as the "Filing Date"). The Issuer
-----------
and the Subsidiary Guarantors shall use their best efforts (i) to cause the
Exchange Offer Registration Statement to be declared effective under the Act
within 150 days from the Issue Date (or, if such 150th day is not a Business
Day, by the first Business Day thereafter), and (ii) to Consummate the
Registered Exchange Offer within 30 Business Days from the date the Exchange
Offer Registration Statement becomes effective (or, if such 30th day is not a
Business Day, by the first Business Day thereafter).
(b) The objective of such Registered Exchange Offer is to enable each
Holder electing to exchange Transfer Restricted Notes for Exchange Notes
(assuming that such Holder (x) is not an "affiliate" of the Issuer or the
Subsidiary Guarantors within the meaning of the Act, (y) is not a broker-dealer
that acquired the Transfer Restricted Notes in a transaction other than as a
part of its market-making or other trading activities and (z) if such Holder is
not a broker-dealer, acquires the Exchange Notes in the ordinary course of such
Holder's business, is not participating in the distribution of the Exchange
Notes and has no arrangements or understandings with any person to participate
in the distribution of the Exchange Notes) to resell such Exchange Notes from
and after their receipt without any limitations or restrictions under the Act
and without material restrictions under the securities laws of a substantial
proportion of the several states of the United States.
(c) In connection with the Registered Exchange Offer, the Issuer and
the Subsidiary Guarantors shall:
(i) mail to each Holder a copy of the Prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(ii) keep the Registered Exchange Offer open for acceptance for not
less than 20 Business Days after the date notice thereof is mailed to
Holders;
(iii) utilize the services of a depositary for the Registered Exchange
Offer with an address in the Borough of Manhattan, The City of New York;
and
(iv) comply in all material respects with all applicable laws
relating to the Registered Exchange Offer.
(d) The Issuer and the Subsidiary Guarantors may suspend the use of
the Prospectus for a period not to exceed 30 days in any six month period or an
aggregate of 60 days in any twelve-month period for valid business reasons, to
be determined by the Issuer and the Subsidiary Guarantors in their sole
reasonable judgment (not including avoidance of their obligations hereunder),
including, without limitation, the acquisition or divestiture of assets, public
filings with the Commission, pending corporate developments and similar events;
provided that the Issuer and the Subsidiary Guarantors promptly after such
- --------
suspension period comply with the requirements of Section 5(k) hereof, if
applicable.
5
<PAGE>
(e) As soon as practicable after the Consummation of the Registered
Exchange Offer, the Issuer and the Subsidiary Guarantors shall cause the Trustee
promptly to authenticate and deliver to each Holder Exchange Notes equal in
principal amount to the Transfer Restricted Notes of such Holder so accepted for
exchange.
(f) The Initial Purchasers, the Issuer and the Subsidiary Guarantors
acknowledge that, pursuant to interpretations by the staff of the Commission of
Section 5 of the Act, and in the absence of an applicable exemption therefrom,
each Participating Broker-Dealer is required to deliver a Prospectus in
connection with a sale of any Exchange Notes received by such Participating
Broker-Dealer pursuant to the Registered Exchange Offer in exchange for Transfer
Restricted Notes acquired for its own account as a result of market-making
activities or other trading activities. Accordingly, the Issuer and the
Subsidiary Guarantors will allow Participating Broker-Dealers and other persons,
if any, with similar prospectus delivery requirements to use the Prospectus
contained in the Exchange Offer Registration Statement in connection with the
resale of Exchange Notes and shall:
(i) include the information set forth in Exhibit A hereto on the
cover of the Prospectus forming a part of the Exchange Offer Registration
Statement, in Exhibit B hereto in the forepart of the Exchange Offer
Registration Statement in a section setting forth details of the Registered
Exchange Offer, in Exhibit C hereto in the underwriting or plan of
distribution section of the Prospectus forming a part of the Exchange Offer
Registration Statement, and in Exhibit D hereto in the letter of
transmittal delivered pursuant to the Registered Exchange Offer; and
(ii) use all commercially reasonable best efforts to keep the Exchange
Offer Registration Statement continuously effective (subject to Section
2(d)) under the Act during the Exchange Offer Registration Period for
delivery of the Prospectus included therein by Participating Broker-Dealers
in connection with sales of Exchange Notes received pursuant to the
Registered Exchange Offer, as contemplated by Section 5(h) below.
(g) In the event that the Initial Purchasers determine that they are
not eligible to participate in the Registered Exchange Offer with respect to the
exchange of Transfer Restricted Notes constituting any portion of an unsold
allotment, upon the effectiveness of the Shelf Registration Statement as
contemplated by Section 3 hereof and at the request of the Initial Purchasers,
the Issuer and the Subsidiary Guarantors shall issue and deliver to the Initial
Purchasers, or to the party purchasing Transfer Restricted Notes registered
under the Shelf Registration Statement from the Initial Purchasers, in exchange
for such Transfer Restricted Notes, a like principal amount of Exchange Notes to
the extent permitted by applicable law. The Issuer and the Subsidiary
Guarantors shall use their reasonable best efforts to cause the CUSIP Service
Bureau to issue the same CUSIP number for such Exchange Notes as for Exchange
Notes issued pursuant to the Registered Exchange Offer.
3. Shelf Registration. (a) If (i) the Issuer or the Subsidiary
------------------
Guarantors are not permitted to file the Exchange Offer Registration Statement
or to Consummate the Registered
6
<PAGE>
Exchange Offer because the Registered Exchange Offer is not permitted by
applicable law or Commission policy, (ii) for any other reason the Registered
Exchange Offer is not Consummated within 30 Business Days of the date the
Exchange Offer Registration Statement has become effective, (iii) the Initial
Purchasers so request with respect to Notes acquired by them directly from the
Issuer and the Subsidiary Guarantors on or prior to the 20th Business Day
following the Consummation of the Registered Exchange Offer, (iv) any Holder
notifies the Issuer on or prior to the 20th Business Day following the
Consummation of the Registered Exchange Offer that such Holder is not eligible
to participate in the Registered Exchange Offer or the Exchange Notes such
Holder would receive would not be freely tradable, or (v) in the case where the
Initial Purchasers participate in the Registered Exchange Offer or acquire
Exchange Notes pursuant to Section 2(g) hereof, the Initial Purchasers do not
receive freely tradable Exchange Notes in exchange for Notes constituting any
portion of an unsold allotment and the Initial Purchasers notify the Issuer on
or prior to the 20th Business Day following the Consummation of the Registered
Exchange Offer (it being understood that, for purposes of this Section 3, (x)
the requirement that the Initial Purchasers deliver a Prospectus containing the
information required by Items 507 and/or 508 of Regulation S-K under the Act in
connection with sales of Exchange Notes acquired in exchange for such Transfer
Restricted Notes shall result in such Exchange Notes being not "freely tradable"
and (y) the requirement that a Participating Broker-Dealer deliver a Prospectus
in connection with sales of Exchange Notes acquired in the Registered Exchange
Offer in exchange for Transfer Restricted Notes acquired as a result of market-
making activities or other trading activities shall not result in such Exchange
Notes being not "freely tradable"), the following provisions shall apply:
(b) The Issuer and the Subsidiary Guarantors shall use their
reasonable best efforts to file with the Commission a Shelf Registration
Statement prior to the 75th day following the earliest to occur of (i) the date
on which the Issuer and the Subsidiary Guarantors determine that they are not
permitted to file the Exchange Offer Registration Statement or to Consummate the
Exchange Offer; (ii) 30 Business Days after the Exchange Offer Registration
Statement has been declared effective if the Registered Exchange Offer has not
been Consummated by such date and (iii) the date notice is given pursuant to
Section (a)(iii), (iv) or (v) above (or if such 75th day is not a Business Day,
by the first Business Day thereafter) and shall use their reasonable efforts to
cause the Shelf Registration Statement to be declared effective by the
Commission within 135 days thereafter. With respect to Exchange Notes received
by the Initial Purchasers in exchange for Notes constituting any portion of an
unsold allotment, the Issuer and the Subsidiary Guarantors may, if permitted by
current interpretations by the Commission's staff, file a post-effective
amendment to the Exchange Offer Registration Statement containing the
information required by Regulation S-K Items 507 and/or 508, as applicable, in
satisfaction of their obligations under this paragraph (b) with respect thereto,
and any such Exchange Offer Registration Statement, as so amended, shall be
referred to herein as, and governed by the provisions herein applicable to, a
Shelf Registration Statement.
(c) The Issuer and the Subsidiary Guarantors shall use their best
efforts to keep such Shelf Registration Statement continuously effective
(subject to Section 3(d)) in order to permit the Prospectus forming a part
thereof to be usable by Holders until the earliest of (i) such time as the Notes
or Exchange Notes covered by the Shelf Registration Statement can be sold
7
<PAGE>
without any limitations under clauses (c), (e), (f) and (h) of Rule 144, (ii)
two years from the date on which the Shelf Registration Statement was filed and
(iii) such date as of which all the Transfer Restricted Notes have been sold
pursuant to the Shelf Registration Statement (in any such case, such period
being called the "Shelf Registration Period"). The Issuer and the Subsidiary
-------------------------
Guarantors shall be deemed not to have used their best efforts to keep the Shelf
Registration Statement effective during the requisite period if any of them
voluntarily takes any action that would result in Holders of Transfer Restricted
Notes covered thereby not being able to offer and sell such notes during that
period, unless such action is (x) required by applicable law or (y) pursuant to
Section 3(d) hereof, and, in either case, so long as the Issuer or the
Subsidiary Guarantors promptly thereafter comply with the requirements of
Section 5(k) hereof, if applicable.
(d) The Issuer and the Subsidiary Guarantors may suspend the use of
the Prospectus for a period not to exceed 30 days in any six month period or an
aggregate of 60 days in any twelve-month period for valid business reasons, to
be determined by the Issuer and the Subsidiary Guarantors in their sole
reasonable judgment (not including avoidance of their obligations hereunder),
including, without limitation, the acquisition or divestiture of assets, public
filings with the Commission, pending corporate developments and similar events;
provided that the Issuer and the Subsidiary Guarantors promptly after such
- --------
suspension period comply with the requirements of Section 5(k) hereof, if
applicable.
(e) No Holder of Transfer Restricted Notes may include any of its
Transfer Restricted Notes in any Shelf Registration Statement pursuant to this
Agreement unless and until such Holder furnishes to the Issuer in writing,
within 20 Business Days after receipt of a request therefor, such information as
the Issuer may reasonably request for use in connection with any Shelf
Registration Statement or Prospectus or preliminary Prospectus included therein.
No Holder of Transfer Restricted Notes shall be entitled to Liquidated Damages
pursuant to Section 4 hereof unless and until such Holder shall have used its
best efforts to provide all such reasonably requested information. Each Holder
of Transfer Restricted Notes as to which any Shelf Registration Statement is
being effected agrees to furnish promptly to the Issuer all information required
to be disclosed in order to make the information previously furnished to the
Issuer by such Holder not misleading.
4. Liquidated Damages.
------------------
(a) The parties hereto agree that Holders of Exchange Notes that are
Transfer Restricted Notes and Notes, as applicable, will suffer damages if the
Issuer or the Subsidiary Guarantors fail to perform their obligations under
Section 2 or Section 3 hereof and that it would not be feasible to ascertain the
extent of such damages. Accordingly, in the event that (i) the applicable
Registration Statement is not filed with the Commission on or prior to the date
specified herein for such filing, (ii) the applicable Registration Statement has
not been declared effective by the Commission on or prior to the date specified
herein for such effectiveness after such obligation arises, (iii) if the
Registered Exchange Offer is required to be Consummated hereunder, the
Registered Exchange Offer has not been Consummated by the Issuer and the
Subsidiary Guarantors within the time period set forth in Section 2(a), or (iv)
prior to the end of
8
<PAGE>
the Exchange Offer Registration Period or the Shelf Registration Period, the
Commission shall have issued a stop order suspending the effectiveness of the
Exchange Offer Registration Statement or the Shelf Registration Statement, as
the case may be, or proceedings have been initiated with respect to the
Registration Statement under Section 8(d) or 8(e) of the Act, (v) the aggregate
number of days in any one suspension period exceeds the period permitted
pursuant to Section 2(d) or 3(d) hereof, as each may be applicable, or (vi) the
number of suspension periods exceeds the number permitted pursuant to Section
2(d) or 3(d) hereof, as each may be applicable (each such event referred to in
clauses (i) through (vi), a "Registration Default"), then damages ("Liquidated
-------------------- ----------
Damages") will accrue with respect to Exchange Notes that are Transfer
- -------
Restricted Notes or Notes, as applicable, with respect to the first 90-day
period immediately following the occurrence of such Registration Default in an
amount equal to $0.05 per week per $1,000 principal amount of such Exchange
Notes or Notes, as applicable, and will increase by an additional $0.05 per week
per $1,000 principal amount of such Exchange Notes or Notes, as applicable, for
each subsequent 90-day period until such Registration Default has been cured, up
to an aggregate maximum amount of Liquidated Damages of $0.30 per week per
$1,000 principal amount of Notes for all Registration Defaults. Following the
cure of a Registration Default, the accrual of Liquidated Damages with respect
to such Registration Default will cease and upon the cure of all Registration
Defaults the accrual of all Liquidated Damages will cease.
(b) The Issuer shall notify the Trustee and paying agent under the
Indenture (or the trustee and paying agent under such other indenture under
which any Transfer Restricted Notes are issued) immediately upon the happening
of each and every Registration Default. The Issuer and the Subsidiary
Guarantors shall pay the Liquidated Damages due on the Transfer Restricted Notes
by depositing with the paying agent (which shall not be the Issuer for these
purposes) for the Transfer Restricted Notes, in trust, for the benefit of the
Holders thereof, prior to 11:00 A.M. on the next interest payment date specified
in the Indenture (or such other indenture), sums sufficient to pay the
Liquidated Damages then due. The Liquidated Damages due shall be payable on
each interest payment date specified by the Indenture (or such other indenture)
to the record holders entitled to receive the interest payment to be made on
such date. Each obligation to pay Liquidated Damages shall be deemed to accrue
from and including the date of the applicable Registration Default.
(c) The parties hereto agree that the Liquidated Damages provided for
in this Section 4 constitute a reasonable estimate of the damages that will be
suffered by holders of Transfer Restricted Notes by reason of the happening of
any Registration Default.
(d) All of the Issuer's and the Subsidiary Guarantors' obligations
set forth in this Section 4 which are outstanding with respect to any Transfer
Restricted Note at the time such Note ceases to be covered by an effective
Registration Statement shall survive until such time as all such obligations
with respect to such security have been satisfied in full (notwithstanding
termination of the Agreement).
5. Registration Procedures. In connection with any Shelf
-----------------------
Registration Statement and, to the extent applicable, any Exchange Offer
Registration Statement, the following provisions shall apply:
9
<PAGE>
(a) The Issuer and the Subsidiary Guarantors shall furnish to the
Initial Purchasers, prior to the filing thereof with the Commission, a copy of
any Registration Statement, and each amendment thereof and each amendment or
supplement, if any, to the Prospectus included therein and shall use their best
efforts to reflect in each such document, when so filed with the Commission,
such comments as the Initial Purchasers reasonably may propose.
(b) The Issuer and the Subsidiary Guarantors shall ensure that:
(i) any Registration Statement and any amendment thereto and any
Prospectus contained therein and any amendment or supplement thereto
complies in all material respects with the Act;
(ii) any Registration Statement and any amendment thereto does not,
when it becomes effective, contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading; and
(iii) any Prospectus forming part of any Registration Statement,
including any amendment or supplement to such Prospectus, does not include
an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading;
provided that no representation or agreement is made hereby with respect to
- --------
information with respect to the Initial Purchasers, any Underwriter or any
Holder required to be included in any Registration Statement or Prospectus
pursuant to the Act or provided by the Initial Purchasers, any Holder or any
Underwriter specifically for inclusion in any Registration Statement or
Prospectus.
(c) (1) The Issuer and the Subsidiary Guarantors shall advise the
Initial Purchasers and, in the case of a Shelf Registration Statement, the
Holders of Transfer Restricted Notes covered thereby, and, if requested by the
Initial Purchasers or any such Holder, confirm such advice in writing:
(i) when a Registration Statement and any amendment thereto has been
filed with the Commission and when the Registration Statement or any post-
effective amendment thereto has become effective; and
(ii) of any request by the Commission for amendments or supplements to
the Registration Statement or the Prospectus included therein or for
additional information.
(2) The Issuer and the Subsidiary Guarantors shall advise the Initial
Purchasers and, in the case of a Shelf Registration Statement, the Holders of
Transfer Restricted Notes covered thereby, and, in the case of an Exchange Offer
Registration Statement, any Participating Broker-Dealer that has provided in
writing to the Issuer a telephone or facsimile number and
10
<PAGE>
address for notices, and, if requested by the Initial Purchasers or any such
Holder or Participating Broker-Dealer, confirm such advice in writing:
(i) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose;
(ii) of the receipt by the Issuer or the Subsidiary Guarantors of any
notification with respect to the suspension of the qualification of the
Transfer Restricted Notes included in any Registration Statement for sale
in any jurisdiction or the initiation or threatening of any proceeding for
such purpose; and
(iii) of the happening of any event that requires the making of any
changes in the Registration Statement or the Prospectus so that, as of such
date, the statements therein are not misleading and do not omit to state a
material fact required to be stated therein or necessary to make the statements
therein (in the case of the Prospectus, in light of the circumstances under
which they were made) not misleading (which advice shall be accompanied by an
instruction to suspend the use of the Prospectus until the requisite changes
have been made).
(d) The Issuer and the Subsidiary Guarantors shall use their best
efforts to obtain the withdrawal of any order suspending the effectiveness of
any Registration Statement at the earliest possible time.
(e) The Issuer and the Subsidiary Guarantors shall furnish to each
Holder of Transfer Restricted Notes included within the coverage of any Shelf
Registration Statement, without charge, at least one copy of such Shelf
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, and, if the Holder so requests in writing,
all exhibits thereto (including those incorporated by reference).
(f) The Issuer and the Subsidiary Guarantors shall, during the Shelf
Registration Period, deliver to each Holder of Transfer Restricted Notes
included within the coverage of any Shelf Registration Statement, without
charge, as many copies of the Prospectus (including each preliminary Prospectus)
included in such Shelf Registration Statement and any amendment or supplement
thereto as such Holder may reasonably request; and, subject to Section 5(c)(2)
hereof, the Issuer and the Subsidiary Guarantors consent to the use of the
Prospectus or any amendment or supplement thereto by each of the selling Holders
of Transfer Restricted Notes in connection with the offering and sale of the
Transfer Restricted Notes covered by the Prospectus or any amendment or
supplement thereto.
(g) The Issuer and the Subsidiary Guarantors shall furnish to each
Participating Broker-Dealer that so requests, without charge, at least one copy
of the Exchange Offer Registration Statement and any post-effective amendment
thereto, including financial statements and schedules, any documents
incorporated by reference therein and, if the Participating Broker-Dealer so
requests in writing, all exhibits thereto (including those incorporated by
reference).
11
<PAGE>
(h) The Issuer and the Subsidiary Guarantors shall, during the
Exchange Offer Registration Period, deliver to each Participating Broker-Dealer,
without charge, as many copies of the Prospectus (including each preliminary
Prospectus) included in such Exchange Offer Registration Statement and any
amendment or supplement thereto as such Participating Broker-Dealer may
reasonably request; and the Issuer and the Subsidiary Guarantors consent to the
use of the Prospectus or any amendment or supplement thereto by any such
Participating Broker-Dealer in connection with the offering and sale of the
Exchange Notes, as provided in Section 2(f) above.
(i) Prior to the Registered Exchange Offer or any other offering of
Transfer Restricted Notes pursuant to any Registration Statement, the Issuer and
the Subsidiary Guarantors shall register, qualify or cooperate with the Holders
of Transfer Restricted Notes included therein and their respective counsel in
connection with the registration or qualification of such Transfer Restricted
Notes for offer and sale under the securities or blue sky laws of such states as
any such Holders reasonably request in writing and do any and all other acts or
things necessary or advisable to enable the offer and sale in such jurisdictions
of the Transfer Restricted Notes covered by such Registration Statement;
provided, however, that none of the Issuer or Subsidiary Guarantors will be
- -------- -------
required to qualify generally to do business in any jurisdiction in which any of
them is not then so qualified, to file any general consent to service of process
or to take any action which would subject any of them to general service of
process or to taxation in any such jurisdiction where it is not then so subject.
(j) The Issuer and the Subsidiary Guarantors shall cooperate with the
Holders to facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Notes to be sold pursuant to any Registration
Statement free of any restrictive legends and in denominations and registered in
such names as Holders may request prior to sales of Transfer Restricted Notes
pursuant to such Registration Statement.
(k) Upon the occurrence of any event contemplated by paragraph
(c)(2)(iii) of this Section 5, the Issuer and the Subsidiary Guarantors shall
promptly prepare and file a post-effective amendment to any Registration
Statement or an amendment or supplement to the related Prospectus or any other
required document so that, as thereafter delivered to purchasers of the Transfer
Restricted Notes included therein, the Prospectus will not include an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
(l) The Issuer and the Subsidiary Guarantors shall use their
reasonable best efforts to cause The Depository Trust Company ("DTC") on the
---
first Business Day following the effective date of any Registration Statement
hereunder or as soon as possible thereafter to remove (i) from any existing
CUSIP number assigned to the Transfer Restricted Notes or Exchange Notes, as the
case may be, any designation indicating that such notes are "restricted
securities," which efforts shall include delivery to DTC of a letter executed by
the Issuer substantially in the form of Exhibit E hereto and (ii) any other stop
or restriction on DTC's system with respect to the Transfer Restricted Notes or
Exchange Notes, as the case may be. In the event the Issuer and the Subsidiary
Guarantors are unable to cause DTC to take actions
12
<PAGE>
described in the immediately preceding sentence, the Issuer and the Subsidiary
Guarantors shall take such actions as the Initial Purchasers may reasonably
request to provide, as soon as practicable, a CUSIP number for the Transfer
Restricted Notes or Exchange Notes registered under such Registration Statement
and to cause such CUSIP number to be assigned to the Transfer Restricted Notes
or Exchange Notes (or to the maximum aggregate principal amount of the
securities to which such number may be assigned).
(m) The Issuer and the Subsidiary Guarantors shall use their best
efforts to comply with all applicable rules and regulations of the Commission
and shall make generally available to their security holders as soon as
practicable after the effective date of the applicable Registration Statement an
earnings statement satisfying the provisions of Section 11(a) of the Act and
Rule 158 promulgated thereunder.
(n) The Issuer and the Subsidiary Guarantors shall cause the
Indenture to be qualified under the Trust Indenture Act in a timely manner.
(o) The Issuer and the Subsidiary Guarantors may require each Holder
of Transfer Restricted Notes to be sold pursuant to any Shelf Registration
Statement to furnish to the Issuer such information regarding the Holder and the
distribution of such Transfer Restricted Notes as may, from time to time, be
reasonably required by the Act and the rules and regulations promulgated
thereunder, and the obligations of the Issuer and the Subsidiary Guarantors to
any Holder hereunder shall be expressly conditioned on the compliance of such
Holder with such request.
(p) The Issuer and the Subsidiary Guarantors shall, if requested,
promptly incorporate in a Prospectus supplement or post-effective amendment to a
Shelf Registration Statement (i) such information as the Majority Holders
provide or, if the Transfer Restricted Notes are being sold in an underwritten
offering, as the Managing Underwriters and the Majority Holders reasonably agree
should be included therein and provided to the Issuer or Subsidiary Guarantors
in writing for inclusion in the Shelf Registration Statement or Prospectus, and
(ii) such information as a Holder may provide from time to time to the Issuer in
writing for inclusion in a Prospectus or any Shelf Registration Statement
concerning such Holder and the distribution of such Holder's Transfer Restricted
Notes and, in either case, shall make all required filings of such Prospectus
supplement or post-effective amendment as soon as practicable after being
notified in writing of the matters to be incorporated in such Prospectus
supplement or post-effective amendment.
(q) In the case of any Shelf Registration Statement, the Issuer and
the Subsidiary Guarantors shall enter into such agreements (including
underwriting agreements) and take all other customary and appropriate actions as
may be reasonably requested in order to expedite or facilitate the registration
or the disposition of any Transfer Restricted Notes, and in connection
therewith, if an underwriting agreement is entered into, cause the same to
contain indemnification provisions and procedures no less favorable than those
set forth in Section 8 (or such other provisions and procedures acceptable to
the Majority Holders and the Managing Underwriters, if any, with respect to all
parties to be indemnified pursuant to Section 8).
13
<PAGE>
(r) In the case of any Shelf Registration Statement, the Issuer and
the Subsidiary Guarantors shall:
(i) make reasonably available for inspection by the Holders of
Transfer Restricted Notes to be registered thereunder, any Underwriter
participating in any disposition pursuant to such Shelf Registration
Statement, and any attorney, accountant or other agent retained by the
Holders or any such Underwriter, all relevant financial and other records,
pertinent corporate documents and properties of the Issuer and the
Subsidiary Guarantors and their subsidiaries;
(ii) make reasonably available their officers, directors and
employees to supply all relevant information reasonably requested by the
Holders or any such Underwriter, attorney, accountant or agent in
connection with any such Registration Statement as is customary for similar
due diligence examinations; provided, however, that any information so
-------- -------
provided will be deemed confidential at the time of delivery of such
information and shall be kept confidential by the Holders or any such
Underwriter, attorney, accountant or agent, unless (x) disclosure thereof
is made in connection with a court proceeding or required by law; provided
--------
that each Holder and any such Managing Underwriter, attorney, accountant or
agent will, upon learning that disclosure of such information is sought in
a court proceeding or required by law, give reasonable notice to the Issuer
and/or the Subsidiary Guarantors with enough time to allow the Issuer
and/or the Subsidiary Guarantors to undertake appropriate action to prevent
disclosure at the Issuer's and the Subsidiary Guarantors' sole expense, or
(y) such information has previously been made or becomes available to the
public generally through the Issuer or the Subsidiary Guarantors or through
a third party without an accompanying obligation of confidentiality;
(iii) if requested by the Majority Holders or the Managing
Underwriters, if any, make such representations and warranties to the
Holders of Transfer Restricted Notes registered thereunder and the Managing
Underwriters, if any, in form, substance and scope as are customarily made
by issuers to Managing Underwriters and covering matters including, but not
limited to, those set forth in the Purchase Agreement;
(iv) if requested by the Majority Holders or the Managing
Underwriters, if any, obtain opinions of counsel to the Issuer and the
Subsidiary Guarantors and updates thereof (which counsel and opinions, in
form, scope and substance, shall be reasonably satisfactory to the Managing
Underwriters, if any) addressed to each selling Holder and the Managing
Underwriters, if any, covering such matters as are customarily covered in
opinions requested in underwritten offerings and such other matters as may
be reasonably requested by such Holders and Managing Underwriters;
(v) obtain "cold comfort" letters and updates thereof from the
independent certified public accountants of the Issuer and the Subsidiary
Guarantors (and, if necessary, any other independent certified public
accountants of any subsidiary of the Issuer or the Subsidiary Guarantors or
of any business acquired by the Issuer and the
14
<PAGE>
Subsidiary Guarantors for which financial statements and financial data
are, or are required to be, included in the Registration Statement),
addressed to each selling Holder of the Transfer Restricted Notes covered
by such Shelf Registration Statement (provided such Holder furnishes the
accountants with such representations as the accountants customarily
require in similar situations) and the Managing Underwriters, if any, in
customary form and covering matters of the type customarily covered in
"cold comfort" letters in connection with primary underwritten offerings;
(vi) deliver such documents and certificates as may be reasonably
requested by the Majority Holders and the Managing Underwriters, if any,
including those to evidence compliance with Section 5(i) and with any
customary conditions contained in the underwriting agreement or other
agreement entered into by the Issuer and the Subsidiary Guarantors; and
(vii) The foregoing actions set forth in this Section 5(r) shall be
performed at (A) the effectiveness of such Shelf Registration Statement and
each post-effective amendment thereto and (B) each closing under any
underwriting or similar agreement as and to the extent required thereunder.
(s) The Issuer shall, if and to the extent required under the Act
and/or the Trust Indenture Act and the rules and regulations thereunder in order
to register the Transfer Restricted Notes (including the Note Guarantees, if
any) under the Act and qualify the Indenture under the Trust Indenture Act,
cause each Subsidiary Guarantor, if any, to sign any Registration Statement and
take all other action necessary to register the Note Guarantees, if any, under
the applicable Registration Statement.
6. Registration Expenses. The Issuer and the Subsidiary Guarantors
---------------------
shall bear all fees and expenses (including the fees and expenses, if any, of
Cleary, Gottlieb, Steen & Hamilton, counsel for the Initial Purchasers, incurred
in connection with the Registered Exchange Offer) incurred in connection with
the performance of their obligations under Sections 2, 3, 4 and 5 hereof (other
than brokers', dealers' and underwriters' discounts and commissions and
brokers', dealers' and underwriters' counsel fees) and shall reimburse the
Holders for the reasonable fees and disbursements of one firm or counsel
designated by the Majority Holders to act as counsel for the Holders in
connection therewith.
7. Rules 144 and 144A. The Issuer shall use its best efforts to
------------------
file the reports required to be filed by it under the Act and the Exchange Act
in a timely manner and, if at any time the Issuer is not required to file such
reports, it will, upon the request of any Holder of Transfer Restricted Notes,
make publicly available other information so long as necessary to permit sales
of its securities pursuant to Rules 144 and 144A. The Issuer covenants that it
will take such further action as any Holder of Transfer Restricted Notes may
reasonably request, all to the extent required from time to time to enable such
Holder to sell Transfer Restricted Notes without registration under the
Securities Act within the limitation of the exemptions provided by Rules 144 and
144A (including the requirements of Rule 144A(d)(4)). The Issuer will provide a
copy of this Agreement to prospective purchasers of Transfer Restricted Notes
identified to the
15
<PAGE>
Issuer by the Initial Purchasers upon request. Upon the request of any Holder of
Transfer Restricted Notes, the Issuer shall deliver to such Holder a written
statement as to whether it has complied with such requirements. Notwithstanding
the foregoing, nothing in this Section 7 shall be deemed to require the Issuer
to register any of its securities pursuant to the Exchange Act.
8. Indemnification and Contribution.
--------------------------------
(a) (i) In connection with any Registration Statement, the Issuer
and the Subsidiary Guarantors jointly and severally agree to indemnify and
hold harmless each Holder of Transfer Restricted Notes covered thereby, the
directors, officers, employees and agents of each such Holder and each
person who controls any such Holder within the meaning of either the Act or
the Exchange Act against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become
subject under the Act, the Exchange Act or other Federal or state statutory
law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement as originally filed
or in any amendment thereof, in any preliminary Prospectus or Prospectus or
in any amendment thereof or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, and agree to reimburse each such indemnified party,
as incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Issuer and the Subsidiary
-------- -------
Guarantors will not be liable in any case to the extent that any such loss,
claim, damage or liability arises out of or is based upon (A) any such
untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information relating to the Holder furnished to the Issuer or the
Subsidiary Guarantors by or on behalf of any such Holder specifically for
inclusion therein, (B) use of a Registration Statement or the related
Prospectus during a period when a stop order has been issued in respect of
such Registration Statement or any proceedings for that purpose have been
initiated or use of a Prospectus when use of such Prospectus has been
suspended pursuant to Section 5(c); provided, further, in each case, that
-------- -------
Holders received prior notice of such stop order, initiation of proceedings
or suspension or (C) if the Holder is required to but does not deliver a
Prospectus or the then current Prospectus. This indemnity agreement will
be in addition to any liability which the Issuer or the Subsidiary
Guarantors may otherwise have.
(ii) The Issuer and the Subsidiary Guarantors also agree to indemnify
or contribute to Losses, as provided in Section 8(d), of any Managing
Underwriters of Transfer Restricted Notes registered under a Registration
Statement, their officers and directors and each person who controls such
Managing Underwriters on substantially the same basis as that of the
indemnification of the selling Holders provided in this Section 8(a) and
shall, if requested by any Holder, enter into an underwriting agreement
reflecting such agreement, as provided in Section 5(q) hereof.
16
<PAGE>
(b) Each Holder of Transfer Restricted Notes covered by a
Registration Statement severally agrees to indemnify and hold harmless (i) the
Issuer, (ii) each Subsidiary Guarantor, (iii) each of their respective
directors, (iv) each of their respective officers who signs such Registration
Statement and (v) each person who controls the Issuer or any Subsidiary
Guarantor within the meaning of either the Act or the Exchange Act to the same
extent as the foregoing indemnity from the Issuer and the Subsidiary Guarantors
to each such Holder, but only with reference to written information relating to
such Holder furnished to the Issuer and the Subsidiary Guarantors by or on
behalf of such Holder specifically for inclusion in the documents referred to in
the foregoing indemnity. This indemnity agreement will be in addition to any
liability which any such Holder may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); provided, however, that such counsel shall be
-------- -------
satisfactory to the indemnified party. Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel (and local counsel) if (i) the use of
counsel chosen by the indemnifying party to represent the indemnified party
would present such counsel with a conflict of interest, (ii) the actual or
potential defendants in, or targets of, any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to those
available to the indemnifying party, (iii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the institution of
such action or (iv) the indemnifying party shall have authorized the indemnified
party to employ separate counsel at the expense of the indemnifying party;
provided further, that the indemnifying party shall not be responsible for the
- -------- -------
fees and expenses of more than one separate counsel (together with appropriate
local counsel) representing all the indemnified parties under paragraph (a) or
paragraph (b) above. An indemnifying party will not, without the prior written
consent of the indemnified parties, settle or compromise or consent to the entry
of any judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise
17
<PAGE>
or consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall have a joint and several
obligation to contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in connection
with investigating or defending same) (collectively "Losses") to which such
------
indemnified party may be subject in such proportion as is appropriate to reflect
the relative benefits received by such indemnifying party, on the one hand, and
such indemnified party, on the other hand, from the Registration Statement which
resulted in such Losses; provided, however, that in no case shall any
-------- -------
Underwriter be responsible for any amount in excess of the underwriting discount
or commission applicable to the Transfer Restricted Notes purchased by such
Underwriter under the Registration Statement which resulted in such Losses, and
that in no case shall any Holder be responsible for any amount in excess of the
proceeds received by such Holder from sales of Transfer Restricted Notes under
the Registration Statement which resulted in such Losses. If the allocation
provided by the immediately preceding sentence is unavailable for any reason,
the indemnifying party and the indemnified party shall contribute in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of such indemnifying party, on the one hand, and such
indemnified party, on the other hand, in connection with the statements or
omissions which resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Issuer and the Subsidiary Guarantors
shall be deemed to be equal to the aggregate principal amount of the Notes
covered by the Registration Statement which resulted in such Losses. Benefits
received by any Holder shall be deemed to be equal to the value of receiving
Transfer Restricted Notes registered under the Act. Benefits received by any
Underwriter shall be deemed to be equal to the total underwriting discounts and
commissions, as set forth on the cover page of the Prospectus forming a part of
the Registration Statement which resulted in such Losses. Relative fault shall
be determined by reference to, among other things, whether any alleged untrue
statement or omission relates to information provided by the indemnifying party,
on the one hand, or by the indemnified party, on the other hand. The parties
agree that it would not be just and equitable if contribution were determined by
pro rata allocation or any other method of allocation which does not take
account of the equitable considerations referred to above. Notwithstanding the
provisions of this paragraph (d), no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8, each person who controls a
Holder within the meaning of either the Act or the Exchange Act and each
director, officer, employee and agent of such Holder shall have the same rights
to contribution as such Holder, and each person who controls the Issuer or any
Subsidiary Guarantor within the meaning of either the Act or the Exchange Act
and each director, officer, employee and agent of the Issuer or any Subsidiary
Guarantor shall have the same rights to contribution as the Issuer or such
Subsidiary Guarantor, subject in each case to the applicable terms and
conditions of this paragraph (d).
18
<PAGE>
(e) The provisions of this Section 8 will remain in full force and
effect, regardless of any investigation made by or on behalf of any Holder, the
Issuer or any Subsidiary Guarantor or any of the officers, directors or
controlling persons referred to in Section 8 hereof, and will survive the sale
by a Holder of Transfer Restricted Notes covered by a Registration Statement.
9. Miscellaneous.
-------------
(a) No Inconsistent Agreements. None of the Issuer or the Subsidiary
--------------------------
Guarantors has, as of the date hereof, entered into nor shall any of them, on or
after the date hereof, enter into any agreement that is inconsistent with the
rights granted to the Holders herein or otherwise conflicts with the provisions
hereof.
(b) Amendments and Waivers. The provisions of this Agreement,
----------------------
including the provisions of this sentence, may not be amended, qualified,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Issuer and the Subsidiary
Guarantors have obtained the written consent of the Majority Holders.
Notwithstanding the foregoing, a waiver or consent to departure from the
provisions hereof with respect to a matter that relates exclusively to the
rights of Holders whose Transfer Restricted Notes are being sold pursuant to a
Shelf Registration Statement or whose Notes are being exchanged pursuant to an
Exchange Offer Registration Statement, as the case may be, and which does not
directly or indirectly affect the rights of other Holders may be given by such
Holders, determined on the basis of Notes being sold rather than registered.
Notwithstanding any of the foregoing, no amendment, modification, supplement,
waiver or consents to any departure from the provisions of Section 8 hereof
shall be effective as against any Holder of Transfer Restricted Notes unless
consented to in writing by such Holder.
(c) Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telex, telecopier, or air courier guaranteeing overnight delivery:
(i) if to the Initial Purchasers, as follows:
First Union Capital Markets Corp.
301 South College Street, TW-10
Charlotte, NC 28288-0606
Attention: Corporate Finance Department
(ii) if to any other Holder, at the most current address given by such
Holder to the Issuer in accordance with the provisions of this Section
9(c), which address initially is, with respect to each Holder, the address
of such Holder maintained by the registrar under the Indenture, with a copy
in like manner to the Initial Purchasers; and
19
<PAGE>
(iii) if to the Issuer, as follows:
Global Imaging Systems, Inc.
P.O. Box 273478
Tampa, FL 33688-3478
Attention: Chief Financial Officer
All such notices and communications shall be deemed to have been duly
given when received, if delivered by hand or air courier, and when sent, if sent
by first-class mail, telex or telecopier.
The Issuer by notice to the others may designate additional or
different addresses for subsequent notices or communications.
(d) Successors and Assigns. This Agreement shall inure to the
----------------------
benefit of and be binding upon the successors and assigns of each of the
parties, including, without the need for an express assignment or any consent by
the Issuer or any Subsidiary Guarantor thereto, subsequent Holders. The Issuer
and the Subsidiary Guarantors hereby agree to extend the benefits of this
Agreement to any Holder and any such Holder may specifically enforce the
provisions of this Agreement as if an original party hereto.
(e) Counterparts. This agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. This agreement shall be governed by and
-------------
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in said State, without regard to the
conflicts of law rules thereof.
(h) Severability. In the event that any one or more of the
------------
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired
or affected thereby, it being intended that all of the rights and privileges of
the parties shall be enforceable to the fullest extent permitted by law.
(i) Notes Held by the Issuer, etc. Whenever the consent or approval
------------------------------
of Holders of a specified percentage of principal amount of Transfer Restricted
Notes or Exchange Notes is required hereunder, Transfer Restricted Notes or
Exchange Notes held by the Issuer, the Subsidiary Guarantors or their Affiliates
(other than subsequent Holders of Transfer Restricted Notes or Exchange Notes if
such subsequent Holders are deemed to be Affiliates solely by reason
20
<PAGE>
of their holdings of such notes) shall not be counted in determining whether
such consent or approval was given by the Holders of such required percentage.
21
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
among the Issuer, the Subsidiary Guarantors and the Initial Purchasers.
Very truly yours,
GLOBAL IMAGING SYSTEMS, INC.
By /s/ Raymond Schilling
-----------------------------------------------
Name: Raymond Schilling
Title: Vice President, Chief Financial Officer,
Secretary and Treasurer
Each SUBSIDIARY GUARANTOR listed on Annex A
attached hereto
By /s/ Raymond Schilling
-----------------------------------------------
Name: Raymond Schilling, on behalf of, and in his
capacity as an authorized signatory for,
each of the Subsidiary Guarantors listed on
Annex A hereto
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
FIRST UNION CAPITAL MARKETS CORP.
PRUDENTIAL SECURITIES INCORPORATED
RAYMOND JAMES & ASSOCIATES, INC.
SCOTIA CAPITAL MARKETS (USA) INC.
By FIRST UNION CAPITAL MARKETS CORP.
By /s/ Eric Lloyd
----------------------------
Name: Eric Lloyd
Title: Managing Director
For itself and on behalf of the other Initial Purchasers
22
<PAGE>
ANNEX A
Subsidiary Guarantors
---------------------
1. American Photocopy
Equipment Company of Pittsburgh
2. Berney, Inc.
3. Business Equipment Unlimited
4. Cameron Office Products,
Inc.
5. Capitol Copy Products, Inc.
6. Capitol Office Solutions,
Inc.
7. Carr Business Machines of
Great Neck Inc.
8. Centre Business Products,
Inc.
9. Connecticut Business
Systems, Inc.
10. Conway Office Products,
Inc.
11. Copy Service and Supply,
Inc.
12. COS Financial, Inc.
13. Dahill Industries, Inc.
14. Distinctive Business
Products, Inc.
15. Duplicating Specialties,
Inc. dba Copytronix
16. Eastern Copy Products, Inc.
17. Electronic Systems of
Richmond, Inc.
18. Electronic Systems, Inc.
19. Felco Office Systems, Inc.
20. Global Imaging Finance
Company
21. Global Imaging Operations,
Inc.
22. ProView, Inc.
23. Quality Business Systems,
Inc.
24. Southern Business
Communications, Inc.
25. Southern Copy Systems, Inc.
<PAGE>
EXHIBIT A
Each broker-dealer that receives Exchange Notes for its own account pursuant to
the Registered Exchange Offer must acknowledge that it will deliver a prospectus
in connection with any resale of such Exchange Notes. The Letter of Transmittal
states that by so acknowledging and by delivering a prospectus, a broker-dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Act. This Prospectus, as it may be amended or supplemented from time to
time, may be used by a broker-dealer in connection with resales of Exchange
Notes received in exchange for Notes where such Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. The Company has agreed that, starting on the Expiration Date and
ending on the close of business 180 days after the Expiration Date, it will make
this Prospectus available to any broker-dealer for use in connection with any
such resale. See "Plan of Distribution."
A-1
<PAGE>
EXHIBIT B
Each broker-dealer that receives Exchange Notes for its own account in exchange
for Notes, where such Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of such Exchange Notes.
See "Plan of Distribution."
B-1
<PAGE>
EXHIBIT C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Registered Exchange Offer must acknowledge that it will deliver
a prospectus in connection with any resale of such Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Notes received in
exchange for Notes where such Notes were acquired as a result of market-making
activities or other trading activities. The Company has agreed that, starting
on the Expiration Date and ending on the close of business 180 days after the
Expiration Date, it will make this Prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale. In
addition, until ____________, 1999, all dealers effecting transactions in the
Exchange Notes may be required to deliver a prospectus.
The Company will not receive any proceeds from any sale of Exchange
Notes by broker-dealers. Exchange Notes received by broker-dealers for their
own account pursuant to the Registered Exchange Offer may be sold from time to
time in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Exchange Notes or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer and/or the purchasers of any such
Exchange Notes. Any broker-dealer that resells Exchange Notes that were
received by it for its own account pursuant to the Registered Exchange Offer and
any broker or dealer that participates in a distribution of such Exchange Notes
may be deemed to be an "underwriter" within the meaning of the Act and any
profit from any such resale of Exchange Notes and any commissions or concessions
received by any such persons may be deemed to be underwriting compensation under
the Act. The Letter of Transmittal states that by acknowledging that it will
deliver and by delivering a prospectus, a broker-dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Act.
For a period of 180 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Registered Exchange Offer (including the expenses of one counsel
for the holders of the Notes) other than dealers' and brokers' discounts,
commissions and counsel fees) and will indemnify the holders of the Notes
(including any broker-dealers) against certain liabilities, including
liabilities under the Act.
[If applicable, add information required by Regulation S-K Items 507
and/or 508.]
C-1
<PAGE>
EXHIBIT D
CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR
SUPPLEMENTS THERETO.
[_]
Name: _____________________________________
Address: _____________________________________
_____________________________________
The undersigned represents that it is not an affiliate of the Company,
that any Exchange Notes to be received by it will be acquired in the ordinary
course of business and that at the time of the commencement of the Registered
Exchange Offer it had no arrangement with any person to participate in a
distribution of the Exchange Notes.
In addition, if the undersigned is not a broker-dealer, the
undersigned represents that it is not engaged in, and does not intend to engage
in, a distribution of Exchange Notes. If the undersigned is a broker-dealer
that will receive Exchange Notes for its own account in exchange for Notes, it
represents that the Notes to be exchanged for Exchange Notes were acquired by it
as a result of market-making activities or other trading activities and
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Notes; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Act.
D-1
<PAGE>
EXHIBIT E
FORM OF LETTER TO BE PROVIDED BY ISSUER TO
THE DEPOSITORY TRUST COMPANY
The Depository Trust Company
55 Water Street, 50th Floor
New York, NY 10041
Re: 10 3/4% Senior Subordinated Notes Due 2007 (the "Notes") of
Global Imaging Systems, Inc.
Ladies and Gentlemen:
Please be advised that the Securities and Exchange Commission has
declared effective a Registration Statement on Form S- under the Securities Act
of 1933, as amended, with regard to all of the Notes referenced above.
Accordingly, there is no longer any restriction as to whom such Notes may be
sold and any restrictions on the CUSIP designation are no longer appropriate and
may be removed. I understand that upon receipt of this letter, DTC will remove
any stop or restriction on its system with respect to this issue.
As always, please do not hesitate to call if we can be of further
assistance.
Very truly yours,
Authorized Officer
E-1
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
RATIO OF EARNINGS TO FIXED CHARGES Exhibit 12.1
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Fiscal Year Ended March 31, Nine Months Ended December 31,
--------------------------------------------------- ------------------------------
Pro forma Pro forma
1995 1996 1997 1998 1998 (1) 1997 1998 1998 (1)
-------- -------- -------- -------- ---------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Income (loss) before
taxes and extraordinary item (629) 83 2,130 8,401 10,017 5,538 15,798 18,989
Fixed charges:
Interest expense (including debt cost
amortization) 375 2,041 3,189 6,713 18,702 4,534 5,443 10,313
Interest - capitalized leases - - - - - - - -
Estimated interest factor on rent 68 188 264 699 1,011 422 831 1,036
-----------------------------------------------------------------------------------
Total fixed charges 443 2,229 3,453 7,412 19,713 4,956 6,274 11,349
-----------------------------------------------------------------------------------
Earnings - adjusted (186) 2,312 5,583 15,813 29,730 10,494 22,072 30,338
===================================================================================
Ratio of earnings to fixed charges (2) - 1.04 1.62 2.13 1.51 2.12 3.52 2.67
===================================================================================
</TABLE>
(1) The pro forma information takes into account the effect of acquisitions.
(2) For the fiscal year ended March 31, 1995, earnings were insufficient to
cover fixed charges by $0.6 million.
<PAGE>
EXHIBIT 21.1
GLOBAL IMAGING SYSTEMS, INC. AND ADDITIONAL REGISTRANTS
Direct and Indirect Subsidiaries
--------------------------------
<TABLE>
<CAPTION>
ADDITIONAL NAME(S) UNDER WHICH
SUBSIDIARY JURISDICTION OF
NAME DOES BUSINESS ORGANIZATION
----- ------------- ------------
<S> <C> <C>
American Photocopy Equipment Company of Pittsburgh AMCOM Office Systems Delaware
Berney, Inc. and its subsidiary: Alabama
Southern Copy Systems, Inc. Alabama
Capitol Office Solutions, Inc. and its subsidiaries: Delaware
Capitol Copy Products, Inc. Delaware
COS Financial, Inc. Maryland
Carr Business Machines of Great Neck Inc. Carr Business Systems New York
Connecticut Business Systems, Inc. Connecticut
Conway Office Products, Inc. and its subsidiaries: New Hampshire
Business Equipment Unlimited Maine
Cameron Office Products, Inc. Massachusetts
Eastern Copy Products, Inc. New York
Copy Service and Supply, Inc. North Carolina
Distinctive Business Products, Inc. Illinois
Duplicating Specialties, Inc. Copytronix Oregon
Henderson's Office Systems
Electronic Systems, Inc. and its subsidiary: Virginia
Electronic Systems of Richmond, Inc. Virginia
Felco Office Systems, Inc. Dahill Industries, Inc. Texas
Global Imaging Finance Company Delaware
Global Imaging Operations, Inc. Delaware
(a subsidiary of Global, American Photocopy Equipment
Company of Pittsburgh, Berney, Conway, Felco and
Southern Business Communications)
Quality Business Systems, Inc. Washington
Southern Business Communications, Inc. and its subsidiaries: Georgia
ProView, Inc. North Carolina
Centre Business Products, Inc. Pennsylvania
</TABLE>
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
use of our reports dated May 6, 1998 (except for Note 12, as to which the date
is May 28, 1998) and February 13, 1998 (except for Note 12, as to which the
date is May 28, 1998) in the Registration Statement (Form S-4) and the related
Prospectus of Global Imaging Systems, Inc. for the registration of $100 million
of 10.75% Senior Subordinated Notes due 2007.
/s/ Ernst & Young LLP
Tampa, Florida
May 3, 1999
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated January 23, 1998, with respect to the financial
statements of Electronic Systems, Inc. included in the Registration Statement
(Form S-4) and related Prospectus of Global Imaging Systems, Inc. for the
registration of $100 million of 10.75% Senior Subordinated Notes due 2007.
/s/ Ernst & Young LLP
Richmond, Virginia
May 3, 1999
<PAGE>
Exhibit 23.3
PASQUALE & BOWERS, LLP
-------------------------------------------
CERTIFIED PUBLIC ACCOUNTANTS
100 Clinton Square, P.O. Box 7067 . Syraouse, NY 13261-7067
(315) 424-1508 . FAX (315) 424-1496
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
WE CONSENT to the reference to our firm under the caption "Experts" and to the
use of our report on the financial statements of EASTERN COPY PRODUCTS, INC.
dated December 17, 1997, in the Registration Statement (Form S-4) and related
prospectus of Global Imaging Systems, Inc. 1998 for the registration of
$100,000,000 aggregate principal amount of 10- 3/4% senior subordinated notes
due 2007.
Pasquale & Bowers, LLP
/s/ Pasquale & Bowers, LLP
Syracuse, New York
April 30, 1999
<PAGE>
Exhibit 23.4
[LETTERHEAD OF MOSS ADAMS LLP APPEARS HERE]
INDEPENDENT AUDITOR'S CONSENT
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated December 19, 1997, with respect to the financial
statements of Duplicating Specialties, Inc. included in the Registration
Statement (Form S-4) and related Prospectus of Global Imaging Systems, Inc. for
the registration of $100,000 aggregate principal amount of 10 3/4% senior
subordinated notes due 2007.
/s/ Moss Adams LLP
Vancouver, Washington
May 3, 1999
<PAGE>
Exhibit 23.5
Consent of Independent Certified Public Accountants
---------------------------------------------------
We consent to the reference to our firm under the caption "Experts" and to the
use of our report on the financial statements of ELECTRONIC SYSTEMS OF
RICHMOND, INC. dated January 27, 1998, in the Registration Statement (Form S-4)
and related prospectus of Global Imaging Systems, Inc. 1998 for the
registration of $100,000,000 aggregate principal amount of 10-3/4% senior
subordinated notes due 2007.
/s/ EDMONDSON, LEDBETTER & BALLARD, L.L.P.
Norfolk, Virginia
April 30, 1999
<PAGE>
Exhibit 23.6
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" and to the
use of our report on the financial statements of CONNECTICUT BUSINESS SYSTEMS,
INC. dated February 16, 1998, in the Registration Statement (Form S-4) and
related prospectus of Global Imaging Systems, Inc. 1998 for the registration of
$100,000,000 aggregate principal amount of 10-3/4% senior subordinated notes
due 2007.
ARTHUR ANDERSEN LLP
By: /s/ Philip M. Cahill
--------------------
Hartford, Connecticut
April 30, 1999
<PAGE>
Exhibit 23.7
[LETTERHEAD OF JOSEPH D. KALICKA & COMPANY, LLP]
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
---------------------------------------------------
(Notes)
WE CONSENT to the reference to our firm under the caption "Experts" and to the
use of our report on the financial statements of BUSINESS SYSTEMS DIVISION, an
operating division of BLOOM'S INCORPORATED dated February 6, 1998 (for period
ended 12/31/97) and February 20, 1998 (for period ended 1/31/97) in the
Registration Statement (Form S-4) and related prospectus of Global Imaging
Systems, Inc. 1998 for the registration of $100,000,000 aggregate principal
amount of 10-3/4% senior subordinated notes due 2007.
JOSEPH D. KALICKA & COMPANY, LLP
/s/ Joseph D. Kalicka & Company LLP
- -----------------------------------
(Signature)
April 30, 1999
- -----------------------------------
(Date)
Holyoke, Massachusetts
<PAGE>
Exhibit 23.8
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" and to
the use of our report on the financial statements of Carr Business Machines of
Great Neck Inc. dated November 13, 1998, in the Registration Statement (Form S-
4) and related prospectus of Global Imaging Systems, Inc. 1998 for the
registration of $100,000,000 aggregate principal amount of 10 3/4% senior
subordinated notes due 2007.
/s/ Margolin, Winer & Evens LLP
Margolin, Winer & Evens LLP
Garden City, New York
April 30, 1999
<PAGE>
EXHIBIT 23.9
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of Global Imaging Systems,
Inc. on Form S-4 of our report dated August 28, 1998 on our audits of the
consolidated financial statements of Capital Office Solutions, Inc., appearing
in the Prospectus which is part of the Registration Statements. We also consent
to the reference to our firm under the heading "Experts."
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Washington, DC
May 3, 1999
<PAGE>
Exhibit 23.10
CONSENT OF PACIFIC MEDIA ASSOCIATES
We consent to Global Imaging Systems, Inc.'s use of data provided by us
regarding the size of the electronic presentation systems market (as set forth
on the attached page) in its registration statement to register senior
subordinated notes due 2007, and in any related prospectus.
By: Pacific Media Associates
----------------------------------
City, State: Mt. View, CA Signature: /s/ Bill Coggshall
------------------------ ---------------------------
Date: 2/18/99 Name: Bill Coggshall
------------------------------- --------------------------------
<PAGE>
Exhibit 23.11
CONSENT OF INTERNATIONAL DATA CORPORATION
We consent to Global Imaging Systems, Inc.'s use of data provided by us
regarding the size of the network consulting and integration services and
network management services market (as set forth on the attached page) in its
registration statement to register senior subordinated notes due 2007, and in
any related prospectus.
By: International Data Corporation
----------------------------------
City, State: Framingham, MA Signature: /s/ Michael Melenovsky
------------------------ ---------------------------
Date: February 26, 1999 Name: Michael Melenovsky
------------------------------- --------------------------------
<PAGE>
Exhibit 23.12
CONSENT OF AIIM INTERNATIONAL
We consent to Global Imaging Systems, Inc.'s use of data provided by us
regarding the size of the document technology systems market (as set forth on
the attached page) in its registration statement to register senior
subordinated notes due 2007, and in any related prospectus.
By: AIIM International
---------------------------------
City, State: Silver Spring, MD Signature: /s/ Priscilla Emery
------------------------- ---------------------------
Date: 2/26/99 Name: Priscilla Emery
-------------------------------- --------------------------------
<PAGE>
Exhibit 23.13
CONSENT OF INDUSTRY ANALYSTS, INC.
We consent to Global Imaging Systems, Inc.'s use of data provided by us
regarding the number of dealer and distributor outlets, both affiliated and
unaffiliated, for automated office equipment (as set forth on the attached
page) in its registration statement to register senior subordinated notes due
2007, and in any related prospectus.
By: Industry Analysts, Inc.
--------------------------------
City, State: Rochester, NY Signature: /s/ Louis E. Slawetsky
------------------------- --------------------------
Date: 2/26/99 Name: Louis E. Slawetsky
-------------------------------- -------------------------------
<PAGE>
EXHIBIT 25.1
FORM T-1
==============================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
__________________
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) _______
__________________
UNITED STATES TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-3818954
(Jurisdiction of incorporation (I.R.S. employer
if not a U.S. national bank) identification No.)
114 West 47th Street 10036-1532
New York, NY (Zip Code)
(Address of principal
executive offices)
__________________
GLOBAL IMAGING SYSTEMS, INC.
(Exact name of obligor as specified in its charter)
Delaware 99-3247752
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
3820 Northdale Boulevard
Suite 200A
Tampa, Florida 33624
(Address of principal executive offices) (Zip Code)
__________________
10 3/4% Senior Subordinated Notes due 2007
(Title of the indenture securities)
==============================================
<PAGE>
-2-
INFORMATION REGARDING ADDITIONAL REGISTRANTS
The following additional registrants are wholly owned, direct and indirect
subsidiaries of Global Imaging Systems, Inc. and guarantors of the senior
subordinated notes.
<TABLE>
<CAPTION>
IRS
Employer
Jurisdiction of Primary S.I.C. Identification
Name Organization Code Number # Number
- ---- --------------- -------------- --------------
<S> <C> <C> <C>
1. American Photocopy Equipment Company of Pittsburgh Delaware 5995 25-1333970
d/b/a AMCOM Office Systems
2. Berney, Inc. Alabama 5995 63-0872797
3. Business Equipment Unlimited Maine 5995 01-0332262
4. Cameron Office Products, Inc. Massachusetts 5995 04-2943281
5. Capitol Copy Products, Inc. Delaware 5995
6. Capitol Office Solutions, Inc. Delaware 5995 52-1058303
7. Carr Business Machines of Great Beck Inc. d/b/a Carr New York 5995 11-2382276
Business Systems
8. Centre Business Products, Inc. Pennsylvania 5995 25-1402615
9. Connecticut Business Systems, Inc. Connecticut 5995 06-1164954
10. Conway Office Products, Inc. New Hampshire 5995 02-0326832
11. Copy Service and Supply, Inc. North Carolina 5995 56-1405771
12. COS Financial, Inc. Maryland 5995
13. Distinctive Business Products, Inc. Illinois 5995 36-3206780
14. Duplicating Specialties, Inc. d/b/a Copytronix Oregon 5995 93-0557407
15. Eastern Copy Products, Inc. New York 5995 16-1060031
16. Electronic Systems, Inc. Virginia 5995 54-1145980
17. Electronic Systems of Richmond, Inc. Virginia 5995 54-1221626
18. Felco Office Systems, Inc. Texas 5995 74-2355241
19. Global Imaging Finance Company Delaware 5995 59-3423296
20. Global Imaging Operations, Inc. Delaware 5995 04-3340313
21. ProView, Inc. North Carolina 5995 56-1879665
22. Quality Business Systems, Inc. Washington 5995 91-1332069
23. Southern Business Communications, Inc. Georgia 5995 58-1428621
24. Southern Copy Systems, Inc. Alabama 5995 63-0895357
</TABLE>
The address and telephone number of the principal executive offices for each of
the additional registrants are the same as for Global Imaging Systems, Inc., as
set forth on the facing page of this statement of eligibility.
<PAGE>
-3-
GENERAL
1. GENERAL INFORMATION
-------------------
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Federal Reserve Bank of New York (2nd District), New York, New York
(Board of Governors of the Federal Reserve System)
Federal Deposit Insurance Corporation, Washington, D.C.
New York State Banking Department, Albany, New York
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. AFFILIATIONS WITH THE OBLIGOR
-----------------------------
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None
3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15:
Global Imaging Systems, Inc. currently is not in default under any of its
outstanding securities for which United States Trust Company of New York is
Trustee. Accordingly, responses to Items 3, 4, 5, 6, 7, 8, 9, 10, 11, 12,
13, 14 and 15 of Form T-1 are not required under General Instruction B.
16. LIST OF EXHIBITS
----------------
T-1.1 -- Organization Certificate, as amended, issued by the State of
New York Banking Department to transact business as a Trust
Company, is incorporated by reference to Exhibit T-1.1 to
Form T-1 filed on September 15, 1995 with the Commission
pursuant to the Trust Indenture Act of 1939, as amended by
the Trust Indenture Reform Act of 1990 (Registration No. 33-
97056).
T-1.2 -- Included in Exhibit T-1.1.
T-1.3 -- Included in Exhibit T-1.1.
<PAGE>
-4-
16. LIST OF EXHIBITS
----------------
(cont'd)
T-1.4 -- The By-Laws of United States Trust Company of New York, as
amended is incorporated by reference to Exhibit T-1.4 to
Form T-1 filed on September 15, 1995 with the Commission
pursuant to the Trust Indenture Act of 1939, as amended by
the Trust Indenture Reform Act of 1990 (Registration No.
33-97056).
T-1.6 -- The consent of the trustee required by Section 321(b) of the
Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990.
T-1.7 -- A copy of the latest report of condition of the trustee
pursuant to law or the requirements of its supervising or
examining authority.
NOTE
====
As of April 28, 1999, the trustee had 2,999,020 shares of Common Stock
outstanding, all of which are owned by its parent company, U.S. Trust
Corporation. The term "trustee" in Item 2, refers to each of United States
Trust Company of New York and its parent company, U. S. Trust Corporation.
In answering Item 2 in this statement of eligibility as to matters peculiarly
within the knowledge of the obligor or its directors, the trustee has relied
upon information furnished to it by the obligor and will rely on information to
be furnished by the obligor and the trustee disclaims responsibility for the
accuracy or completeness of such information.
__________________
Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee,
United States Trust Company of New York, a corporation organized and existing
under the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York, and State of New York, on the 29th day
of April, 1999.
UNITED STATES TRUST COMPANY
OF NEW YORK, Trustee
By: /s/ Louis P. Young
------------------------------
Louis P. Young
Vice President
<PAGE>
Exhibit T-1.6
-------------
The consent of the trustee required by Section 321(b) of the Act.
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
January 7, 1997
Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990, and subject to the
limitations set forth therein, United States Trust Company of New York ("U.S.
Trust") hereby consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
/s/Gerard F. Ganey
---------------------------------
By: Gerard F. Ganey
Senior Vice President
<PAGE>
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
DECEMBER 31, 1998
-----------------
($ IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS
- ------
<S> <C>
Cash and Due from Banks $ 104,220
Short-Term Investments 207,292
Securities, Available for Sale 578,874
Loans 2,061,582
Less: Allowance for Credit Losses 17,199
----------
Net Loans 2,044,383
Premises and Equipment 58,263
Other Assets 124,079
----------
TOTAL ASSETS $3,117,111
==========
LIABILITIES
- -----------
Deposits:
Non-Interest Bearing $ 709,221
Interest Bearing 1,908,861
----------
Total Deposits 2,618,082
Short-Term Credit Facilities 170,644
Accounts Payable and Accrued Liabilities 146,324
----------
TOTAL LIABILITIES $2,935,050
==========
STOCKHOLDER'S EQUITY
- --------------------
Common Stock 14,995
Capital Surplus 53,041
Retained Earnings 111,402
Unrealized Gains on Securities
Available for Sale (Net of Taxes) 2,623
----------
TOTAL STOCKHOLDER'S EQUITY 182,061
----------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $3,117,111
==========
</TABLE>
I, Richard E. Brinkmann, Managing Director & Comptroller of the named bank do
hereby declare that this Statement of Condition has been prepared in conformance
with the instructions issued by the appropriate regulatory authority and is true
to the best of my knowledge and belief.
Richard E. Brinkmann, Managing Director & Controller
February 1, 1999
<PAGE>
Exhibit 99.1
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 5:00 P.M., NEW YORK CITY TIME, ON , 1999,
UNLESS EXTENDED.
Global Imaging Systems, Inc.
LETTER OF TRANSMITTAL
Offer To Exchange Its 10 3/4% Senior Subordinated Notes Due 2007
Which Have Been Registered Under The Securities Act of 1933
For Any And All Of Its Outstanding
10 3/4% Senior Subordinated Notes Due 2007
Pursuant To The Prospectus Dated , 1999
The exchange agent
for the exchange offer is:
UNITED STATES TRUST COMPANY OF NEW YORK
By Facsimile: By Mail:
(212) 780-0592 United States Trust Company of New York
Attention: Customer Service P.O. Box 843 Cooper Station
Confirm by Telephone to: (800) 548-6565 New York, New York 10276
Attention: Corporate Trust Services
By Hand before 4:30 p.m.: By Overnight Courier and
By Hand after 4:30 p.m.:
United States Trust Company of New York
111 Broadway United States Trust Company of New York
New York, New York 10006 770 Broadway, 13th Floor
Attention: Lower Level Corporate Trust New York, New York 10003
Window
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA FACSIMILE TO A
NUMBER OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS
LETTER OF TRANSMITTAL IS COMPLETED.
<PAGE>
This Letter of Transmittal is to be completed by holders of outstanding notes
(as defined below) either if outstanding notes are to be forwarded herewith or
if tenders of outstanding notes are to be made by book-entry transfer to an
account maintained by United States Trust Company of New York (the "exchange
agent") at The Depository Trust Company ("DTC") pursuant to the procedures set
forth in "The Exchange Offer--Procedures for Tendering Outstanding Notes" in
the prospectus.
Holders of outstanding notes whose certificates for such outstanding notes
are not immediately available or who cannot deliver their certificates, this
Letter of Transmittal and all other required documents to the exchange agent on
or prior to the expiration date or who cannot complete the procedures for book-
entry transfer on a timely basis, may tender their outstanding notes according
to the guaranteed delivery procedures set forth in "The Exchange Offer--
Procedures for Tendering Outstanding Notes" in the prospectus.
DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE
AGENT.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
List below the outstanding notes of which you are a holder. If the space
provided below is inadequate, list the certificate numbers and principal amount
on a separate signed schedule and attach that schedule to this Letter of
------
Transmittal. See Instruction 3.
<TABLE>
<CAPTION>
ALL TENDERING HOLDERS COMPLETE THIS BOX:
- --------------------------------------------------------------------------------------------------------
Description of Outstanding Notes Tendered
- --------------------------------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Holder(s)
(Fill in, if blank) Outstanding Notes Tendered
- --------------------------------------------------------------------------------------------------------
Certificate
Number(s)*
(Attach additional Principal Amount Principal Amount
list (Attach additional Tendered (if less
if necessary) list if necessary) than all)**
--------------------------------------------------------
<S> <C> <C> <C>
$
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
Total Amount Tendered: $ $
- --------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by book-entry holders. Such holders should check
the appropriate box below and provide the requested information.
** Need not be completed if tendering for exchange all outstanding notes
held. Outstanding notes may be tendered in whole or in part in integral
multiples of $1,000 principal amount. All outstanding notes held shall
be deemed tendered unless a lesser number is specified in this column.
See Instruction 4.
2
<PAGE>
(Boxes Below To Be Checked By Eligible Institutions Only. See Instruction 1)
[_] CHECK HERE IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT AT DTC AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution: _____________________________________________
DTC Account Number: ________________________________________________________
Transaction Code Number: ___________________________________________________
[_] CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF
TENDERED OUTSTANDING NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Holder(s): ___________________________________________
Window Ticket Number (if any): _____________________________________________
Date of Notice of Guaranteed Delivery: _____________________________________
Institution Which Guaranteed Delivery: _____________________________________
If Guaranteed Delivery is to be made by book-entry transfer:
Name of Tendering Institution: _____________________________________________
DTC Account Number: ________________________________________________________
Transaction Code Number: ___________________________________________________
[_] CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED OUTSTANDING NOTES FOR
YOUR OWN ACCOUNT AS A RESULT OF MARKET-MAKING ACTIVITIES OR OTHER TRADING
ACTIVITIES (A "PARTICIPATING BROKER-DEALER") AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR
SUPPLEMENTS THERETO.
Name: ______________________________________________________________________
Address: ___________________________________________________________________
___________________________________________________________________
Telephone Number and Contact Person: _______________________________________
3
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Global Imaging Systems, Inc., a Delaware
corporation ("Global" or the "Company"), the above described principal amount
of Global's 10 3/4% Senior Subordinated Notes due 2007 (the "outstanding
notes") in exchange for a like principal amount of Global's 10 3/4% Senior
Subordinated Notes due 2007 (the "exchange notes"), which have been registered
under the Securities Act of 1933 (the "Securities Act"), upon the terms and
subject to the conditions set forth in the prospectus dated , 1999 (as the
same may be amended or supplemented from time to time, the "prospectus"),
receipt of which is hereby acknowledged, and in this Letter of Transmittal
(which, together with the prospectus, constitute the "exchange offer").
Subject to and effective upon the acceptance for exchange of the outstanding
notes tendered herewith, the undersigned hereby sells, assigns and transfers to
or upon the order of Global all right, title and interest in and to such
outstanding notes as are being tendered herewith. The undersigned hereby
irrevocably constitutes and appoints the exchange agent as its agent and
attorney-in-fact (with full knowledge that the exchange agent is also acting as
agent of Global in connection with the exchange offer and as trustee under the
indenture for the outstanding notes and the exchange notes) with respect to the
tendered outstanding notes, with full power of substitution (such power of
attorney being an irrevocable power coupled with an interest), subject only to
the right of withdrawal described in the prospectus, to: (i) deliver such
outstanding notes to Global together with all accompanying evidences of
transfer and authenticity to, or upon the order of, Global upon receipt by the
exchange agent, as the undersigned's agent, of the exchange notes to be issued
in exchange for such outstanding notes; (ii) present certificates for such
outstanding notes for transfer, and to transfer such outstanding notes on the
account books maintained by DTC; and (iii) receive for the account of Global
all benefits and otherwise exercise all rights of beneficial ownership of such
outstanding notes, all in accordance with the terms and conditions of the
exchange offer.
THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT THE UNDERSIGNED HAS FULL
POWER AND AUTHORITY TO TENDER, EXCHANGE, SELL, ASSIGN AND TRANSFER THE
OUTSTANDING NOTES TENDERED HEREBY AND THAT, WHEN THE SAME ARE ACCEPTED FOR
EXCHANGE, THE COMPANY WILL ACQUIRE GOOD, MARKETABLE AND UNENCUMBERED TITLE
THERETO, FREE AND CLEAR OF ALL LIENS, RESTRICTIONS, CHARGES AND ENCUMBRANCES,
AND THAT THE OUTSTANDING NOTES TENDERED HEREBY ARE NOT SUBJECT TO ANY ADVERSE
CLAIMS OR PROXIES. THE UNDERSIGNED WILL, UPON REQUEST, EXECUTE AND DELIVER ANY
ADDITIONAL DOCUMENTS DEEMED BY GLOBAL OR THE EXCHANGE AGENT TO BE NECESSARY OR
DESIRABLE TO COMPLETE THE EXCHANGE, SALE, ASSIGNMENT AND TRANSFER OF THE
OUTSTANDING NOTES TENDERED HEREBY. THE UNDERSIGNED HAS READ AND AGREES TO ALL
OF THE TERMS OF THE EXCHANGE OFFER.
The name(s) and address(es) of the registered holder(s) of the outstanding
notes tendered hereby should be printed above, if they are not already set
forth above, as they appear on the certificates representing such outstanding
notes. The certificate number(s) and the outstanding notes that the undersigned
wishes to tender should be indicated in the appropriate boxes above.
If any tendered outstanding notes are not exchanged pursuant to the exchange
offer for any reason, or if certificates are submitted for more outstanding
notes than are tendered or accepted for exchange, certificates for such
nonexchanged or nontendered outstanding notes will be returned (or, in the case
of outstanding notes tendered by book-entry transfer, such outstanding notes
will be credited to an account maintained at DTC), without expense to the
tendering holder promptly following the expiration or termination of the
exchange offer.
4
<PAGE>
The undersigned understands that tenders of outstanding notes pursuant to any
one of the procedures described in "The Exchange Offer--Procedures for
Tendering Outstanding Notes" in the prospectus and in the instructions herein
will, upon Global's acceptance for exchange of such tendered outstanding notes,
constitute a binding agreement between the undersigned and Global upon the
terms and subject to the conditions of the exchange offer. The undersigned
recognizes that, under certain circumstances set forth in the prospectus,
Global may not be required to accept for exchange any of the outstanding notes
tendered hereby.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, the undersigned hereby directs that the exchange notes be
issued in the name(s) of the undersigned or, in the case of a book-entry
transfer of outstanding notes, that such exchange notes be credited to the
account indicated above maintained at DTC. If applicable, substitute
certificates representing outstanding notes not exchanged or not accepted for
exchange will be issued to the undersigned or, in the case of a book-entry
transfer of outstanding notes, will be credited to the account indicated above
maintained at DTC. Similarly, unless otherwise indicated under "Special
Delivery Instructions," please deliver exchange notes to the undersigned at the
address shown below the undersigned's signature.
BY TENDERING OUTSTANDING NOTES AND EXECUTING THIS LETTER OF TRANSMITTAL, THE
UNDERSIGNED HEREBY REPRESENTS AND AGREES THAT: (i) THE UNDERSIGNED IS NOT AN
"AFFILIATE" OF GLOBAL (WITHIN THE MEANING OF RULE 405 UNDER THE SECURITIES
ACT), OR IF THE UNDERSIGNED IS AN AFFILIATE, THE UNDERSIGNED WILL COMPLY WITH
THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE SECURITIES ACT TO
THE EXTENT APPLICABLE; (ii) ANY EXCHANGE NOTES TO BE RECEIVED BY THE
UNDERSIGNED ARE BEING ACQUIRED IN THE ORDINARY COURSE OF ITS BUSINESS; AND
(iii) THE UNDERSIGNED HAS NO ARRANGEMENT OR UNDERSTANDING WITH ANY PERSON TO
PARTICIPATE IN A DISTRIBUTION (WITHIN THE MEANING OF THE SECURITIES ACT) OF
EXCHANGE NOTES TO BE RECEIVED IN THE EXCHANGE OFFER. IF THE UNDERSIGNED IS NOT
A BROKER-DEALER, BY TENDERING OUTSTANDING NOTES AND EXECUTING THIS LETTER OF
TRANSMITTAL, THE UNDERSIGNED REPRESENTS AND AGREES THAT IT IS NOT ENGAGED IN,
AND DOES NOT INTEND TO ENGAGE IN, A DISTRIBUTION OF EXCHANGE NOTES. IF THE
UNDERSIGNED IS A BROKER-DEALER THAT WILL RECEIVE EXCHANGE NOTES FOR ITS OWN
ACCOUNT IN EXCHANGE FOR OUTSTANDING NOTES PURSUANT TO THE EXCHANGE OFFER, BY
TENDERING OUTSTANDING NOTES AND EXECUTING THIS LETTER OF TRANSMITTAL, THE
UNDERSIGNED REPRESENTS AND AGREES THAT SUCH OUTSTANDING NOTES WERE ACQUIRED BY
SUCH BROKER-DEALER FOR ITS OWN ACCOUNT AS A RESULT OF MARKET-MAKING ACTIVITIES
OR OTHER TRADING ACTIVITIES AND IT WILL DELIVER A PROSPECTUS MEETING THE
REQUIREMENTS OF THE SECURITIES ACT IN CONNECTION WITH ANY RESALE OF EXCHANGE
NOTES (PROVIDED THAT, BY SO ACKNOWLEDGING AND BY DELIVERING A PROSPECTUS, SUCH
BROKER-DEALER WILL NOT BE DEEMED TO ADMIT THAT IT IS AN "UNDERWRITER" WITHIN
THE MEANING OF THE SECURITIES ACT). GLOBAL HAS AGREED THAT STARTING ON THE
EXPIRATION DATE AND ENDING ON THE CLOSE OF BUSINESS ON THE FIRST ANNIVERSARY OF
THE EXPIRATION DATE, IT WILL MAKE THE PROSPECTUS AVAILABLE TO ANY PARTICIPATING
BROKER-DEALER IN CONNECTION WITH ANY SUCH RESALE.
All authority herein conferred or agreed to be conferred in this Letter of
Transmittal shall survive the death or incapacity of the undersigned and any
obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, personal representatives, trustees in bankruptcy,
legal representatives, successors and assigns of the undersigned. Except as
stated in the prospectus and in the instructions contained in this Letter of
Transmittal, this tender is irrevocable.
5
<PAGE>
PLEASE SIGN HERE PLEASE SIGN HERE
_____________________________________ ________________________________________
Authorized Signature Authorized Signature
Name:________________________________ Name:___________________________________
Title:_______________________________ Title:__________________________________
Address:_____________________________ Address:________________________________
_____________________________________ ________________________________________
Telephone Number:____________________ Telephone Number:_______________________
Dated:_______________________________ Dated:__________________________________
_____________________________________ ________________________________________
Taxpayer Identification or Social Taxpayer Identification or Social
Security Number Security Number
(NOTE: Signature(s) must be guaranteed if required by Instructions 2 and 5.
This Letter of Transmittal must be signed by the registered holder(s) exactly
as the name(s) appear(s) on certificate(s) for the outstanding notes hereby
tendered or on a security position listing, or by any person(s) authorized to
become the registered holder(s) by endorsements and documents transmitted
herewith, including such opinions of counsel, certifications and other
information as may be required by Global or the trustee for the outstanding
notes to comply with the restrictions on transfer applicable to the outstanding
notes. If signature is by an attorney-in-fact, executor, administrator,
trustee, guardian, officer of a corporation or another acting in a fiduciary
capacity or representative capacity, please set forth the signer's full title.
See Instructions 2 and 5. Please complete substitute Form W-9 below.)
6
<PAGE>
Guarantee of Signature(s)
(If required--see Instructions 2 and 5)
Signature(s) Guaranteed by an
Eligible Institution:_____________________________
Date:______________________
Authorized Signature
Name of Eligible Institution
Guaranteeing Signature:______________________________________________________
Address:______________________________
______________________________________
Capacity (full title):____________ ______________________________________
Telephone Number:_________________
SPECIAL ISSUANCE INSTRUCTIONS(See
Instructions 2, 5 and 6)
SPECIAL DELIVERY INSTRUCTIONS (See
To be completed ONLY if the ex- Instructions 2, 5 and 6)
change notes or any outstanding
notes that are not tendered are to
be issued in the name of someone
other than the registered hold-
er(s) of the outstanding notes
whose name(s) appear(s) above.
To be completed ONLY if exchange
notes or any outstanding notes
that are not tendered are to be
sent to someone other than the
registered holder(s) of the
outstanding notes whose name(s)
appear(s) above, or to such
registered holder(s) at an address
other than that shown above.
Issue:
[_] Outstanding notes not ten-
dered, to:
Mail:
[_] Exchange notes, to:
[_] Outstanding notes not ten-
dered, to:
Name(s) ___________________________
Address ___________________________ [_] Exchange notes, to:
___________________________________ Address ___________________________
Name(s)____________________________
___________________________________
Telephone Number:__________________
___________________________________ Telephone Number:__________________
(Tax Identification or Social
Security Number) ___________________________________
(Tax Identification or Social
Security Number)
7
<PAGE>
INSTRUCTIONS
(Forming part of the terms and conditions of the exchange offer)
1. Delivery of Letter of Transmittal and Certificates; Guaranteed Delivery
Procedures. This Letter of Transmittal is to be completed either if (a)
certificates are to be forwarded herewith or (b) tenders are to be made
pursuant to the procedures for tender by book-entry transfer set forth in "The
Exchange Offer--Procedures for Tendering Outstanding Notes" in the prospectus.
Certificates, or timely confirmation of a book-entry transfer of such
outstanding notes into the exchange agent's account at DTC, as well as this
Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees and any other documents
required by this Letter of Transmittal, must be received by the exchange agent
at its address set forth herein on or prior to the expiration date. The term
"book-entry confirmation" means a timely confirmation of book-entry transfer of
outstanding notes into the exchange agent's account at DTC. Outstanding notes
may be tendered in whole or in part in integral multiples of $1,000 principal
amount.
Holders who wish to tender their outstanding notes and: (i) whose
certificates for such outstanding notes are not immediately available; (ii) who
cannot deliver their certificates, this Letter of Transmittal and all other
required documents to the exchange agent prior to the expiration date; or (iii)
who cannot complete the procedures for delivery by book-entry transfer on a
timely basis, may tender their outstanding notes by properly completing and
duly executing a Notice of Guaranteed Delivery pursuant to the guaranteed
delivery procedures set forth in "The Exchange Offer--Procedures for Tendering
Outstanding Notes" in the prospectus. Pursuant to such procedures: (i) such
tender must be made by or through an Eligible Institution (as defined below);
(ii) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form accompanying this Letter of Transmittal, must be
received by the exchange agent prior to the expiration date; and (iii) the
certificates (or a book-entry confirmation) representing all tendered
outstanding notes, in proper form for transfer, together with a Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees and any other documents required by this
Letter of Transmittal, must be received by the exchange agent within three New
York Stock Exchange trading days after the date of execution of such Notice of
Guaranteed Delivery, all as provided in "The Exchange Offer--Procedures for
Tendering Outstanding Notes" in the prospectus.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
facsimile or mail to the exchange agent and must include a guarantee by an
Eligible Institution in the form set forth in the Notice of Guaranteed
Delivery. For outstanding notes to be properly tendered pursuant to the
guaranteed delivery procedure, the exchange agent must receive a Notice of
Guaranteed Delivery prior to the expiration date. As used herein and in the
prospectus, "Eligible Institution" means a firm or other entity identified in
Rule 17Ad-15 under the exchange act as "an eligible guarantor institution,"
including (as such terms are defined therein): (i) a bank; (ii) a broker,
dealer, municipal securities broker or dealer or government securities broker
or dealer; (iii) a credit union; (iv) a national securities exchange,
registered securities association or clearing agency; or (v) a savings
association that is a participant in a Securities Transfer Association.
THE METHOD OF DELIVERY OF OUTSTANDING NOTES, THIS LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING
HOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE
AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE TIMELY DELIVERY AND PROPER INSURANCE SHOULD BE OBTAINED. NO
LETTER OF TRANSMITTAL OR OUTSTANDING NOTES SHOULD BE SENT TO GLOBAL. HOLDERS
MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST
COMPANIES OR NOMINEES TO EFFECT THESE TRANSACTIONS FOR SUCH HOLDERS.
8
<PAGE>
Global will not accept any alternative, conditional or contingent tenders.
Each tendering holder, by execution of a letter of transmittal (or facsimile
thereof), waives any right to receive any notice of the acceptance of such
tender.
2. Guarantee of Signatures. No signature guarantee on this Letter of
Transmittal is required if: (i) this Letter of Transmittal is signed by the
registered holder (which shall include any participant in DTC whose name
appears on a security position listing as the owner of the outstanding notes)
of outstanding notes tendered herewith, unless such holder has completed
either the box entitled "Special Issuance Instructions" or the box entitled
"Special Delivery Instructions" above; or (ii) such outstanding notes are
tendered for the account of a firm that is an Eligible Institution. In all
other cases, an Eligible Institution must guarantee the signature(s) on this
Letter of Transmittal. See Instruction 5.
3. Inadequate Space. If the space provided in the box captioned "Description
of Outstanding Notes Tendered" is inadequate, the certificate number(s) and/or
the principal amount of outstanding notes and any other required information
should be listed on a separate signed schedule and attached to this Letter of
Transmittal.
4. Partial Tenders and Withdrawal Rights. Tenders of outstanding notes will
be accepted only in integral multiples of $1,000 principal amount. If less
than all the outstanding notes evidenced by any certificate submitted are to
be tendered, fill in the principal amount of outstanding notes which are to be
tendered in the box entitled "Principal Amount Tendered (if less than all)."
In such case, new certificate(s) for the remainder of the outstanding notes
that were evidenced by the old certificate(s) will be sent to the tendering
holder, unless the appropriate boxes on this Letter of Transmittal are
completed, promptly after the expiration date. All outstanding notes
represented by certificates delivered to the exchange agent will be deemed to
have been tendered unless otherwise indicated.
Except as otherwise provided herein, tenders of outstanding notes may be
withdrawn at any time prior to the expiration date. In order for a withdrawal
to be effective, a written, telegraphic or facsimile transmission of such
notice of withdrawal must be timely received by the exchange agent at its
address set forth above prior to the expiration date. Any such notice of
withdrawal must specify the name of the person who tendered the outstanding
notes to be withdrawn, the aggregate principal amount of outstanding notes to
be withdrawn, and (if certificates for such outstanding notes have been
tendered) the name of the registered holder of the outstanding notes as set
forth on the certificate(s), if different from that of the person who tendered
such outstanding notes. If certificates for outstanding notes have been
delivered or otherwise identified to the exchange agent, the notice of
withdrawal must specify the serial numbers on the particular certificates for
the outstanding notes to be withdrawn and the signature on the notice of
withdrawal must be guaranteed by an Eligible Institution, except in the case
of outstanding notes tendered for the account of an Eligible Institution. If
outstanding notes have been tendered pursuant to the procedures for book-entry
transfer set forth in "The Exchange Offer--Procedures for Tendering
Outstanding Notes," the notice of withdrawal must specify the name and number
of the account at DTC to be credited with the withdrawal of outstanding notes
and must otherwise comply with the procedures of DTC. Withdrawals of tenders
of outstanding notes may not be rescinded. Outstanding notes properly
withdrawn will not be deemed validly tendered for purposes of the exchange
offer, but may be retendered at any subsequent time prior to the expiration
date by following any of the procedures described in the prospectus under "The
Exchange Offer--Procedures for Tendering Outstanding Notes."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by Global, in its sole
discretion, which determination shall be final and binding on all parties.
None of Global, any affiliates of Global, the exchange agent or any other
person shall be under any duty to give any notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure
to give any such notification. Any outstanding notes which have been tendered
but which are withdrawn will be returned to the holder thereof promptly after
withdrawal.
9
<PAGE>
5. Signatures on Letter of Transmittal, Assignments and Endorsements. If this
Letter of Transmittal is signed by the registered holder(s) of the outstanding
notes tendered hereby, the signature(s) must correspond exactly with the
name(s) as written on the face of the certificate(s) or on a security position
listing, without alteration, enlargement or any change whatsoever.
If any of the outstanding notes tendered hereby are owned of record by two or
more joint owners, all such owners must sign this Letter of Transmittal.
If any tendered outstanding notes are registered in different names on
several certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal (or facsimiles thereof) as there are names in
which certificates are registered.
If this Letter of Transmittal or any certificates or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity,
such persons should so indicate when signing and must submit proper evidence
satisfactory to Global, in its sole discretion, of such persons' authority to
so act.
If this Letter of Transmittal is signed by a person other than the registered
holder(s) of the outstanding notes listed and transmitted hereby, the
certificate(s) must be endorsed or accompanied by appropriate bond power(s),
signed exactly as the name(s) of the registered owner appear(s) on the
certificate(s), and also must be accompanied by such opinions of counsel,
certifications and other information as Global or the trustee for the
outstanding notes may require in accordance with the restrictions on transfer
applicable to the outstanding notes. Signature(s) on such certificate(s) or
bond power(s) must be guaranteed by an Eligible Institution.
6. Special Issuance and Delivery Instructions. If exchange notes or
certificates for outstanding notes not exchanged are to be issued in the name
of a person other than the signer of this Letter of Transmittal, or are to be
sent to someone other than the signer of this Letter of Transmittal or to an
address other than that shown above, the appropriate boxes on this Letter of
Transmittal should be completed. In the case of issuance in a different name,
the taxpayer identification number of the person named must also be indicated.
Holders tendering outstanding notes by book-entry transfer may request that
outstanding notes not exchanged be credited to such account maintained at DTC
as such holder may designate. If no such instructions are given, outstanding
notes not exchanged will be returned by mail or, if tendered by book-entry
transfer, by crediting the account indicated above maintained at DTC.
7. Irregularities. Global will determine, in its sole discretion, all
questions as to the form of documents, validity, eligibility (including time of
receipt) and acceptance for exchange of any tender of outstanding notes, which
determination shall be final and binding on all parties. Global reserves the
absolute right, in its sole and absolute discretion, to reject any and all
tenders determined by it not to be in proper form or the acceptance for
exchange of which may, in the view of counsel to Global, be unlawful. Global
also reserves the absolute right, subject to applicable law, to waive any of
the conditions of the exchange offer set forth in the prospectus under "The
Exchange Offer--Conditions to the Exchange Offer" or any defect or irregularity
in any tender of outstanding notes of any particular holder whether or not
similar defects or irregularities are waived in the case of other holders.
Global's interpretation of the terms and conditions of the exchange offer
(including this Letter of Transmittal and the instructions hereto) will be
final and binding. No tender of outstanding notes will be deemed to have been
validly made until all defects or irregularities with respect to such tender
have been cured or waived. None of Global, any affiliates of Global, the
exchange agent, or any other person shall be under any duty to give any
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such notification.
10
<PAGE>
8. Questions, Requests for Assistance and Additional Copies. Questions and
requests for assistance may be directed to the exchange agent at its address
and telephone number set forth above. Additional copies of the prospectus, the
Notice of Guaranteed Delivery and the Letter of Transmittal may be obtained
from the exchange agent or from your broker, dealer, commercial bank, trust
company or other nominee.
9. Backup Withholding; Substitute Form W-9. Under U.S. Federal income tax
law, a holder whose tendered outstanding notes are accepted for exchange is
required to provide the exchange agent with such holder's correct taxpayer
identification number ("TIN") on Substitute Form W-9 below. If the exchange
agent is not provided with the correct TIN, the Internal Revenue Service (the
"IRS") may subject the holder or other payee to a $50 penalty. In addition,
payments to such holders or other payees with respect to outstanding notes
exchanged pursuant to the exchange offer may be subject to 31% backup
withholding.
The box in Part 3 of the Substitute Form W-9 may be checked if the tendering
holder has not been issued a TIN and has applied for a TIN or intends to apply
for a TIN in the near future. If the box in Part 3 is checked, the holder or
other payee must also complete the certificate of Awaiting Taxpayer
Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the exchange agent will
withhold 31% of all payments made prior to the time a properly certified TIN is
provided to the exchange agent. The exchange agent will retain such amounts
withheld during the 60 day period following the date of the Substitute
Form W-9. If the holder furnishes the exchange agent with its TIN within 60
days after the date of the Substitute Form W-9, the amounts retained during the
60 day period will be remitted to the holder and no further amounts shall be
retained or withheld from payments made to the holder thereafter. If, however,
the holder has not provided the exchange agent with its TIN within such 60 day
period, amounts withheld will be remitted to the IRS as backup withholding. In
addition, 31% of all payments made thereafter will be withheld and remitted to
the IRS until a correct TIN is provided.
The holder is required to give the exchange agent the TIN (e.g., social
security number or employer identification number) of the registered owner of
the outstanding notes or of the last transferee appearing on the transfers
attached to, or endorsed on, the outstanding notes. If the outstanding notes
are registered in more than one name or are not in the name of the actual
owner, consult the Instructions to Form W-9 (Request for Identification Number
and Certification) for additional guidance on which number to report.
Certain holders (including, among others, corporations, financial
institutions and certain foreign persons) may not be subject to these backup
withholding and reporting requirements. Such holders should nevertheless
complete the attached Substitute Form W-9 below, and write "exempt" on the face
thereof, to avoid possible erroneous backup withholding. A foreign person may
qualify as an exempt recipient by submitting a properly completed IRS Form W-8,
signed under penalties of perjury, attesting to that holder's exempt status.
Please consult the Instructions to Form W-9 (Request for Identification Number
and Certification) for additional guidance on which holders are exempt from
backup withholding.
Backup withholding is not an additional U.S. federal income tax. Rather, the
U.S. federal income tax liability of a person subject to backup withholding
will be reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund may be obtained.
10. Mutilated, Lost, Destroyed or Stolen Certificates. If any certificate
representing outstanding notes has been mutilated, lost, destroyed or stolen,
the holder should promptly notify the exchange agent. The holder will then be
instructed as to the steps that must be taken in order to replace the
certificate. This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing mutilated, lost, destroyed or
stolen certificates have been followed.
11
<PAGE>
11. Security Transfer Taxes. Holders who tender their outstanding notes for
exchange will not be obligated to pay any transfer taxes in connection
therewith, except that if exchange notes are to be delivered to, or are to be
issued in the name of, any person other than the registered holder of the
outstanding notes tendered, or if a transfer tax is imposed for any reason
other than the exchange of outstanding notes in connection with the exchange
offer, then the amount of any such transfer tax (whether imposed on the
registered holder or any other persons) will be payable by the tendering
holder. If satisfactory evidence of payment of such transfer tax or exemption
therefrom is not submitted with the Letter of Transmittal, the amount of such
transfer tax will be billed directly to such tendering holder.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF), TOGETHER WITH
CERTIFICATES REPRESENTING TENDERED OUTSTANDING NOTES OR A BOOK ENTRY
CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE EXCHANGE
AGENT PRIOR TO THE EXPIRATION DATE.
12
<PAGE>
TO BE COMPLETED BY ALL TENDERING SECURITY HOLDERS:
(See Instruction 9)
PAYER'S NAME: UNITED STATES TRUST COMPANY OF NEW YORK
Part 1--PLEASE PROVIDE YOUR
TIN ON THE LINE AT RIGHT AND
CERTIFY BY SIGNING AND
DATING BELOW
Social security number or
SUBSTITUTE Employer identification
number
Form W-9 -----------------------
----------------------------------------------------------
Department of Part 2--CERTIFICATION--Under penalties of perjury, I
the Treasury certify that:
Internal (1) The number shown on this form is my correct
Revenue Service taxpayer identification number (or I am waiting for
a number to be issued to me);
Payer's (2) I am not subject to backup withholding either
Request for because: (a) I am exempt from backup withholding;
Taxpayer's (b) I have not been notified by the Internal
Identification Revenue Service ("IRS") that I am subject to backup
Number (TIN) withholding as a result of a failure to report all
interest or dividends; or (c) the IRS has notified
me that I am no longer subject to backup
withholding; and
(3) Any other information provided on this form is true
and correct.
Certification Instructions--You must cross out item (2)
above if you have been notified by the IRS that you are
subject to backup withholding because of underreporting
interest or dividends on your tax return and you have
not been notified by the IRS that you are no longer
subject to backup withholding.
----------------------------------------------------------
SIGNATURE ____________________________ Part 3--
Awaiting
TIN [_]
DATE _________________________________
----------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY IN
CERTAIN CIRCUMSTANCES RESULT IN BACKUP WITHHOLDING OF
31% OF ANY AMOUNTS PAID TO YOU PURSUANT TO THE EXCHANGE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
----------------------------------------------------------
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECKED THE BOX IN PART 3 OF THE SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer
identification number has not been issued to me, and
either (1) I have mailed or delivered an application to
receive a taxpayer identification number to the
appropriate Internal Revenue Service Center or Social
Security Administration Office or (2) I intend to mail
or deliver an application in the near future. I
understand that if I do not provide a taxpayer
identification number by the time of payment, 31% of
all payments made to me on account of the Exchange
Notes shall be retained until I provide a taxpayer
identification number to the Exchange Agent and that,
if I do not provide my taxpayer identification number
within 60 days, such retained amounts shall be remitted
to the Internal Revenue Service as backup withholding
and 31% of all reportable payments made to me
thereafter will be withheld and remitted to the
Internal Revenue Service until I provide a taxpayer
identification number.
SIGNATURE: _________________ DATE: __________________
13
<PAGE>
Exhibit 99.2
NOTICE OF GUARANTEED DELIVERY
for Tender of
10 3/4% Senior Subordinated Notes Due 2007
(the "outstanding notes")
of
Global Imaging Systems, Inc.
This Notice of Guaranteed Delivery, or one substantially equivalent to this
form, must be used to tender outstanding notes pursuant to the exchange offer
described in the prospectus dated , 1999 (as the same may be amended or
supplemented from time to time, the "prospectus") of Global Imaging Systems,
Inc., a Delaware corporation ("Global"), if certificates for the outstanding
notes are not immediately available, or time will not permit the outstanding
notes, the Letter of Transmittal and all other required documents to be
delivered to United States Trust Company of New York (the "exchange agent")
prior to 5:00 p.m., New York City time, on , 1999 or such later date and
time to which the exchange offer may be extended (the "expiration date"), or
the procedures for delivery by book-entry transfer cannot be completed on a
timely basis. This Notice of Guaranteed Delivery, or one substantially
equivalent to this form, must be delivered by hand or sent by facsimile
transmission or mail to the exchange agent, and must be received by the
exchange agent prior to the expiration date. See "The Exchange Offer--
Procedures for Tendering Outstanding Notes" in the prospectus. Capitalized
terms used but not defined herein shall have the same meaning given them in the
prospectus.
The exchange agent for the exchange offer is:
UNITED STATES TRUST COMPANY OF NEW YORK
By Facsimile: By Mail: By Hand before 4:30
p.m.:
(212) 780-0592 United States Trust United States Trust
Company of New York Company of New York
Attention: Customer P.O. Box 843 Cooper 111 Broadway
Service Confirm by Station New York, New York 10006
Telephone to: (800) 548- New York, New York 10276 Attention: Lower Level
6565 Attention: Corporate Corporate Trust Window
Trust Services
By Overnight Courier and By Hand after 4:30 p.m.:
United States Trust Company of New York
770 Broadway, 13th Floor
New York, New York 10003
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF THIS NOTICE OF GUARANTEED DELIVERY VIA FACSIMILE
OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee signatures.
If a signature on a Letter of Transmittal is required to be guaranteed by an
"Eligible Institution" under the instructions thereto, such signature guarantee
must appear in the applicable space provided in the signature box on the Letter
of Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Global, upon the terms and subject to the
conditions set forth in the prospectus and the related Letter of Transmittal,
the outstanding notes indicated below pursuant to the guaranteed delivery
procedures set forth in the prospectus under the caption "The Exchange Offer--
Procedures for Tendering Outstanding Notes."
Name(s) of Registered Holder(s): ______________________________________________
(Please Print or Type)
Signature(s): _________________________________________________________________
Address(es): __________________________________________________________________
_______________________________________________________________________________
Area Code(s) and Telephone Number(s): _________________________________________
Account Number: _______________________________________________________________
Date: _________________________________________________________________________
Certificate No(s). Principal Amount of Outstanding
(if available) Notes Tendered*
_________________________________ _____________________________________
_________________________________ _____________________________________
_________________________________ _____________________________________
_________________________________ _____________________________________
_________________________________ _____________________________________
_________________________________ _____________________________________
* Must be in integral multiples of $1,000 principal amount.
GUARANTEE OF DELIVERY
(Not to be used for signature guarantee)
The undersigned, a member firm of a registered national securities exchange
or of the National Association of Securities Dealers, Inc., a commercial bank
or trust company having an office or a correspondent in the United States or
an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under
the Securities Exchange Act of 1934, as amended, hereby guarantees that the
undersigned will deliver to the exchange agent the certificates representing
the outstanding notes being tendered hereby in proper form for transfer (or a
confirmation of book-entry transfer of such outstanding notes, into the
exchange agent's account at the book-entry transfer facility of The Depository
Trust Company ("DTC")) with delivery of a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), with any required signature
guarantees and any other required documents, all within three New York Stock
Exchange trading days after the date of execution of the Notice of Guaranteed
Delivery.
Name of Firm: ___________________ _____________________________________
Address: ________________________ Authorized Signature
_________________________________ Name: _______________________________
Zip Code Please Print or Type
Telephone No.: __________________ Title: ______________________________
Dated: ______________________________
The institution that completes this form must communicate the guarantee to
the exchange agent and must deliver the certificates representing any
outstanding notes (or a confirmation of book-entry transfer of such
outstanding notes into the exchange agent's account at DTC) and the Letter of
Transmittal to the exchange agent within the time period shown herein. Failure
to do so could result in a financial loss to such institution.
2
<PAGE>
Exhibit 99.3
Global Imaging Systems, Inc.
Offer to Exchange its
10 3/4% Senior Subordinated Notes Due 2007
Which Have Been Registered Under
the Securities Act of 1933
For Any and All of its Outstanding
10 3/4% Senior Subordinated Notes Due 2007
Pursuant to the Prospectus Dated , 1999
TO: BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES AND OTHER NOMINEES:
Global Imaging Systems, Inc. ("Global") is offering to exchange, upon and
subject to the terms and conditions set forth in the enclosed prospectus,
dated , 1999 (the "prospectus"), and the enclosed Letter of Transmittal
(the "Letter of Transmittal"), its 10 3/4% Senior Subordinated Notes due 2007
which have been registered under the Securities Act of 1933 (the "exchange
notes") for any and all of its outstanding 10 3/4% Senior Subordinated Notes
due 2007 (the "outstanding notes"). The exchange offer is being made in order
to satisfy certain of Global's obligations contained in the Registration
Rights Agreement dated as of March 8, 1999, among Global, First Union Capital
Markets Corp., Prudential Securities Incorporated, Raymond James & Associates,
Inc. and Scotia Capital Markets (USA) Inc.
In connection with the exchange offer, we are requesting that you contact
your clients for whom you hold outstanding notes registered in your name or in
the name of your nominee, or who hold outstanding notes registered in their
own names. Global, First Union Capital Markets Corp., Prudential Securities
Incorporated, Raymond James & Associates, Inc. and Scotia Capital Markets
(USA) Inc. will not pay any fees or commissions to any broker, dealer or other
person in connection with the solicitation of tenders pursuant to the exchange
offer. However, you will, upon request, be reimbursed for reasonable out-of-
pocket expenses incurred in connection with soliciting acceptances of the
exchange offer. Global, First Union Capital Markets Corp., Prudential
Securities Incorporated, Raymond James & Associates, Inc. and Scotia Capital
Markets (USA) Inc. will pay or cause to be paid all transfer taxes applicable
to the exchange of outstanding notes pursuant to the exchange offer, except as
set forth in the prospectus and the Letter of Transmittal.
For your information and for forwarding to your clients, we are enclosing
the following documents:
1. Prospectus dated , 1999;
2. A Letter of Transmittal for your use and for the information of your
clients;
3. A form of Notice of Guaranteed Delivery; and
4. A form of letter which may be sent to your clients for whose account you
hold outstanding notes registered in your name or the name of your
nominee, with space provided for obtaining such clients' instructions
with regard to the exchange offer.
YOUR PROMPT ACTION IS REQUESTED. THE EXCHANGE OFFER WILL EXPIRE AT 5:00
P.M., NEW YORK CITY TIME, ON , 1999 (THE "EXPIRATION DATE"), UNLESS
EXTENDED BY GLOBAL (IN WHICH CASE THE TERM "EXPIRATION DATE" SHALL MEAN THE
LATEST DATE AND TIME TO WHICH THE EXCHANGE OFFER IS EXTENDED). THE OUTSTANDING
NOTES TENDERED PURSUANT TO THE EXCHANGE OFFER MAY BE WITHDRAWN, SUBJECT TO THE
PROCEDURES DESCRIBED IN THE PROSPECTUS AND THE LETTER OF TRANSMITTAL, AT ANY
TIME PRIOR TO THE EXPIRATION DATE.
To participate in the exchange offer, a duly executed and properly completed
Letter of Transmittal (or facsimile thereof), with any required signature
guarantees and any other required documents, should be sent to the exchange
agent and certificates representing the outstanding notes should be delivered
to the exchange agent, all in accordance with the instructions set forth in
the prospectus and the Letter of Transmittal.
<PAGE>
If holders of outstanding notes wish to tender, but it is impracticable for
them to forward their certificates for outstanding notes prior to the
expiration of the exchange offer or to comply with the book-entry transfer
procedures on a timely basis, a tender may be effected by following the
guaranteed delivery procedures described in the prospectus and the Letter of
Transmittal.
Any inquiries you may have with respect to the exchange offer, or requests
for additional copies of the enclosed materials, should be directed to the
exchange agent for the outstanding notes, at its address and telephone number
set forth on the front of the Letter of Transmittal.
Very truly yours,
Global Imaging Systems, Inc.
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER
PERSON AS AN AGENT OF GLOBAL OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF EITHER OF
THEM WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE
IN THE PROSPECTUS OR THE LETTER OF TRANSMITTAL.
2
<PAGE>
Exhibit 99.4
Global Imaging Systems, Inc.
Offer to Exchange its
10 3/4% Senior Subordinated Notes Due 2007
Which Have Been Registered Under the Securities Act of 1933
For Any and All of its Outstanding
10 3/4% Senior Subordinated Notes Due 2007
TO OUR CLIENTS:
Enclosed for your consideration is a prospectus, dated , 1999 (the
"prospectus"), and a form of Letter of Transmittal (the "Letter of
Transmittal"), relating to the offer (the "exchange offer") of Global Imaging
Systems, Inc. ("Global") to exchange its 10 3/4% Senior Subordinated Notes due
2007, which have been registered under the Securities Act of 1933 (the
"exchange notes"), for any and all of its outstanding 10 3/4% Senior
Subordinated Notes due 2007 (the "outstanding notes"), upon the terms and
subject to the conditions described in the prospectus and the Letter of
Transmittal. The exchange offer is being made in order to satisfy certain of
Global's obligations contained in the Registration Rights Agreement dated as of
March 8, 1999, among Global, First Union Capital Markets Corp., Prudential
Securities Incorporated, Raymond James & Associates, Inc. and Scotia Capital
Markets (USA).
This material is being forwarded to you as the beneficial owner of the
outstanding notes carried by us in your account but not registered in your
name. A TENDER OF SUCH OUTSTANDING NOTES MAY ONLY BE MADE BY US AS THE HOLDER
OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS.
Accordingly, we request instructions as to whether you wish us to tender on
your behalf the outstanding notes held by us for your account, pursuant to the
terms and conditions set forth in the enclosed prospectus and Letter of
Transmittal.
Your instructions should be forwarded to us as promptly as possible in order
to permit us to tender the outstanding notes on your behalf in accordance with
the provisions of the exchange offer. The exchange offer will expire at 5:00
p.m., New York City time, on , 1999, unless extended by Global (the
"expiration date"). Any outstanding notes tendered pursuant to the exchange
offer may be withdrawn, subject to the procedures described in the prospectus
and the Letter of Transmittal, at any time prior to the expiration date.
If you wish to have us tender your outstanding notes, please so instruct us
by completing, executing and returning to us the instruction form included with
this letter. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR INFORMATION ONLY
AND MAY NOT BE USED DIRECTLY BY YOU TO TENDER OUTSTANDING NOTES.
<PAGE>
INSTRUCTIONS WITH RESPECT TO
THE EXCHANGE OFFER
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein, including the prospectus and the accompanying
form of Letter of Transmittal, relating to the exchange offer made by Global
Imaging Systems, Inc. with respect to its outstanding notes.
This will instruct you as to the action to be taken by you relating to the
exchange offer with respect to the outstanding notes held by you for the
account of the undersigned, upon and subject to the terms and conditions set
forth in the prospectus and the Letter of Transmittal.
The aggregate principal amount of the outstanding notes held by you for the
account of the undersigned is (fill in amount):
$ ___________________________________
of the 10 3/4% Senior Subordinated
Notes due 2007
With respect to the exchange offer, the undersigned hereby instructs you
(check appropriate box):
[_]To TENDER the following outstanding notes held by you for the account of
the undersigned (insert aggregate principal amount at maturity of
outstanding notes to be tendered, in integral multiples of $1,000):
$ ___________________________________
of the 10 3/4% Senior Subordinated
Notes due 2007
[_]NOT to tender any outstanding notes held by you for the account of the
undersigned.
2
<PAGE>
If the undersigned instructs you to tender the outstanding notes held by you
for the account of the undersigned, it is understood that you are authorized to
make, on behalf of the undersigned (and the undersigned, by its signature
below, hereby makes to you), the representations, warranties and agreements
contained in the Letter of Transmittal that are to be made with respect to the
undersigned as beneficial owner.
SIGN HERE
Name of beneficial owner(s): ___________________________________________________
Signature(s): __________________________________________________________________
Name(s) (please print): ________________________________________________________
Address: _______________________________________________________________________
Telephone Number: ______________________________________________________________
Taxpayer Identification or Social Security Number(s): __________________________
Date: __________________________________________________________________________
None of the outstanding notes held by us for your account will be tendered
unless we receive written instructions from you to do so. Unless a specific
contrary instruction is given in the space provided, your signature(s) hereon
shall constitute an instruction to us to tender all the outstanding notes held
by us for your account.
3
<PAGE>
Exhibit 99.5
DELAWARE CODE ANNOTATED
TITLE 8. CORPORATIONS
CHAPTER 1. GENERAL CORPORATION LAW
SUBCHAPTER IV. DIRECTORS AND OFFICERS
(S) 145 Indemnification of officers, directors, employees and agents;
insurance.
(a) A corporation shall have power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the corporation)
by reason of the fact that the person 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 expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by the person in connection with such action,
suit or proceeding if the person acted in good faith and in a manner the person
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe the person's conduct was unlawful. The termination
of any action, suit or proceeding by judgment, order, settlement, conviction,
or upon a plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good faith and in a manner
which the person reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that the person's conduct was
unlawful.
(b) A corporation shall have power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that the person 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 expenses (including attorneys' fees) actually and reasonably incurred
by the person in connection with the defense or settlement of such action or
suit if the person acted in good faith and in a manner the person reasonably
believed to be in or not opposed to the best interests of the corporation and
except that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
(c) To the extent that a present or former director or officer of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, such person shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the present or
former director, officer, employee or agent is proper in the circumstances
because the person has met the applicable standard of conduct set forth in
subsections (a) and (b) of this section. Such determination shall be made, with
respect to a person who is a director or officer at the time of such
determination, (1) by a majority vote of the directors who are not parties to
such action, suit or proceeding, even though less than a quorum, or (2) by a
committee of such directors designated by majority vote of such directors, even
<PAGE>
though less than a quorum, or (3) if there are no such directors, or if such
directors so direct, by independent legal counsel in a written opinion, or (4)
by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that such person is not entitled to be
indemnified by the corporation as authorized in this section. Such expenses
(including attorneys' fees) incurred by former directors and officers or other
employees and agents may be so paid upon such terms and conditions, if any, as
the corporation deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in such
person's official capacity and as to action in another capacity while holding
such office.
(g) A corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against such
person and incurred by such person in any such capacity, or arising out of such
person's status as such, whether or not the corporation would have the power to
indemnify such person against such liability under this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so
that any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall stand
in the same position under this section with respect to the resulting or
surviving corporation as such person would have with respect to such
constituent corporation if its separate existence had continued.
(i) For purposes of this section, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner such person
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive jurisdiction to
hear and determine all actions for advancement of expenses or indemnification
brought under this section or under any bylaw, agreement, vote of stockholders
or disinterested directors, or otherwise. The Court of Chancery may summarily
determine a corporation's obligation to advance expenses (including attorneys'
fees).
<PAGE>
Exhibit 99.6
CODE OF ALABAMA
TITLE 10. CORPORATIONS, PARTNERSHIPS, AND ASSOCIATIONS.
CHAPTER 2B. BUSINESS CORPORATIONS.
ARTICLE 8. DIRECTORS AND OFFICERS.
DIVISION E. INDEMNIFICATION.
(S) 10-2B-8.51. Authority to indemnify.
(a) Except as provided in subsection (d), a corporation may indemnify an
individual made a party to a proceeding because he or she is or was a director
against liability incurred in the proceeding if:
(1) The individual conducted himself or herself in good faith; and
(2) The individual reasonably believed:
(i) In the case of conduct in his or her official capacity with the
corporation, that the conduct was in its best interests; and
(ii) In all other cases, that the conduct was at least not opposed to
its best interests; and
(3) In the case of any criminal proceeding, the individual had no
reasonable cause to believe his or her conduct was unlawful.
(b) A director's conduct with respect to an employee benefit plan for a purpose
he or she reasonably believed to be in the interests of the participants in, and
beneficiaries of the plan is conduct that satisfies the requirement of
subsection (a)(2)(ii).
(c) The termination of a proceeding by judgement, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent is not, of
itself, determinative that the director did not meet the standard of conduct
described in this section.
(d) A corporation may not indemnify a director under this section:
(1) In connection with a proceeding by or in the right of the corporation
in which the director was adjudged liable to the corporation; or
(2) In connection with any other proceeding charging improper personal
benefit to the director, whether or not involving action in his or her
official capacity, in which the director was adjudged liable on the basis that
personal benefit was improperly received by him or her.
(e) Indemnification permitted under this section in connection with a
proceeding by or in the right of the corporation is limited to reasonable
expenses incurred in connection with the proceeding.
(S) 10-2B-8.52. Mandatory indemnification.
A corporation shall indemnify a director who was successful, on the merits or
otherwise, in the defense of any proceeding, or of any claim, issue or matter
in such proceeding, here he or she was a party because he or she is or was a
director of the corporation, against reasonable expenses incurred in connection
therewith, notwithstanding that he or she was not successful on any other
claim, issue or matter in any such proceeding.
(S) 10-2B-8.53. Advance for expenses.
(a) A corporation may pay for or reimburse the reasonable expenses incurred by
a director who is a party to a proceeding in advance of final disposition of
the proceeding if:
(1) The director furnishes the corporation a written affirmation of good
faith belief that he or she has met the standard of conduct described in
Section 10-2B-8.51;
(2) The director furnishes the corporation a written undertaking, executed
personally or on the director's behalf, to repay the advance if it is
ultimately determined that the director did not meet the standard of conduct,
or is not otherwise entitled to indemnification under Section 10-2B-
8.51(d), unless indemnification is approved by the court under Section 10-
2B-8.54;
(3) A determination is made that the facts then known to those making the
<PAGE>
determination would not preclude indemnification under Division E of this
article.
(b) The undertaking required by subsection (a)(2) must be an unlimited general
obligation of the director but need not be secured and may be accepted without
reference to financial ability to make repayment.
(c) Determinations and authorizations of payments under this section shall be
made in the manner specified in Section 10-2B-8.55.
(S) 10-2B-8.54. Court-ordered indemnification.
A director of the corporation who is a party to a proceeding may apply for
indemnification to the court conducting the proceeding, or may file an action
therefor in another court of competent jurisdiction if such court has
jurisdiction over the corporation and the corporation is a party to the
proceeding. On receipt of such an application or the filing of such an action,
the court after giving any notice it considers necessary may order
indemnification if it determines:
(1) The director is entitled to mandatory indemnification under Section
10-2B-8.52, in which case the court shall also order the corporation to pay
the director's reasonable expenses incurred to obtain court-ordered
indemnification; or
(2) The director is fairly and reasonably entitled to indemnification in
view of all the relevant circumstances, whether or not he or she met the
standard of conduct set forth in Section 10-2B-8.51 or was adjudged liable as
described in Section 10-2B-8.51(d), but if he or she was adjudged so liable the
indemnification is limited to reasonable expenses incurred.
(S) 10-2B-8.55. Determination and authorization of indemnification.
(a) A corporation may not indemnify a director under Section 10-2B-8.51
unless authorized in the specific case after a determination has been made that
indemnification of the director is permissible in the circumstances because the
director has met the standard of conduct set forth in Section 10-2B-8.51.
(b) The determination shall be made:
(1) By the board of directors by majority vote of a quorum consisting of
directors not at the time parties to the proceeding;
(2) If a quorum cannot be obtained under subdivision (1), by majority vote
of a committee duly designated by the board of directors (in which designation
directors who are parties may participate) consisting solely of two or more
directors not at the time parties to the proceeding;
(3) By special legal counsel;
(i) Selected by the board of directors or its committee in the manner
prescribed in subdivision (1) or (2); or
(ii) If a quorum of the board of directors cannot be obtained under
subdivision (1) and a committee cannot be designated under subdivision (2),
selected by majority vote of the full board of directors (in which selection
directors who are parties may participate); or (4) By the shareholders, but
shares owned by or voted under the control of directors who are at the time
parties to the proceeding may not be voted on the determination. A majority of
the shares that are entitled to vote on the transaction by virtue of not being
owned by or under the control of such directors constitutes a quorum for the
purpose of taking action under this section.
(c) Authorization of indemnification and evaluation as to reasonableness of
expenses shall be made in the same manner as the determination that
indemnification is permissible, except that if the determination is made by
special legal counsel, authorization of indemnification and evaluation as to
reasonableness of expenses shall be made by those entitled under subsection
(b)(3) to select counsel.
(S) 10-2B-8.56. Indemnification of officers, employees, and agents.
(a) An officer of a corporation who is not a director is entitled to mandatory
indemnification under Section 10-2B-8.52, and is entitled to apply for
<PAGE>
court-ordered indemnification under Section 10-2B-8.54, in each case to the
same extent as a director.
(b) A corporation may indemnify and may advance expenses under Division E of
this article to an officer, employee, or agent of the corporation who is not a
director to the same extent as to a director.
(S) 10-2B-8.57. Insurance.
A corporation may purchase and maintain insurance, or furnish similar
protection (including but not limited to trust funds, self-insurance reserves,
or the like), on behalf of an individual who is or was a director, officer,
employee, or agent of the corporation, or who, while a director, officer,
employee, or agent of the corporation, is or was serving at the request of the
corporation as a director, officer, partner, trustee, employee, or agent of
another foreign or domestic corporation, partnership, joint venture trust,
employee benefit plan, or other enterprise, against liability asserted against
or incurred by him or her in that capacity or arising from his or her status as
a director, officer, employee, or agent, whether or not the corporation would
have power to indemnify him or her against the same liability under Section
10-2B-8.51 or 10-2B-8.52.
(S) 10-2B-8.58. Application of indemnification provisions.
(a) Any indemnification, or advance for expenses, authorized under Division E
of this article shall not be deemed exclusive of and shall be in addition to
that which may be contained in a corporation's articles of incorporation,
bylaws, a resolution of its shareholders or board of directors, or in a
contract or otherwise.
(b) Division E of this article does not limit a corporation's power to pay or
reimburse expenses incurred by a director in connection with the director's
appearance as a witness in a proceeding at a time when he or she has not been
made a named defendant or respondent to the proceeding.
<PAGE>
Exhibit 99.7
MAINE REVISED STATUTES ANNOTATED
TITLE 13-A. MAINE BUSINESS CORPORATION ACT
CHAPTER 7. DIRECTORS AND OFFICERS
(S) 719. Indemnification of officers, directors, employees and agents;
insurance
1. A corporation shall have power to indemnify or, if so provided in the
bylaws, shall in all cases indemnify, any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
by reason of the fact that that person 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, trustee, partner, fiduciary, employee or
agent of another corporation, partnership, joint venture, trust, pension or
other employee benefit plan or other enterprise, against expenses, including
attorneys' fees, judgments, fines and amounts paid in settlement actually and
reasonably incurred by that person in connection with such action, suit or
proceeding; provided that no indemnification may be provided for any person
with respect to any matter as to which that person shall have been finally
adjudicated:
A. Not to have acted honestly or in the reasonable belief that that
person's action was in or not opposed to the best interests of the corporation
or its shareholders or, in the case of a person serving as a fiduciary of an
employee benefit plan or trust, in or not opposed to the best interests of that
plan or trust, or its participants or beneficiaries; or
B. With respect to any criminal action or proceeding, to have had
reasonable cause to believe that that person's conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order or
conviction adverse to that person, or by settlement or plea of nolo contendere
or its equivalent, shall not of itself create a presumption that that person
did not act honestly or in the reasonable belief that that person's action was
in or not opposed to the best interests of the corporation or its shareholders
or, in the case of a person serving as a fiduciary of an employee benefit plan
or trust, in or not opposed to the best interests of that plan or trust or its
participants or beneficiaries and, with respect to any criminal action or
proceeding, had reasonable cause to believe that that person's conduct was
unlawful.
1-A. Notwithstanding any provision of subsection 1, a corporation shall not
have the power to indemnify any person with respect to any claim, issue or
matter asserted by or in the right of the corporation as to which that person
is finally adjudicated to be liable to the corporation unless the court in
which the action, suit or proceeding was brought shall determine that, in view
of all the circumstances of the case, that person is fairly and reasonably
entitled to indemnity for such amounts as the court shall deem reasonable.
2. Any provision of subsection 1, 1-A or 3 to the contrary
notwithstanding, to the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsection 1 or 1-A, or in defense of
any claim, issue or matter therein, that director, officer, employee or agent
shall be indemnified against expenses, including attorneys' fees, actually and
reasonably incurred by that director, officer, employee or agent in connection
therewith. The right to indemnification granted by this subsection may be
enforced by a separate action against the corporation, if an order for
indemnification is not entered by a court in the action, suit or proceeding
wherein that director, officer, employee or agent was successful on the merits
or otherwise.
3. Any indemnification under subsection 1, unless ordered by a court or
required by the bylaws, shall be made by the corporation only as authorized in
the specific case upon a determination that indemnification of the director,
<PAGE>
officer, employee or agent is proper in the circumstances and in the best
interests of the corporation. That determination shall be made by the board of
directors by a majority vote of a quorum consisting of directors who were not
parties to that action, suit or proceeding, or if such a quorum is not
obtainable, or even if obtainable, if a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or by the
shareholders. Such a determination once made may not be revoked and, upon the
making of that determination, the director, officer, employee or agent may
enforce the indemnification against the corporation by a separate action
notwithstanding any attempted or actual subsequent action by the board of
directors.
4. Expenses incurred in defending a civil, criminal, administrative or
investigative action, suit or proceeding may be authorized and paid by the
corporation in advance of the final disposition of that action, suit or
proceeding upon a determination made in accordance with the procedure
established in subsection 3 that, based solely on the facts then known to those
making the determination and without further investigation, the person seeking
indemnification satisfied the standard of conduct prescribed by subsection 1,
or if so provided in the bylaws, these expenses shall in all cases be
authorized and paid by the corporation in advance of the final disposition of
that action, suit or proceeding upon receipt by the corporation of:
A. A written undertaking by or on behalf of the officer, director,
employee or agent to repay that amount if that person is finally adjudicated:
(1) Not to have acted honestly or in the reasonable belief that that
person's action was in or not opposed to the best interests of the corporation
or its shareholders or, in the case of a person serving as a fiduciary of an
employee benefit plan or trust, in or not opposed to the best interests of such
plan or trust or its participants or beneficiaries;
(2) With respect to any criminal action or proceeding, to have had
reasonable cause to believe that the person's conduct was unlawful; or
(3) With respect to any claim, issue or matter asserted in any
action, suit or proceeding brought by or in the right of the corporation, to be
liable to the corporation, unless the court in which that action, suit or
proceeding was brought permits indemnification in accordance with subsection 2;
and
B. A written affirmation by the officer, director, employee or agent that
the person has met the standard of conduct necessary for indemnification by the
corporation as authorized in this section.
The undertaking required by paragraph A shall be an unlimited general
obligation of the person seeking the advance, but need not be secured and may
be accepted without reference to financial ability to make the repayment.
5. The indemnification and entitlement to advances of expenses provided by
this section shall not be deemed exclusive of any other rights to which those
indemnified may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in that person's
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee, agent, trustee, partner or fiduciary and shall inure to the
benefit of the heirs, executors and administrators of such a person. A right to
indemnification required by the bylaws may be enforced by a separate action
against the corporation, if an order for indemnification has not been entered by
a court in any action, suit or proceeding in respect to which indemnification is
sought.
6. A corporation shall have power to purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, trustee, partner, fiduciary, employee or agent of another
corporation, partnership, joint venture, trust, pension or other employee
benefit plan or other enterprise against any liability asserted against that
person and incurred by that person in any such capacity, or arising out of that
person's status as such, whether or not the corporation would have the power to
<PAGE>
indemnify that person against such liability under this section.
7. For purposes of this section, references to the "corporation" shall
include, in addition to the surviving corporation or new corporation, any
participating corporation in a consolidation or merger.
<PAGE>
Exhibit 99.8
MASSACHUSETTS GENERAL LAWS ANNOTATED
PART I. ADMINISTRATION OF THE GOVERNMENT
TITLE XXII. CORPORATIONS
CHAPTER 156B. CERTAIN BUSINESS CORPORATIONS
DIRECTORS AND OFFICERS
(S) 67. Indemnification of officers and directors
Indemnification of directors, officers, employees and other agents of a
corporation, and persons who serve at its request as directors, officers,
employees or other agents of another organization, or who serve at its request
in any capacity with respect to any employee benefit plan, may be provided by
it to whatever extent shall be specified in or authorized by (i) the articles
of organization or (ii) a by-law adopted by the stockholders or (iii) a vote
adopted by the holders of a majority of the shares of stock entitled to vote on
the election of directors. Except as the articles of organization or by-laws
otherwise require, indemnification of any persons referred to in the preceding
sentence who are not directors of the corporation may be provided by it to the
extent authorized by the directors. Such indemnification may include payment
by the corporation of expenses incurred in defending a civil or criminal action
or proceeding in advance of the final disposition of such action or proceeding,
upon receipt of an undertaking by the person indemnified to repay such payment
if he shall be adjudicated to be not entitled to indemnification under this
section which undertaking may be accepted without reference to the financial
ability of such person to make repayment. Any such indemnification may be
provided although the person to be indemnified is no longer an officer,
director, employee or agent of the corporation or of such other organization or
no longer serves with respect to any such employee benefit plan.
No indemnification shall be provided for any person with respect to any
matter as to which he shall have been adjudicated in any proceeding not to have
acted in good faith in the reasonable belief that his action was in the best
interest of the corporation or to the extent that such matter relates to service
with respect to an employee benefit plan, in the best interests of the
participants or beneficiaries of such employee benefit plan.
The absence of any express provision for indemnification shall not limit
any right of indemnification existing independently of this section.
A corporation shall have power to purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee or other agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or other agent of another organization or with
respect to any employee benefit plan, against any liability incurred by him in
any such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability.
<PAGE>
Exhibit 99.9
MCKINNEY'S CONSOLIDATED LAWS OF NEW YORK ANNOTATED
BUSINESS CORPORATION LAW
CHAPTER 4 OF THE CONSOLIDATED LAWS
ARTICLE 7--DIRECTORS AND OFFICERS
(S) 402. Certificate of incorporation; contents
(a) A certificate, entitled "Certificate of incorporation of ...... (name
of CORPORATION) under section 402 of the Business CORPORATION Law", shall be
signed by each incorporator, with his name and address included in such
certificate and delivered to the department of state. It shall set forth:
(1) The name of the CORPORATION.
(2) The purpose or purposes for which it is formed, it being sufficient to
state, either alone or with other purposes, that the purpose of the CORPORATION
is to engage in any lawful act or activity for which CORPORATIONS may be
organized under this chapter, provided that it also state that it is not formed
to engage in any act or activity requiring the consent or approval of any state
official, department, board, agency or other body without such consent or
approval first being obtained. By such statement all lawful acts and
activities shall be within the purposes of the CORPORATION, except for express
limitations therein or in this chapter, if any.
(3) The county within this state in which the office of the CORPORATION is
to be located.
(4) The aggregate number of shares which the CORPORATION shall have the
authority to issue; if such shares are to consist of one class only, the par
value of the shares or a statement that the shares are without par value; or,
if the shares are to be divided into classes, the number of shares of each
class and the par value of the shares having par value and a statement as to
which shares, if any, are without par value.
(5) If the shares are to be divided into classes, the designation of each
class and a statement of the relative rights, preferences and limitations of
the shares of each class.
(6) If the shares of any preferred class are to be issued in series, the
designation of each series and a statement of the variations in the relative
rights, preferences and limitations as between series insofar as the same are
to be fixed in the certificate of incorporation, a statement of any authority
to be vested in the board to establish and designate series and to fix the
variations in the relative rights, preferences and limitations as between
series and a statement of any limit on the authority of the board of directors
to change the number of shares of any series of preferred shares as provided in
paragraph (e) of section 502 (Issue of any class of preferred shares in series).
(7) A designation of the secretary of state as agent of the CORPORATION
upon whom process against it may be served and the post office address within or
without this state to which the secretary of state shall mail a copy of any
process against it served upon him.
(8) If the CORPORATION is to have a registered agent, his name and address
within this state and a statement that the registered agent is to be the agent
of the CORPORATION upon whom process against it may be served.
(9) The duration of the CORPORATION if other than perpetual.
(b) The certificate of incorporation may set forth a provision eliminating
or limiting the personal liability of directors to the CORPORATION or its
shareholders for damages for any breach of duty in such capacity, provided that
no such provision shall eliminate or limit:
(1) the liability of any director if a judgment or other final
adjudication adverse to him establishes that his acts or omissions were in bad
faith or involved intentional misconduct or a knowing violation of law or that
he personally gained in fact a financial profit or other advantage to which he
was not legally entitled or that his acts violated section 719, or
(2) the liability of any director for any act or omission prior to the
adoption of a provision authorized by this paragraph.
(c) The certificate of incorporation may set forth any provision, not
inconsistent with this chapter or any other statute of this state, relating to
the business of the CORPORATION, its affairs, its rights or powers, or the
<PAGE>
rights or powers of its shareholders, directors or officers including any
provision relating to matters which under this chapter are required or permitted
to be set forth in the by-laws. It is not necessary to set forth in the
certificate of incorporation any of the powers enumerated in this chapter.
(S) 721. Nonexclusivity of statutory provisions for indemnification of
directors and officers
The indemnification and advancement of expenses granted pursuant to, or
provided by, this article shall not be deemed exclusive of any other rights to
which a director or officer seeking indemnification or advancement of expenses
may be entitled, whether contained in the certificate of incorporation or the
by-laws or, when authorized by such certificate of incorporation or by-laws, (i)
a resolution of shareholders, (ii) a resolution of directors, or (iii) an
agreement providing for such indemnification, provided that no indemnification
may be made to or on behalf of any director or officer if a judgment or other
final adjudication adverse to the director or officer establishes that his acts
were committed in bad faith or were the result of active and deliberate
dishonesty and were material to the cause of action so adjudicated, or that he
personally gained in fact a financial profit or other advantage to which he was
not legally entitled. Nothing contained in this article shall affect any rights
to indemnification to which corporate personnel other than directors and
officers may be entitled by contract or otherwise under law.
(S) 722. Authorization for indemnification of directors and officers
(a) A corporation may indemnify any person made, or threatened to be made,
a party to an action or proceeding( other than one by or in the right of the
corporation to procure a judgment in its favor), whether civil or criminal,
including an action by or in the right of any other corporation of any type or
kind, domestic or foreign, or any partnership, joint venture, trust, employee
benefit plan or other enterprise, which any director or officer of the
corporation served in any capacity at the request of the corporation, by reason
of the fact that he, his testator or intestate, was a director or officer of the
corporation, or served such other corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise in any capacity, against
judgments, fines, amounts paid in settlement and reasonable expenses, including
attorneys' fees actually and necessarily incurred as a result of such action or
proceeding, or any appeal therein, if such director or officer acted, in good
faith, for a purpose which he reasonably believed to be in, or, in the case of
service for any other corporation or any partnership, joint venture, trust,
employee benefit plan or other enterprise, not opposed to, the best interests of
the corporation and, in criminal actions or proceedings, in addition, had no
reasonable cause to believe that his conduct was unlawful.
(b) The termination of any such civil or criminal action or proceeding by
judgment, settlement, conviction or upon a plea of nolo contendere, or its
equivalent, shall not in itself create a presumption that any such director or
officer did not act, in good faith, for a purpose which he reasonably believed
to be in, or, in the case of service for any other corporation or any
partnership, joint venture, trust, employee benefit plan or other enterprise,
not opposed to, the best interests of the corporation or that he had reasonable
cause to believe that his conduct was unlawful.
(c) A corporation may indemnify any person made, or threatened to be made,
a party to an action by or in the right of the corporation to procure a judgment
in its favor by reason of the fact that he, his testator or intestate, is or was
a director or officer of the corporation, or is or was serving at the request of
the corporation as a director or officer of any other corporation of any type or
kind, domestic or foreign, of any partnership, joint venture, trust, employee
benefit plan or other enterprise, against amounts paid in settlement and
reasonable expenses, including attorneys' fees, actually and necessarily
incurred by him in connection with the defense or settlement of such action, or
in connection with an appeal therein, if such director or officer acted, in good
faith, for a purpose which he reasonably believed to be in, or, in the case of
service for any other corporation or any partnership, joint venture, trust,
employee benefit plan or other enterprise, not opposed
<PAGE>
to, the best interests of the corporation, except that no indemnification under
this paragraph shall be made in respect of (1) a threatened action, or a pending
action which is settled or otherwise disposed of, or (2) any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
corporation, unless and only to the extent that the court in which the action
was brought, or, if no action was brought, any court of competent jurisdiction,
determines upon application that, in view of all the circumstances of the case,
the person is fairly and reasonably entitled to indemnity for such portion of
the settlement amount and expenses as the court deems proper.
(d) For the purpose of this section, a corporation shall be deemed to have
requested a person to serve an employee benefit plan where the performance by
such person of his duties to the corporation also imposes duties on, or
otherwise involves services by, such person to the plan or participants or
beneficiaries of the plan; excise taxes assessed on a person with respect to an
employee benefit plan pursuant to applicable law shall be considered fines; and
action taken or omitted by a person with respect to an employee benefit plan in
the performance of such person's duties for a purpose reasonably believed by
such person to be in the interest of the participants and beneficiaries of the
plan shall be deemed to be for a purpose which is not opposed to the best
interests of the corporation.
(S) 723. Payment of indemnification other than by court award
(a) A person who has been successful, on the merits or otherwise, in the
defense of a civil or criminal action or proceeding of the character described
in section 722 shall be entitled to indemnification as authorized in such
section.
(b) Except as provided in paragraph (a), any indemnification under section
722 or otherwise permitted by section 721, unless ordered by a court under
section 724 (indemnification of directors and officers by a court), shall be
made by the corporation, only if authorized in the specific case:
(1) By the board acting by a quorum consisting of directors who are not
parties to such action or proceeding upon a finding that the director or officer
has met the standard of conduct set forth in section 722 or established pursuant
to section 721, as the case may be, or,
(2) If a quorum under subparagraph (1) is not obtainable or, even if
obtainable, a quorum of disinterested directors so directs;
(A) By the board upon the opinion in writing of independent legal counsel
that indemnification is proper in the circumstances because the applicable
standard of conduct set forth in such sections has been met by such director or
officer, or
(B) By the shareholders upon a finding that the director or officer has
met the applicable standard of conduct set forth in such sections.
(c) Expenses incurred in defending a civil or criminal action or
proceeding may be paid by the corporation in advance of the final disposition of
such action or proceeding upon receipt of an undertaking by or on behalf of such
director or officer to repay such amount as, and to the extent, required by
paragraph (a) of section 725.
(S) 724. Indemnification of directors and officers by a court
(a) Notwithstanding the failure of a corporation to provide
indemnification, and despite any contrary resolution of the board or of the
shareholders in the specific case under section 723 (Payment of indemnification
other than by court award), indemnification shall be awarded by a court to the
extent authorized under section 722 (Authorization for indemnification of
directors and officers ), and paragraph (a) of section 723. Application therefor
may be made, in every case, either:
(1) In the civil action or proceeding in which the expenses were incurred
or other amounts were paid, or
(2) To the supreme court in a separate proceeding, in which case the
application shall set forth the disposition of any previous application made to
any court for the same or similar relief and also reasonable cause for the
failure to make application for such relief in the action or proceeding in which
the expenses were incurred or other amounts were paid.
<PAGE>
(b) The application shall be made in such manner and form as may be
required by the applicable rules of court or, in the absence thereof, by
direction of a court to which it is made. Such application shall be upon notice
to the corporation. The court may also direct that notice be given at the
expense of the corporation to the shareholders and such other persons as it may
designate in such manner as it may require.
(c) Where indemnification is sought by judicial action, the court may
allow a person such reasonable expenses, including attorneys' fees, during the
pendency of the litigation as are necessary in connection with his defense
therein, if the court shall find that the defendant has by his pleadings or
during the course of the litigation raised genuine issues of fact or law.
(S) 725. Other provisions affecting indemnification of directors and officers
(a) All expenses incurred in defending a civil or criminal action or
proceeding which are advanced by the corporation under paragraph (c) of section
723 (Payment of indemnification other than by court award) or allowed by a court
under paragraph (c) of section 724 (indemnification of directors and officers by
a court) shall be repaid in case the person receiving such advancement or
allowance is ultimately found, under the procedure set forth in this article,
not to be entitled to indemnification or, where indemnification is granted, to
the extent the expenses so advanced by the corporation or allowed by the court
exceed the indemnification to which he is entitled.
(b) No indemnification, advancement or allowance shall be made under this
article in any circumstance where it appears:
(1) That the indemnification would be inconsistent with the law of the
jurisdiction of incorporation of a foreign corporation which prohibits or
otherwise limits such indemnification;
(2) That the indemnification would be inconsistent with a provision of the
certificate of incorporation, a by-law, a resolution of the board or of the
shareholders, an agreement or other proper corporate action, in effect at the
time of the accrual of the alleged cause of action asserted in the threatened or
pending action or proceeding in which the expenses were incurred or other
amounts were paid, which prohibits or otherwise limits indemnification; or
(3) If there has been a settlement approved by the court, that the
indemnification would be inconsistent with any condition with respect to
indemnification expressly imposed by the court in approving the settlement.
(c) If any expenses or other amounts are paid by way of indemnification,
otherwise than by court order or action by the shareholders, the corporation
shall, not later than the next annual meeting of shareholders unless such
meeting is held within three months from the date of such payment, and, in any
event, within fifteen months from the date of such payment, mail to its
shareholders of record at the time entitled to vote for the election of
directors a statement specifying the persons paid, the amounts paid, and the
nature and status at the time of such payment of the litigation or threatened
litigation.
(d) If any action with respect to indemnification of directors and
officers is taken by way of amendment of the by-laws, resolution of directors,
or by agreement, then the corporation shall, not later than the next annual
meeting of shareholders, unless such meeting is held within three months from
the date of such action, and, in any event, within fifteen months from the date
of such action, mail to its shareholders of record at the time entitled to vote
for the election of directors a statement specifying the action taken.
(e) Any notification required to be made pursuant to the foregoing
paragraph (c) or (d) of this section by any domestic mutual insurer shall be
satisfied by compliance with the corresponding provisions of section one
thousand two hundred sixteen of the insurance law.
(f) The provisions of this article relating to indemnification of
directors and officers and insurance therefor shall apply to domestic
corporations and foreign corporations doing business in this state, except as
provided in section 1320 (Exemption from certain provisions).
(S) 726. Insurance for indemnification of directors and officers
(a) Subject to paragraph (b), a corporation shall have power to purchase
and maintain insurance:
<PAGE>
(1) To indemnify the corporation for any obligation which it incurs as a
result of the indemnification of directors and officers under the provisions of
this article, and
(2) To indemnify directors and officers in instances in which they may be
indemnified by the corporation under the provisions of this article, and
(3) To indemnify directors and officers in instances in which they may not
otherwise be indemnified by the corporation under the provisions of this article
provided the contract of insurance covering such directors and officers
provides, in a manner acceptable to the superintendent of insurance, for a
retention amount and for co-insurance.
(b) No insurance under paragraph (a) may provide for any payment, other
than cost of defense, to or on behalf of any director or officer:
(1) if a judgment or other final adjudication adverse to the insured
director or officer establishes that his acts of active and deliberate
dishonesty were material to the cause of action so adjudicated, or that he
personally gained in fact a financial profit or other advantage to which he was
not legally entitled, or
(2) in relation to any risk the insurance of which is prohibited under the
insurance law of this state.
(c) Insurance under any or all subparagraphs of paragraph (a) may be
included in a single contract or supplement thereto. Retrospective rated
contracts are prohibited.
(d) The corporation shall, within the time and to the persons provided in
paragraph (c) of section 725 (Other provisions affecting indemnification of
directors or officers), mail a statement in respect of any insurance it has
purchased or renewed under this section, specifying the insurance carrier, date
of the contract, cost of the insurance, corporate positions insured, and a
statement explaining all sums, not previously reported in a statement to
shareholders, paid under any indemnification insurance contract.
(e) This section is the public policy of this state to spread the risk of
corporate management, notwithstanding any other general or special law of this
state or of any other jurisdiction including the federal government.
<PAGE>
EXHIBIT 99.10
PURDON'S PENNSYLVANIA STATUTES AND CONSOLIDATED STATUTES ANNOTATED
PURDON'S PENNSYLVANIA CONSOLIDATED STATUTES ANNOTATED
TITLE 15. CORPORATIONS AND UNINCORPORATED ASSOCIATIONS
PART II. CORPORATIONS
SUBPART B. BUSINESS CORPORATIONS
ARTICLE B. DOMESTIC BUSINESS CORPORATIONS GENERALLY
CHAPTER 17. OFFICERS, DIRECTORS AND SHAREHOLDERS
SUBCHAPTER D. INDEMNIFICATION
(S) 1741. Third-party actions
Unless otherwise restricted in its bylaws, a business corporation shall
have power to indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation), by reason of the fact that he is or was
a representative of the corporation, or is or was serving at the request of the
corporation as a representative of another domestic or foreign corporation for
profit or not-for-profit, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with the
action or proceeding if he acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the corporation and,
with respect to any criminal proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action or proceeding by judgment,
order, settlement or conviction or upon a plea of nolo contendere or its
equivalent shall not of itself create a presumption that the person did not act
in good faith and in a manner that he reasonably believed to be in, or not
opposed to, the best interests of the corporation and, with respect to any
criminal proceeding, had reasonable cause to believe that his conduct was
unlawful.
(S) 1742. Derivative and corporate actions
Unless otherwise restricted in its bylaws, a business corporation shall
have power to indemnify any person who was or is a party, or is threatened to be
made a party, to any threatened, pending or completed action by or in the right
of the corporation to procure a judgment in its favor by reason of the fact that
he is or was a representative of the corporation or is or was serving at the
request of the corporation as a representative of another domestic or foreign
corporation for profit or not-for-profit, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of the
action if he acted in good faith and in a manner he reasonably believed to be
in, or not opposed to, the best interests of the corporation. Indemnification
shall not be made under this section in respect of any claim, issue or matter as
to which the person has been adjudged to be liable to the corporation unless and
only to the extent that the court of common pleas of the judicial district
embracing the county in which the registered office of the corporation is
located or the court in which the action was brought determines upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, the person is fairly and reasonably entitled to indemnity for the
expenses that the court of common pleas or other court deems proper.
(S) 1743. Mandatory indemnification
To the extent that a representative of a business corporation has been
successful on the merits or otherwise in defense of any action or proceeding
referred to in section 1741 (relating to third-party actions) or 1742 (relating
to derivative and corporate actions) or in defense of any claim, issue or
<PAGE>
matter therein, he shall be indemnified against expenses (including attorney
fees) actually and reasonably incurred by him in connection therewith.
(S) 1744. Procedure for effecting indemnification
Unless ordered by a court, any indemnification under section 1741 (relating
to third-party actions) or 1742 (relating to derivative and corporate actions)
shall be made by the business corporation only as authorized in the specific
case upon a determination that indemnification of the representative is proper
in the circumstances because he has met the applicable standard of conduct set
forth in those sections. The determination shall be made:
(1) by the board of directors by a majority vote of a quorum consisting of
directors who were not parties to the action or proceeding;
(2) if such a quorum is not obtainable or if obtainable and a majority
vote of a quorum of disinterested directors so directs, by independent legal
counsel in a written opinion; or
(3) by the shareholders.
(S) 1745. Advancing expenses
Expenses (including attorneys' fees) incurred in defending any action or
proceeding referred to in this subchapter may be paid by a business corporation
in advance of the final disposition of the action or proceeding upon receipt of
an undertaking by or on behalf of the representative to repay the amount if it
is ultimately determined that he is not entitled to be indemnified by the
corporation as authorized in this subchapter or otherwise.
(S) 1746. Supplementary coverage
(a) General rule.--The indemnification and advancement of expenses
provided by, or granted pursuant to, the other sections of this subchapter shall
not be deemed exclusive of any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under any bylaw,
agreement, vote of shareholders or disinterested directors or otherwise, both as
to action in his official capacity and as to action in another capacity while
holding that office. Section 1728 (relating to interested directors or officers;
quorum) and, in the case of a registered corporation, section 2538 (relating to
approval of transactions with interested shareholders) shall be applicable to
any bylaw, contract or transaction authorized by the directors under this
section. A corporation may create a fund of any nature, which may, but need not
be, under the control of a trustee, or otherwise secure or insure in any manner
its indemnification obligations, whether arising under or pursuant to this
section or otherwise.
(b) When indemnification is not to be made.--Indemnification pursuant to
subsection (a) shall not be made in any case where the act or failure to act
giving rise to the claim for indemnification is determined by a court to have
constituted willful misconduct or recklessness. The articles may not provide for
indemnification in the case of willful misconduct or recklessness.
(c) Grounds.--Indemnification pursuant to subsection (a) under any bylaw,
agreement, vote of shareholders or directors or otherwise may be granted for any
action taken and may be made whether or not the corporation would have the power
to indemnify the person under any other provision of law except as provided in
this section and whether or not the indemnified liability arises or arose from
any threatened, pending or completed action by or in the right of the
corporation. Such indemnification is declared to be consistent with the public
policy of this Commonwealth.
(S) 1747. Power to purchase insurance
Unless otherwise restricted in its bylaws, a business corporation shall
have power to purchase and maintain insurance on behalf of any person who is or
was a representative of the corporation or is or was serving at the request of
the corporation as a representative of another domestic or foreign corporation
for
<PAGE>
profit or not-for-profit, partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the corporation
would have the power to indemnify him against that liability under the
provisions of this subchapter. Such insurance is declared to be consistent with
the public policy of this Commonwealth.
(S) 1748. Application to surviving or new corporations
For the purposes of this subchapter, references to "the corporation"
include all constituent corporations absorbed in a consolidation, merger or
division, as well as the surviving or new corporations surviving or resulting
therefrom, so that any person who is or was a representative of the constituent,
surviving or new corporation, or is or was serving at the request of the
constituent, surviving or new corporation as a representative of another
domestic or foreign corporation for profit or not-for-profit, partnership, joint
venture, trust or other enterprise, shall stand in the same position under the
provisions of this subchapter with respect to the surviving or new corporation
as he would if he had served the surviving or new corporation in the same
capacity.
(S) 1749. Application to employee benefit plans
For purposes of this subchapter:
(1) References to "other enterprises" shall include employee benefit plans
and references to "serving at the request of the corporation" shall include any
service as a representative of the business corporation that imposes duties on,
or involves services by, the representative with respect to an employee benefit
plan, its participants or beneficiaries.
(2) Excise taxes assessed on a person with respect to an employee benefit
plan pursuant to applicable law shall be deemed "fines."
(3) Action with respect to an employee benefit plan taken or omitted in
good faith by a representative of the corporation in a manner he reasonably
believed to be in the interest of the participants and beneficiaries of the plan
shall be deemed to be action in a manner that is not opposed to the best
interests of the corporation.
(S) 1750. Duration and extent of coverage
The indemnification and advancement of expenses provided by, or granted
pursuant to, this subchapter shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a representative of the
corporation and shall inure to the benefit of the heirs and personal
representative of that person.
<PAGE>
EXHIBIT 99.11
CONNECTICUT GENERAL STATUTES ANNOTATED
TITLE 33. CORPORATIONS
CHAPTER 601. BUSINESS CORPORATIONS
PART VIII. DIRECTORS AND OFFICERS
(E) INDEMNIFICATION
(S) 33-771. Permissible indemnification
(a) Except as otherwise provided in this section, a corporation may
indemnify an individual who is a party to a proceeding because he is a director
against liability incurred in the proceeding if: (1) (A) He conducted himself in
good faith; (B) he reasonably believed (i) in the case of conduct in his
official capacity, that his conduct was in the best interests of the
corporation; and (ii) in all other cases, that his conduct was at least not
opposed to the best interests of the corporation; and (C) in the case of any
criminal proceeding, he had no reasonable cause to believe his conduct was
unlawful; or (2) he engaged in conduct for which broader indemnification has
been made permissible or obligatory under a provision of the certificate of
incorporation as authorized by subdivision (5) of subsection (b) of section 33-
636.
(b) A director's conduct with respect to an employee benefit plan for a
purpose he reasonably believed to be in the interests of the participants in and
beneficiaries of the plan is conduct that satisfies the requirement of
subparagraph (ii) of subdivision (1) of subsection (a) of this section.
(c) The termination of a proceeding by judgment, order, settlement or
conviction or upon a plea of nolo contendere or its equivalent is not, of
itself, determinative that the director did not meet the relevant standard of
conduct described in this section.
(d) Unless ordered by a court under section 33-774, a corporation may not
indemnify a director under this section: (1) In connection with a proceeding by
or in the right of the corporation except for reasonable expenses incurred in
connection with the proceeding if it is determined that the director has met the
relevant standard of conduct under subsection (a) of this section; or (2) in
connection with any proceeding with respect to conduct for which he was adjudged
liable on the basis that he received a financial benefit to which he was not
entitled, whether or not involving action in his official capacity.
(e) Notwithstanding any provision of this section to the contrary, a
corporation which was incorporated under the laws of this state, whether under
chapter 599 [FN1] of the general statutes, revised to January 1, 1995, or any
other general law or special act, prior to January 1, 1997, shall, except to the
extent that the certificate of incorporation expressly provides otherwise,
indemnify under sections 33-770 to 33-779, inclusive, except subdivision (2) of
subsection (a) of this section, a director to the same extent the corporation is
permitted to provide the same to a director pursuant to subdivision (1) of
subsection (a) and subsections (b), (c) and (d) of this section as limited by
the provisions of section 33-775.
(f) Redesignated (e). (1997, P.A. 97-246, s 13, eff. June 27, 1997.)
[FN1] C.G.S.A. s 33-282 et seq.
(S) 33-772. Mandatory indemnification
A corporation shall indemnify a director who was wholly successful, on the
merits or otherwise, in the defense of any proceeding to which he was a party
because he was a director of the corporation against reasonable expenses
incurred by him in connection with the proceeding.
(S) 33-773. Advance for expenses
(a) A corporation may, before final disposition of a proceeding, advance
funds to pay for or reimburse the reasonable expenses incurred by a director who
is a party to a proceeding because he is a director if he delivers to the
corporation: (1) A written affirmation of his good faith belief that he has
<PAGE>
met the relevant standard of conduct described in section 33-771, or that the
proceeding involves conduct for which liability has been limited under a
provision of the certificate of incorporation as authorized by subdivision (4)
of subsection (b) of section 33-636; and (2) his written undertaking to repay
any funds advanced if he is not entitled to mandatory indemnification under
section 33-772 and it is ultimately determined under section 33-774 or section
33-775 that he has not met the relevant standard of conduct described in
section 33-771.
(b) The undertaking required by subdivision (2) of subsection (a) of this
section must be an unlimited general obligation of the director but need not be
secured and may be accepted without reference to the financial ability of the
director to make repayment.
(c) Authorizations under this section shall be made: (1) By the board of
directors: (A) If there are two or more disinterested directors, by a majority
vote of all the disinterested directors, a majority of whom shall for such
purpose constitute a quorum, or by a majority of the members of a committee of
two or more disinterested directors appointed by such a vote; or (B) if there
are fewer than two disinterested directors, by the vote necessary for action by
the board in accordance with section 33-752, in which authorization directors
who do not qualify as disinterested directors may participate; or (2) by the
shareholders, provided shares owned by or voted under the control of a director
who at the time does not qualify as a disinterested director may not be voted on
the authorization.
(S) 33-774. Court-ordered indemnification and advance for expenses
(a) A director who is a party to a proceeding because he is a director may
apply for indemnification or an advance for expenses to the court conducting the
proceeding or to another court of competent jurisdiction. After receipt of an
application and after giving any notice it considers necessary, the court shall:
(1) Order indemnification if it determines that the director is entitled to
mandatory indemnification under section 33-772; (2) order indemnification or
advance for expenses if the court determines that the director is entitled to
indemnification or advance for expenses pursuant to a provision authorized by
subsection (a) of section 33-778; or (3) order indemnification or advance for
expenses if the court determines, in view of all the relevant circumstances,
that it is fair and reasonable (A) to indemnify the director or (B) to advance
expenses to the director, even if he has not met the relevant standard of
conduct set forth in subsection (a) of section 33-771, failed to comply with
section 33-773 or was adjudged liable in a proceeding referred to in subdivision
(1) or (2) of subsection (d) of section 33-771, provided if he was adjudged so
liable his indemnification shall be limited to reasonable expenses incurred in
connection with the proceeding.
(b) If the court determines that the director is entitled to
indemnification under subdivision (1) of subsection (a) of this section or to
indemnification or advance for expenses under subdivision (2) of subsection (a)
of this section, it shall also order the corporation to pay the director's
reasonable expenses incurred in connection with obtaining court-ordered
indemnification or advance for expenses. If the court determines that the
director is entitled to indemnification or advance for expenses under
subdivision (3) of subsection (a) of this section, it may also order the
corporation to pay the director's reasonable expenses to obtain court-ordered
indemnification or advance for expenses.
(S) 33-775. Determination and authorization of indemnification
(a) A corporation may not indemnify a director under section 33-771 unless
authorized for a specific proceeding after a determination has been made that
indemnification of the director is permissible because he has met the relevant
standard of conduct set forth in said section.
(b) The determination shall be made:
(1) If there are two or more disinterested directors, by the board of
directors by a majority vote of all the disinterested directors, a majority of
whom shall for such purpose constitute a quorum, or by a majority of the members
of a committee of two or more disinterested directors appointed by such
<PAGE>
a vote;
(2) By special legal counsel (A) selected in the manner prescribed in
subdivision (1) of this subsection, or (B) if there are fewer than two
disinterested directors, selected by the board of directors, in which selection
directors who do not qualify as disinterested directors may participate; or
(3) By the shareholders, but shares owned by or voted under the control of
a director who at the time does not qualify as a disinterested director may not
be voted on the determination.
(4) Redesignated (3). (1997, P.A. 97-246, s 17, eff. June 27, 1997.)
(c) Authorization of indemnification shall be made in the same manner as
the determination that indemnification is permissible, except that if there are
fewer than two disinterested directors, authorization of indemnification shall
be made by those entitled under subparagraph (B) of subdivision (2) of
subsection (b) of this section to select special legal counsel.
(S) 33-776. Indemnification of and advance for expenses to officers, employees
and agents
(a) A corporation may indemnify and advance expenses under sections 33-770
to 33-779, inclusive, to an officer, employee or agent of the corporation who is
a party to a proceeding because he is an officer, employee or agent of the
corporation (1) to the same extent as a director, and (2) if he is an officer,
employee or agent but not a director, to such further extent, consistent with
public policy, as may be provided by contract, the certificate of incorporation,
the bylaws or a resolution of the board of directors. A corporation may delegate
to its general counsel or other specified officer or officers the ability under
this subsection to determine that indemnification or advance for expenses to
such officer, employee or agent is permissible and the ability to authorize
payment of such indemnification or advance for expenses. Nothing in this
subdivision shall in any way limit either the ability or the obligation of a
corporation to indemnify and advance expenses under other applicable law to any
officer, employee or agent who is not a director.
(b) The provisions of subdivision (2) of subsection (a) of this section
shall apply to an officer, employee or agent who is also a director if the basis
on which he is made a party to the proceeding is an act or omission solely as an
officer, employee or agent.
(c) An officer, employee or agent of a corporation who is not a director
is entitled to mandatory indemnification under section 33-772 and may apply to a
court under section 33-774 for indemnification or advance for expenses, in each
case to the same extent to which a director may be entitled to indemnification
or advance for expenses under said sections.
(d) A corporation which was incorporated under the laws of this state,
whether under chapter 599 [FN1] of the general statutes, revised to January 1,
1995, or any other general law or special act, prior to January 1, 1997, shall,
except to the extent that the certificate of incorporation expressly provides
otherwise, indemnify under sections 33-770 to 33-779, inclusive, except
subdivision (2) of subsection (a) of section 33-771, each officer, employee or
agent of the corporation who is not a director to the same extent as the
corporation is permitted to provide the same to a director pursuant to
subdivision (1) of subsection (a) and subsections (b), (c) and (d) of section
33-771, as limited by section 33-775, and for this purpose the determination
required by section 33-775, may in addition be made by the general counsel of
the corporation, or such other or additional officer or officers as the board of
directors may specify.
[FN1] C.G.S.A. s 33-282 et seq.
(S) 33-777. Insurance
A corporation may purchase and maintain insurance on behalf of an
individual who is a director, officer, employee or agent of the corporation, or
who, while a director, officer, employee or agent of the corporation, serves at
the corporation's request as a director, officer, partner, trustee, employee or
agent of another domestic or foreign corporation, partnership, joint venture,
<PAGE>
trust, employee benefit plan or other entity against liability asserted against
or incurred by him in that capacity or arising from his status as a director,
employee or agent, whether or not the corporation would have power to indemnify
or advance expenses to him against the same liability under sections 33-770 to
33-779, inclusive.
(S) 33-778. Variation by corporate action
(a) A corporation may, by a provision in its certificate of incorporation
or bylaws or in a resolution adopted or a contract approved by its board of
directors or shareholders, obligate itself in advance of the act or omission
giving rise to a proceeding to provide indemnification in accordance with
section 33-771, or advance funds to pay for or reimburse expenses in accordance
with section 33-773. Any such provision that obligates the corporation to
provide indemnification to the fullest extent permitted by law shall be deemed
to obligate the corporation to advance funds to pay for or reimburse expenses in
accordance with section 33-773, to the fullest extent permitted by law, unless
the provision specifically provides otherwise.
(b) Any provision pursuant to subsection (a) of this section shall not
obligate the corporation to indemnify or advance expenses to a director of a
predecessor of the corporation, pertaining to conduct with respect to the
predecessor, unless otherwise specifically provided. Any provision for
indemnification or advance for expenses in the certificate of incorporation,
bylaws or resolution of the board of directors or shareholders of a predecessor
of the corporation in a merger or in a contract to which the predecessor is a
party, existing at the time the merger takes effect, shall be governed by
subdivision (3) of subsection (a) of section 33-820.
(c) A corporation may, by a provision in its certificate of incorporation,
limit any of the rights to indemnification or advance for expenses created by
or pursuant to sections 33-770 to 33-7798, inclusive.
(d) Sections 33-770 to 33-779, inclusive, do not limit a corporation's
power to pay or reimburse expenses incurred by a director in connection with his
appearance as a witness in a proceeding at a time when he is not a party.
(S) 33-779. Exclusivity of provisions
A corporation may provide indemnification of or advance expenses to a
director, officer, employee or agent only as permitted by sections 33-770 to
33-778, inclusive.
<PAGE>
Exhibit 99.12
NEW HAMPSHIRE STATUTES ANNOTATED
TITLE XXVII. CORPORATIONS, ASSOCIATIONS, AND PROPRIETORS OF COMMON LANDS
PART E. Indemnification
(S) 293-A:8.50 Definitions.
In this subdivision:
(1) "Corporation" includes any domestic or foreign predecessor entity of a
corporation in a merger or other transaction in which the predecessor's
existence ceased upon consummation of the transaction.
(2) "Director" means an individual who is or was a director of a
corporation or an individual who, while a director of a corporation, is or
was serving at the corporation's request as a director, officer, partner,
trustee, employee, or agent of another foreign or domestic corporation,
partnership, joint venture, trust, employee benefit plan, or other
enterprise. A director is considered to be serving an employee benefit plan
at the corporation's request if his duties to the corporation also impose
duties on, or otherwise involve services by, him to the plan or to
participants in or beneficiaries of the plan. "Director" includes, unless the
context requires otherwise, the estate or personal representative of a
director.
(3) "Expenses" include counsel fees.
(4) "Liability" means the obligation to pay a judgment, settlement,
penalty, fine, including an excise tax assessed with respect to an employee
benefit plan, or reasonable expenses incurred with respect to a proceeding.
(5) "Official capacity" means:
(i) when used with respect to a director, the office of director in a
corporation; and
(ii) when used with respect to an individual other than a director, as
contemplated in RSA 293-A:8.56, the office in a corporation held by the
officer or the employment or agency relationship undertaken by the employee
or agent on behalf of the corporation. "Official capacity" does not include
service for any other foreign or domestic corporation or any partnership,
joint venture, trust, employee benefit plan, or other enterprise.
(6) "Party" includes an individual who was, is, or is threatened to be
made a named defendant or respondent in a proceeding.
(7) "Proceeding" means any threatened, pending, or completed action, suit,
or proceeding, whether civil, criminal, administrative, or investigative and
whether formal or informal.
(S) 293-A:8.51 Authority to Indemnify.
(a) Except as provided in subsection (d), a corporation may indemnify an
individual made a party to a proceeding because he is or was a director,
against liability incurred in the proceeding if:
(1) he conducted himself in good faith; and
(2) he reasonably believed:
(i) in the case of conduct in his official capacity with the
corporation, that his conduct was in its best interests; and
(ii) in all other cases, that his conduct was at least not opposed to
its best interests; and
(3) in the case of any criminal proceeding, he had no reasonable cause
to believe his conduct was unlawful.
(b) A director's conduct with respect to an employee benefit plan for a
purpose he reasonably believed to be in the interests of the participants in
and beneficiaries of the plan is conduct that satisfies the requirement of
subparagraph (a)(2)(ii).
(c) The termination of a proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent is not, of
itself, determinative that the director did not meet the standard of conduct
described in this section.
(d) A corporation may not indemnify a director under this section:
(1) in connection with a proceeding by or in the right of the
corporation in which the director was adjudged liable to the corporation; or
<PAGE>
(2) in connection with any other proceeding charging improper personal
benefit to him, whether or not involving action in his official capacity, in
which he was adjudged liable on the basis that personal benefit was
improperly received by him.
(e) Indemnification permitted under this section in connection with a
proceeding by or in the right of the corporation is limited to reasonable
expenses incurred in connection with the proceeding.
(S) 293-A:8.52 Mandatory Indemnification.
Unless limited by its articles of incorporation, a corporation shall
indemnify a director who was wholly successful, on the merits or otherwise, in
the defense of any proceeding to which he was a party because he is or was a
director of the corporation against reasonable expenses incurred by him in
connection with the proceeding.
(S) 293-A:8.53 Advance for Expenses.
(a) A corporation may pay for or reimburse the reasonable expenses
incurred by a director who is a party to a proceeding in advance of final
disposition of the proceeding if:
(1) the director furnishes the corporation a written affirmation of his
good faith belief that he has met the standard of conduct described in RSA
293-A:8.51;
(2) the director furnishes the corporation a written undertaking,
executed personally or on his behalf, to repay the advance if it is
ultimately determined that he did not meet the standard of conduct; and
(3) a determination is made that the facts then known to those making
the determination would not preclude indemnification under this subdivision.
(b) The undertaking required by subparagraph (a)(2) must be an unlimited
general obligation of the director but need not be secured and may be accepted
without reference to financial ability to make repayment.
(c) Determinations and authorizations of payments under this section shall
be made in the manner specified in RSA 293-A:8.55.
(S) 293-A:8.54 Court-Ordered Indemnification.
Unless a corporation's articles of incorporation provide otherwise, a
director of the corporation who is a party to a proceeding may apply for
indemnification to the court conducting the proceeding or to another court of
competent jurisdiction. On receipt of an application, the court after giving
any notice the court considers necessary may order indemnification if it
determines:
(1) the director is entitled to mandatory indemnification under RSA 293-
A:8.52, in which case the court shall also order the corporation to pay the
director's reasonable expenses incurred to obtain court-ordered
indemnification; or
(2) the director is fairly and reasonably entitled to indemnification in
view of all the relevant circumstances, whether or not he met the standard of
conduct set forth in RSA 293-A:8.51 or was adjudged liable as described in RSA
293-A:8.51(d), but if he was adjudged so liable his indemnification is limited
to reasonable expenses incurred.
(S) 293-A:8.55 Determination and Authorization of Indemnification.
(a) A corporation may not indemnify a director under RSA 293-A:8.51,
unless authorized in the specific case after a determination has been made that
indemnification of the director is permissible in the circumstances because he
has met the standard of conduct set forth in RSA 293-A:8.51.
(b) The determination shall be made:
(1) by the board of directors by majority vote of a quorum consisting of
directors not at the time parties to the proceeding;
(2) if a quorum cannot be obtained under subparagraph (b)(1) by majority
vote of a committee duly designated by the board of directors, in which
designation directors who are parties may participate, consisting solely of
2 or more directors not at the time parties to the proceeding;
<PAGE>
(3) by special legal counsel:
(i) selected by the board of directors or its committee in the
manner prescribed in subparagraphs (1) or (2); or
(ii) if a quorum of the board of directors cannot be obtained under
subparagraph (b)(3)(i) and a committee cannot be designated under
subparagraph (b)(2), selected by majority vote of the full board of
directors in which selection directors who are parties may participate.
(4) by the shareholders, but shares owned by or voted under the control
of directors who are at the time parties to the proceeding may not be voted
on the determination.
(c) Authorization of indemnification and evaluation as to reasonableness
of expenses shall be made in the same manner as the determination that
indemnification is permissible, except that if the determination is made by
special legal counsel, authorization of indemnification and evaluation as to
reasonableness of expenses shall be made by those entitled under subparagraph
(b)(3) to select counsel.
(S) 293-A:8.56 Indemnification of Officers, Employees, and Agents.
Unless a corporation's articles of incorporation provide otherwise:
(1) an officer of the corporation who is not a director is entitled to
mandatory indemnification under RSA 293-A:8.52, and is entitled to apply for
court-ordered indemnification under RSA 293-A:8.54, in each case to the same
extent as a director;
(2) the corporation may indemnify and advance expenses under this
subdivision to an officer, employee or agent of the corporation who is not a
director, to the same extent as to a director; and
(3) a corporation may also indemnify and advance expenses to an officer,
employee, or agent who is not a director to the extent, consistent with
public policy, that may be provided by its articles of incorporation,
bylaws, general or specific action of its board of directors, or contract.
(S) 293-A:8.57 Insurance.
A corporation may purchase and maintain insurance on behalf of an individual
who is or was a director, officer, employee, or agent of the corporation, or
who, while a director, officer, employee, or agent of the corporation, is or was
serving at the request of the corporation as a director, officer, partner,
trustee, employee, or agent of another foreign or domestic corporation,
partnership, joint venture, trust, employee benefit plan, or other enterprise,
against liability asserted against or incurred by him in that capacity or
arising from his status as a director, officer, employee, or agent, whether or
not the corporation would have power to indemnify him against the same liability
under (S) RSA 293-A:8.51 or (S) 293-A:8.52.
(S) 293-A:8.58 Application of This Subdivision.
(a) A provision treating a corporation's indemnification of or advance for
expenses to directors that is contained in its articles of incorporation,
bylaws, a resolution of its shareholders or board of directors, or in a
contract or otherwise, is valid only if and to the extent the provision is
consistent with this subdivision. If articles of incorporation limit
indemnification or advance for expenses, indemnification and advance for
expenses are valid only to the extent consistent with the articles.
(b) This subdivision does not limit a corporation's power to pay or
reimburse expenses incurred by a director in connection with his appearance as a
witness in a proceeding at a time when he has not been made a named defendant or
respondent to the proceeding.
<PAGE>
Exhibit 99.13
GENERAL STATUTES OF NORTH CAROLINA
CHAPTER 55. NORTH CAROLINA BUSINESS CORPORATION ACT.
ARTICLE 8. DIRECTORS AND OFFICERS.
PART 5. INDEMNIFICATION.
(S) 55-8-50 Policy statement and definitions.
(a) It is the public policy of this State to enable corporations organized
under this Chapter to attract and maintain responsible, qualified directors,
officers, employees and agents, and, to that end, to permit corporations
organized under this Chapter to allocate the risk of personal liability of
directors, officers, employees and agents through indemnification and insurance
as authorized in this Part.
(b) Definitions in this Part:
(1) "Corporation" includes any domestic or foreign corporation absorbed
in a merger which, if its separate existence had continued, would have
had the obligation or power to indemnify its directors, officers,
employees, or agents, so that a person who would have been entitled to
receive or request indemnification from such corporation if its
separate existence had continued shall stand in the same position under
this Part with respect to the surviving corporation.
(2) "Director" means an individual who is or was a director of a
corporation or an individual who, while a director of a corporation, is
or was serving at the corporation's request as a director, officer,
partner, trustee, employee, or agent of another foreign or domestic
corporation, partnership, joint venture, trust, employee benefit plan,
or other enterprise. A director is considered to be serving an employee
benefit plan at the corporation's request if his duties to the
corporation also impose duties on, or otherwise involve services by,
him to the plan or to participants in or beneficiaries of the plan.
"Director" includes, unless the context requires otherwise, the estate
or personal representative of a director.
(3) "Expenses" means expenses of every kind incurred in defending a
proceeding, including counsel fees.
(4) "Liability" means the obligation to pay a judgment, settlement,
penalty, fine (including an excise tax assessed with respect to an
employee benefit plan), or reasonable expenses incurred with respect to
a proceeding.
(4a) "Officer", "employee", or "agent" includes, unless the context
requires otherwise, the estate or personal representative of a person
who acted in that capacity.
(5) "Official capacity" means: (i) when used with respect to a
director, the office of director in a corporation; and (ii) when used
with respect to an individual other than a director, as contemplated in
G.S. 55-8-56, the office in a corporation held by the officer or the
employment or agency relationship undertaken by the employee or agent
on behalf of the corporation. "Official capacity" does not include
service for any other foreign or domestic corporation or any
partnership, joint venture, trust, employee benefit plan, or other
enterprise.
(6) "Party" includes an individual who was, is, or is threatened to be
made a named defendant or respondent in a proceeding.
(7) "Proceeding" means any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, or
investigative and whether formal or informal.
(S) 55-8-51 Authority to indemnify.
(a) Except as provided in subsection (d), a corporation may indemnify an
individual made a party to a proceeding because he is or was a director against
liability incurred in the proceeding if:
(1) He conducted himself in good faith; and
(2) He reasonably believed (i) in the case of conduct in his official
capacity with the corporation, that his conduct was in its best
interests;
<PAGE>
and (ii) in all other cases, that his conduct was at least not opposed
to its best interests; and
(3) In the case of any criminal proceeding, he had no reasonable cause
to believe his conduct was unlawful.
(b) A director's conduct with respect to an employee benefit plan for a
purpose he reasonably believed to be in the interests of the participants in
and beneficiaries of the plan is conduct that satisfies the requirement of
subsection (a)(2)(ii).
(c) The termination of a proceeding by judgment, order, settlement,
conviction, or upon a plea of no contest or its equivalent is not, of itself,
determinative that the director did not meet the standard of conduct described
in this section.
(d) A corporation may not indemnify a director under this section:
(1) In connection with a proceeding by or in the right of the
corporation in which the director was adjudged liable to the
corporation; or
(2) In connection with any other proceeding charging improper personal
benefit to him, whether or not involving action in his official
capacity, in which he was adjudged liable on the basis that personal
benefit was improperly received by him.
(e) Indemnification permitted under this section in connection with a
proceeding by or in the right of the corporation that is concluded without a
final adjudication on the issue of liability is limited to reasonable expenses
incurred in connection with the proceeding.
(f) The authorization, approval or favorable recommendation by the board
of directors of a corporation of indemnification, as permitted by this section,
shall not be deemed an act or corporate transaction in which a director has a
conflict of interest, and no such indemnification shall be void or voidable on
such ground.
(S) 55-8-52 Mandatory indemnification.
Unless limited by its articles of incorporation, a corporation shall
indemnify a director who was wholly successful, on the merits or otherwise, in
the defense of any proceeding to which he was a party because he is or was a
director of the corporation against reasonable expenses incurred by him in
connection with the proceeding.
(S) 55-8-53 Advance for expenses.
Expenses incurred by a director in defending a proceeding may be paid by
the corporation in advance of the final disposition of such proceeding as
authorized by the board of directors in the specific case or as authorized or
required under any provision in the articles of incorporation or bylaws or by
any applicable resolution or contract upon receipt of an undertaking by or on
behalf of the director to repay such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the corporation against such
expenses.
(S) 55-8-54 Court-ordered indemnification.
Unless a corporation's articles of incorporation provide otherwise, a
director of the corporation who is a party to a proceeding may apply for
indemnification to the court conducting the proceeding or to another court of
competent jurisdiction. On receipt of an application, the court after giving
any notice the court considers necessary may order indemnification if it
determines:
(1) The director is entitled to mandatory indemnification under G.S.
55-8-52, in which case the court shall also order the corporation to
pay the director's reasonable expenses incurred to obtain court-ordered
indemnification; or
(2) The director is fairly and reasonably entitled to indemnification
in view of all the relevant circumstances, whether or not he met the
standard of conduct set forth in G.S. 55-8-51 or was adjudged liable as
described in G.S. 55-8-51(d), but if he was adjudged so liable his
<PAGE>
indemnification is limited to reasonable expenses incurred.
(S) 55-8-55 Determination and authorization of indemnification.
(a) A corporation may not indemnify a director under G.S. 55-8-51 unless
authorized in the specific case after a determination has been made that
indemnification of the director is permissible in the circumstances because he
has met the standard of conduct set forth in G.S. 55-8-51.
(b) The determination shall be made:
(1) By the board of directors by majority vote of a quorum consisting
of directors not at the time parties to the proceeding;
(2) If a quorum cannot be obtained under subdivision (1), by majority
vote of a committee duly designated by the board of directors (in which
designation directors who are parties may participate), consisting
solely of two or more directors not at the time parties to the
proceeding;
(3) By special legal counsel (i) selected by the board of directors or
its committee in the manner prescribed in subdivision (1) or (2); or
(ii) if a quorum of the board of directors cannot be obtained under
subdivision (1) and a committee cannot be designated under subdivision
(2), selected by majority vote of the full board of directors (in which
selection directors who are parties may participate); or
(4) By the shareholders, but shares owned by or voted under the control
of directors who are at the time parties to the proceeding may not be
voted on the determination.
(c) Authorization of indemnification and evaluation as to reasonableness
of expenses shall be made in the same manner as the determination that
indemnification is permissible, except that if the determination is made by
special legal counsel, authorization of indemnification and evaluation as to
reasonableness of expenses shall be made by those entitled under subsection
(b)(3) to select counsel.
(S) 55-8-56 Indemnification of officers, employees, and agents.
Unless a corporation's articles of incorporation provide otherwise:
(1) An officer of the corporation is entitled to mandatory
indemnification under G.S. 55-8-52, and is entitled to apply for court-
ordered indemnification under G.S. 55-8-54, in each case to the same
extent as a director;
(2) The corporation may indemnify and advance expenses under this Part
to an officer, employee, or agent of the corporation to the same extent
as to a director; and
(3) A corporation may also indemnify and advance expenses to an
officer, employee, or agent who is not a director to the extent,
consistent with public policy, that may be provided by its articles of
incorporation, bylaws, general or specific action of its board of
directors, or contract.
(S) 55-8-57 Additional indemnification and insurance.
(a) In addition to and separate and apart from the indemnification
provided for in G.S. 55-8-51, 55-8-52, 55-8-54, 55-8-55 and 55-8-56, a
corporation may in its articles of incorporation or bylaws or by contract or
resolution indemnify or agree to indemnify any one or more of its directors,
officers, employees, or agents against liability and expenses in any proceeding
(including without limitation a proceeding brought by or on behalf of the
corporation itself) arising out of their status as such or their activities in
any of the foregoing capacities; provided, however, that a corporation may not
indemnify or agree to indemnify a person against liability or expenses he may
incur on account of his activities which were at the time taken known or
believed by him to be clearly in conflict with the best interests of the
corporation. A corporation may likewise and to the same extent indemnify or
agree to indemnify any person who, at the request of the corporation, is or was
serving as a director, officer, partner, trustee, employee, or agent of another
foreign or domestic corporation, partnership, joint venture, trust or other
enterprise or as a trustee or administrator under an employee benefit plan. Any
provision in any articles of incorporation,
<PAGE>
bylaw, contract, or resolution permitted under this section may include
provisions for recovery from the corporation of reasonable costs, expenses, and
attorneys' fees in connection with the enforcement of rights to indemnification
granted therein and may further include provisions establishing reasonable
procedures for determining and enforcing the rights granted therein.
(b) The authorization, adoption, approval, or favorable recommendation by
the board of directors of a public corporation of any provision in any articles
of incorporation, bylaw, contract or resolution, as permitted in this section,
shall not be deemed an act or corporate transaction in which a director has a
conflict of interest, and no such articles of incorporation or bylaw provision
or contract or resolution shall be void or voidable on such grounds. The
authorization, adoption, approval, or favorable recommendation by the board of
directors of a nonpublic corporation of any provision in any articles of
incorporation, bylaw, contract or resolution, as permitted in this section,
which occurred prior to July 1, 1990, shall not be deemed an act or corporate
transaction in which a director has a conflict of interest, and no such articles
of incorporation, bylaw provision, contract or resolution shall be void or
voidable on such grounds. Except as permitted in G.S. 55-8-31, no such bylaw,
contract, or resolution not adopted, authorized, approved or ratified by
shareholders shall be effective as to claims made or liabilities asserted
against any director prior to its adoption, authorization, or approval by the
board of directors.
(c) A corporation may purchase and maintain insurance on behalf of an
individual who is or was a director, officer, employee, or agent of the
corporation, or who, while a director, officer, employee, or agent of the
corporation, is or was serving at the request of the corporation as a director,
officer, partner, trustee, employee, or agent of another foreign or domestic
corporation, partnership, joint venture, trust, employee benefit plan, or other
enterprise, against liability asserted against or incurred by him in that
capacity or arising from his status as a director, officer, employee, or agent,
whether or not the corporation would have power to indemnify him against the
same liability under any provision of this Chapter.
(S) 55-8-58 Application of Part.
(a) If articles of incorporation limit indemnification or advance for
expenses, indemnification and advance for expenses are valid only to the extent
consistent with the articles.
(b) This Part does not limit a corporation's power to pay or reimburse
expenses incurred by a director in connection with his appearance as a witness
in a proceeding at a time when he has not been made a named defendant or
respondent to the proceeding.
(c) This Part shall not affect rights or liabilities arising out of acts
or omissions occurring before July 1, 1990.
<PAGE>
Exhibit 99.14
ANNOTATED CODE OF MARYLAND
CORPORATIONS AND ASSOCIATIONS.
TITLE 2. CORPORATIONS IN GENERAL -- FORMATION, ORGANIZATION, AND OPERATION.
Subtitle 4. Directors and Officers.
(S) 2-418 Indemnification of directors, officers, employees and agents.
(a) Definitions. -- In this section the following words have the meanings
indicated.
(1) "Director" means any person who is or was a director of a
corporation and any person who, while a director of a corporation, is or was
serving at the request of the corporation as a director, officer, partner,
trustee, employee, or agent of another foreign or domestic corporation,
partnership, joint venture, trust, other enterprise, or employee benefit plan.
(2) "Corporation" includes any domestic or foreign predecessor entity
of a corporation in a merger, consolidation, or other transaction in which the
predecessor's existence ceased upon consummation of the transaction.
(3) "Expenses" include attorney's fees.
(4) "Official capacity" means the following:
(i) When used with respect to a director, the office of director in
the corporation; and
(ii) When used with respect to a person other than a director as
contemplated in subsection (j), the elective or appointive office in the
corporation held by the officer, or the employment or agency relationship
undertaken by the employee or agent in behalf of the corporation.
(iii) "Official capacity" does not include service for any other
foreign or domestic corporation or any partnership, joint venture, trust, other
enterprise, or employee benefit plan.
(5) "Party" includes a person who was, is, or is threatened to be made a
named defendant or respondent in a proceeding.
(6) "Proceeding" means any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative, or investigative.
(b) Permitted indemnification of director. -- (1) A corporation may
indemnify any director made a party to any proceeding by reason of service in
that capacity unless it is established that:
(i) The act or omission of the director was material to the matter
giving rise to the proceeding; and
1. Was committed in bad faith; or
2. Was the result of active and deliberate dishonesty; or
(ii) The director actually received an improper personal benefit in
money, property, or services; or
(iii) In the case of any criminal proceeding, the director had
reasonable cause to believe that the act or omission was unlawful.
(2) (i) Indemnification may be against judgments, penalties, fines,
settlements, and reasonable expenses actually incurred by the director in
connection with the proceeding.
(ii) However, if the proceeding was one by or in the right of the
corporation, indemnification may not be made in respect of any proceeding in
which the director shall have been adjudged to be liable to the corporation.
(3) (i) The termination of any proceeding by judgment, order, or
settlement does not create a presumption that the director did not meet the
requisite standard of conduct set forth in this subsection.
(ii) The termination of any proceeding by conviction, or a plea of
nolo contendere or its equivalent, or an entry of an order of probation prior to
judgment, creates a rebuttable presumption that the director did not meet that
standard of conduct.
(c) No indemnification of director liable for improper personal
benefit. -- A director may not be indemnified under subsection (b) of this
section in respect of any proceeding charging improper personal benefit to the
director, whether or not involving action in the director's official capacity,
in which the director was adjudged to be liable on the basis that personal
benefit was improperly received.
(d) Required indemnification against expenses incurred in successful
<PAGE>
defense. -- Unless limited by the charter:
(1) A director who has been successful, on the merits or otherwise, in
the defense of any proceeding referred to in subsection (b) of this section
shall be indemnified against reasonable expenses incurred by the director in
connection with the proceeding.
(2) A court of appropriate jurisdiction, upon application of a director
and such notice as the court shall require, may order indemnification in the
following circumstances:
(i) If it determines a director is entitled to reimbursement under
paragraph (1) of this subsection, the court shall order indemnification, in
which case the director shall be entitled to recover the expenses of securing
such reimbursement; or
(ii) If it determines that the director is fairly and reasonably
entitled to indemnification in view of all the relevant circumstances, whether
or not the director has met the standards of conduct set forth in subsection (b)
of this section or has been adjudged liable under the circumstances described in
subsection (c) of this section, the court may order such indemnification as the
court shall deem proper. However, indemnification with respect to any proceeding
by or in the right of the corporation or in which liability shall have been
adjudged in the circumstances described in subsection (c) shall be limited to
expenses.
(3) A court of appropriate jurisdiction may be the same court in which
the proceeding involving the director's liability took place.
(e) Determination that indemnification is proper. -- (1)
Indemnification under subsection (b) of this section may not be made by the
corporation unless authorized for a specific proceeding after a determination
has been made that indemnification of the director is permissible in the
circumstances because the director has met the standard of conduct set forth in
subsection (b) of this section.
(2) Such determination shall be made:
(i) By the board of directors by a majority vote of a quorum
consisting of directors not, at the time, parties to the proceeding, or, if such
a quorum cannot be obtained, then by a majority vote of a committee of the board
consisting solely of two or more directors not, at the time, parties to such
proceeding and who were duly designated to act in the matter by a majority vote
of the full board in which the designated directors who are parties may
participate;
(ii) By special legal counsel selected by the board of directors or a
committee of the board by vote as set forth in subparagraph (i) of this
paragraph, or, if the requisite quorum of the full board cannot be obtained
therefor and the committee cannot be established, by a majority vote of the
full board in which directors who are parties may participate; or
(iii) By the stockholders.
(3) Authorization of indemnification and determination as to
reasonableness of expenses shall be made in the same manner as the determination
that indemnification is permissible. However, if the determination that
indemnification is permissible is made by special legal counsel, authorization
of indemnification and determination as to reasonableness of expenses shall be
made in the manner specified in subparagraph (ii) of paragraph (2) of this
subsection for selection of such counsel.
(4) Shares held by directors who are parties to the proceeding may not
be voted on the subject matter under this subsection.
(f) Payment of expenses in advance of final disposition of action. -- (1)
Reasonable expenses incurred by a director who is a party to a proceeding may
be paid or reimbursed by the corporation in advance of the final disposition of
the proceeding upon receipt by the corporation of:
(i) A written affirmation by the director of the director's good
faith belief that the standard of conduct necessary for indemnification by the
corporation as authorized in this section has been met; and
(ii) A written undertaking by or on behalf of the director to repay
the amount if it shall ultimately be determined that the standard of conduct has
not been met.
(2) The undertaking required by subparagraph (ii) of paragraph (1) of
this subsection shall be an unlimited general obligation of the director but
need not be secured and may be accepted without reference to financial ability
to make the repayment.
(3) Payments under this subsection shall be made as provided by the
charter,
<PAGE>
bylaws, or contract or as specified in subsection (e) of this section.
(g) Validity of indemnification provision. -- The indemnification and
advancement of expenses provided or authorized by this section may not be
deemed exclusive of any other rights, by indemnification or otherwise, to which
a director may be entitled under the charter, the bylaws, a resolution of
stockholders or directors, an agreement or otherwise, both as to action in an
official capacity and as to action in another capacity while holding such
office.
(h) Reimbursement of director's expenses incurred while appearing as
witness. -- This section does not limit the corporation's power to pay or
reimburse expenses incurred by a director in connection with an appearance as a
witness in a proceeding at a time when the director has not been made a named
defendant or respondent in the proceeding.
(i) Director's service to employee benefit plan. -- For purposes of this
section:
(1) The corporation shall be deemed to have requested a director to serve an
employee benefit plan where the performance of the director's duties to the
corporation also imposes duties on, or otherwise involves services by, the
director to the plan or participants or beneficiaries of the plan;
(2) Excise taxes assessed on a director with respect to an employee benefit
plan pursuant to applicable law shall be deemed fines; and
(3) Action taken or omitted by the director with respect to an employee
benefit plan in the performance of the director's duties for a purpose
reasonably believed by the director to be in the interest of the participants
and beneficiaries of the plan shall be deemed to be for a purpose which is not
opposed to the best interests of the corporation.
(j) Officer, employee or agent. -- Unless limited by the charter:
(1) An officer of the corporation shall be indemnified as and to the extent
provided in subsection (d) of this section for a director and shall be
entitled, to the same extent as a director, to seek indemnification pursuant to
the provisions of subsection (d);
(2) A corporation may indemnify and advance expenses to an officer,
employee, or agent of the corporation to the same extent that it may indemnify
directors under this section; and
(3) A corporation, in addition, may indemnify and advance expenses to an
officer, employee, or agent who is not a director to such further extent,
consistent with law, as may be provided by its charter, bylaws, general or
specific action of its board of directors, or contract.
(k) Insurance or similar protection. -- (1) A corporation may purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee, or agent of the corporation, or who, while a director, officer,
employee, or agent of the corporation, is or was serving at the request of the
corporation as a director, officer, partner, trustee, employee, or agent of
another foreign or domestic corporation, partnership, joint venture, trust,
other enterprise, or employee benefit plan against any liability asserted
against and incurred by such person in any such capacity or arising out of such
person's position, whether or not the corporation would have the power to
indemnify against liability under the provisions of this section.
(2) A corporation may provide similar protection, including a trust fund,
letter of credit, or surety bond, not inconsistent with this section.
(3) The insurance or similar protection may be provided by a subsidiary or
an affiliate of the corporation.
(l) Report of indemnification to stockholders. -- Any indemnification of, or
advance of expenses to, a director in accordance with this section, if arising
out of a proceeding by or in the right of the corporation, shall be reported in
writing to the stockholders with the notice of the next stockholders' meeting
or prior to the meeting.
<PAGE>
Exhibit 99.15
WEST'S SMITH-HURD ILLINOIS COMPILED STATUTES ANNOTATED
CHAPTER 805. BUSINESS ORGANIZATIONS
CORPORATIONS
ACT 5. BUSINESS CORPORATION ACT OF 1983
ARTICLE 8. DIRECTORS AND OFFICERS
5/8.75. Indemnification of officers, directors, employees and agents--
Insurance
(S) 8.75. Indemnification of officers, directors, employees and agents;
insurance. (a) A corporation may indemnify any person who was or is a party,
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he or she is or was a director, officer, employee or
agent of the corporation, or who 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 expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such action,
suit or proceeding, if such person acted in good faith and in a manner he or
she reasonably believed to be in, or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. The termination
of any action, suit or proceeding by judgment, order, settlement, conviction,
or upon a plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good faith and in a manner
which he or she reasonably believed to be in or not opposed to the best
interests of the corporation or, with respect to any criminal action or
proceeding, that the person had reasonable cause to believe that his or her
conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party, or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor
by reason of the fact that such person 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 expenses
(including attorneys' fees) actually and reasonably incurred by such person in
connection with the defense or settlement of such action or suit, if such
person acted in good faith and in a manner he or she reasonably believed to be
in, or not opposed to, the best interests of the corporation, provided that no
indemnification shall be made with respect to any claim, issue, or matter as to
which such person has been adjudged to have been liable to the corporation,
unless, and only to the extent that the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability, but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses as the court
shall deem proper.
(c) To the extent that a director, officer, employee or agent of a corporation
has been successful, on the merits or otherwise, in the defense of any action,
suit or proceeding referred to in subsections (a) and (b), or in defense of any
claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection therewith.
(d) Any indemnification under subsections (a) and (b) (unless ordered by a
court) shall be made by the corporation only as authorized in the specific
case, upon a determination that indemnification of the director, officer,
employee or agent is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in subsections (a) or (b). Such
determination shall be made (1) by the board of directors by a majority vote of
a quorum consisting of directors who were not parties to such action, suit or
proceeding, or (2) if such a quorum is not obtainable, or, even if obtainable,
<PAGE>
if a quorum of disinterested directors so directs, by independent legal counsel
in a written opinion, or (3) by the shareholders.
(e) Expenses incurred in defending a civil or criminal action, suit or
proceeding may be paid by the corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of the director, officer, employee or agent to repay such amount if it
shall ultimately be determined that he or she is not entitled to be indemnified
by the corporation as authorized in this Section.
(f) The indemnification and advancement of expenses provided by or granted
under the other subsections of this Section shall not be deemed exclusive of
any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any by-law, agreement, vote of shareholders or
disinterested directors, or otherwise, both as to action in his or her official
capacity and as to action in another capacity while holding such office.
(g) A corporation may purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee or agent of the corporation, or who
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against any liability asserted against such person and
incurred by such person in any such capacity, or arising out of his or her
status as such, whether or not the corporation would have the power to
indemnify such person against such liability under the provisions of this
Section.
(h) If a corporation has paid indemnity or has advanced expenses to a
director, officer, employee or agent, the corporation shall report the
indemnification or advance in writing to the shareholders with or before the
notice of the next shareholders meeting.
(i) For purposes of this Section, references to "the corporation" shall
include, in addition to the surviving corporation, any merging corporation
(including any corporation having merged with a merging corporation) absorbed
in a merger which, if its separate existence had continued, would have had the
power and authority to indemnify its directors, officers, and employees or
agents, so that any person who was a director, officer, employee or agent of
such merging corporation, or was serving at the request of such merging
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under the provisions of this Section with respect to the surviving
corporation as such person would have with respect to such merging corporation
if its separate existence had continued.
(j) For purposes of this Section, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by such director, officer, employee, or
agent with respect to an employee benefit plan, its participants, or
beneficiaries. A person who acted in good faith and in a manner he or she
reasonably believed to be in the best interests of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interest of the corporation" as referred to in
this Section.
(k) The indemnification and advancement of expenses provided by or granted
under this Section shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee, or agent and shall inure to the benefit of the heirs, executors, and
administrators of that person.
<PAGE>
Exhibit 99.16
1998 OREGON REVISED STATUTES
TITLE 7. CORPORATIONS AND PARTNERSHIPS
CHAPTER 60. PRIVATE CORPORATIONS
INCORPORATION
60.047. Articles of incorporation.
(1) The articles of incorporation shall set forth:
(a) A corporate name for the corporation that satisfies the requirements of
ORS 60.094;
(b) The number of shares the corporation is authorized to issue;
(c) The address, including street and number, and mailing address, if
different, of the corporation's initial registered office and the name of its
initial registered agent at that office;
(d) The name and address of each incorporator; and
(e) A mailing address to which notices, as required by this chapter, may be
mailed until an address has been designated by the corporation in its annual
report.
(2) The articles of incorporation may set forth:
(a) The names of the initial directors;
(b) The addresses of the initial directors;
(c) Provisions regarding:
(A) The purpose or purposes for which the corporation is organized;
(B) Managing the business and regulating the affairs of the corporation;
(C) Defining, limiting and regulating the powers of the corporation, its
board of directors and shareholders; and
(D) A par value for authorized shares or classes of shares;
(d) A provision eliminating or limiting the personal liability of a director
to the corporation or its shareholders for monetary damages for conduct as a
director, provided that no such provision shall eliminate or limit the
liability of a director for any act or omission occurring prior to the date
when such provision becomes effective and such provision shall not eliminate or
limit the liability of a director for:
(A) Any breach of the director's duty of loyalty to the corporation or its
shareholders;
(B) Acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
(C) Any unlawful distribution under ORS 60.367; or
(D) Any transaction from which the director derived an improper personal
benefit; and
(e) Any provision that under this chapter is required or permitted to be set
forth in the bylaws.
(3) The articles of incorporation need not set forth any of the corporate
powers enumerated in this chapter.
1998 OREGON REVISED STATUTES
TITLE 7. CORPORATIONS AND PARTNERSHIPS
CHAPTER 60. PRIVATE CORPORATIONS
DIRECTORS AND OFFICERS
(STANDARDS OF CONDUCT)
60.367. Liability for unlawful distributions.
(1) Unless the director complies with the applicable standards of conduct
described in ORS 60.357, a director who votes for or assents to a
distribution made in violation of this chapter or the articles of incorporation
is personally liable to the corporation for the amount of the distribution that
exceeds what could have been distributed without violating this chapter or the
articles of incorporation.
(2) A director held liable for an unlawful distribution under subsection (1)
<PAGE>
of this section is entitled to contribution:
(a) From every other director who voted for or assented to the distribution
without complying with the applicable standards of conduct described in ORS
60.357; and
(b) From each shareholder for the amount the shareholder accepted knowing the
distribution was made in violation of this chapter or the articles of
incorporation.
1998 OREGON REVISED STATUTES
TITLE 7. CORPORATIONS AND PARTNERSHIPS
CHAPTER 60. PRIVATE CORPORATIONS
DIRECTORS AND OFFICERS
(INDEMNIFICATION)
60.387. Definitions for 60.387 to 60.414.
As used in ORS 60.387 to 60.414:
(1) "Corporation" includes any domestic or foreign predecessor entity of a
corporation in a merger or other transaction in which the predecessor's
existence ceased upon consummation of the transaction.
(2) "Director" means an individual who is or was a director of a corporation
or an individual who, while a director of a corporation, is or was serving at
the corporation's request as a director, officer, partner, trustee, employee or
agent of another foreign or domestic corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise. A director is considered to
be serving an employee benefit plan at the corporation's request if the
director's duties to the corporation also impose duties on or otherwise involve
services by the director to the plan or to participants in or beneficiaries of
the plan. "Director" includes, unless the context requires otherwise, the
estate or personal representative of a director.
(3) "Expenses" include counsel fees.
(4) "Liability" means the obligation to pay a judgment, settlement, penalty,
fine, including an excise tax assessed with respect to an employee benefit plan
or reasonable expenses incurred with respect to a proceeding.
(5) "Officer" means an individual who is or was an officer of a corporation
or an individual who, while an officer of a corporation, is or was serving at
the corporation's request as a director, officer, partner, trustee, employee or
agent of another foreign or domestic corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise. An officer is considered to
be serving an employee benefit plan at the corporation's request if the
officer's duties to the corporation also impose duties on or include services
by the officer to the employee benefit plan or to participants in or
beneficiaries of the plan. "Officer" includes, unless the context requires
otherwise, the estate or personal representative of an officer.
(6) "Party" includes an individual who was, is or is threatened to be made a
named defendant or respondent in a proceeding.
(7) "Proceeding" means any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative and
whether formal or informal.
60.391. Authority to indemnify directors.
(1) Except as provided in subsection (4) of this section, a corporation may
indemnify an individual made a party to a proceeding because the individual is
or was a director against liability incurred in the proceeding if:
(a) The conduct of the individual was in good faith;
(b) The individual reasonably believed that the individual's conduct was in
the best interests of the corporation, or at least not opposed to its best
interests; and
(c) In the case of any criminal proceeding, the individual had no reasonable
cause to believe the individual's conduct was unlawful.
(2) A director's conduct with respect to an employee benefit plan for a
purpose the director reasonably believed to be in the interests of the
participants in and beneficiaries of the plan is conduct that satisfies the
<PAGE>
requirement of subsection (1)(b) of this section.
(3) The termination of a proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent is not, of
itself, determinative that the director did not meet the standard of conduct
described in this section.
(4) A corporation may not indemnify a director under this section:
(a) In connection with a proceeding by or in the right of the corporation in
which the director was adjudged liable to the corporation; or
(b) In connection with any other proceeding charging improper personal
benefit to the director in which the director was adjudged liable on the basis
that personal benefit was improperly received by the director.
(5) Indemnification permitted under this section in connection with a
proceeding by or in the right of the corporation is limited to reasonable
expenses incurred in connection with the proceeding.
60.394. Mandatory indemnification.
Unless limited by its articles of incorporation, a corporation shall
indemnify a director who was wholly successful, on the merits or otherwise, in
the defense of any proceeding to which the director was a party because of
being a director of the corporation against reasonable expenses incurred by the
director in connection with the proceeding.
60.397. Advance for expenses.
(1) A corporation may pay for or reimburse the reasonable expenses incurred
by a director who is a party to a proceeding in advance of final disposition of
the proceeding if:
(a) The director furnishes the corporation a written affirmation of the
director's good faith belief that the director has met the standard of conduct
described in ORS 60.391; and
(b) The director furnishes the corporation a written undertaking, executed
personally or on the director's behalf, to repay the advance if it is
ultimately determined that the director did not meet the standard of conduct.
(2) The undertaking required by subsection (1)(b) of this section must be an
unlimited general obligation of the director but need not be secured and may be
accepted without reference to financial ability to make repayment.
(3) Any authorization of payments under this section may be made by provision
in the articles of incorporation, or bylaws, by a resolution of the
shareholders or board of directors or by contract.
60.401. Court-ordered indemnification.
Unless the corporation's articles of incorporation provide otherwise, a
director of the corporation who is a party to a proceeding may apply for
indemnification to the court conducting the proceeding or to another court of
competent jurisdiction. On receipt of an application, the court after giving
any notice the court considers necessary may order indemnification if it
determines:
(1) The director is entitled to mandatory indemnification under ORS
60.394, in which case the court shall also order the corporation to pay the
director's reasonable expenses incurred to obtain court-ordered
indemnification; or
(2) The director is fairly and reasonably entitled to indemnification in view
of all the relevant circumstances, whether or not the director met the standard
of conduct set forth in ORS 60.391 or was adjudged liable as described in
ORS 60.391 (4), whether the liability is based on a judgment, settlement or
proposed settlement or otherwise.
60.404. Determination and authorization of indemnification.
(1) A corporation may not indemnify a director under ORS 60.391 unless
authorized in the specific case after a determination has been made that
<PAGE>
indemnification of the director is permissible in the circumstances because the
director has met the standard of conduct set forth in ORS 60.391.
(2) A determination that indemnification of a director is permissible shall
be made:
(a) By the board of directors by majority vote of a quorum consisting of
directors not at the time parties to the proceeding;
(b) If a quorum cannot be obtained under paragraph (a) of this subsection, by
a majority vote of a committee duly designated by the board of directors
consisting solely of two or more directors not at the time parties to the
proceeding. However, directors who are parties to the proceeding may
participate in designation of the committee;
(c) By special legal counsel selected by the board of directors or its
committee in the manner prescribed in paragraph (a) or (b) of this subsection
or, if a quorum of the board of directors cannot be obtained under paragraph
(a) of this subsection and a committee cannot be designated under paragraph (b)
of this subsection, the special legal counsel shall be selected by majority
vote of the full board of directors, including directors who are parties to the
proceeding; or
(d) By the shareholders.
(3) Authorization of indemnification and evaluation as to reasonableness of
expenses shall be made in the same manner as the determination that
indemnification is permissible, except that if the determination is made by
special legal counsel, authorization of indemnification and evaluation as to
reasonableness of expenses shall be made by those entitled under subsection
(2)(c) of this section to select counsel.
60.407. Indemnification of officers, employees and agents.
Unless a corporation's articles of incorporation provide otherwise:
(1) An officer of the corporation is entitled to mandatory indemnification
under ORS 60.394, and is entitled to apply for court-ordered indemnification
under ORS 60.401, in each case to the same extent as a director under ORS
60.394 and 60.401.
(2) The corporation may indemnify and advance expenses under ORS 60.387
to 60.411 to an officer, employee or agent of the corporation to the same
extent as to a director.
60.411. Insurance.
A corporation may purchase and maintain insurance on behalf of an individual
against liability asserted against or incurred by the individual who is or was
a director, officer, employee or agent of the corporation or who, while a
director, officer, employee or agent of the corporation, is or was serving at
the request of the corporation as a director, officer, partner, trustee,
employee or agent of another foreign or domestic corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise. The
corporation may purchase and maintain the insurance even if the corporation has
no power to indemnify the individual against the same liability under ORS
60.391 or 60.394.
60.414. Application of ORS 60.387 to 60.411.
(1) The indemnification and provisions for advancement of expenses provided
by ORS 60.387 to 60.411 shall not be deemed exclusive of any other rights
to which directors, officers, employees or agents may be entitled under the
corporation's articles of incorporation or bylaws, any agreement, general or
specific action of its board of directors, vote of shareholders or otherwise,
and shall continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person. Specifically and not by way of limitation, a
corporation shall have the power to make or agree to make any further
indemnification, including advancement of expenses, of:
(a) Any director as authorized by the articles of incorporation, any bylaws
approved, adopted or ratified by the shareholders or any resolution or
<PAGE>
agreement approved, adopted or ratified, before or after such indemnification
or agreement is made, by the shareholders, provided that no such
indemnification shall indemnify any director from or on account of acts or
omissions for which liability could not be eliminated under ORS 60.047
(2)(d); and
(b) Any officer, employee or agent who is not a director as authorized by its
articles of incorporation or bylaws, general or specific action of its board of
directors or agreement. Unless the articles of incorporation, or any such
bylaws, agreement or resolution provide otherwise, any determination as to any
further indemnity under this paragraph shall be made in accordance with ORS
60.404.
(2) If articles of incorporation limit indemnification or advance of
expenses, any indemnification and advance of expenses are valid only to the
extent consistent with the articles of incorporation.
(3) ORS 60.387 to 60.411 does not limit a corporation's power to pay or
reimburse expenses incurred by a director in connection with the director's
appearance as a witness in a proceeding at a time when the director has not
been made a named defendant or respondent to a proceeding.
<PAGE>
Exhibit 99.17
CODE OF VIRGINIA
TITLE 13.1. CORPORATIONS.
CHAPTER 9. VIRGINIA STOCK CORPORATION ACT.
ARTICLE 10. INDEMNIFICATION.
(S) 13.1-692 Liability for unlawful distributions.
A. Unless he complies with the applicable standards of conduct described in
s 13.1-690, a director who votes for or assents to a distribution made in
violation of this chapter or the articles of incorporation is personally liable
to the corporation and its creditors for the amount of the distribution that
exceeds what could have been distributed without violating this chapter or the
articles of incorporation.
B. A director held liable for an unlawful distribution under subsection A of
this section is entitled to contribution:
1. From every other director who voted for or assented to the distribution
without complying with the applicable standards of conduct described in
s 13.1-690; and
2. From the shareholders who received the unlawful distribution in proportion
to the amounts of such unlawful distribution received by them respectively.
C. No suit shall be brought against any director for any liability imposed by
this section except within two years after the right of action shall accrue.
(S) 13.1-692.1 Limitation on liability of officers and directors; exception.
A. In any proceeding brought by or in the right of a corporation or brought
by or on behalf of shareholders of the corporation, the damages assessed
against an officer or director arising out of a single transaction, occurrence
or course of conduct shall not exceed the lesser of:
1. The monetary amount, including the elimination of liability, specified in
the articles of incorporation or, if approved by the shareholders, in the
bylaws as a limitation on or elimination of the liability of the officer or
director; or
2. The greater of (i) $100,000 or (ii) the amount of cash compensation
received by the officer or director from the corporation during the twelve
months immediately preceding the act or omission for which liability was
imposed.
B. The liability of an officer or director shall not be limited as provided
in this section if the officer or director engaged in willful misconduct or a
knowing violation of the criminal law or of any federal or state securities
law, including, without limitation, any claim of unlawful insider trading or
manipulation of the market for any security.
C. No limitation on or elimination of liability adopted pursuant to this
section may be affected by any amendment of the articles of incorporation or
bylaws with respect to any act or omission occurring before such amendment.
(S) 13.1-696 Definitions.
In this article:
"Corporation" includes any domestic or foreign predecessor entity of a
corporation in a merger or other transaction in which the predecessor's
existence ceased upon consummation of the transaction.
"Director" means an individual who is or was a director of a corporation or
an individual who, while a director of a corporation, is or was serving at the
corporation's request as a director, officer, partner, trustee, employee, or
agent of another foreign or domestic corporation, partnership, joint venture,
trust, employee benefit plan, or other enterprise. A director is considered to
be serving an employee benefit plan at the corporation's request if his duties
to the corporation also impose duties on, or otherwise involve services by, him
to the plan or to participants in or beneficiaries of the plan. "Director"
includes, unless the context requires otherwise, the estate or personal
<PAGE>
representative of a director.
"Expenses" includes counsel fees.
"Liability" means the obligation to pay a judgment, settlement, penalty,
fine, including any excise tax assessed with respect to an employee benefit
plan, or reasonable expenses incurred with respect to a proceeding.
"Official capacity" means, (i) when used with respect to a director, the
office of director in a corporation; or (ii) when used with respect to an
individual other than a director, as contemplated in s 13.1-702, the office
in a corporation held by the officer or the employment or agency relationship
undertaken by the employee or agent on behalf of the corporation. "Official
capacity" does not include service for any other foreign or domestic
corporation or any partnership, joint venture, trust, employee benefit plan, or
other enterprise.
"Party" includes an individual who was, is, or is threatened to be made a
named defendant or respondent in a proceeding.
"Proceeding" means any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative or investigative and
whether formal or informal.
(S) 13.1-697 Authority to indemnify.
A. Except as provided in subsection D of this section, a corporation may
indemnify an individual made a party to a proceeding because he is or was a
director against liability incurred in the proceeding if:
1. He conducted himself in good faith; and
2. He believed:
a. In the case of conduct in his official capacity with the corporation, that
his conduct was in its best interests; and
b. In all other cases, that his conduct was at least not opposed to its best
interests; and
3. In the case of any criminal proceeding, he had no reasonable cause to
believe his conduct was unlawful.
B. A director's conduct with respect to an employee benefit plan for a
purpose he believed to be in the interests of the participants in and
beneficiaries of the plan is conduct that satisfies the requirement of
subdivision 2 b of subsection A of this section.
C. The termination of a proceeding by judgment, order, settlement or
conviction is not, of itself, determinative that the director did not meet the
standard of conduct described in this section.
D. A corporation may not indemnify a director under this section:
1. In connection with a proceeding by or in the right of the corporation in
which the director was adjudged liable to the corporation; or
2. In connection with any other proceeding charging improper personal benefit
to him, whether or not involving action in his official capacity, in which he
was adjudged liable on the basis that personal benefit was improperly received
by him.
E. Indemnification permitted under this section in connection with a
proceeding by or in the right of the corporation is limited to reasonable
expenses incurred in connection with the proceeding.
(S) 13.1-698 Mandatory indemnification.
Unless limited by its articles of incorporation, a corporation shall
indemnify a director who entirely prevails in the defense of any proceeding to
which he was a party because he is or was a director of the corporation against
reasonable expenses incurred by him in connection with the proceeding.
(S) 13.1-699 Advance for expenses.
A. A corporation may pay for or reimburse the reasonable expenses incurred by
a director who is a party to a proceeding in advance of final disposition of
the proceeding if:
1. The director furnishes the corporation a written statement of his good
faith belief that he has met the standard of conduct described in s 13.1-
<PAGE>
697;
2. The director furnishes the corporation a written undertaking, executed
personally or on his behalf, to repay the advance if it is ultimately
determined that he did not meet the standard of conduct; and
3. A determination is made that the facts then known to those making the
determination would not preclude indemnification under this article.
B. The undertaking required by subdivision 2 of subsection A of this
section shall be an unlimited general obligation of the director but need not be
secured and may be accepted without reference to financial ability to make
repayment.
C. Determinations and authorizations of payments under this section shall
be made in the manner specified in s 13.1-701.
(S) 13.1-700.1 Court orders for advances, reimbursement or indemnification.
A. An individual who is made a party to a proceeding because he is or was a
director of a corporation may apply to a court for an order directing the
corporation to make advances or reimbursement for expenses or to provide
indemnification. Such application may be made to the court conducting the
proceeding or to another court of competent jurisdiction.
B. The court shall order the corporation to make advances and/or
reimbursement for expenses or to provide indemnification if it determines that
the director is entitled to such advances, reimbursement or indemnification and
shall also order the corporation to pay the director's reasonable expenses
incurred to obtain the order.
C. With respect to a proceeding by or in the right of the corporation, the
court may (i) order indemnification of the director to the extent of his
reasonable expenses if it determines that, considering all the relevant
circumstances, the director is entitled to indemnification even though he was
adjudged liable to the corporation and (ii) also order the corporation to pay
the director's reasonable expenses incurred to obtain the order of
indemnification.
D. Neither (i) the failure of the corporation, including its board of
directors, its independent legal counsel and its shareholders, to have made an
independent determination prior to the commencement of any action permitted by
this section that the applying director is entitled to receive advances and/or
reimbursement nor (ii) the determination by the corporation, including its
board of directors, its independent legal counsel and its shareholders, that
the applying director is not entitled to receive advances and/or reimbursement
or indemnification shall create a presumption to that effect or otherwise of
itself be a defense to that director's application for advances for expenses,
reimbursement or indemnification.
(S) 13.1-701 Determination and authorization of indemnification.
A. A corporation may not indemnify a director under s 13.1-697 unless
authorized in the specific case after a determination has been made that
indemnification of the director is permissible in the circumstances because he
has met the standard of conduct set forth in s 13.1-697.
B. The determination shall be made:
1. By the board of directors by a majority vote of a quorum consisting of
directors not at the time parties to the proceeding;
2. If a quorum cannot be obtained under subdivision 1 of this subsection,
by majority vote of a committee duly designated by the board of directors (in
which designation directors who are parties may participate), consisting solely
of two or more directors not at the time parties to the proceeding;
3. By special legal counsel:
a. Selected by the board of directors or its committee in the manner
prescribed in subdivisions 1 and 2 of this subsection; or
b. If a quorum of the board of directors cannot be obtained under
subdivision 1 of this subsection and a committee cannot be designated under
subdivision 2 of this subsection, selected by majority vote of the full board of
directors, in which selection directors who are parties may participate; or
4. By the shareholders, but shares owned by or voted under the control of
directors who are at the time parties to the proceeding may not be voted on the
determination.
<PAGE>
C. Authorization of indemnification and evaluation as to reasonableness of
expenses shall be made in the same manner as the determination that
indemnification is permissible, except that if the determination is made by
special legal counsel, authorization of indemnification and evaluation as to
reasonableness of expenses shall be made by those entitled under subdivision 3
of subsection B of this section to select counsel.
(S) 13.1-702 Indemnification of officers, employees and agents.
Unless limited by a corporation's articles of incorporation,
1. An officer of the corporation is entitled to mandatory indemnification
under s 13.1-698, and is entitled to apply for court-ordered indemnification
under s 13.1-700.1, in each case to the same extent as a director; and
2. The corporation may indemnify and advance expenses under this article to
an officer, employee, or agent of the corporation to the same extent as to a
director.
(S) 13.1-703 Insurance.
A corporation may purchase and maintain insurance on behalf of an
individual who is or was a director, officer, employee, or agent of the
corporation, or who, while a director, officer, employee, or agent of the
corporation, is or was serving at the request of the corporation as a director,
officer, partner, trustee, employee, or agent of another foreign or domestic
corporation, partnership, joint venture, trust, employee benefit plan, or other
enterprise, against liability asserted against or incurred by him in that
capacity or arising from his status as a director, officer, employee, or agent,
whether or not the corporation would have power to indemnify him against the
same liability under s 13.1-697 or s 13.1-698.
(S) 13.1-704 Application of article.
A. Unless the articles of incorporation or bylaws expressly provide
otherwise, any authorization of indemnification in the articles of
incorporation or bylaws shall not be deemed to prevent the corporation from
providing the indemnity permitted or mandated by this article.
B. Any corporation shall have power to make any further indemnity,
including indemnity with respect to a proceeding by or in the right of the
corporation, and to make additional provision for advances and reimbursement of
expenses, to any director, officer, employee or agent that may be authorized by
the articles of incorporation or any bylaw made by the shareholders or any
resolution adopted, before or after the event, by the shareholders, except an
indemnity against (i) his willful misconduct, or (ii) a knowing violation of the
criminal law. Unless the articles of incorporation, or any such bylaw or
resolution expressly provide otherwise, any determination as to the right to any
further indemnity shall be made in accordance with (S) 13.1-701 B. Each such
indemnity may continue as to a person who has ceased to have the capacity
referred to above and may inure to the benefit of the heirs, executors and
administrators of such a person.
C. No right provided to any person pursuant to this section may be reduced
or eliminated by any amendment of the articles of incorporation or bylaws with
respect to any act or omission occurring before such amendment.
<PAGE>
Exhibit 99.18
VERNON'S TEXAS STATUTES AND CODES ANNOTATED
BUSINESS CORPORATION ACT
PART TWO
Art. 2.02-1. Power to Indemnify and to Purchase Indemnity Insurance; Duty
to Indemnify
A. In this article:
(1) "Corporation" includes any domestic or foreign predecessor entity of
the corporation in a merger, conversion, or other transaction in which some or
all of the liabilities of the predecessor are transferred to the corporation by
operation of law and in any other transaction in which the corporation assumes
the liabilities of the predecessor but does not specifically exclude liabilities
that are the subject matter of this article.
(2) "Director" means any person who is or was a director of the corporation
and any person who, while a director of the corporation, is or was serving at
the request of the corporation as a director, officer, partner, venturer,
proprietor, trustee, employee, agent, or similar functionary of another foreign
or domestic corporation, employee benefit plan, other enterprise, or other
entity.
(3) "Expenses" include court costs and attorneys' fees.
(4) "Official capacity" means
(a) when used with respect to a director, the office of director in the
corporation, and
(b) when used with respect to a person other than a director, the elective
or appointive office in the corporation held by the officer or the employment or
agency relationship undertaken by the employee or agent in behalf of the
corporation, but
(c) in both Paragraphs (a) and (b) does not include service for any other
foreign or domestic corporation or any employee benefit plan, other enterprise,
or other entity.
(5) "Proceeding" means any threatened, pending, or completed action, suit,
or proceeding, whether civil, criminal, administrative, arbitrative, or
investigative, any appeal in such an action, suit, or proceeding, and any
inquiry or investigation that could lead to such an action, suit, or proceeding.
B. A corporation may indemnify a person who was, is, or is threatened to be
made a named defendant or respondent in a proceeding because the person is or
was a director only if it is determined in accordance with Section F of this
article that the person:
(1) conducted himself in good faith;
(2) reasonably believed:
(a) in the case of conduct in his official capacity as a director of the
corporation, that his conduct was in the corporation's best interests; and
(b) in all other cases, that his conduct was at least not opposed to the
corporation's best interests; and
(3) in the case of any criminal proceeding, had no reasonable cause to
believe his conduct was unlawful.
C. Except to the extent permitted by Section E of this article, a director
may not be indemnified under Section B of this article in respect of a
proceeding:
(1) in which the person is found liable on the basis that personal benefit
was improperly received by him, whether or not the benefit resulted from an
action taken in the person's official capacity; or
(2) in which the person is found liable to the corporation.
D. The termination of a proceeding by judgment, order, settlement, or
conviction, or on a plea of nolo contendere or its equivalent is not of itself
determinative that the person did not meet the requirements set forth in
Section B of this article. A person shall be deemed to have been found liable
in respect of any claim, issue or matter only after the person shall have been
so adjudged by a court of competent jurisdiction after exhaustion of all
appeals therefrom.
E. A person may be indemnified under Section B of this article against
judgments, penalties (including excise and similar taxes), fines, settlements,
<PAGE>
and reasonable expenses actually incurred by the person in connection with the
proceeding; but if the person is found liable to the corporation or is found
liable on the basis that personal benefit was improperly received by the
person, the indemnification (1) is limited to reasonable expenses actually
incurred by the person in connection with the proceeding and (2) shall not be
made in respect of any proceeding in which the person shall have been found
liable for willful or intentional misconduct in the performance of his duty to
the corporation.
F. A determination of indemnification under Section B of this article must
be made:
(1) by a majority vote of a quorum consisting of directors who at the time
of the vote are not named defendants or respondents in the proceeding;
(2) if such a quorum cannot be obtained, by a majority vote of a committee
of the board of directors, designated to act in the matter by a majority vote of
all directors, consisting solely of two or more directors who at the time of the
vote are not named defendants or respondents in the proceeding;
(3) by special legal counsel selected by the board of directors or a
committee of the board by vote as set forth in Subsection (1) or (2) of this
section, or, if such a quorum cannot be obtained and such a committee cannot be
established, by a majority vote of all directors; or
(4) by the shareholders in a vote that excludes the shares held by
directors who are named defendants or respondents in the proceeding.
G. Authorization of indemnification and determination as to reasonableness
of expenses must be made in the same manner as the determination that
indemnification is permissible, except that if the determination that
indemnification is permissible is made by special legal counsel, authorization
of indemnification and determination as to reasonableness of expenses must be
made in the manner specified by Subsection (3) of Section F of this article for
the selection of special legal counsel. A provision contained in the articles of
incorporation, the bylaws, a resolution of shareholders or directors, or an
agreement that makes mandatory the indemnification permitted under Section B of
this article shall be deemed to constitute authorization of indemnification in
the manner required by this section even though such provision may not have been
adopted or authorized in the same manner as the determination that
indemnification is permissible.
H. A corporation shall indemnify a director against reasonable expenses
incurred by him in connection with a proceeding in which he is a named
defendant or respondent because he is or was a director if he has been wholly
successful, on the merits or otherwise, in the defense of the proceeding.
I. If, in a suit for the indemnification required by Section H of this
article, a court of competent jurisdiction determines that the director is
entitled to indemnification under that section, the court shall order
indemnification and shall award to the director the expenses incurred in
securing the indemnification.
J. If, upon application of a director, a court of competent jurisdiction
determines, after giving any notice the court considers necessary, that the
director is fairly and reasonably entitled to indemnification in view of all
the relevant circumstances, whether or not he has met the requirements set
forth in Section B of this article or has been found liable in the
circumstances described by Section C of this article, the court may order the
indemnification that the court determines is proper and equitable; but if the
person is found liable to the corporation or is found liable on the basis that
personal benefit was improperly received by the person, the indemnification
shall be limited to reasonable expenses actually incurred by the person in
connection with the proceeding.
K. Reasonable expenses incurred by a director who was, is, or is threatened
to be made a named defendant or respondent in a proceeding may be paid or
reimbursed by the corporation, in advance of the final disposition of the
proceeding and without the determination specified in Section F of this article
or the authorization or determination specified in Section G of this article,
after the corporation receives a written affirmation by the director of his good
faith belief that he has met the standard of conduct necessary for
indemnification under this article and a written undertaking by or on behalf of
the director to repay the amount paid or reimbursed if it is ultimately
determined that he has not met that standard or if it is ultimately determined
that indemnification of the director against expenses incurred by him in
connection with that proceeding is prohibited by Section E of this article. A
<PAGE>
provision contained in the articles of incorporation, the bylaws, a resolution
of shareholders or directors, or an agreement that makes mandatory the payment
or reimbursement permitted under this section shall be deemed to constitute
authorization of that payment or reimbursement.
L. The written undertaking required by Section K of this article must be an
unlimited general obligation of the director but need not be secured. It may
be accepted without reference to financial ability to make repayment.
M. A provision for a corporation to indemnify or to advance expenses to a
director who was, is, or is threatened to be made a named defendant or
respondent in a proceeding, whether contained in the articles of incorporation,
the bylaws, a resolution of shareholders or directors, an agreement, or
otherwise, except in accordance with Section R of this article, is valid only
to the extent it is consistent with this article as limited by the articles of
incorporation, if such a limitation exists.
N. Notwithstanding any other provision of this article, a corporation may
pay or reimburse expenses incurred by a director in connection with his
appearance as a witness or other participation in a proceeding at a time when he
is not a named defendant or respondent in the proceeding.
O. An officer of the corporation shall be indemnified as, and to the same
extent, provided by Sections H, I, and J of this article for a director and is
entitled to seek indemnification under those sections to the same extent as a
director. A corporation may indemnify and advance expenses to an officer,
employee, or agent of the corporation to the same extent that it may indemnify
and advance expenses to directors under this article.
P. A corporation may indemnify and advance expenses to persons who are not
or were not officers, employees, or agents of the corporation but who are or
were serving at the request of the corporation as a director, officer, partner,
venturer, proprietor, trustee, employee, agent, or similar functionary of
another foreign or domestic corporation, employee benefit plan, other
enterprise, or other entity to the same extent that it may indemnify and advance
expenses to directors under this article.
Q. A corporation may indemnify and advance expenses to an officer,
employee, agent, or person identified in Section P of this article and who is
not a director to such further extent, consistent with law, as may be provided
by its articles of incorporation, bylaws, general or specific action of its
board of directors, or contract or as permitted or required by common law.
R. A corporation may purchase and maintain insurance or another arrangement
on behalf of any person who is or was a director, officer, employee, or agent of
the corporation or who is or was serving at the request of the corporation as a
director, officer, partner, venturer, proprietor, trustee, employee, agent, or
similar functionary of another foreign or domestic corporation, employee benefit
plan, other enterprise, or other entity, against any liability asserted against
him and incurred by him in such a capacity or arising out of his status as such
a person, whether or not the corporation would have the power to indemnify him
against that liability under this article. If the insurance or other arrangement
is with a person or entity that is not regularly engaged in the business of
providing insurance coverage, the insurance or arrangement may provide for
payment of a liability with respect to which the corporation would not have the
power to indemnify the person only if including coverage for the additional
liability has been approved by the shareholders of the corporation. Without
limiting the power of the corporation to procure or maintain any kind of
insurance or other arrangement, a corporation may, for the benefit of persons
indemnified by the corporation, (1) create a trust fund; (2) establish any form
of self-insurance; (3) secure its indemnity obligation by grant of a security
interest or other lien on the assets of the corporation; or (4) establish a
letter of credit, guaranty, or surety arrangement. The insurance or other
arrangement may be procured, maintained, or established within the corporation
or with any insurer or other person deemed appropriate by the board of directors
regardless of whether all or part of the stock or other securities of the
insurer or other person are owned in whole or part by the corporation. In the
absence of fraud, the judgment of the board of directors as to the terms and
conditions of the insurance or other arrangement and the identity of the insurer
or other person participating in an arrangement shall be conclusive and the
insurance or arrangement shall not be voidable and shall not subject the
directors approving the insurance or arrangement to liability, on any ground,
regardless of whether directors participating in the approval are beneficiaries
of the insurance or arrangement.
<PAGE>
S. Any indemnification of or advance of expenses to a director in
accordance with this article shall be reported in writing to the shareholders
with or before the notice or waiver of notice of the next shareholders' meeting
or with or before the next submission to shareholders of a consent to action
without a meeting pursuant to Section A, Article 9.10, of this Act and, in any
case, within the 12-month period immediately following the date of the
indemnification or advance.
T. For purposes of this article, the corporation is deemed to have
requested a director to serve as a trustee, employee, agent, or similar
functionary of an employee benefit plan whenever the performance by him of his
duties to the corporation also imposes duties on or otherwise involves services
by him to the plan or participants or beneficiaries of the plan. Excise taxes
assessed on a director with respect to an employee benefit plan pursuant to
applicable law are deemed fines. Action taken or omitted by a director with
respect to an employee benefit plan in the performance of his duties for a
purpose reasonably believed by him to be in the interest of the participants and
beneficiaries of the plan is deemed to be for a purpose which is not opposed to
the best interests of the corporation.
U. The articles of incorporation of a corporation may restrict the
circumstances under which the corporation is required or permitted to indemnify
a person under Section H, I, J, O, P, or Q of this article.
VERNON'S TEXAS STATUTES AND CODES ANNOTATED
CIVIL STATUTES
TITLE 32--CORPORATIONS
CHAPTER ONE--TEXAS MISCELLANEOUS CORPORATION LAWS ACT
PART SEVEN
Art. 1302-7.06. Limitation of Liability
A. In this article:
(1) "Articles of incorporation" means the articles of incorporation or
association of a corporation, the charter of a corporation, or any other
document required to incorporate or organize a corporation under the laws of
this state.
(2) "Corporation" means:
(a) Any corporation, association, or other organization incorporated or
organized under the Texas Business Corporation Act, the Texas Non-Profit
Corporation Act (Article 1396-1.01 et seq., Vernon's Texas Civil Statutes),
the Texas Banking Act [FN1] (Article 342-1.001 et seq., Vernon's Texas
Civil Statutes) or a predecessor of that Act, the Texas Trust Company Act or a
predecessor of that Act, the Insurance Code, the Texas Savings and Loan Act
(Article 852a, Vernon's Texas Civil Statutes), Chapter 76, Acts of the 43rd
Legislature, 1st Called Session, 1933 (Article 1434a, Vernon's Texas Civil
Statutes), the Texas Credit Union Act (Article 2461-1.01 et seq., Vernon's
Texas Civil Statutes), the Cooperative Association Act (Article 1396-50.01,
Vernon's Texas Civil Statutes), Articles 1399 through 1407, Revised Statutes,
Article 1448, Revised Statutes, [FN2] Section 2, Chapter 42, Acts of the
42nd Legislature, 3rd Called Session, 1932 (Article 1524c, Vernon's Texas
Civil Statutes), the State Housing Law (Article 1528a, Vernon's Texas Civil
Statutes), the Electric Cooperative Corporation Act (Article 1528b, Vernon's
Texas Civil Statutes), the Telephone Cooperative Act (Article 1528c,
Vernon's Texas Civil Statutes), the Automobile Club Services Act (Article
1528d, Vernon's Texas Civil Statutes), [FN3] the Texas Professional
Corporation Act (Article 1528e, Vernon's Texas Civil Statutes), the Texas
Professional Association Act (Article 1528f, Vernon's Texas Civil Statutes),
the Texas Mutual Trust Investment Company Act (Article 1528i, Vernon's Texas
Civil Statutes), Chapter 221, Health and Safety Code, the Texas
Transportation Corporation Act (Article 1528l, Vernon's Texas Civil
Statutes), [FN4] the Cultural Education Facilities Corporation Act
(Article 1528m, Vernon's Texas Civil Statutes), Chapter 262, Health and
Safety Code, Chapter 264, Health and Safety Code, Title 4, Agriculture
Code, [FN5] Subchapter A, Chapter 301, Health and Safety Code, Subchapter
B, Chapter 301, Health and Safety Code, [FN6] or the Higher Education
<PAGE>
Authority Act, Chapter 53, Education Code;
(b) Any corporation, association, or other organization incorporated or
organized under the laws of this state that is governed in whole or in part by
the Texas Business Corporation Act, the Texas Non-Profit Corporation Act
(Article 1396-1.01 et seq., Vernon's Texas Civil Statutes), or the Texas
Miscellaneous Corporation Laws Act (Article 1302-1.01 et seq., Vernon's
Texas Civil Statutes); or
(c) To the extent permitted by federal law, any federally chartered bank,
savings and loan association, or credit union.
(3) "Director" means an individual who is a director or trustee of a
corporation.
CR01
B. The articles of incorporation of a corporation may provide that a
director of the corporation shall not be liable, or shall be liable only to the
extent provided in the articles of incorporation, to the corporation or its
shareholders or members for monetary damages for an act or omission in the
director's capacity as a director, except that this article does not authorize
the elimination or limitation of the liability of a director to the extent the
director is found liable for:
(1) a breach of the director's duty of loyalty to the corporation or its
shareholders or members;
(2) an act or omission not in good faith that constitutes a breach of duty
of the director to the corporation or an act or omission that involves
intentional misconduct or a knowing violation of the law;
(3) a transaction from which the director received an improper benefit,
whether or not the benefit resulted from an action taken within the scope of
the director's office; or
(4) an act or omission for which the liability of a director is expressly
provided by an applicable statute.
<PAGE>
Exhibit 99.19
WEST'S REVISED CODE OF WASHINGTON ANNOTATED
TITLE 23B. WASHINGTON BUSINESS CORPORATION ACT
CHAPTER 23B.08. DIRECTORS AND OFFICERS
23B.08.500. Indemnification definitions
For purposes of RCW 23B.08.510 through 23B.08.600:
(1) "Corporation" includes any domestic or foreign predecessor entity of a
corporation in a merger or other transaction in which the predecessor's
existence ceased upon consummation of the transaction.
(2) "Director" means an individual who is or was a director of a
corporation or an individual who, while a director of a corporation, is or was
serving at the corporation's request as a director, officer, partner, trustee,
employee, or agent of another foreign or domestic corporation, partnership,
joint venture, trust, employee benefit plan, or other enterprise. A director is
considered to be serving an employee benefit plan at the corporation's request
if the director's duties to the corporation also impose duties on, or otherwise
involve services by, the director to the plan or to participants in or
beneficiaries of the plan. "Director" includes, unless the context requires
otherwise, the estate or personal representative of a director.
(3) "Expenses" include counsel fees.
(4) "Liability" means the obligation to pay a judgment, settlement,
penalty, fine, including an excise tax assessed with respect to an employee
benefit plan, or reasonable expenses incurred with respect to a proceeding.
(5) "Official capacity" means: (a) When used with respect to a director,
the office of director in a corporation; and (b) when used with respect to an
individual other than a director, as contemplated in RCW 23B.08.570, the office
in a corporation held by the officer or the employment or agency relationship
undertaken by the employee or agent on behalf of the corporation. "Official
capacity" does not include service for any other foreign or domestic corporation
or any partnership, joint venture, trust, employee benefit plan, or other
enterprise.
(6) "Party" includes an individual who was, is, or is threatened to be made
a named defendant or respondent in a proceeding.
(7) "Proceeding" means any threatened, pending, or completed action, suit,
or proceeding, whether civil, criminal, administrative, or investigative and
whether formal or informal.
23B.08.510. Authority to indemnify
(1) Except as provided in subsection (4) of this section, a corporation may
indemnify an individual made a party to a proceeding because the individual is
or was a director against liability incurred in the proceeding if:
(a) The individual acted in good faith; and
(b) The individual reasonably believed:
(i) In the case of conduct in the individual's official capacity with the
corporation, that the individual's conduct was in its best interests; and
(ii) In all other cases, that the individual's conduct was at least not
opposed to its best interests; and
(c) In the case of any criminal proceeding, the individual had no
reasonable cause to believe the individual's conduct was unlawful.
(2) A director's conduct with respect to an employee benefit plan for a
purpose the director reasonably believed to be in the interests of the
participants in and beneficiaries of the plan is conduct that satisfies the
requirement of subsection (1)(b)(ii) of this section.
(3) The termination of a proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent is not, of
itself, determinative that the director did not meet the standard of conduct
described in this section.
(4) A corporation may not indemnify a director under this section:
(a) In connection with a proceeding by or in the right of the corporation
in which the director was adjudged liable to the corporation; or
(b) In connection with any other proceeding charging improper personal
benefit
<PAGE>
to the director, whether or not involving action in the director's official
capacity, in which the director was adjudged liable on the basis that personal
benefit was improperly received by the director.
(5) Indemnification permitted under this section in connection with a
proceeding by or in the right of the corporation is limited to reasonable
expenses incurred in connection with the proceeding.
23B.08.520. Mandatory indemnification
Unless limited by its articles of incorporation, a corporation shall
indemnify a director who was wholly successful, on the merits or otherwise, in
the defense of any proceeding to which the director was a party because of being
a director of the corporation against reasonable expenses incurred by the
director in connection with the proceeding.
23B.08.530. Advance for expenses
(1) A corporation may pay for or reimburse the reasonable expenses incurred
by a director who is a party to a proceeding in advance of final disposition of
the proceeding if:
(a) The director furnishes the corporation a written affirmation of the
director's good faith belief that the director has met the standard of conduct
described in RCW 23B.08.510; and
(b) The director furnishes the corporation a written undertaking, executed
personally or on the director's behalf, to repay the advance if it is
ultimately determined that the director did not meet the standard of conduct.
(2) The undertaking required by subsection (1)(b) of this section must be
an unlimited general obligation of the director but need not be secured and may
be accepted without reference to financial ability to make repayment.
(3) Authorization of payments under this section may be made by provision
in the articles of incorporation or bylaws, by resolution adopted by the
shareholders or board of directors, or by contract.
23B.08.540. Court-ordered indemnification
Unless a corporation's articles of incorporation provide otherwise, a
director of a corporation who is a party to a proceeding may apply for
indemnification or advance of expenses to the court conducting the proceeding or
to another court of competent jurisdiction. On receipt of an application, the
court after giving any notice the court considers necessary may order
indemnification or advance of expenses if it determines:
(1) The director is entitled to mandatory indemnification under RCW
23B.08.520, in which case the court shall also order the corporation to pay the
director's reasonable expenses incurred to obtain court-ordered
indemnification;
(2) The director is fairly and reasonably entitled to indemnification in
view of all the relevant circumstances, whether or not the director met the
standard of conduct set forth in RCW 23B.08.510 or was adjudged liable as
described in RCW 23B.08.510(4), but if the director was adjudged so liable the
director's indemnification is limited to reasonable expenses incurred unless the
articles of incorporation or a bylaw, contract, or resolution approved or
ratified by the shareholders pursuant to RCW 23B.08.560 provides otherwise; or
(3) In the case of an advance of expenses, the director is entitled
pursuant to the articles of incorporation, bylaws, or any applicable resolution
or contract, to payment or reimbursement of the director's reasonable expenses
incurred as a party to the proceeding in advance of final disposition of the
proceeding.
23B.08.550. Determination and authorization of indemnification
(1) A corporation may not indemnify a director under RCW 23B.08.510 unless
authorized in the specific case after a determination has been made that
<PAGE>
indemnification of the director is permissible in the circumstances because the
director has met the standard of conduct set forth in RCW 23B.08.510.
(2) The determination shall be made:
(a) By the board of directors by majority vote of a quorum consisting of
directors not at the time parties to the proceeding;
(b) If a quorum cannot be obtained under (a) of this subsection, by
majority vote of a committee duly designated by the board of directors, in which
designation directors who are parties may participate, consisting solely of two
or more directors not at the time parties to the proceeding;
(c) By special legal counsel:
(i) Selected by the board of directors or its committee in the manner
prescribed in (a) or (b) of this subsection; or
(ii) If a quorum of the board of directors cannot be obtained under (a) of
this subsection and a committee cannot be designated under (b) of this
subsection, selected by majority vote of the full board of directors, in which
selection directors who are parties may participate; or
(d) By the shareholders, but shares owned by or voted under the control of
directors who are at the time parties to the proceeding may not be voted on the
determination.
(3) Authorization of indemnification and evaluation as to reasonableness
of expenses shall be made in the same manner as the determination that
indemnification is permissible, except that if the determination is made by
special legal counsel, authorization of indemnification and evaluation as to
reasonableness of expenses shall be made by those entitled under subsection
(2)(c) of this section to select counsel.
23B.08.560. Shareholder authorized indemnification and advancement of
expenses
(1) If authorized by the articles of incorporation, a bylaw adopted or
ratified by the shareholders, or a resolution adopted or ratified, before or
after the event, by the shareholders, a corporation shall have power to
indemnify or agree to indemnify a director made a party to a proceeding, or
obligate itself to advance or reimburse expenses incurred in a proceeding,
without regard to the limitations in RCW 23B.08.510 through 23B.08.550,
provided that no such indemnity shall indemnify any director from or on account
of:
(a) Acts or omissions of the director finally adjudged to be intentional
misconduct or a knowing violation of law;
(b) Conduct of the director finally adjudged to be in violation of RCW
23B.08.310; or
(c) Any transaction with respect to which it was finally adjudged that
such director personally received a benefit in money, property, or services to
which the director was not legally entitled.
(2) Unless the articles of incorporation, or a bylaw or resolution adopted
or ratified by the shareholders, provide otherwise, any determination as to any
indemnity or advance of expenses under subsection (1) of this section shall be
made in accordance with RCW 23B.08.550.
23B.08.570. Indemnification of officers, employees, and agents
Unless a corporation's articles of incorporation provide otherwise:
(1) An officer of the corporation who is not a director is entitled to
mandatory indemnification under RCW 23B.08.520, and is entitled to apply for
court-ordered indemnification under RCW 23B.08.540, in each case to the same
extent as a director;
(2) The corporation may indemnify and advance expenses under RCW
23B.08.510 through 23B.08.560 to an officer, employee, or agent of the
corporation who is not a director to the same extent as to a director; and
(3) A corporation may also indemnify and advance expenses to an officer,
employee, or agent who is not a director to the extent, consistent with law,
that may be provided by its articles of incorporation, bylaws, general or
specific action of its board of directors, or contract.
23B.08.580. Insurance
<PAGE>
A corporation may purchase and maintain insurance on behalf of an individual
who is or was a director, officer, employee, or agent of the corporation, or
who, while a director, officer, employee, or agent of the corporation, is or was
serving at the request of the corporation as a director, officer, partner,
trustee, employee, or agent of another foreign or domestic corporation,
partnership, joint venture, trust, employee benefit plan, or other enterprise,
against liability asserted against or incurred by the individual in that
capacity or arising from the individual's status as a director, officer,
employee, or agent, whether or not the corporation would have power to indemnify
the individual against the same liability under RCW 23B.08.510 or 23B.08.520.
23B.08.590. Validity of indemnification or advance for expenses
(1) A provision treating a corporation's indemnification of or advance for
expenses to directors that is contained in its articles of incorporation,
bylaws, a resolution of its shareholders or board of directors, or in a contract
or otherwise, is valid only if and to the extent the provision is consistent
with RCW 23B.08.500 through 23B.08.580. If articles of incorporation limit
indemnification or advance for expenses, indemnification and advance for
expenses are valid only to the extent consistent with the articles of
incorporation.
(2) RCW 23B.08.500 through 23B.08.580 do not limit a corporation's power to
pay or reimburse expenses incurred by a director in connection with the
director's appearance as a witness in a proceeding at a time when the director
has not been made a named defendant or respondent to the proceeding.
23B.08.600. Report to shareholders
If a corporation indemnifies or advances expenses to a director under RCW
23B.08.510, 23B.08.520, 23B.08.530, 23B.08.540, or 23B.08.560 in connection with
a proceeding by or in the right of the corporation, the corporation shall report
the indemnification or advance in writing to the shareholders with or before the
notice of the next shareholders' meeting.
23B.17.030. Limitation on liability of directors--indemnification
The provisions of RCW 23B.08.320 and 23B.08.500 through 23B.08.600
shall apply to any corporation, other than a municipal corporation,
incorporated under the laws of the state of Washington.
<PAGE>
Exhibit 99.20
CODE OF GEORGIA
TITLE 14. CORPORATIONS, PARTNERSHIPS, AND ASSOCIATIONS
CHAPTER 2. BUSINESS CORPORATIONS
ARTICLE 8. DIRECTORS AND OFFICERS
PART 5. INDEMNIFICATION
14-2-202 Articles of incorporation.
(a) The articles of incorporation must set forth:
(1) A corporate name for the corporation that satisfies the requirements of
Code Section 14-2-401;
(2) The number of shares the corporation is authorized to issue;
(3) The street address and county of the corporation's initial registered
office and the name of its initial registered agent at that office;
(4) The name and address of each incorporator; and
(5) The mailing address of the initial principal office of the corporation.
(b) The articles of incorporation may set forth:
(1) The names and addresses of the individuals who are to serve as the
initial directors;
(2) Provisions not inconsistent with law regarding:
(A) The purpose or purposes for which the corporation is organized;
(B) Managing the business and regulating the affairs of the corporation;
(C) Defining, limiting, and regulating the powers of the corporation, its
board of directors, and shareholders;
(D) A par value for authorized shares or classes of shares; and
(E) The imposition of personal liability on shareholders for the debts of
the corporation to a specified extent and upon specified conditions;
(3) Any provision that under this chapter is required or permitted to be
set forth in the bylaws;
(4) A provision eliminating or limiting the liability of a director to the
corporation or its shareholders for monetary damages for any action taken, or
any failure to take any action, as a director, except liability:
(A) For any appropriation, in violation of his or her duties, of any
business opportunity of the corporation;
(B) For acts or omissions which involve intentional misconduct or a
knowing violation of law;
(C) For the types of liability set forth in Code Section 14-2-832; or
(D) For any transaction from which the director received an improper
personal benefit,
provided that no such provision shall eliminate or limit the liability of a
director for any act or omission occurring prior to the date when such
provision becomes effective; and
(5) A provision that, in discharging the duties of their respective
positions and in determining what is believed to be in the best interests of
the corporation, the board of directors, committees of the board of directors,
and individual directors, in addition to considering the effects of any action
on the corporation or its shareholders, may consider the interests of the
employees, customers, suppliers, and creditors of the corporation and its
subsidiaries, the communities in which offices or other establishments of the
corporation and its subsidiaries are located, and all other factors such
directors consider pertinent; provided, however, that any such provision shall
be deemed solely to grant discretionary authority to the directors and shall
not be deemed to provide to any constituency any right to be considered.
(c) The articles of incorporation need not set forth any of the corporate
powers enumerated in this chapter.
14-2-850 Part definitions.
As used in this part, the term:
(1) "Corporation" includes any domestic or foreign predecessor entity of a
corporation in a merger or other transaction in which the predecessor's
existence ceased upon consummation of the transaction.
<PAGE>
(2) "Director" or "officer" means an individual who is or was a director or
officer, respectively, of a corporation or who, while a director or officer of
the corporation, is or was serving at the corporation's request as a director,
officer, partner, trustee, employee, or agent of another domestic or foreign
corporation, partnership, joint venture, trust, employee benefit
plan, or other entity. A director or officer is considered to be serving an
employee benefit plan at the corporation's request if his or her duties to the
corporation also impose duties on, or otherwise involve services by, the
director or officer to the plan or to participants in or beneficiaries of the
plan. Director or officer includes, unless the context otherwise requires, the
estate or personal representative of a director or officer.
(3) "Disinterested director" means a director who at the time of a vote
referred to in subsection (c) of (S) Code Section 14-2-853 or a vote or
selection referred to in subsection (b) or (c) of (S) Code Section 14-2-855 or
subsection (a) of (S) Code Section 14-2-856 is not:
(A) A party to the proceeding; or
(B) An individual who is a party to a proceeding having a familial,
financial, professional, or employment relationship with the director whose
indemnification or advance for expenses is the subject of the decision being
made with respect to the proceeding, which relationship would, in the
circumstances, reasonably be expected to exert an influence on the director's
judgment when voting on the decision being made.
(4) "Expenses" includes counsel fees.
(5) "Liability" means the obligation to pay a judgment, settlement,
penalty, fine (including an excise tax assessed with respect to an employee
benefit plan), or reasonable expenses incurred with respect to a proceeding.
(6) "Official capacity" means:
(A) When used with respect to a director, the office of director in a
corporation; and
(B) When used with respect to an officer, as contemplated in Code (S)
Section 14-2-857, the office in a corporation held by the officer. Official
capacity does not include service for any other domestic or foreign corporation
or any partnership, joint venture, trust, employee benefit plan, or other
entity.
(7) "Party" means an individual who was, is, or is threatened to be made a
named defendant or respondent in a proceeding.
(8) "Proceeding" means any threatened, pending, or completed action, suit,
or proceeding, whether civil, criminal, administrative, arbitrative, or
investigative and whether formal or informal.
14-2-851 Authority to indemnify.
(a) Except as otherwise provided in this Code section, a corporation may
indemnify an individual who is a party to a proceeding because he or she is or
was a director against liability incurred in the proceeding if:
(1) Such individual conducted himself or herself in good faith; and
(2) Such individual reasonably believed:
(A) In the case of conduct in his or her official capacity, that such
conduct was in the best interests of the corporation;
(B) In all other cases, that such conduct was at least not opposed to the
best interests of the corporation; and
(C) In the case of any criminal proceeding, that the individual had no
reasonable cause to believe such conduct was unlawful.
(b) A director's conduct with respect to an employee benefit plan for a
purpose he or she believed in good faith to be in the interests of the
participants in and beneficiaries of the plan is conduct that satisfies the
requirement of subparagraph (a)(2)(B) of this Code section.
(c) The termination of a proceeding by judgment, order, settlement, or
conviction, or upon a plea of nolo contendere or its equivalent is not, of
itself, determinative that the director did not meet the standard of conduct
described in this Code section.
(d) A corporation may not indemnify a director under this Code section:
(1) In connection with a proceeding by or in the right of the corporation,
except for reasonable expenses incurred in connection with the proceeding if
it is determined that the director has met the relevant standard of conduct
under this Code section; or
<PAGE>
(2) In connection with any proceeding with respect to conduct for which he
or she was adjudged liable on the basis that personal benefit was improperly
received by him or her, whether or not involving action in his or her
official capacity.
14-2-852 Mandatory indemnification.
A corporation shall indemnify a director who was wholly successful, on the
merits or otherwise, in the defense of any proceeding to which he or she was a
party because he or she was a director of the corporation against reasonable
expenses incurred by the director in connection with the proceeding.
14-2-853 Advance for expenses.
(a) A corporation may, before final disposition of a proceeding, advance
funds to pay for or reimburse the reasonable expenses incurred by a director
who is a party to a proceeding because he or she is a director if he or she
delivers to the corporation:
(1) A written affirmation of his or her good faith belief that he or she
has met the relevant standard of conduct described in Code Section 14-2-851 or
that the proceeding involves conduct for which liability has been eliminated
under a provision of the articles of incorporation as authorized by paragraph
(4) of subsection (b) of Code Section 14-2-202; and
(2) His or her written undertaking to repay any funds advanced if it is
ultimately determined that the director is not entitled to indemnification
under this part.
(b) The undertaking required by paragraph (2) of subsection (a) of this Code
section must be an unlimited general obligation of the director but need not be
secured and may be accepted without reference to the financial ability of the
director to make repayment.
(c) Authorizations under this Code section shall be made:
(1) By the board of directors:
(A) When there are two or more disinterested directors, by a majority vote
of all the disinterested directors (a majority of whom shall for such
purpose constitute a quorum) or by a majority of the members of a committee
of two or more disinterested directors appointed by such a vote; or
(B) When there are fewer than two disinterested directors, by the vote
necessary for action by the board in accordance with subsection (c) of
Code Section 14-2-824, in which authorization directors who do not
qualify as disinterested directors may participate; or
(2) By the shareholders, but shares owned or voted under the control of a
director who at the time does not qualify as a disinterested director with
respect to the proceeding may not be voted on the authorization.
14-2-854 Court-ordered indemnification and advances for expenses.
(a) A director who is a party to a proceeding because he or she is a
director may apply for indemnification or advance for expenses to the court
conducting the proceeding or to another court of competent jurisdiction. After
receipt of an application and after giving any notice it considers necessary,
the court shall:
(1) Order indemnification or advance for expenses if it determines that the
director is entitled to indemnification under this part; or
(2) Order indemnification or advance for expenses if it determines, in view
of all the relevant circumstances, that it is fair and reasonable to
indemnify the director or to advance expenses to the director, even if the
director has not met the relevant standard of conduct set forth in
subsections (a) and (b) of Code Section 14-2-851, failed to comply with
Code Section 14-2-853, or was adjudged liable in a proceeding referred to
in paragraph (1) or (2) of subsection (d) of Code Section 14-2-851, but if
the director was adjudged so liable, the indemnification shall be limited to
reasonable expenses incurred in connection with the proceeding.
(b) If the court determines that the director is entitled to
indemnification or advance for expenses under this part, it may also order the
corporation to
<PAGE>
pay the director's reasonable expenses to obtain court-ordered indemnification
or advance for expenses.
14-2-855 Determination and authorization of indemnification.
(a) A corporation may not indemnify a director under Code Section 14-2-851
unless authorized thereunder and a determination has been made for a specific
proceeding that indemnification of the director is permissible in the
circumstances because he or she has met the relevant standard of conduct set
forth in Code Section 14-2-851.
(b) The determination shall be made:
(1) If there are two or more disinterested directors, by the board of
directors by a majority vote of all the disinterested directors (a majority
of whom shall for such purpose constitute a quorum) or by a majority of the
members of a committee of two or more disinterested directors appointed by
such a vote;
(2) By special legal counsel:
(A) Selected in the manner prescribed in paragraph (1) of this subsection;
or
(B) If there are fewer than two disinterested directors, selected by the
board of directors (in which selection directors who do not qualify as
disinterested directors may participate); or
(3) By the shareholders, but shares owned by or voted under the control of
a director who at the time does not qualify as a disinterested director may not
be voted on the determination.
(c) Authorization of indemnification or an obligation to indemnify and
evaluation as to reasonableness of expenses shall be made in the same manner as
the determination that indemnification is permissible, except that if there are
fewer than two disinterested directors or if the determination is made by
special legal counsel, authorization of indemnification and evaluation as to
reasonableness of expenses shall be made by those entitled under subparagraph
(b) (2) (B) of this Code section to select special legal counsel.
14-2-856 Shareholder approved indemnification.
(a) If authorized by the articles of incorporation or a bylaw, contract, or
resolution approved or ratified by the shareholders by a majority of the votes
entitled to be cast, a corporation may indemnify or obligate itself to
indemnify a director made a party to a proceeding including a proceeding
brought by or in the right of the corporation, without regard to the
limitations in other Code sections of this part, but shares owned or voted
under the control of a director who at the time does not qualify as a
disinterested director with respect to any existing or threatened proceeding
that would be covered by the authorization may not be voted on the
authorization.
(b) The corporation shall not indemnify a director under this Code section
for any liability incurred in a proceeding in which the director is adjudged
liable to the corporation or is subjected to injunctive relief in favor of the
corporation:
(1) For any appropriation, in violation of the director's duties, of any
business opportunity of the corporation;
(2) For acts or omissions which involve intentional misconduct or a
knowing violation of law;
(3) For the types of liability set forth in Code Section 14-2-832; or
(4) For any transaction from which he or she received an improper personal
benefit.
(c) Where approved or authorized in the manner described in subsection (a)
of this Code section, a corporation may advance or reimburse expenses incurred
in advance of final disposition of the proceeding only if:
(1) The director furnishes the corporation a written affirmation of his or
her good faith belief that his or her conduct does not constitute behavior of
the kind described in subsection (b) of this Code section; and
(2) The director furnishes the corporation a written undertaking, executed
personally or on his or her behalf, to repay any advances if it is ultimately
determined that the director is not entitled to indemnification under this
<PAGE>
Code section.
14-2-857 Indemnification of officers, employees, and agents.
(a) A corporation may indemnify and advance expenses under this part to an
officer of the corporation who is a party to a proceeding because he or she is
an officer of the corporation:
(1) To the same extent as a director; and
(2) If he or she is not a director, to such further extent as may be
provided by the articles of incorporation, the bylaws, a resolution of the
board of directors, or contract except for liability arising out of conduct
that constitutes:
(A) Appropriation, in violation of his or her duties, of any business
opportunity of the corporation;
(B) Acts or omissions which involve intentional misconduct or a knowing
violation of law;
(C) The types of liability set forth in Code Section 14-2-832; or
(D) Receipt of an improper personal benefit.
(b) The provisions of paragraph (2) of subsection (a) of this Code section
shall apply to an officer who is also a director if the sole basis on which he
or she is made a party to the proceeding is an act or omission solely as an
officer.
(c) An officer of a corporation who is not a director is entitled to
mandatory indemnification under Code Section 14-2-852, and may apply to a
court under Code Section 14-2-854 for indemnification or advances for
expenses, in each case to the same extent to which a director may be entitled
to indemnification or advances for expenses under those provisions.
(d) A corporation may also indemnify and advance expenses to an employee or
agent who is not a director to the extent, consistent with public policy, that
may be provided by its articles of incorporation, bylaws, general or specific
action of its board of directors, or contract.
14-2-858 Insurance.
A corporation may purchase and maintain insurance on behalf of an
individual who is a director, officer, employee, or agent of the corporation or
who, while a director, officer, employee, or agent of the corporation, serves at
the corporation's request as a director, officer, partner, trustee, employee, or
agent of another domestic or foreign corporation, partnership, joint venture,
trust, employee benefit plan, or other entity against liability asserted against
or incurred by him or her in that capacity or arising from his or her status as
a director, officer, employee, or agent, whether or not the corporation would
have power to indemnify or advance expenses to him or her against the same
liability under this part.
14-2-859 Application of part.
(a) A corporation may, by a provision in its articles of incorporation or
bylaws or in a resolution adopted or a contract approved by its board of
directors or shareholders, obligate itself in advance of the act or omission
giving rise to a proceeding to provide indemnification or advance funds to pay
for or reimburse expenses consistent with this part. Any such obligatory
provision shall be deemed to satisfy the requirements for authorization
referred to in subsection (c) of Code Section 14-2-853 or subsection (c) of
Code Section 14-2-855. Any such provision that obligates the corporation to
provide indemnification to the fullest extent permitted by law shall be deemed
to obligate the corporation to advance funds to pay for or reimburse expenses
in accordance with Code Section 14-2-853 to the fullest extent permitted by
law, unless the provision specifically provides otherwise.
(b) Any provision pursuant to subsection (a) of this Code section shall
not obligate the corporation to indemnify or advance expenses to a director of a
predecessor of the corporation, pertaining to conduct with respect to the
predecessor, unless otherwise specifically provided. Any provision for
indemnification or advance for expenses in the articles of incorporation,
<PAGE>
bylaws, or a resolution of the board of directors or shareholders, partners, or,
in the case of limited liability companies, members or managers of a predecessor
of the corporation or other entity in a merger or in a contract to which the
predecessor is a party, existing at the time the merger takes effect, shall be
governed by paragraph (3) of subsection (a) of Code Section 14-2-1106.
(c) A corporation may, by a provision in its articles of incorporation,
limit any of the rights to indemnification or advance for expenses created by or
pursuant to this part.
(d) This part does not limit a corporation's power to pay or reimburse
expenses incurred by a director or an officer in connection with his or her
appearance as a witness in a proceeding at a time when he or she is not a party.
(e) Except as expressly provided in Code Section 14-2-857, this part does
not limit a corporation's power to indemnify, advance expenses to, or provide
or maintain insurance on behalf of an employee or agent.
